July 15, 2016 Page 1

J.CREW

RESPONSIBLE SOURCING PROGRAM

SUPPLIER GUIDELINES

UPDATED JULY 2016

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CONTENTS

Table of Contents INTRODUCTION ................................................................................................................................................ 3

CODE OF VENDOR CONDUCT ........................................................................................................................... 4

SUPPLIER REQUIREMENTS ............................................................................................................................... 6

Agents and Vendors ...................................................................................................................................... 6

Factories(including wash-facilities) ............................................................................................................... 7

Subcontractors .............................................................................................................................................. 7 COMPLIANCE GUIDELINES ................................................................................................................................ 8

Transparency and Continuous Improvement ............................................................................................... 8

Zero Tolerance Issues .................................................................................................................................... 8

Subcontractor Notification .......................................................................................................................... 10

Homework Policy ........................................................................................................................................ 10

Charge Back Policy ...................................................................................................................................... 11

Types of Assessments.................................................................................................................................. 12

Audit Costs and Audit Ratings ..................................................................................................................... 14

Scheduling ................................................................................................................................................... 15

The Audit Process ........................................................................................................................................ 15

Corrective Action Plan (CAP) ....................................................................................................................... 17

Remediation ................................................................................................................................................ 18

Continuous Improvement ........................................................................................................................... 18

Collaboration ............................................................................................................................................... 19

PRODUCT RESPONSIBILITY ............................................................................................................................. 21

Animal Welfare............................................................................................................................................ 21

Uzbek Cotton ............................................................................................................................................... 21

Traceability .................................................................................................................................................. 21

Sandblasting ................................................................................................................................................ 21

BRIBERY AND ANTI-CORRUPTION ................................................................................................................. 22

J.CREW’S CONFLICT MINERALS PROGRAM.................................................................................................... 23

Policy ........................................................................................................................................................... 23

Dodd-Frank Requirements .......................................................................................................................... 24

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Supplier Requirements ................................................................................................................................ 25

APPENDIX A: SAMPLE NEW VENDOR / FACTORY AUTHORIZATION FORM .............................................................. 26

APPENDIX B: REPORT SHARING REQUEST FORM .................................................................................................. 27 APPENDIX C: SAMPLE AUDIT APPOINTMENT SHEET ............................................................................................ 28

APPENDIX D: SUBCONTRACTOR NOTIFICATION FORM ......................................................................................... 29

APPENDIX E: VENDOR INFORMATION CHANGE REQUEST FORM .......................................................................... 30

APPENDIX F: HOMEWORK PROFILE ..................................................................................................................... 31

APPENDIX G: HOMEWORK SCHEDULE ................................................................................................................. 32

INTRODUCTION

In keeping with our commitment to excellence in all areas of business, J.Crew aims to ensure that all

merchandise produced for J.Crew is manufactured in a manner consistent with the highest standards

and in accordance with applicable laws and J.Crew policies.

The J.Crew Responsible Sourcing Program has been established in order to ensure that all Suppliers are equally committed to these standards. Audits are conducted of all manufacturing facilities to verify compliance with the Code. All Suppliers for J.Crew are required to cooperate fully in all J.Crew Responsible Sourcing efforts.

This version of the Responsible Sourcing Supplier Guidelines dated July 2016 includes the following new or updated policies / requirements:

1. Supplier requirements 2. Zero Tolerance Issues Requirements 3. Charge Back Policy 4. Revision on Audit Costs 5. Collaboration 6. Product Responsibility 7. Updated New Vendor Form (Appendix A) 8. New Report Sharing Request Form (Appendix B) 9. Updated Subcontractor Notification Form (Appendix D) 10. New Vendor Information Request Form (Appendix F)

The following pages detail important information on the J.Crew Responsible Sourcing Program. Please

feel free to contact us by email with any questions or comments at socialcompliance@jcrew.com.

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CODE OF VENDOR CONDUCT

The fundamental principles of J.Crew’s Responsible Sourcing Program are outlined in our J.Crew Vendor Code of Conduct (“Code”). The Code sets forth the essential foundation upon which our program is built. While J.Crew recognizes that there are different legal and cultural environments in which our Suppliers operate throughout the world, the “Code” sets forth the guiding principles for our Responsible Sourcing Program, applicable to all suppliers.

Child Labor: J.Crew Suppliers must not employ workers younger than 15 years of age. However, i f the age for completing compulsory education or the minimum working age in the country of manufacture is greater than 15. Suppliers must comply with all other applicable child labor laws, and must ensure workers under the age of 18 do not perform work that may jeopardize their health or safety.

Forced Labor: J.Crew Suppliers must not use any type of forced, bonded, compulsory or prison labor. Suppliers shall ensure that all employment is voluntary, free from violence, threats, financial penalties or coercion. There shall be no restrictions on movement, withholding of personal documents, or deposits. Suppliers must take adequate steps to ensure that workers are not trafficked or otherwise exploited.

Discrimination: J.Crew Suppliers must not discriminate in employment practices including recruitment, hiring, compensation, training, benefits, advancement, termination or retirement on the basis of race, color, ancestry, national or social origin, religion, gender, marital status, age, sexual orientation, gender identity or expression, disability, political opinion or any other personal characteristics or beliefs.

Harassment and Abuse: J.Crew Suppliers must treat all workers with respect and dignity. No worker shall be subject to corporal punishment or physical, sexual, psychological or verbal harassment or abuse. Suppliers shall not use monetary fines as a disciplinary practice.

Wage and Benefits: J.Crew Suppliers must comply with all applicable laws and regulations relating to wages and benefits. Workers shall be paid at least the minimum wage or a wage that is consistent with prevailing local industry standards; whichever is higher. Overtime work shall be compensated at the premium rate as is legally required. Compensation must be provided at least monthly and should be provided without illegal or inappropriate deductions or penalties.

