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Global Compliance
Table of Contents........................................................................................... page
1.0 2.0 3.0 4.0 Purpose..................................................................................................................... 1 Scope ......................................................................................................................... 1
Contacts

Role of Global Compliance .................................................................................. 1 Compliance Review Process................................................................................ 1

Consequences of Facility Approval Consequences of Facility Rejection Cases Where Corrective Action Is Needed

5.0 6.0 7.0 8.0

On-site Facility Evaluation .................................................................................... 3 Ongoing Monitoring............................................................................................... 3 Changes to Facility or Facility Name ................................................................. 3 Termination of Approved Status ........................................................................ 4

Appendix................................................................................................................. 5
Code of Vendor Conduct Wet Processing Specifications for Laundry and Garment Dyeing Facilities

Global Compliance Table of Contents Vendor Handbook, Gap Inc., August 2002

Global Compliance
1.0 Purpose
1.0.1 This section of the Vendor Handbook introduces Global Compliance and describes its function.

2.0

Scope
2.0.1 Vendors and Vendor Affiliates: Any and all applicable personnel and departments involved in, managing and/or controlling the production of goods for a Company Purchaser. Company: All Gap Inc. or agent personnel that interact with Vendors and Vendor Affiliates or have responsibility for sourcing production.

2.0.2

2.1

Contacts
2.1.1 Questions regarding the Code of Vendor Conduct (Code) or Global Compliance should be communicated directly to the local Compliance Administrator (CA) or the local Vendor Compliance Officer (VCO) responsible for managing the Vendor or Vendor Affiliate relationship.

3.0

Role of Global Compliance

3.0.1 A role of Global Compliance is to evaluate facility practices and conditions against the standards set forth in the Code. A copy of the Code is included in the Appendix at the end of this chapter. 3.0.1.1 3.0.1.2 3.0.1.3 CAs coordinate the compliance review process. VCOs perform on-site evaluations of facility practices and conditions. Other individuals or organizations designated by Company may perform on-site facility evaluations.

4.0

Compliance Review Process

4.0.1 Vendor must ensure that all facilities anticipated to produce goods for Company, including subcontractors, are approved by Global Compliance before any Company production begins. The approval process is outlined below. 4.0.1.1 Production, Sourcing or Buying Agent staff coordinate with Global Compliance to initiate the compliance approval process.

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4.0

Compliance Review Process (contd)

4.0.1.2 Vendor and Vendor Affiliates sign and return the Vendor Compliance Agreement (VCA). By signing the VCA, Vendor and Vendor Affiliates certify that they will comply with the Code and allow VCOs or other designated parties to have unrestricted access to Vendors and Vendor Affiliates facilities, dormitories, workers, and to all relevant records (see VCA sections I.B, I.C and VII.A). A copy of the VCA is included in the Vendor Compliance Agreement section of the Vendor Handbook, Chapter I.

4.0.1.3 4.0.1.4

Where appropriate, Global Compliance may request that a VCO or other designated party conduct an on-site evaluation of the requested facilities. Upon review of the facility evaluation report, the CA will notify the Vendor and Company representative of one of the following decisions: Approved Rejected Corrective Action Needed

4.1

Consequences of Facility Approval

4.1.2 4.1.3 Only the Global Compliance department is authorized to approve a facility. This approval will be documented in writing. An approved facility will be authorized to begin production only after a Purchase Order (PO) is received from Company.

4.2

Consequences of Facility Rejection

4.2.1 Rejected facilities are not authorized to produce for Company.

4.3

Cases Where Corrective Action Is Needed

4.3.1 If Global Compliance informs a Vendor that corrective action is needed before a facility can be approved, the facility may be given the opportunity to take appropriate steps to gain approval. Global Compliance must determine that corrective action has been satisfactorily completed before a facility can be approved for production. See section 4.1 above.

4.3.2

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5.0

On-site Facility Evaluation

5.0.1 5.0.2 Where appropriate, VCOs or other designated parties visit facilities and perform onsite evaluations of facility practices and conditions. This evaluation may include a visual inspection of the physical facility (including dormitories, if applicable); a review of payroll and related employee documentation, policies and procedures; and interviews with employees. 5.0.2.1 The document review may include, but is not limited to, payroll records, wage statements, timecards, piece-rate tickets, employment eligibility forms, evacuation drill logs, medical or accident records, job applications and material safety data sheets (MSDS).

