VII. REMEDIATION OF NONCOMPLIANCE

Disney requires that Facilities engaged in the production of Disney branded products meet and maintain, at a minimum, the Minimum Compliance Standard (“MCS”). As a condition to the continued use of a Facility, you as a Licensee or Vendor are responsible for working with the Facility to remediate any MCS violations identified during an ILS Audit within the time periods specified below.

OBLIGATION TO MEET THE MCS

If an ILS Audit conducted by or on behalf of Disney, or provided to Disney by you as a Licensee or Vendor, reveals that a Facility does not meet the MCS:

? You will receive a Corrective Action Plan (“CAP”) outlining violations identified in the ILS Audit Report. (See Appendix 14: Sample Corrective Action Plan for more information.)

? You will generally be given 90 days to remediate the MCS violations, conduct a new ILS Audit, and submit a new ILS Audit Report that confirms that these violations have been remediated. The subsequent ILS Audit Report must indicate that no additional MCS violations exist. Disney may specify a shorter time period for remediation in certain instances involving egregious violations.

? You are responsible for working with the Facility, Social Compliance Monitoring Organizations, social compliance consultants, and/or other Licensees and Vendors using the Facility to remediate the MCS violations and improve Facility working conditions.

? You must ensure that the Facility meets the MCS prior to the time of the required subsequent ILS Audit or the Facility will lose authorization to produce Disney-branded products.

MCS VIOLATION EXAMPLES

? CHILD LABOR VIOLATIONS: Any confirmed current employment of underage workers or any inappropriate remediation of child labor violations under applicable laws.

? INVOLUNTARY LABOR VIOLATIONS: Any confirmed current employment of forced, bonded, indentured, or prison labor; mandatory or involuntary overtime, or imposition of penalties or fines for refusing overtime; withholding of personal property (e.g., passport, identification papers) or wages; or unreasonably limiting freedom of movement during and/or after work hours.

? COERCION AND HARASSMENT VIOLATIONS: Any policy permitting, or the actual the use of, corporal punishment; threats of termination of employment; the imposition of penalties or retaliation as disciplinary action; or intrusive or intimidating security practices.

? NONDISCRIMINATION VIOLATIONS: Discriminatory hiring and employment practices (e.g., salary, benefits, advancement, discipline, termination, or retirement) on the basis of race, religion, age, nationality, social or ethnic origin, sexual orientation, gender, political opinion, disability, pregnancy, or union membership.

? ASSOCIATION VIOLATIONS: Policies or practices that prevent employees from exercising their legal right to associate, organize, and bargain in a lawful and peaceful manner in accordance with applicable laws; retaliation for the exercise of any such right.

? HEALTH AND SAFETY VIOLATIONS: Conditions in the Facility, including dormitories, that could cause immediate severe injury or death to employees or the public, including but not limited to the following:

? SUBCONTRACTING VIOLATIONS: Any use of another Facility or other source for Disney branded production without authorization from Disney.

? MONITORING AND COMPLIANCE VIOLATIONS: Employees influenced to provide untruthful responses to auditors; discrepancies between the actual number of employees observed at the Facility and the number of employees disclosed; failure to provide trueand complete records for review.