Hours of Work: J.Crew Suppliers must comply with all applicable laws and regulations relating to hours

of work. Except in extraordinary business circumstances, workers shall not be required to work more

than 60 hours per week (including overtime). Suppliers shall provide workers with at least one day off

for every seven‐day period.

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Freedom of Association: J.Crew Suppliers must recognize and respect the rights of workers to freedom of association and collective bargaining. Where such rights are not provided by law, Suppliers should take steps to provide an open means of communication with workers.

Health and Safety: J.Crew Suppliers must comply with all applicable laws and regulations governing workplace health and safety. Suppliers shall provide their workers with a clean, safe and healthy work environment. The same applies for dormitory facilities, where provided.

Laws and Regulations: J.Crew Suppliers must operate in full compliance with all applicable local,

national and international laws, standards and regulations relevant to the conduct of their business.

Customs and Security: J.Crew Suppliers must comply with all applicable local, national and international customs laws including those prohibiting transshipment. Suppliers shall implement security measures consistent with the recommendations set forth by the Customs‐Trade Partnership Against Terrorism (C‐ TPAT).

Environmental Standards: J.Crew Suppliers must adhere to applicable local, national and international laws and regulations regarding the protection and preservation of the environment.

Subcontracting: J.Crew Suppliers must not subcontract any portion of the manufacturing process without prior written approval from J.Crew. As a condition of approval, subcontractors shall agree to comply with the J.Crew Code of Vendor Conduct.

Transparency: J.Crew is committed to working with Suppliers who are open and honest with us. J.Crew Suppliers shall maintain complete and accurate records and information so that compliance can be effectively assessed. Suppliers must not falsify or understate any aspects of their operations to J.Crew or our representatives. Suppliers must not coach employees on how to answer questions or respond to inquiries by J.Crew or our representatives.

Monitoring and Compliance: J.Crew reserves the right to conduct announced and unannounced inspections of all manufacturing facilities. Suppliers should ensure that the requirements in this Code are understood and implemented at every level, and must maintain all documentation necessary to demonstrate compliance with the J.Crew Code of Vendor Conduct. Suppliers must allow representatives of J.Crew full access to facilities, documents and workers. Suppliers shall submit an improvement plan to address any issues of noncompliance that may be found during the course of compliance inspections. J.Crew reserves the right to terminate its business relationship with any Supplier who is unwilling or unable to comply with the provisions set forth herein.

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SUPPLIER REQUIREMENTS

J.Crew is committed to a standard of excellence in every aspect of our business, including legal, ethical

and responsible conduct in all of our operations. We require these same commitments to be shared

and implemented by all of our agents and vendors, as well as by the factories and subcontractors that

are affiliated with the manufacture of J.Crew goods. In addition, agent and vendors are also

expected to share our commitment to product quality and to maintaining the practices necessary to

meet our quality standards. Below is a detailed description of the requirements of our supply

chain partners:

Agents and Vendors Commitment:

Agents and Vendors are required to ensure that J.Crew Responsible Sourcing requirements are met and in addition should strive for continuous improvement. Agents and vendors must annually certify that they have read and will comply with these Responsible Sourcing Supplier Guidelines, including the Code of Vendor Conduct, in order to access the Packing List System on jcrewimports.com. J.Crew will review agents’ and vendors’ ability to manage social compliance on an ongoing basis.

Our key expectations to our agents and vendors include, but are not limited to:

1. Resources: Agents and direct vendors are required to have a sufficient number of dedicated staff to manage social compliance. The responsibilities should at least include: Register and Onboard New factories and Subcontractors:

- Notify J.Crew Responsible Sourcing of any and all new manufacturing facilities before sampling

using the New Vendor / Factory Authorization Form (See Appendix A) - Notify J.Crew Responsible Sourcing of any and all subcontractors before the start of production

using the Subcontractor Notification Form (See Appendix D) and provide an audit report (not older

than 6 months)

- Notify J.Crew within 24 hours if unauthorized subcontracting or any other type of Zero Tolerance

issues are detected, including those revealed during internal quality or social compliance

inspections

- Ensure that the New Vendor Form is prepared and submitted correctly including the MID Code for the new factory

- Onboarding (review of supplier guidelines) and audit of the factory to ensure that it meets J.Crew requirements before submitting it for approval to J.Crew

- Disseminate and communicate the Code to all workers and supervisors at factory

Audit/Remediation Process:

- Ensure timely scheduling of audits - Facilitate access to auditors in case of a denied or partially denied audit - Work with factory on corrective actions within agreed upon timeframe - Encourage best practices in factories - Garner factories or vendors senior management’s commitment for improvement

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- Continuous internal review of factories’ performance - Track improvement of identified issues

Provide updates:

- Provide a quarterly factory list to J.Crew - Submit vendor information changes (i.e. name, address or banking information) through the

Vendor Information Change Request Form (Appendix E) - Update J.Crew immediately if a factory is going inactive including last ship date

o Failure to do so may result in the responsibility to bear the audit costs in case of an unannounced audit

- Suppliers must inform J.Crew within 24 hours if there are other critical issues and events at the factory (worker unrest, workers strikes, fire, building collapse, death of worker, natural disasters etc.). Failure to do so may have an impact on our business relationship

2. Internal Management Systems:

- Internal code of conduct is reflective of J.Crew’s Code of Conduct requirements - Policies, procedures and resources in place to ensure that J.Crew’s Code of Conduct requirements

are met - Internal checks and balance system

3. Partnership:

- Work with J.Crew to enhance agent/vendor’s ability to manage social compliance - Partner with J.Crew to follow remediation requirements at factories - Transparency in terms of supply chain visibility and proper handling of zero tolerance issues

(detailed requirements can be found in the “Transparency and Continuous Improvement” and “Zero Tolerance Issues” section).