5.0.3

Facilities must cooperate with the VCO or designated party, including granting full access to all documents, employees and buildings, whether or not the visit is announced. The application of certain Code health and safety standards to laundry and garment dyeing facilities can be found in the Wet Processing Specifications included in the Appendix at the end of this chapter.

5.0.4

6.0

Ongoing Monitoring
6.0.1 6.0.2 Approved facilities may be re-inspected on a periodic basis. Facilities are expected to take prompt corrective action to address areas identified for improvement by Global Compliance. If corrective action is not promptly completed, the facilitys status as approved for production may be jeopardized. This may affect the facilitys existing and future orders.

7.0

Changes to Facility or Facility Name

7.0.1 7.0.2 Vendor and Vendor Affiliates must promptly notify the CA in advance by e-mail, fax or letter of changes in Vendors or Vendor Affiliates name, address or ownership. Vendor and Vendor Affiliates must also promptly notify the CA in advance by e-mail, fax or letter if the facilitys physical structure, capabilities or composition of the workforce significantly changes, such as adding an additional building or additional room to an existing structure. By signing the VCA, Vendor certifies that it and Vendor Affiliates will comply with 7.0.1 and 7.0.2 and acknowledges that its approved status may be jeopardized if it fails to do so.

7.0.3

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8.0

Termination of Approved Status

8.0.1 A facilitys approved status may be revoked by Global Compliance for significant noncompliance with the Code. 8.0.1.1 Orders are not authorized to be placed at a facility with revoked status. In addition, existing production may be pulled once a determination of revocation has been made.

8.0.2

Facilities that are not expected to receive future POs may be deactivated. Production in deactivated facilities is not authorized. 8.0.2.1 Deactivated facilities may be re-approved for production only following the appropriate review by Global Compliance.

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Global Compliance: Appendix

Code of Vendor Conduct

This Code of Vendor Conduct applies to all factories that produce goods for Gap Inc. or any of its subsidiaries, divisions, affiliates or agents (Gap). While Gap recognizes that there are different legal and cultural environments in which factories operate throughout the world, this Code sets forth the basic requirements all factories must meet in order to do business with Gap. The Code also provides the foundation for Gaps ongoing evaluation of a factorys employment practices and environmental compliance.

I. General Principle
Factories that produce goods for Gap shall operate in full compliance with the laws of their respective countries and with all other applicable laws, rules and regulations. A. The factory operates in full compliance with all applicable laws, rules and regulations, including those relating to labor, worker health and safety, and the environment. B. The factory allows Gap and/or any of its representatives or agents unrestricted access to its facilities and to all relevant records at all times, whether or not notice is provided in advance.

II. Environment
Factories must comply with all applicable environmental laws and regulations. Where such requirements are less stringent than Gaps own, factories are encouraged to meet the standards outlined in Gaps statement of environmental principles. A. The factory has an environmental management system or plan. B. The factory has procedures for notifying local community authorities in case of accidental discharge or release or any other environmental emergency.

III. Discrimination
Factories shall employ workers on the basis of their ability to do the job, not on the basis of their personal characteristics or beliefs. A. The factory employs workers without regard to race, color, gender, nationality, religion, age, maternity or marital status. B. The factory pays workers wages and provides benefits without regard to race, color, gender, nationality, religion, age, maternity or marital status.

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IV. Forced Labor

Factories shall not use any prison, indentured or forced labor. A. The factory does not use involuntary labor of any kind, including prison labor, debt bondage or forced labor by governments. B. If the factory recruits foreign contract workers, the factory pays agency recruitment commissions and does not require any worker to remain in employment for any period of time against his or her will.

V. Child Labor
Factories shall employ only workers who meet the applicable minimum legal age requirement or are at least 14 years of age, whichever is greater. Factories must also comply with all other applicable child labor laws. Factories are encouraged to develop lawful workplace apprenticeship programs for the educational benefit of their workers, provided that all participants meet both Gaps minimum age standard of 14 and the minimum legal age requirement. A. Every worker employed by the factory is at least 14 years of age and meets the applicable minimum legal age requirement. B. The factory complies with all applicable child labor laws, including those related to hiring, wages, hours worked, overtime and working conditions. C. The factory encourages and allows eligible workers, especially younger workers, to attend night classes and participate in work-study programs and other government-sponsored educational programs. D. The factory maintains official documentation for every worker that verifies the workers date of birth. In those countries where official documents are not available to confirm exact date of birth, the factory confirms age using an appropriate and reliable assessment method.

