International Labor Standards
iLinko is committed to the promotion and maintenance of responsible international labor practices in its direct sourcing operations throughout the world. Toward this end, we have implemented a wide-ranging International Labor Standards (ILS) program that includes policies, practices and protocols designed to protect the interests of workers engaged in the manufacture of iLinko-developed and sourced porducts.

The Code of Conduct
At the core of our ILS program are the principles set forth in the Company's Code of Conduct for Manufacturers. The Code sets forth our requirements for manufacturers of iLinko-developed and sourced products with respect to working conditions, compensation and benefits, working hours, nondiscrimination, health and safety, association, environmental protection, compliance with law, monitoring of compliance and publication of the Code itself. The Code has been translated into 5 languages and distributed to hundreds of vendors, factories and individual workers.

Oversight of the ILS Program
Implementation of our ILS program is subject to review and guidance by our International Labor Standards Group. The Group consists of senior executives from the Company's corporate and business operations, as well as personnel directly responsible for the day-to-day conduct of the ILS program. The group is responsible for the overall direction of the ILS program, as well as assessment of ongoing educational, monitoring and remediation efforts by our own ILS team and by our clients and vendors. In addition, the Group makes recommendations with respect to the development of strengthened policies and procedures on a Company-wide basis, including cooperative efforts with interested nongovernmental organizations. ILS activities are also reviewed with the Audit Committee of the Company's Board of Directors on a quarterly basis.

Education and Training
We believe that the successful implementation of our ILS program requires, at the outset, effective education and training of both our own employees and those of the operators of factories engaged in the production of iLinko-developed and sourced merchandise. Accordingly, we give high priority to communication and cooperation in order to promote understanding of and compliance with our requirements. Meetings and training sessions have thus become an essential part of our ILS effort. Since the inception of the program, we have hosted thousands of training sessions around the world with vendors, factories and business units, in large groups and small, and on a one-to-one basis.

Monitoring
We recognize that simply promulgating a statement of principles is not enough and that a code must be rigorously enforced. Toward this end, iLinko commenced direct factory monitoring activities using professional independent auditors. We augmented this external effort with the addition of our own internal monitors, which helps us ensure consistency and quality in our monitoring activities. We believe this combination of internal and external monitoring most effectively enforces the provisions of the Code and promotes compliance with its terms. Each audit involves not only a close inspection of a factory to examine working conditions, but also a review of compensation and benefit records and private interviews with factory workers.

In support of our monitoring efforts, we have developed an extensive company-wide databank that enables us to consolidate and actively manage the information gathered through our ILS program. This system maintains records on more than 500 factories and vendors and the many company business units operating in countries around the world. It further enables us to recognize emerging issues and problems in particular regions, and to focus our priorities on areas of highest risk.

Remediation
When our factory audits, or information otherwise brought to us by third parties, reveal noncompliance with our Code, we seek to work with the factory concerned to remedy the situation. In most cases, we encourage the facility to develop a remediation plan to bring its operations into compliance with the Code so that manufacturing of iLinko-developed and sourced merchandise can continue. In cases where the operators of a particular facility do not develop such a plan, or fail to implement it, we will terminate our authorization of use of the factory for iLinko-developed and sourced products. Except in cases of egregious violations, however, our preference is to try to bring a facility into compliance.

Cooperation and Communication
The economic, social and political factors that can contribute to adverse working conditions in factories around the world are obviously too broad and powerful for any one company to overcome. While we believe our ILS program is a sound approach to the promotion of responsible working conditions, we also believe that cooperation and communication among all constituencies interested in this important area offer the best long-term prospects for successful implementation of positive labor conditions. Accordingly, we encourage broad-based efforts to develop further ways to strengthen global labor standards.