Factories (includes wash facilities): - All factories are expected to comply with the J.Crew Code of Vendor Conduct. - Factories are subject to regular compliance audits or may participate in a remediation program. - Full cooperation with auditors/consultants is expected - Factories are expected to make improvements on identified issues within a reasonable time

frame

Subcontractors (including but not limited to embroidery, screen‐printing, pleating, lasting, etc.): Our definition of a subcontractor is broad and includes any facility that is conducting any process on J.Crew merchandise not done by the main manufacturing or wash facility, regardless of relationship to the main factory

All subcontractors must be disclosed to J.Crew Responsible Sourcing and are expected to comply with the J.Crew Code of Vendor Conduct.

- Agent and vendors should provide a Code of Conduct assessment report to J.Crew that has either been conducted by the agent, vendor or another brand working with the subcontractor

- On a case‐by‐case basis, subcontractors may be subject to regular or minimum assessment compliance audits.

- Full cooperation with auditors is expected - Subcontractors are expected to make improvement on identified issues

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COMPLIANCE GUIDELINES

J.Crew typically employs external monitoring firms to conduct responsible sourcing audits. Per the J.Crew Code of Vendor Conduct, J.Crew expects factory management to cooperate fully during the audit process. If you ever have any concerns about the audit firm, an individual auditor or a specific audit process, please contact us directly at socialcompliance@jcrew.com.

This section details our approach to social compliance, audit types, audit scheduling, the audit process and remediation requirements and audit/remediation costs

Transparency and Continuous Improvement J.Crew is committed to working with Suppliers who are open and honest with us. While we understand

that many suppliers struggle with compliance, as a minimum requirement, we expect all factories to be

transparent and honest about their real practices. J.Crew Suppliers shall maintain complete and accurate

records and information so that compliance can be effectively assessed. J.Crew will look favorably

upon suppliers that are transparent and committed to continuous improvement on issues identified.

Suppliers must not falsify or understate any aspects of their operations to J.Crew or our audit representatives. Suppliers shall not coach employees on how to answer questions or respond to inquiries by J.Crew or our representatives.

ZERO TOLERANCE ISSUES The J.Crew Social Responsibility Program aims to create long‐term relationships with our suppliers and work with suppliers to improve working conditions. It is our practice to support suppliers in their efforts to make necessary improvement within a reasonable and realistic time frame. However, in cases where we identify zero tolerance issues we may choose to terminate our relationship with a supplier Furthermore, J.Crew reserves the right to reduce business volume with agents, vendors and factories for use of unauthorized manufacturing facilities.

Zero Tolerance Issues are issues that are not tolerated by J.Crew. Issues may include but are not limited to Child Labor, Forced Labor, Discrimination, Harassment and Abuse, Unauthorized Subcontracting, Structurally Unsafe Building, Imminent Health and Safety Threat to the workers, and Denied Audits. Below are detailed requirements in these areas:

Detailed Requirements on Zero Tolerance Issues

Child Labor: All workers meet minimum legal requirements and are at least 15 years of age. All workers are historically at or above the legal age at the time of hire. The facility has proof of age documentation for all workers, including temporary workers.

Forced Labor: All workers are able to voluntarily end their employment without excessive notice periods or

finds. Labor contracts meet legal requirements The facility does not require monetary deposits or keep original documents Workers are not intimated and their movement is not restricted.

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Worker are allowed access to religious facilities, toilets and drinking water Overtime is voluntary No prison or involuntary labor is accepted

Migrant Labor (Sub-Section of Forced Labor): All foreign migrant workers should have access to the travel documents (passport) and work

permit. All foreign migrant workers should understand the work contract. It should be in a language they

understand, and it should be in the local language. Facility management should have staff that is able to speak the language of the foreign migrant

workers. The facility should be able to provide contact information for home-country and destination-

country recruiters. Foreign worker contracts should comply with local labor laws, and the facility should ensure they

are followed. Workers should not be required to pay any recruitment fees, including repatriation fees. The facility shall not discriminate against foreign migrant workers.

Discrimination: The facility shall not unlawfully discriminate but rather shall make employment decisions based

on an individual’s ability to do the job.

Harassment and Abuse: The facility shall not tolerate harassment and abuse of its workers. Monetary fines as a disciplinary practice are prohibited.

Freedom of Association: The facility shall not terminate, demote or restrict workers should they choose to freely

associate, collectively bargain or organize.

Health and Safety/Dormitories: Production and dormitory buildings are structurally sound. No life threatening issues Not unsafe or unsanitary living conditions

Laws and Regulations: No legal documentation such as the business license, or building permit

Environmental Standards: No illegal disposal of waste Wastewater has to be properly treated before release Environmental Issues that are posing a threat to workers and the community

Subcontracting: Unauthorized subcontracting is not tolerated

Monitoring and Compliance: No denied or obstructed access during an audit No attempted bribery to auditors or J.Crew representatives

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Transparency: Repeated transparency issues

Where zero tolerance issues have been identified J.Crew may in its discretion re-evaluate the business relationship, terminate the business or request detailed remediation. The supplier is required to work closely with J.Crew.

Subcontractor Notification Suppliers are required to notify us, in advance, of the plan to use any subcontractor for a process related to J.Crew production. Please use the form in Appendix D for such notification. The use of a

subcontractor without prior notification will result in a penalty vendor charge‐back. JCREW reserves the right to decrease PO volume according to the seriousness of subcontracting on a case-by-case basis. Our definition of subcontractors is broad and includes any facility that is performing any process in the preparation, production, finishing, packing, handling, or storing of J.Crew merchandise not done by the main manufacturing factory or wash facility. The agent and vendor should have an internal system to control and eliminate subcontracting.

Homework Policy In limited circumstances we may accept of the use of homeworkers at our discretion. We require the disclosure of any homework in advance of production, along with basic information about the structure of the homework arrangement. Please submit this information using the “Homework Profile” (Appendix F). We additionally require that the factory contracting for such work maintain at least minimum records on the production as is outlined in the attached “Homework Schedule” in Appendix G.