VI. Wages & Hours

Factories shall set working hours, wages and overtime pay in compliance with all applicable laws. Workers shall be paid at least the minimum legal wage or a wage that meets local industry standards, whichever is greater. While it is understood that overtime is often required in garment production, factories shall carry out operations in ways that limit overtime to a level that ensures humane and productive working conditions. A. Workers are paid at least the minimum legal wage or the local industry standard, whichever is greater. B. The factory pays overtime and any incentive (or piece) rates that meet all legal requirements or the local industry standard, whichever is greater. Hourly wage rates for overtime must be higher than the rates for the regular work shift. C. The factory does not require, on a regularly scheduled basis, a work week in excess of 60 hours. D. Workers may refuse overtime without any threat of penalty, punishment or dismissal. E. Workers have at least one day off in seven. F. The factory provides paid annual leave and holidays as required by law or which meet the local industry standard, whichever is greater. G. For each pay period, the factory provides workers an understandable wage statement which includes days worked, wage or piece rate earned per day, hours of overtime at each specified rate, bonuses, allowances and legal or contractual deductions.

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VII. Working Conditions

Factories must treat all workers with respect and dignity and provide them with a safe and healthy environment. Factories shall comply with all applicable laws and regulations regarding working conditions. Factories shall not use corporal punishment or any other form of physical or psychological coercion. Factories must be sufficiently lighted and ventilated, aisles accessible, machinery maintained, and hazardous materials sensibly stored and disposed of. Factories providing housing for their workers must keep these facilities clean and safe. Factory: A. The factory does not engage in or permit physical acts to punish or coerce workers. B. The factory does not engage in or permit psychological coercion or any other form of non-physical abuse, including threats of violence, sexual harassment, screaming or other verbal abuse. C. The factory complies with all applicable laws regarding working conditions, including worker health and safety, sanitation, fire safety, risk protection, and electrical, mechanical and structural safety. D. Work surface lighting in production areassuch as sewing, knitting, pressing and cuttingis sufficient for the safe performance of production activities. E. The factory is well ventilated. There are windows, fans, air conditioners or heaters in all work areas for adequate circulation, ventilation and temperature control. F. There are sufficient, clearly marked exits allowing for the orderly evacuation of workers in case of fire or other emergencies. Emergency exit routes are posted and clearly marked in all sections of the factory. G. Aisles, exits and stairwells are kept clear at all times of work in process, finished garments, bolts of fabric, boxes and all other objects that could obstruct the orderly evacuation of workers in case of fire or other emergencies. The factory indicates with a yellow box or other markings that the areas in front of exits, fire fighting equipment, control panels and potential fire sources are to be kept clear. H. Doors and other exits are kept accessible and unlocked during all working hours for orderly evacuation in case of fire or other emergencies. All main exit doors open to the outside. I. Fire extinguishers are appropriate to the types of possible fires in the various areas of the factory, are regularly maintained and charged, display the date of their last inspection, and are mounted on walls and columns throughout the factory so they are visible and accessible to workers in all areas. J. Fire alarms are on each floor and emergency lights are placed above exits and on stairwells. K. Evacuation drills are conducted at least annually. L. Machinery is equipped with operational safety devices and is inspected and serviced on a regular basis. M. Appropriate personal protective equipmentsuch as masks, gloves, goggles, ear plugs and rubber bootsis made available at no cost to all workers and instruction in its use is provided. N. The factory provides potable water for all workers and allows reasonable access to it throughout the working day. O. The factory places at least one well-stocked first aid kit on every factory floor and trains specific staff in basic first aid. The factory has procedures for dealing with serious injuries that require medical treatment outside the factory. P. The factory maintains throughout working hours clean and sanitary toilet areas and places no unreasonable restrictions on their use. Q. The factory stores hazardous and combustible materials in secure and ventilated areas and disposes of them in a safe and legal manner. Housing (if applicable): Dormitory facilities meet all applicable laws and regulations related to health and safety, including fire safety, sanitation, risk protection, and electrical, mechanical and structural safety. Sleeping quarters are segregated by sex. The living space per worker in the sleeping quarters meets both the minimum legal requirement and the local industry standard. Workers are provided their own individual mats or beds.

AA. BB. CC.

DD.

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EE.

Dormitory facilities are well ventilated. There are windows to the outside or fans and/or air conditioners and/or heaters in all sleeping areas for adequate circulation, ventilation and temperature control.

