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Code of Conduct

Foreword

The purpose of this Code of Conduct is to set forth the ethical principles and conduct rules that should guide the internal and external relationships of GRENDENE members.

GRENDENE’s operations in the domestic and foreign capital markets and the participation of GRENDENE members in different business units, geographic areas and cultures that make up globalized, competitive markets require transparent work standards and compliance with various legal systems.

Our reputation and our credibility are the most important assets we have, and the ethical principles guiding our work help keep up GRENDENE’s image as a solid, reliable organization among our clients, suppliers, customers and employees at large.

We would like to underscore that our philosophy is based on integrity, independence and freedom of speech, which precepts shall always be encouraged at GRENDENE.

The guidelines contained in this code are to be followed by all GRENDENE members, regardless of their roles and responsibilities.

Compliance with the Code of Conduct by each one of our members reaffirms one of our most important goals, which is to uphold and cement GRENDENE’s reputation.

Code of Conduct

Preface
For all intents and purposes, those employed by GRENDENE shall be called simply members.

The guidelines established in this Code of Conduct apply to every member and also, when such is the case, to all persons whose ties with GRENDENE arise simply from their position as sales and/or statutory agents for the company

General Guidelines

1.  Relationship with Members
The admission and promotion criterion will be one’s compliance with each position’s basic requirements according to the predetermined criteria and goals.
There will be no discrimination based on religion, philosophical conviction or political affiliation, nationality, origin, gender, age, color, sexual orientation, marital status, nor physical or mental disability.

2.  Members’ Conduct
While performing their duties, GRENDENE expects from its members the care and diligence that any person usually applies to their personal business, that is, an honest, dignified conduct in accordance with society’s laws and ethical standards.

GRENDENE expects that all company business, without exception, be treated as confidential.

3.  Work Environment
As for the relationships among its members, GRENDENE expects them to treat each other with kindness, trust, respect, and a dignified, honest conduct, regardless of their rank, position or job.

It is the responsibility of each and every GRENDENE member to provide the others with an environment free from insinuations or restrictions of any kind, so as to avoid possible embarrassment.

GRENDENE does not accept intrusions in members’ private lives in or out of the workplace. Controls or insertions of any kind will be repudiated.

4.  Responsibilities while Conducting Business
GRENDENE’s business must be conducted in a transparent way and in strict compliance with the law. Members are responsible for ensuring their corresponding compliance.

Such responsibilities also involve taking the necessary steps when they learn about irregularities practiced by third parties that may compromise GRENDENE’s name and interests. Any and all operations involving GRENDENE must be supported by the applicable documents in the manner prescribed by law.

4.1.  Responsibilities of Members
It is every member’s obligation to know, understand and practice the provisions set forth in this Code of Conduct.

Within the scope of their duties, members are also responsible for protecting GRENDENE’s name and image.

4.2.  Responsibilities of Managers
Among other things, managers have the obligation to behave as follows:

5.  Business Relationships
GRENDENE expects its members to conduct business relationships in compliance with the law, legal market practices, and especially national and international antitrust regulations.

Each and every GRENDENE member is strictly forbidden from making any kind of improper, doubtful or illegal payment, or favoring, by granting undue benefits outside of usual market practices, clients, suppliers and competitors to the detriment of the others; neither shall they make such payments or grant such privileges to civil servants, public officials and the like, whether directly or via third parties.

5.1  Relationship with Clients
Satisfying clients is the foundation of GRENDENE’s existence. Therefore, the basic principle of GRENDENE business operations is to serve clients by focusing on quality, productivity and innovation through social, community and environmental responsibility, in full compliance with the laws and regulations regarding each product and area where they operate.

Clients are to be served kindly and efficiently, and given clear, accurate and transparent information. Clients are to be given answers, albeit negative, to their requests in the proper way and within the timeframe expected.

Client-derived expenses related to meals, transportation, accommodations or entertainment are acceptable provided they are justified by business reasons, incurred within reasonable limits, and do not imply coercion nor the need for reciprocation.

5.2.  Relationship with Suppliers
Relationships with suppliers are to be long-term and harmless to the principles of free initiative and fair competition.

Selecting and hiring suppliers must be always based on technical, professional and ethical criteria, and according to GRENDENE’s needs.

They are to be performed via predetermined objective processes, such as public bidding or price quotes, to ensure the best cost-benefit ratio.

Doing business with suppliers whose reputation is doubtful is to be avoided.

Supplier-derived expenses related to meals, transportation, accommodations or entertainment are acceptable provided they are justified by business reasons, incurred within reasonable limits, and do not imply coercion nor the need for reciprocation.

5.3.  Relationship with the Competition
The competitiveness of products manufactured and/or sold by GRENDENE is to be achieved based on fair competition.

No one is to make comments that may affect the image of the competition or help spread rumors about them. The competition is to be treated with the same respect GRENDENE expects to be treated with.

It is strictly forbidden to provide information that is strategic, confidential or otherwise harmful to GRENDENE’s business to any third parties, including, but not limited to, the competition.

5.4.  Relationship with Family Members
Family members comprise one’s spouse, parents, siblings, children, uncles and aunts, nephews and nieces, and cousins up to the 2nd degree, including their spouse’s.

Should a member wish to do business on behalf of GRENDENE with one of his/her family members or people with whom their family members have a close personal relationship, or even with companies in which said people are partners, have relevant interest or perform any administration role, said member must first obtain written permission from his/her manager, who is responsible for discussing the matter with the GRENDENE ACADEMY Board.