However, we also acknowledge that it is difficult to verify if the labor conditions for homeworkers meet the standards set out in our Code. We are therefore committed to partnering with our suppliers to take actions to improve transparency around the use of homework and to understand and improve conditions where homework is used.

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Charge Back Policy Denied or Partially Denied Audits J.Crew has the right to charge back up to US$ 5000 if a manufacturing facility denies our inspectors access to the facilities, employees, system or records including hardcopy and softcopy, or otherwise obstruct audit activities.

Unauthorized Subcontracting J.Crew will charge a penalty to vendors for each facility that was not audited and approved by J.Crew

Responsible Sourcing before the placement of production. The penalty increases substantially after the

first offense and J.Crew reserves the right to charge a penalty up to $100,000 USD for a 2nd offense to the

vendor.

1st time offense: $ 10,000 USD penalty per factory

2nd time offense: Up to $ 100,000 USD penalty per factory

3rd time offense: Termination of vendor relationship

Incorrect MID Code

J.Crew will charge a penalty of $500 USD to vendors for providing the wrong MID Code.

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Types of Assessments:

Pre‐Qualification of New Suppliers

The objective of the Pre‐Qualification Process is to ensure that, before samples are ordered or purchase orders are placed at any new Supplier, all new manufacturing facilities are audited and approved by J.Crew Responsible Sourcing and J.Crew Quality (in China).

For all new potential Suppliers, (including new vendors and/or new factories under existing vendors) a New Vendor Form must be submitted to J.Crew in order for the facility to be considered for production. The New Vendor Form can be found on JCrewImports under the “Download Document” Section. Please ensure that all fields are correctly filled out. Failure to do so may lead to delay of audit scheduling and factory set up. IMPORTANT:

Include number of workers and MID code of the factory.

Include start production date

Domestic vendors need to include a W9 Form

New direct vendors with no previous business relationship to J.Crew will be asked to pre-pay for the audit directly with a J.Crew designated audit firm

The Production, Responsible Sourcing and Finance departments must all approve new Suppliers. All new

Suppliers are subject to a pre‐qualification audit for each manufacturing facility which will be active for J.Crew production and must confirm acceptance with the J.Crew Code of Vendor Conduct. J.Crew will not place production at a new Supplier should serious issues of noncompliance be discovered.

Failure to comply with these requirements will result in a US$10,000 vendor charge back (See below for

the complete Charge Back Policy).

J.Crew Responsible Sourcing recommends that new factories are disclosed to us at least six weeks prior

to sampling and/or start‐production date in order to allow for sufficient time for factory review.

It is the Supplier’s responsibility to ensure that submitted factories will be able to meet J.Crew standards

prior to pre‐qualification audits. The supplier should implement a due diligence process before

proposing new factories to J.Crew. This process may include, but is not limited to, reviewing the

factory’s experience with social compliance audits and previous social audit reports, evaluating the

factory’s overall health and safety conditions, and assessing the facility’s financial health. Please contact

socialcompliance@jcrew.com for further guidance.

Annual Audits of Existing Suppliers Factories with Very Good, Good ratings need to be audited annually. If certain criteria are met, it is possible to use audit reports from other brands in lieu of a J.Crew audit. Look at the collaboration section for details.

Re-Audits of Existing Suppliers Factories with Fair and Need Improvement and Immediate Action Required have to undergo a re-audit within an assigned time frame to verify the corrections of these issues. Re-Audits can take place

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anywhere from 1 month up to 9 months of the previous audit. The re‐audit will follow the same process as the initial audit, consisting of facility observation / walkthrough, document review and

employee interviews.

Re‐audits are scheduled at the discretion of J.Crew, based primarily on the audit findings and the CAP details received from the supplier.

Minimum Assessments

In cases where the factory is moving locations, producing on a small scale and not fully up and running

yet, J.Crew will conduct a Minimum Assessment to verify that there are no Zero Tolerance issues at the

factory. Minimum Assessments may be applied for process –subcontractors.

Minimum Assessments may also apply in cases where a factory is expanding their production site to the

currently approved facility i.e. adding another floor or neighboring building.

Based on the rating, the factory will have to undergo a full audit after 3-6 months.

Focused Assessments In certain cases, J.Crew will assign a specific audit to assess possible risks at factories. Examples of specific

audits could be Foreign Worker Assessment, Structural Safety Assessments or other critical issues that

require specific expertise.

Fully Unannounced Assessments

J.Crew may at any given time conduct unannounced assessments through our internal or external

auditors at a facility. In cases zero tolerance issues are identified, the audit costs will be charge back to

the vendor.

CTPAT Assessments J.Crew will conduct CTPAT assessments for all new suppliers outside of China. For more information about CTPAT assessments, please refer to the following website: https://www.cbp.gov/sites/default/files/documents/CTPAT's%20Five%20Step%20Risk%20Assessment%20Process.pdf

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Audit Costs:

All audit costs for Pre-Qualification, Annual and Re-Audits, Minimum Assessments and Focused Assessment and CTPAT audits are borne by the vendor or agent. J.Crew will schedule the audits and will issue an invoice or debit note to agents and direct vendors after the audits have been conducted. Invoice payments are due 30 days after issuance of invoice. J.Crew will offset debit memos within 30 days after the vendor has been issued a debit note.

Exception: Pre-Qualification Audits for new direct vendors have to be paid directly to the designated audit firm.

There will be a two-tiered pricing structure for Pre-Qualification, Annual and Re-audits:

Region

Number of workers in Factory Type A

Costs Factory Type A

Number of workers in Factory Type B Costs Factory Type B

China ≤1000

US$ 2000

>1000

US$2500

South Asia / South East Asia ≤1000 >1000

Europe / United States ≤ 100 >100

Latin America / North Africa ≤1000 >1000

The frequency of audits will be determined based on the rating of the factory and demonstrated commitment of the direct vendors to improve identified issues at their factories, as determined by J.Crew, in its sole discretion. J.Crew reserves the right to adjust the prices of the audits based on facts and circumstances.

