Below is an extract of a letter sent to all suppliers of products to Panda Apparel regarding the Consumer Product Safety Information Act:

Panda Apparel prides itself on being a family-focused retailer. Panda Apparel values the partnerships that we have formed with out entire vendor community, including your company, which has allowed us to provide quality, safe products at a great value to our customers.

As you are aware, as a merchandise supplier to Panda Apparel , your company warrants, covenants and represents that (1) your company has and will comply with all applicable laws relevant to your performance under the merchandise purchase order(s) that may have been placed with your company from time to time; (2) all merchandise delivered pursuant to Panda Apparel’s purchase order(s) was produced, processed, manufactured, represented, described, packaged, labeled, tagged, packed, advertised, sold, invoiced and shipped in full compliance with all the applicable laws; and (3) neither Panda Apparel’s acquisition nor Panda Apparel’s subsequent sale of merchandise delivered pursuant to Panda Apparel purchase order(s) will violate any applicable laws.

Panda Apparel requires all of its vendors to remain informed about, and fully comply with, any changes in existing laws or regulations. However, Panda Apparel believes that the recent changes to the national product safety laws warrant special attention due to the heightened awareness to sensitivity by the relevant government agencies. As detailed in this letter, in the event your company previously supplied Panda Apparel with any products that may still be in Panda Apparel’s inventory that do not comply with the new product safety requirements, Panda Apparel expects that you will alert Panda Apparel to this fact and provide a plan for safe the disposition of the noncompliant products.

CONSUMER PRODUCT SAFETY INPROVEMENT ACT OF 2008

On August 14, 2008, President Bush signed the Consumer Product Safety Improvement Act of 2008 ("CPSIA"), which overhauls the national product safety system and imposes a number of new product safety requirements on product manufacturers, distributors, private labelers and retailers. Additional information regarding the CPSIA and all of its requirements can be found at: http://www.cpsc.gov/about/cpsia/cpsia.html. All Panda Apparel vendors, including your company, are required to  ensure that merchandise fully complies with all of the new requirements as set forth in the CPSIA, including, but not limited to, the requirements discussed in more detail below.

A.        Lead

One of the new federal mandates under the CPSIA relates to the permissible lead levels in children's products, which the CPSIA defines as products designed or intended primarily for children 12 and younger. By February 10, 2009, products designed or intended primarily for children 12 and younger may not contain more than 600 ppm of lead. On September 12, 2008, the Office of General Counsel for the Consumer Product Safety Commission ("CPSC") issued a legal memorandum regarding the retroactive application of the CPSIA to existing inventory. A copy of this memorandum is available at the Website referenced above. That memorandum concludes that children's products containing more lead than 600ppm are banned in the United States after February 10, 2009 and existing inventory or products on shelves may not be sold after February 9, 2009.

In addition, effective August 14, 2009, products designed or intended primarily for children 12 and younger cannot contain more than 300ppm of lead. The limit goes down to 100ppm on August 14, 2011, unless the CPSC determines that it is not technologically feasible to have this lower limit. Importantly, the Office of the General Counsel for the CPSC has likewise announced that these effective dates will also apply retroactively to any existing inventories on such dates.

As such, any existing inventories that your company previously shipped to Panda Apparel, as well as all future shipments must be in compliance with these new lead levels and effective dates. If that is not the case, just like any other product deficiency, you must alert Panda Apparel to this fact, provide a plan for the safe disposition of the noncompliant products and provide timely replacement.

You should also be aware that the CPSIA will also alter the permissible levels of lead in paint and other surface coatings, and will eventually require certifications by accredited third parties certifying compliance with these, and other, product safety standards.

B.         Phthalates

As you should also be aware, another new federal mandate under the CPSIA relates to permissible levels of phthalates in children's products. Specifically, effective on February 10, 2009, children's toys and child care articles may not contain concentrations of more than 0.1 percent of di- (2-ethylhexyl) phthalate (DEHP), dibutyl phthalate (DBP), or benzyl butyl phthalate (BBP). Also starting February 10, 2009, a temporary ban is imposed on any children's toy that can be placed in a child's mouth or child care article that contains concentrations of more than 0.1 percent of diisononyl phthalate (DINP), or di-n-octyl phthalate (DnOP). As discussed above with respect to lead content, any existing inventories previously shipped to Panda Apparel as well as all future shipments must be in compliance with these new phthalates levels and dates. If that is not the case, just like any other product deficiency, you must alert Panda Apparel to this fact, provide a plan for the safe disposition of the noncompliant products and provide timely replacement complying products to Panda Apparel.

Please be advised that the summaries of the CPSIA requirements in this letter are provided for informational purposes only and should not be construed as legal advice on any specific requirement. As stated at the beginning of this letter, Panda Apparel’s vendors must comply with any changes in existing laws or regulations, including - but not limited to - the legal requirements set forth in the CPSIA. In the event your company previously supplied Panda Apparel with any products not in compliance with current safety requirements or other laws or regulations, Panda Apparel expects that you will immediately Panda Apparel to this fact, provide a plan for the safe disposition of the noncompliant products.