5.5.  Relationship with the Government
Each and every GRENDENE member is strictly forbidden from offering gifts or benefits to civil servants, public officials, their family members, and the like, whether directly or via third parties.

6.  Gifts
GRENDENE members and their families are forbidden from giving or accepting presents or favors from clients, suppliers or competitors in an amount exceeding R$ 100 (one hundred reals).

Should any member be given something worth more than the amount above and be unable to refuse it for any reason, he/she must hand it over to the GRENDENE ACADEMY Board, which in turn will donate it accordingly. Members are to thank the person who gave said gift and let them know of the destination given to the gift.

7.  Conflicts of Interest
Members are to make sure their actions do not clash against GRENDENE’s interests, nor damage the company’s image and reputation.

For example purposes only we have listed below a few situations in which members face a conflict of interest:

Once facing any conflict of interest situations, members are to promptly inform their managers about the fact, who may in turn resolve the issue or discuss the matter with his/her respective manager or the GRENDENE ACADEMY Board.

8.  Activities outside Grendene
GRENDENE members must not perform activities or join organizations that compromise their dedication to GRENDENE, or adopt behaviors that generate conflicts of interest against their responsibilities and duties; neither work in any other area that may somehow compromise their efficiency, integrity, and GRENDENE’s confidentiality and safety.

9.  Relationship with Stockholders
Communications with stockholders will be carried out through the investor relations director.

The relationship with stockholders and investors must be based on accurate, transparent and timely communications of information enabling them to monitor GRENDENE’s activities and performance, as well as on the search for results that bring positive impacts on GRENDENE’s market value.

The treatment provided to stockholders is not dependent on the amount of stocks they hold, legal restrictions observed. They shall all be equally provided with the same information.

10.  Privileged Information
Should any members come across relevant, privileged information on GRENDENE stocks, he/she is strictly forbidden from negotiating GRENDENE stocks, whether directly or indirectly, for any reasons, and also from disclosing such information to third parties.

GRENDENE expects members to abide by the legal provisions on the matter, as well as by any and all policies, instructions or guidance from GRENDENE in that respect.

By law, violating this rule carries criminal and civil punishments.

11.  Political Activities
GRENDENE does not make restrictions to the political activities of its members. However, members’ conduct in this regard shall be always of a personal nature and carried out in such a way as to not interfere with their professional responsibilities.

Members are strictly forbidden from performing political activities in the workplace and which somehow involve GRENDENE resources.
Neither shall members wear company uniforms when performing their political activities.

Members are strictly forbidden from making any sort of political advertisement at the facilities, vehicles, publications or any other property of GRENDENE.
Members taking part in political activities shall do so as private citizens and not as GRENDENE representatives.

12.  Use and Conservation of Grendene Property
Members are responsible for ensuring the conservation of GRENDENE assets, including facilities, machines, equipment, furniture, vehicles, amounts, brands, patents, technologies, and others.

Members are not allowed to use GRENDENE equipment and other company assets for personal purposes.

Access to the internet and telephones, as well as the use of e-mails, software and hardware are restricted to members’ professional activities, in compliance with the other provisions set forth in GRENDENE policies, regulations or instructions.

Members are not allowed to use GRENDENE’s address to receive personal mail, except when authorized.

13.  Grendene Spokespeople
Only certain members have been authorized by the company management to speak on behalf of GRENDENE and make comments about it to the press or external groups.

14.  Accounting Records
Transparency is essential to allow market agents to accurately evaluate GRENDENE.

GRENDENE’s accounting rules and practices are to be strictly complied with, so as to generate consistent records and reports and create an even base to evaluate and publish GRENDENE’s operations and results. Hence, it is necessary to ensure any and all assets, rights and obligations GRENDENE has the obligation to report are accounted for.

15.  The Environment
Environmental balance and nature conservation are of the utmost importance for GRENDENE’s business activities.

GRENDENE actively participates in protecting the ecosystems where its industrial plants are located, whether by the precautions and care exercised in manufacturing, handling and transporting its products, or by helping preserve forest reserves, preventing the waste of natural resources, and holding conservation campaigns to raise awareness among local communities, besides supporting several public and private environmental conservation projects.
Hence, each member is responsible for helping protect and improve the environment and its ecosystems.

16.  Questions
The guidelines in this code allow us to evaluate most situations and minimize the subjectivity of personal interpretations about moral and ethical principles. However, they do not necessarily detail all the situations that may come up in each member’s daily life. Hence, should you have questions about the application of the guidelines in this code, please contact your department manager.

17.  Violations
Members are expected to comply with these guidelines under any and all circumstances.

Members who violate a GRENDENE conduct, practice or policy, or who allow a subordinate to do so, will be subject to disciplinary actions, including termination. Members who become aware of a violation of any aspect of this code, on the part of any person, must inform their department manager about such fact.

18. GRENDENE ACADEMY Board
GRENDENE will have the GRENDENE ACADEMY Board, which will be responsible for judging more severe cases of violation of this code and for imposing the applicable disciplinary penalties, as well as for discussing how to answer questions related to its text.

The GRENDENE ACADEMY Board will meet whenever necessary.

19.  General Provisions
This Code of Conduct takes effect immediately.

The conduct guidelines contained in this code will be relayed to all members.

No member shall be allowed to claim ignorance of the guidelines contained in this code for any reason or according to any argument.

This Code of Conduct takes effect on December 1st, 2008.