A factory with good and very good standing will have to be audited at least every 12 months, unless otherwise noted. All audit timeframes will always be clearly communicated to the direct vendors by J.Crew.

Audit Ratings: Very Good No issues were identified Next audit in 12- 18 months

Good Some minor issues were identified Next audit in 12 months

Fair Medium risk issues were identified that need to be addressed Next audit in 6-9 months

Needs Improvement

Medium to high risk issues were identified that need to be addressed Next audit in 3-9 months

Immediate Attention Required Zero Tolerance issues were identified Next audit in 1-3 months

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Note: New factories can be “Conditionally Approved”. Under this status the factory will have to undergo a re-audit within 3-6 months. The approval status may be revoked if factory fails to take necessary corrective actions.

Scheduling While J.Crew reserves the right to conduct unannounced audits at any time, most manufacturing facilities will be notified in advance with a two‐week window during which the audit will take place. An Appointment Sheet (see Appendix C) will be emailed or faxed to the facility, requesting confirmation of the two‐week audit window. The facility is expected to confirm acceptance of the window within 48 hours. It is the agents and vendors responsibility to ensure timely scheduling of the audit.

The Audit Process for Pre-Qualification, Annual and Re-audits

The audit will consist of document review, facility observation/walkthrough and employee interviews.

Auditors will be fluent in the local language and will always have a letter of authorization from J.Crew on

hand.

Facility Observation and Walkthrough

Auditors must be allowed full facility access. The observation and walkthrough will include main factory

building, work area(s), restrooms, kitchen/canteens, building interiors and exteriors and dormitories (if

applicable).

Sample Rooms: Sample rooms are typically excluded from Program Scope as long as they are used only for samples production. If the sample room is housed within the factory that is being audited, then the sample room is part of the audit scope. Also, if a Sample Room is to be used for production to fulfill Purchase Orders, J.Crew Responsible Sourcing must be notified in advance.

Required Documentation

J.Crew Suppliers must maintain the following documents for a minimum of 12 months, or as required by

law, whichever is longer, and promptly make them available to J.Crew representatives during the course

of a compliance audit:

Payroll Records for all workers

Time Cards for all workers

Piece Rate Records for all workers (if

applicable)

Employee files (including age

documentation)

All legally required certifications and

licenses

Production Records

Sub‐contractor / Supplier Records

Financial records

Disciplinary records

Machine maintenance records

Employee Interviews

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Accident and injury logs

Medical clinic records

Collective Bargaining Agreements

Employee contracts

Human Resources policies and

procedures

Temporary Worker documents

including age documentation, payroll

records and time cards

CCTV recordings

Lease agreements and utility bills

Other related documents, including

electronic files

A key aspect of the audit process is the employee interviews. Factory management must provide a private area for auditors to conduct employee interviews, away from management.

Selection of employees for interview is at the sole discretion of auditors; factory management cannot

pre‐select employees. Interviews may be conducted one‐on‐one or in small groups. Normal sample size

will be 20 employees; this number may change based on factory size and/or auditor observations.

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Corrective Action Plan (CAP) During the closing meeting, auditors will leave a draft version of the Corrective Action Plan (CAP) that details the issues of noncompliance identified during the audit. The CAP includes recommended corrective action. Please note that the CAP is subject to change pending final review by J.Crew management; the final CAP will be forwarded to the Supplier.

When issues of noncompliance are identified, Suppliers are expected to create realistic and detailed improvement plans that identify what behaviors or conditions need to be changed to address the concerns and prevent the recurrence of similar issues in the future. Supplier management should include realistic completion dates for improvement, as the scheduling of re‐audits is based in part on the completion dates provided on the CAP. The CAP submitted to J.Crew should take the following into consideration:

1. Identification of root cause: Ask the question of “why” an issue arose. Include the root cause in

your CAP submission and detail how it will be addressed. For example, if a factory has blocked

fire extinguishers, the root cause may be that workers and supervisors are unaware of the

requirement to keep fire equipment unblocked at all times. An inadequate corrective action

would be to clear access to the fire extinguishers on a one‐time basis. Instead, the factory

should establish a policy around keeping fire equipment unblocked, and should provide training

to workers and supervisors accordingly.

2. Assign responsibilities: Develop a documented CAP focused on adherence to all applicable laws

as well as J.Crew requirements. This should include clearly defined roles and responsibilities

identifying who is responsible for correcting each issue, who is responsible for checking that the

issue has been resolved, and who has overall responsibility for ensuring that all identified issues

are addressed. These individuals may be different.

3. Utilize resources to determine action: Dedicate adequate resources to ensure CAP

implementation. This should include both short‐term resources to correct immediate problems

as well as long‐term resources to proactively prevent similar issues from reoccurring in the

future (see “identification of root cause, above).

4. Develop timetables: Based on severity of the issues and the resources available in the factory,

determine an appropriate timetable for CAP implementation. Fill in realistic start and

completion dates.

5. Revise systems: On a regular basis, assess the effectiveness of the factory’s systems to prevent

compliance issues; revise policies and procedures as appropriate.

6. Communication plan: Communicate the CAP to staff and workers so they are aware of the

problems and objectives, and their actions can be in line with the CAP implementation. Plan for

ongoing communication with J.Crew on CAP implementation.

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7. Communication with J.Crew: Send the CAP back to J.Crew within 15 business days of receipt.

Include evidence such as photographs and documentation to adequately demonstrate that

corrective actions have taken place.

Remediation If a factory continuously is not able to improve their issues, we may ask them to join a tailored

remediation program. If a factory fails to show any improvement after the remediation program, J.Crew

may re-evaluate the business relationship.