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Working Conditions (continued): FF. Workers are provided their own storage space for their clothes and personal possessions. GG. There are at least two clearly marked exits on each floor, and emergency lighting is installed in halls, stairwells and above each exit. HH. Halls and exits are kept clear of obstructions for safe and rapid evacuation in case of fire or other emergencies. II. Directions for evacuation in case of fire or other emergencies are posted in all sleeping quarters. JJ. Fire extinguishers are placed in or accessible to all sleeping quarters. KK. Hazardous and combustible materials used in the production process are not stored in the dormitory or in buildings connected to sleeping quarters. LL. Fire drills are conducted at least every six months. MM. Sleeping quarters have adequate lighting. NN. Sufficient toilets and showers or mandis are segregated by sex and provided in safe, sanitary, accessible and private areas. OO. Potable water or facilities to boil water are available to dormitory residents. PP. Dormitory residents are free to come and go during their off-hours under reasonable limitations imposed for their safety and comfort.

VIII. Freedom of Association

Workers are free to join associations of their own choosing. Factories must not interfere with workers who wish to lawfully and peacefully associate, organize or bargain collectively. The decision whether or not to do so should be made solely by the workers. A. Workers are free to choose whether or not to lawfully organize and join associations. B. The factory does not threaten, penalize, restrict or interfere with workers lawful efforts to join associations of their choosing.

Monitoring & Enforcement

As a condition of doing business with Gap, each and every factory must comply with this Code of Vendor Conduct. Gap will continue to develop monitoring systems to assess and ensure compliance. If Gap determines that any factory has violated this Code, Gap may either terminate its business relationship or require the factory to implement a corrective action plan. If corrective action is advised but not taken, Gap will suspend placement of future orders and may terminate current production.

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Wet Processing Specifications for Laundry and Garment Dyeing Facilities

FACILITY OPERATIONS AND MAINTENANCE A. The facility covers and keeps free of debris, open drains and trenches that could cause harm to workers in the course of their activities. B. Floors have proper construction, drainage and maintenance to prevent workers from slipping. C. Exposed hot water and steam pipes have warning markings. Pipes and electrical wiring, accessible to workers, are insulated. D. Temperature gauges on machines are operational. E. Extractors have working brakes and solid, securely attached covers. F. Workers are safe from exposure to the flames of gas dryers. G. Dryer exhaust ducts and screens are cleaned on a regular basis. H. The facility prohibits the wearing of loose clothing where it poses a hazard to the worker. I. Pulleys, gears and other moving machine parts are covered with safety devices to prevent injury to workers. J. Boilers are serviced by licensed companies/individuals as required by government regulations, and service logs or records are maintained on the premises. K. Chemical mixing and transfer areas are well ventilated. HAZARD COMMUNICATION L. The facility maintains a list of hazardous substances used in the workplace and makes available to workers, on request, information on the physical and chemical properties and hazards of these substances, the short and long term effects of exposure and precautions for safe storage and handling. M. Workers receive verbal training in safe work practices and specific training on hazards particular to their job assignments. N. The wet processing facility, including chemical, fuel storage areas and boiler room, is a posted no smoking space. O. The facility instructs employees on, and posts in both the storage and mixing areas, first aid procedures and emergency action to take in case of accidental exposure. CHEMICAL LABELING P. Bulk chemical drums are labeled with content identification and, where appropriate, a hazard warning. Q. Secondary or point of use containers are labeled with content identification and, where appropriate, a hazard warning, or signs are posted in storage and mixing areas with this information. CHEMICAL STORAGE, USE, AND DISPOSAL R. The chemical storage area is segregated from the product processing work area. S. Each chemical has its own separate dispenser or dispensing tools. T. Bulk chemical containers are closed when not in use. U. Empty chemical and hazardous substances containers are removed from work areas promptly, stored in a secure designated area and removed from the facility on a regular basis. PERSONAL PROTECTIVE EQUIPMENT V. Workers are given proper equipment and follow procedures that allow them to manually dispense chemicals in a manner that reduces the possibility of spillage and unnecessary exposure. W. Sandblasting and brushing facilities are segregated from the general work area, and workers in these facilities are provided eye protection, air purifying respirators and earguards. EMERGENCY AND FIRST AID PROCEDURES X. There is a designated wash area in or near the work and chemical mixing/transfer areas with facilities for bathing eyes and washing skin. Y. The facility has written procedures and conducts drills/training on the clean-up of chemical spills.

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