Levi Strauss & Co. seeks to conduct its business in a responsible manner. We believe this is an important element of our corporate reputation which contributes to the strength of our commercial success. As we expand our marketing activities abroad, and work with contractors and suppliers throughout the world to help meet our customers' needs, it is important to protect our Company's reputation in selecting where and with whom to do business.

Levi Strauss & Co.'s Global Sourcing & Operating Guidelines include two parts: the Business Partner Terms of Engagement, which address workplace issues that are substantially controllable by individual business partners; and the Country Assess ment Guidelines, which address larger, external issues beyond the control of indi vidual business partners.

Business Partner Terms of Engagement

The Terms of Engagement are tools that help protect Levi Strauss & Co.'s corporate reputation and, therefore, its commercial success. They assist us in selecting business partners that follow work place standards and business practices consistent with our Company's policies. As a set of guiding prin ciples, they also help identify potential problems so that we can work with our business partners to address issues of concern as they arise.

Specifically, we expect our business partners to operate workplaces where the following standards and practices are followed:

1. ETHICAL STANDARDS

We will seek to identify and utilize business partners who aspire as individu als and in the conduct of all their businesses to a set of ethical standards not incompatible with our own.

2. LEGAL REQUIREMENTS

We expect our business partners to be law abiding as individuals and to comply with legal requirements relevant to the conduct of all their busi nesses.

3. ENVIRONMENTAL REQUIREMENTS

We will only do business with partners who share our commitment to the environment and who conduct their business in a way that is consistent with Levi Strauss & Co.'s Environmental Philosophy and Guiding Principles.

4. COMMUNITY INVOLVEMENT

We will favor business partners who share our commitment to contribute to improving community conditions.

5. EMPLOYMENT STANDARDS

We will only do business with partners whose workers are in all cases present voluntarily, not put at risk of physical harm, fairly compensated, allowed the right of free association and not exploited in any way. In addition, the following specific guidelines will be followed:

* Wages and Benefits. We will only do business with partners who provide wages and benefits that comply with any applicable law and match the prevailing local manufacturing or finishing Industry prac tices.

* Working Hours. While permitting flexibility in scheduling, we will identify prevailing local work hours and seek business partners who do not exceed them except for appropriately compensated overtime. While we favor partners who utilize less than sixty-hour work weeks, we will not use contractors who, on a regularly scheduled basis, require in excess of a sixty-hour week. Employees should be al lowed at least one day off in seven.

* Child Labor. Use of child labor is not permissible. Workers can be no less than 14 years of age and not younger than the compulsory age to be in school. We will not utilize partners who use child labor in any of their facilities. We support the development of legitimate workplace apprenticeship programs for the educational benefit of younger people.

* Prison Labor/Forced Labor. We will not utilize prison or forced labor in contracting relationships in the manufacture and finishing of our products. We will not utilize or purchase materials from a busi ness partner utilizing prison or forced labor.

* Health & Safety. We will only utilize business partners who provide workers with a safe and healthy work environment. Business part ners who provide residential facilities for their workers must provide safe and healthy facilities.

* Discrimination. While we recognize and respect cultural differ ences, we belive that workers should be employed on the basis of their ability to do the job, rather than on the basis of personal charac teristics or beliefs. We will favor business partners who share this value.

* Disciplinary Practices. We will not utilize business partners who use corporal punishment or other forms of mental or physical coer cion.

Country Assessment Guidelines

The diverse cultural, social, political, and economic circumstances of the various countries where Levi Strauss & Co. has existing or future business raise issues that could subject our corporate reputation and therefore, our business success, to poten tial harm. The Country Assessment Guidelines are intended to help us assess these issues. The Guidelines are tools that assist us in making practical and principled business decisions as we balance the potential risks and opportunities associated with conducting business in a particular country.

In making these decisions, we consider the degree to which our global corporate reputation and commercial success may be exposed to unreasonable risk. Specifi cally, we assess whether the:

BRAND IMAGE would be adversely affected by a country's perception or image among our customers and/or consumers;

HEALTH AND SAFETY of our employees and their families, or our company repre sentatives would be exposed to unreasonable risk;

HUMAN RIGHTS ENVIRONMENT would prevent us from conducting business ac tivities in a manner that is consistent with the Global Sourcing Guidelines and other company policies;

LEGAL SYSTEM would prevent us from adequately protecting our trademarks, in vestments or other commercial interests, or from implementing the Global Sourcing Guidelines and other company policies; and

POLITICAL, ECONOMIC AND SOCIAL ENVIRONMENT would threaten the Company's reputation and/or commercial interests.

In making these assessments, we take into account the various types of business activities and objectives proposed (e.g., procurement of fabric and sundries, sourc ing, licensing, direct investments in subsidiaries) and, thus, the accompanying level of risk involved.

Levi Strauss & Co. is committed to continuous improvement in the implementation of its Global Sourcing & Operating Guidelines. As we apply these standards throughout the world, we will acquire greater experience. As has always been our practice, we will continue to take into consideration all pertinent information that helps us better address issues of concern, meet new challenges and update our Guidelines.

Business partners are contractors and subcontractors who manufacture or finish our products and suppliers who provide raw materials used in the production of our products. We have begun applying the Terms of Engagement to business partners involved in manufacturing and finisbing and plan to extend their application to suppliers.