We believe that training, education and capacity building are important aspects of a sustainable compliance program. We have developed a list of recommended service providers around the world, including in the fields of labor, environmental health and safety, energy, productivity and general management. Suppliers who are interested in conducting training and capacity building within their factories should contact us and we can work with you to identify a service provider that fits your particular needs.

Before contacting a third party provider, we strongly recommend that our suppliers discuss their needs

with us so that we can jointly develop an effective plan that will improve factory conditions.

On a case‐by‐case basis we may postpone or cancel audits if a factory has shown sufficient remediation, such as having participated in a training seminar or hired consultants to help address

certain issues. Please note that a pre‐qualification audit will not be postponed or cancelled due to ongoing training.

Vendors should contact us at socialcompliance@jcrew.com if its factories are participating or interested

in participating in any kind training program.

Continuous Improvement We have begun to use continuous improvement programs in certain factories in place of the traditional

audit model. The program provides ongoing technical support to factories that have committed to

being transparent about their workplace practices and challenges.

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The goal of the program is to facilitate realistic improvement and the implementation of sustainable

management systems at the factory level.

If the factory can commit to complete transparency of time a n d payroll records and develops and

implements a long‐term improvement plan to address the identified issues, J.Crew may commit to work with the factory to address issues of noncompliance and avoid termination. Vendors should contact us at socialcompliance@jcrew.com for more information about continuous improvement. The programs we currently used are outlined as below:

Worker Engagement

In addition to remediation and capacity building training, J.Crew aims to support suppliers in their efforts to engage with workers directly on training programs.

J.Crew is a proud supporter of the BSR HERproject, a program focused on educating factory workers, particularly women, about general health and nutrition, as well as reproductive and maternal health. The program is designed to benefit both workers and factories. A healthier workforce can reduce absenteeism, improve morale and motivation, increase productivity and result in a better quality of life for workers and better returns for the factory. Since 2011, we have launched the program at eight factories in China and Indonesia, reaching over 6,300 workers.

Verité Vendor Management Systems Guidebook

Verité has helped us to create a practical guidebook to help vendors and suppliers maintain compliance and meet our standards. The guidebook contains information on: how to integrate responsible sourcing practices into existing management systems; the benefits of implementing a system‐based approach to compliance; and the types of policies and operating procedures that should be in place for each standard. Suppliers should contact us at socialcompliance@jcrew.com to request a copy.

Collaboration We recognize that factories are subject to frequent and sometimes redundant audits. We believe that by working to minimize audits, we can help suppliers to better focus resources on remediation of identified issues.

In order to maximize the effectiveness and efficiency of the Responsible Sourcing Program, we may seek

to collaborate with other like‐minded companies on audits, training and remediation opportunities. The

potential benefits of collaboration include:

Improved factory compliance performance

Increased efficiency through reduction of duplication on audits, training and remediation

programs

Reduced burden on factories by reducing the number of audits conducted

Improved focus and expanded opportunities for training and capacity building

Cost savings

When a collaborative opportunity arises, we will contact the vendor and factory for permission. As a rule, we will not accept WRAP or SA8000 certifications in place of conducting our own audit. Please note this is a change to our previously held position. We support the idea of industry certification but in

July 15, 2016 Page 20

our experience, existing certification models do not provide us adequate assurances that a factory meets our expectations.

Better Work Program

J.Crew supports the Better Work Programs in Cambodia, Vietnam and Indones ia may accept Better

Work participation in place of our own audits for new factories. We expect all existing suppliers, whose

volumes are 50% or more J.Crew, to participate in the Better Work Program in the above named

countries. However, we encourage all suppliers to participate, where it is available to them. If your

factory participates or is interested in participating in the Better Work program, please contact us. Please

note however, that we may not accept a new factory into our supplier base if the Better Work Report

discloses serious concerns.

FJATA Compliance Management Program Summary The FJATA Compliance Management Program is a jewelry-factory specific auditing program managed by Sumerra for large retail brands. Its aim is to reduce the amount of resources used on individual audits and remediation at these jewelry factories. This is accomplished through a “shared audit” program that allows for jewelry factories to share results of audits, effectively reducing the amount of times factories are audited, and the amount of factory out-of-pocket costs. In addition to the cutting down of costs, Sumerra provides a very thorough audit and remediation process for all of the factories audited, effectively increasing compliance in the factories audited. All jewelry factories based in China are required to be part of this audit sharing program. For more information please contact socialcompliance@jcrew.com

Third Party Audit Reports At our discretion, we may accept certain third party audit reports, as long as we receive the full audit report directly from the audit firm or the brand who commissioned the audit. Our acceptance of such audit is dependent on the audit firm that conducted the audit, the audit scope and how recently the audit was conducted. The report cannot be older than 6 months. Please use the “Report Sharing Request Form”(Appendix B) to request to use a third party audit report in lieu of a J.Crew audit. In cases where identify serious issues in the third party audit report, J.Crew reserves the right to re- audit the factory to verify correction of identified issues.

Shared /Collaborative Audits In some cases, we will work with other like-minded brands to conduct an audit at a shared facility. J.Crew will inform the supplier if this opportunity arises. Generally speaking, one brand will lead the remediation with the factory. Shared/collaborative audits reduce the need for redundant audits. Furthermore, the factory only has to fulfil one corrective action plan as the brands are usually aligned on remediation and expectations from the factory. If your factory is interested in collaborative audits, please reach out to J.Crew and let us know which other brand currently engaging in social compliance is monitoring at the factory.

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PRODUCT RESPONSIBILITY Animal Welfare J.Crew is committed to delivering the best possible products to our customers. As part of this commitment, we are continually working to ensure that the materials in these products are harvested and processed in line with our broader commitment to social responsibility. We aim to work with partners who are equally committed to ethical sourcing, including responsible and humane animal welfare practices in the supply chain. Listed below are our baseline requirements, to which all suppliers are expected to adhere. In addition, we strongly encourage our suppliers to implement industry best practices, such as “The Five Freedoms for Animal Welfare” as defined by the Farm Animal Welfare Council (www.fawc.org.uk/freedoms.htm).

