VIII. FACILITY LOSS OF PRODUCTION AUTHORIZATION

Disney is committed to working cooperatively with Licensees, Vendors, and Facilities to strengthen and improve labor practices and working conditions. However, on occasion it is necessary to withdraw authorization for production of Disney-branded products from certain Facilities. Facility Loss of Production Authorization may result when a Licensee or Vendor fails to ensure that a Facility complies with the requirements of the ILS Program.

Facility Loss of Production Authorization may result from any of the following:

• Minimum Compliance Standard (“MCS”) violations are identified that are not

  remediated within the allowed time period.

• Additional MCS violations are identified subsequent to an initial ILS Audit

  identifying any MCS violations.

• Disney reasonably believes that an ILS Audit was obtained through or

  otherwise involves fraud, bribery, harrassment, intimidation, or other

  improper influence of workers or auditors.

• Two attempts to conduct ILS Audits are made by Disney where the auditor

  is denied full or partial access to the Facility, its employees for

  private interviews, and/or its records.

• One unsuccessful attempt is made by Disney to conduct a follow-up

  ILS Audit subsequent to an initial ILS Audit identifying MCS violations.

• The country in which the Facility is located is no longer a Permitted

  Sourcing Country.

• The Facility constitutes or involves a Prohibited Person.

• The Facility does not comply or continue to comply with any conditions

  applicable to the Permitted Sourcing Country where the Facility is located.

• The Facility uses any intellectual property owned, co-owned, or licensed by Disney,

  its affiliates, or its licensors for any unauthorized purpose and does not halt such

  unauthorized activities as directed by Disney.

CESSATION OF DISNEY-BRANDED PRODUCTION

If Disney withdraws production authorization from a Facility:

• All Licensees and Vendors using the Facility (or who have used the Facility

  previously) will be sent a Facility Loss of Production Authorization Letter.

  (See Appendix 15: Sample Facility Loss of Production Authorization for more

  information.)

• All Licensees and Vendors using the Facility must promptly cease producing

  Disney-branded products and promptly remove any and all Disney-branded

  products whether complete or in process (including any molds and materials).

  All actions must be completed in a period not to exceed 30 days from Disney’s

  written notice, or as otherwise may be required by Law.

FACILITY REINSTATEMENT PROCESS

If authorization to produce Disney branded products is withdrawn from a Facility, the Facility may be considered for reinstatement after 12 months. Please contact your Disney representative to determine whether a Facility may be considered for reinstatement. Any reinstatement is at the discretion of Disney.