Fur: J.Crew prohibits the use of fur, with exceptions made for shearling and hair-on-hide coming from animals that have been bred for meat production, such as cow, buffalo, yak, goat, alpaca or sheep. Down and Feathers: Suppliers must provide us with down and feathers from birds bred for meat production or obtained through the natural shedding process. Down and feathers must not be harvested from live-plucked or force-fed birds. We encourage our suppliers to source down that has been harvested according to the Responsible Down Standards (RDS). Angora and Rabbit Hair: We are concerned by recent reports of inhumane angora harvesting. Until we are satisfied that suppliers are able to provide us with sources that meet our animal welfare standards, we will not produce goods that contain angora or rabbit hair. Endangered Species: J.Crew prohibits the use of materials derived from any endangered species as defined by the United States Fish and Wildlife Service Endangered Species Program (http://www.fws.gov/endangered/).

Uzbek Cotton J.Crew is aware of and takes very seriously the reports of government‐sponsored forced child labor in the harvest of cotton in Uzbekistan. The use of forced child labor is inconsistent with the requirements set forth in the J.Crew Code of Vendor Conduct. Until it has been verified that the use of forced child labor in Uzbekistan has ceased, we expect that all of our suppliers to avoid the use of Uzbek cotton in our products.

Traceability Traceability is the ability, on an ongoing basis, to track, monitor and certify a raw material throughout the supply chain to guarantee that it’s produced in an ethical and environmentally sustainable way. Suppliers should be able to trace materials back to country of origin and provide supporting documentation to J.Crew upon request. J.Crew does not tolerate the illegal harvesting of raw materials. This can include but is not limited to exotic skins f obtained from poachers, or cellulosic fibers sourced from endangered rain forests.

Sandblasting Sandblasting is a textile finishing process that is primarily used to achieve a worn look for denim. The method involves sand particles being applied to garments under high pressure and has been suspected of endangering the health of employees when done without adequate personal protective equipment.

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To ensure the well‐being of the workers who manufacture J.Crew, Madewell and crewcuts products, we

do not permit the use of sandblasting in the manufacture of our products.

Bribery and Anti‐Corruption J. Crew seeks to comply fully with the letter and the spirit of the laws and regulations governing bribery and corrupt behaviors in the jurisdictions in which we operate. Many of these laws are broadly written and carry significant legal penalties for individuals and companies.

All J.Crew associates, Directors, and representatives must comply with the U.S. Foreign Corrupt Practices Act (FCPA). The FCPA prohibits offering, giving, or promising to give, directly or indirectly through a third party representative, anything of value to a foreign official to obtain or retain business or to obtain some other improper business advantage.

Anything of value includes anything that has value to the recipient, including, cash, gifts,

entertainment, samples, above‐market commissions, consulting fees for unspecified services,

charitable contributions, or other business opportunities.

Foreign officials include non‐U.S. elected officials, employees of a foreign government or any of

its agencies, candidates for non‐U.S. political office, and employees of non‐U.S. wholly or partly

state‐owned or nationally‐owned companies. The term “foreign official” also is interpreted

broadly to include spouses or family members of a foreign official.

At no time should a J.Crew associate, Director, supplier or other representative offer anything of value

to a government official in order to obtain or retain business.

In addition to the FCPA requirements, under no condition should our associates or representatives offer or accept bribes to or from any person or company. We consider bribery to be a very serious issue and will re‐evaluate our business relationship with any factory that offers a bribe to a J.Crew associate or representative.

Please contact us directly (responsiblesourcing@jcrew.com) if you are, or have ever been, asked for a bribe from a J.Crew associate or representative.

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J.CREW CONFLICT MINERALS PROGRAM

Policy At J.Crew, we believe that we have a responsibility to source our products in a legal, ethical and responsible manner consistent with the highest standards. The Responsible Sourcing program at J.Crew is in place to clearly communicate our expectations to our suppliers and to monitor and improve working conditions at the facilities that manufacture products for J.Crew, Madewell and crewcuts.

Conflict minerals are certain minerals mined in conditions that support armed conflict and human rights abuses, particularly in regions in and surrounding the Democratic Republic of the Congo (DRC). The minerals include tantalum, tin, gold and tungsten (3TG). In 2010, Congress passed the Dodd‐Frank Wall Street Reform and Consumer Protection Act. Section 1502 of the act requires that companies disclose whether minerals necessary to the functionality or production of their products originated from the conflict regions in and around the DRC. The purpose of this law is to raise public awareness about conflict minerals and promote the use of due diligence in conflict mineral supply chains in order to cut off funding to armed groups in conflict regions.

J.Crew does not source or buy minerals directly. Nevertheless, we are concerned about the reported link between mining and armed conflict and human rights abuse in conflict regions. J.Crew supports the goals and objectives of Section 1502. As a company affected by the regulation, we have established a Conflict Minerals Program that uses a reasonable due diligence process as suggested by the Organization for Economic Cooperation and Development (OECD) guidelines and we are working closely with our suppliers to determine the presence of 3TG in our supply chain. We are committed to identifying the source of minerals that are required for the functionality or production of J.Crew

Madewell and crewcuts branded products and eliminating those minerals that may have originated at

conflict mines. J.Crew expects its suppliers to fully cooperate with its requirements to ensure compliance with the Dodd‐Frank requirements. Suppliers are expected to purchase materials from legitimate sources that can trace and verify that the materials provided are not involved in funding conflict. Failure to comply with J.Crew requirements will result in reevaluation of our business relationship with the supplier.

July 15, 2016 Page 24

Dodd‐Frank Requirements The conflict minerals reporting requirement in Dodd‐Frank applies to any products that the company

contracts to manufacture and where the minerals are necessary to the functionality of the product:

A company is considered to be contracting to manufacture the product if it has some influence

over the manufacturing of the product (including control over design or materials used in the

product)

The minerals must be necessary to the functionality or production of the product “Products” that J.Crew “Contracts to Manufacture”

In Scope Not in Scope

J.Crew, Madewell and crewcuts products Third party branded products

Packaging

Store fixtures

Components that may be “Necessary to the Functionality”

Based on current production knowledge, we have determined that the following components may

contain 3TG and are /are not necessary to the functionality of J.Crew, Madewell and crewcuts products.

This list may be revised as we gather more information about where 3TG is used in components.

Components In Scope Components Not in Scope

Metal used in jewelry, including plating

Functional metal trim and hardware, which may

include:

Zippers

Buttons

Dress hooks

Hook and bars

D‐rings

Buckles

Key rings

Eyelets

Chains

Clasps

Snaps

Metal clips

Any type of metal used for decoration or

ornamentation on any product (except jewelry). This

may include:

o Sequins

o Beading

o Rivets

o Ornamental trim such as buttons, buckles or

zippers

o Silk screens

o Metallic thread

o Decorative plating on any functional metal trim

(“shininess”)

Derivatives of conflict minerals, such as Organotin

July 15, 2016 Page 25

Supplier Requirements We have engaged with Source Intelligence® to assist in our conflict minerals compliance program. Source Intelligence will facilitate the data collection process on behalf of J.Crew. Information provided will be collected, analyzed and stored within their secure system.

All suppliers are required to cooperate fully with J.Crew requirements relating to conflict minerals compliance. J.Crew and Source Intelligence send periodic reminders and follow up via phone and/or email with suppliers that fail to provide necessary information. As needed, J.Crew requests assistance from related agent and/or vendor contacts to assist in collection of necessary information.

Failure by a supplier to provide the necessary information may result in a temporary block of purchase orders or termination of the relationship with that supplier. If a sub‐supplier fails to provide necessary information, J.Crew may require that the supplier cease working with that sub‐supplier for J.Crew merchandise.

July 15, 2016 Page 26

APPENDIX A: SAMPLE NEW VENDOR/ FACTORY AUTHORIZATION FORM NOTE: All forms shown in the appendix are sample forms only. Please retrieve the updated forms on J.Crew

Imports.

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APPENDIX B: SAMPLE REPORT SHARING REQUEST FORM

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APPENDIX C: SAMPLE AUDIT APPOINTMENT SHEET

To: Factory Name

Attn: Contact Name

From: External Monitoring Firm

Date:

Fax:

RE: Factory Compliance Monitoring Visit

As per the J.Crew Code of Vendor Conduct, J.Crew reserves the right to conduct announced and/or

unannounced on-site inspections of all production facilities. These on-site sessions consist of a factory walk-

through, production analysis, work force evaluations, and health/safety appraisals. In addition, physical and

procedural security arrangements in compliance with the United States Customs–Trade Partnership Against

Terrorism (C-TPAT) program will be reviewed.

A representative from [External Monitoring Firm] will conduct a full inspection of your

manufacturing facility during the two-week period listed below. Please cooperate fully and provide the

auditor(s) with full access to production facilities, worker records, workers for confidential interviews, and

related information including:

Payroll Records for all workers

Time Cards for all workers

Piece Rate Records for all workers (if

applicable)

Employee files (including age documentation)

All legally require certifications and licenses

Production Records

Sub-contractor / Supplier Records

Financial Records

Disciplinary Records

Machine Maintenance Records

Accident & Injury Logs

Medical Clinic Records

Collective Bargaining Agreements

Employee Contracts

Human Resources Policies and Procedures

Temporary worker documents including age

documentation, payroll records and time

cards

Related documents

[External Monitoring Firm] will conduct a compliance audit of your facility between the dates of

and . If you have any questions or concerns, please contact the Regional representative,

, at or via email at .

Please confirm your understanding by signing below and returning this by fax within 48 hours.

Signature: Print Name: Title: Date:

Factory Name and Address in local language:

29

APPENDIX D: SAMPLE SUBCONTRACT OR NOTIFICATION FORM

30

APPENDIX E: SAMPLE VENDOR INFORMATION CHANGE REQUEST FORM

31

APPENDIX F: HOMEWORK PROFILE

Vendor Date Submitted

Factory Product Description

Agent Style Number / Season

Reason for Use of Homeworkers:

Homework Conducted by Regular Factory Workers Yes If yes, how many workers No

Factory Uses Middleman to Contract with Workers Yes If yes, how many No

Factory has a contract with Middlemen Yes If yes, please provide a copy No

Name(s) of Middlemen (if applicable)

Materials

How are materials transferred to the workers?

How is finished work collected from the workers?

How is finished work transferred back to the factory?

What do workers do with leftover materials?

Do workers provide deposit for materials Yes If yes, how much No

Are workers required to provide own tools? Yes No

Where are quality inspections completed?

Who conducts quality inspections? Factory Middleman Both

Who performs re-work if required?

Are there fines for re-work? Yes If yes, how much No

Does homeworker affix brand label? Yes No

32

Workers

Does middleman require the workers to sign any contract?

Yes No

If yes, please describe the terms and provide a copy

Location of Workers (City or Town / Province)

Where is homework completed?

Worker’s homes Shared Workshop

Other Please describe:

Who pays the workers?

Factory Middleman

Other Please describe:

Form of payment to workers Cash Bank Transfer

Method of payment Piece Rate Lump Sum Other

How is rate of payment determined?

Who determines rate of payment? Factory Middleman

When are workers paid?

33

APPENDIX G: HOMEWORK SCHEDULE To be completed by factory or middleman and delivered to the factory with finished goods

Name

of

Worker

Age of

Worker

Location

of

Worker

Date

Materials

Provided

to

Worker

Date

Finished

Materials

Received

# of Pieces

Completed

Piece

Rate

Total

Payment

Date

Paid

Worker

Signature