1. Introduction & Purpose

This Ethical Sourcing Policy (the "Policy") establishes Nexly Corporation's ("Nexly" or the "Company") commitment to ethical and responsible sourcing practices throughout its global supply chain. Located at 701 South Street Suite 100, Mountain Home, AR 72653, Nexly recognizes that its business activities can impact human rights, labor practices, environmental sustainability, and ethical conduct within its supply chain. This Policy is designed to:

• Protect Human Rights: Ensure that all suppliers respect human rights, including the right to freedom from forced labor, child labor, and discrimination.
• Promote Fair Labor Practices: Encourage suppliers to provide fair wages, safe working conditions, and the right to freedom of association.
• Protect the Environment: Encourage suppliers to minimize their environmental impact and to operate in an environmentally responsible manner.
• Uphold Ethical Conduct: Ensure that all suppliers adhere to the highest ethical standards, including preventing corruption and bribery.
• Promote Transparency and Traceability: Increase transparency within the supply chain to enable traceability and accountability.
• Support Sustainable Development: Contribute to sustainable development by partnering with suppliers who share our commitment to ethical and environmental responsibility.
• Protect Nexly’s Reputation: Safeguard Nexly’s reputation and brand image.

This Policy applies to all suppliers, vendors, contractors, and other individuals and entities that provide goods or services to Nexly Corporation (collectively, "Suppliers"). This includes direct suppliers and all sub-tier suppliers in the supply chain. This Policy is to be read in conjunction with other Company policies, including, but not limited to, the Code of Conduct, the Environmental Policy, and the Supplier Code of Conduct.

2. Core Principles

Nexly Corporation's Ethical Sourcing Policy is guided by the following core principles:

• 2.1. Human Rights: Suppliers must respect and uphold human rights, as defined by the Universal Declaration of Human Rights and the International Labour Organization's (ILO) core conventions.
  • Prohibition of Forced Labor: Suppliers must not use any form of forced labor, including bonded labor, indentured servitude, or involuntary prison labor.
  • Prohibition of Child Labor: Suppliers must not employ child labor. The minimum working age must be in accordance with local laws, but must not be less than 15 years of age. If local law permits, exceptions may be made for light work for those between 13-15 years old, provided the work does not harm their health or education.
  • Freedom of Association: Suppliers must respect the right of workers to form and join trade unions and to bargain collectively.
  • Non-Discrimination: Suppliers must not discriminate against workers based on race, gender, religion, ethnicity, age, sexual orientation, disability, or any other protected characteristic.
• 2.2. Fair Labor Practices: Suppliers must provide fair wages, benefits, and working conditions.
  • Fair Wages: Suppliers must pay wages that meet or exceed the legal minimum wage and provide wages and benefits that are sufficient to meet workers' basic needs.
  • Working Hours: Suppliers must comply with all applicable laws and regulations regarding working hours, including limits on overtime. Overtime should be voluntary and compensated at a premium rate.
  • Safe Working Conditions: Suppliers must provide a safe and healthy working environment, including the provision of appropriate safety equipment and training.
• 2.3. Environmental Sustainability: Suppliers must minimize their environmental impact.
  • Environmental Compliance: Suppliers must comply with all applicable environmental laws and regulations.
  • Resource Efficiency: Suppliers should strive to use resources efficiently, including energy, water, and raw materials.
  • Waste Management: Suppliers must manage waste responsibly, including reducing waste generation, promoting recycling, and properly disposing of hazardous waste.
  • Climate Action: Suppliers are encouraged to take actions to reduce greenhouse gas emissions.
• 2.4. Ethical Conduct: Suppliers must conduct their business ethically and with integrity.
  • Anti-Corruption: Suppliers must not engage in any form of corruption, bribery, or extortion.
  • Gifts and Hospitality: Suppliers must not offer or accept gifts or hospitality that could create a conflict of interest.
  • Fair Competition: Suppliers must compete fairly and honestly in the marketplace.
  • Transparency and Disclosure: Suppliers must be transparent about their business practices and disclose any potential conflicts of interest.
• 2.5. Transparency and Traceability: Nexly will strive to increase transparency and traceability throughout its supply chain.
  • Due Diligence: Nexly will conduct due diligence on its suppliers to assess their compliance with this Policy.
  • Supplier Disclosure: Nexly may require suppliers to disclose information about their supply chains, including the location of their facilities and the names of their sub-tier suppliers.
  • Traceability Systems: Nexly will work with its suppliers to implement traceability systems to track the origin of materials and products.

3. Roles & Responsibilities

Effective ethical sourcing requires clearly defined roles and responsibilities across the organization:

• 3.1. Board of Directors:
  • Oversees the Company's ethical sourcing program.
  • Approves the Ethical Sourcing Policy and reviews its effectiveness.
  • Monitors the Company's key performance indicators (KPIs) related to ethical sourcing.
• 3.2. Ethical Sourcing Committee (ESC) (or equivalent): (If applicable, or alternatively, a designated senior management group).
  • Develops, implements, and maintains the Ethical Sourcing Policy.
  • Develops and implements supplier assessment and monitoring processes.
  • Oversees the due diligence process for suppliers.
  • Investigates reports of ethical violations.
  • Recommends corrective actions.
  • Monitors and reports on the Company's ethical sourcing performance.
  • The Ethical Sourcing Committee will be comprised of [Specify Members and their Titles, e.g., CFO, Head of Procurement, Legal Counsel, Head of Sustainability, and a representative from a relevant business unit]. The Chair of the ESC will be [Specify Title, e.g., the CFO].
• 3.3. Chief Executive Officer (CEO):
  • Provides overall leadership and direction for the Company's ethical sourcing efforts.
  • Ensures that the Ethical Sourcing Policy is integrated into all business activities.
  • Supports the Ethical Sourcing Committee (or equivalent) in its efforts.
  • Communicates the importance of ethical sourcing throughout the organization.
• 3.4. Chief Financial Officer (CFO):
  • Oversees the financial aspects of the ethical sourcing program.
  • Ensures that ethical sourcing costs are managed effectively.
  • Works with the Ethical Sourcing Committee to develop and monitor ethical sourcing metrics and targets.
• 3.5. Head of Procurement:
  • Responsible for implementing the Ethical Sourcing Policy within the procurement function.
  • Oversees the supplier selection and assessment process.
  • Ensures that all suppliers adhere to the Ethical Sourcing Policy and the Supplier Code of Conduct.
  • Manages supplier relationships to promote ethical and sustainable practices.
• 3.6. Legal Counsel (Internal or External):
  • Provides legal advice and guidance on ethical sourcing matters.
  • Reviews contracts to ensure that suppliers are required to comply with the Ethical Sourcing Policy.
  • Provides legal support to the Ethical Sourcing Committee.
• 3.7. Head of Sustainability (if applicable):
  • Leads the Company's sustainability efforts, including those related to ethical sourcing.
  • Works with the Ethical Sourcing Committee to develop and implement environmental sustainability initiatives.
  • Monitors and reports on the Company's environmental performance in the supply chain.
• 3.8. All Employees:
  • Responsible for understanding and adhering to the Ethical Sourcing Policy and the Supplier Code of Conduct.
  • Identifying and reporting potential ethical concerns related to the supply chain.
  • Participating in ethical sourcing training and awareness programs.

4. Supplier Selection & Assessment

Nexly Corporation will implement a robust supplier selection and assessment process to ensure that all suppliers meet the Company's ethical and sustainability standards.

• 4.1. Due Diligence:
  • Pre-Selection Screening: Before selecting a new supplier, Nexly will conduct pre-selection screening to assess their ethical and environmental performance. This may include:
    • Reviewing publicly available information about the supplier, such as their website, sustainability reports, and media coverage.
    • Checking for any reports of ethical violations or environmental incidents.
    • Using third-party ratings and certifications, such as those from Sedex, EcoVadis, or other recognized organizations.
  • Supplier Questionnaires: Suppliers will be required to complete a detailed questionnaire that assesses their compliance with the Ethical Sourcing Policy and the Supplier Code of Conduct.
  • Risk Assessment: Nexly will assess the risk associated with each supplier based on factors such as the location of their operations, the nature of the goods or services they provide, and their past performance.
• 4.2. Supplier Audits:
  • Audit Frequency: Nexly will conduct audits of its suppliers, with the frequency of the audits determined by the risk assessment. Higher-risk suppliers will be audited more frequently.
  • Audit Scope: Audits will cover all aspects of the Ethical Sourcing Policy and the Supplier Code of Conduct, including human rights, labor practices, environmental sustainability, and ethical conduct. Audits may be conducted by Nexly employees, third-party auditors, or a combination of both.
  • Audit Procedures: Audits will be conducted in accordance with recognized audit standards and methodologies. Audit findings will be documented and shared with the supplier.
  • Remediation: Suppliers must implement corrective actions to address any identified deficiencies or violations. Nexly will work with suppliers to help them improve their practices.
• 4.3. Supplier Performance Monitoring:
  • Performance Metrics: Nexly will track the performance of its suppliers against key performance indicators (KPIs) related to ethical sourcing and sustainability.
  • Performance Reviews: Supplier performance will be reviewed regularly.
  • Remedial Actions: Nexly will take appropriate action to address any performance issues, which may include:
    • Providing guidance and support to help suppliers improve their practices.
    • Implementing corrective action plans.
    • Suspending or terminating the relationship with the supplier if they fail to meet the requirements of the Ethical Sourcing Policy.
• 4.4. Contracts and Agreements: All contracts and agreements with suppliers will include:
  • Ethical Sourcing Clause: A clause requiring the supplier to comply with the Ethical Sourcing Policy and the Supplier Code of Conduct.
  • Audit Rights: Nexly's right to conduct audits of the supplier's operations.
  • Remediation Requirements: Requirements for suppliers to remediate any violations of the Policy or Code of Conduct.
  • Termination Rights: Nexly's right to terminate the contract if the supplier fails to comply with the Policy or the Code of Conduct.

5. Supplier Code of Conduct

The Supplier Code of Conduct outlines the specific ethical and sustainability standards that Nexly expects its suppliers to meet. All suppliers are required to comply with the Supplier Code of Conduct.

• 5.1. Key Provisions: The Supplier Code of Conduct will include, but not be limited to, the following provisions:
  • Human Rights:
    • Prohibition of forced labor and child labor.
    • Respect for freedom of association and the right to collective bargaining.
    • Non-discrimination in employment.
  • Labor Practices:
    • Fair wages and benefits.
    • Safe and healthy working conditions.
    • Reasonable working hours and overtime compensation.
  • Environmental Sustainability:
    • Compliance with environmental laws and regulations.
    • Resource efficiency (e.g., energy, water).
    • Waste management and recycling.
    • Reduction of greenhouse gas emissions.
  • Ethical Conduct:
    • Prohibition of corruption, bribery, and extortion.
    • Fair competition.
    • Protection of intellectual property.
  • Transparency and Traceability:
    • Maintaining transparency in all business dealings.
    • Providing information about the supply chain.
    • Cooperating with Nexly in traceability efforts.
• 5.2. Access to the Code: The Supplier Code of Conduct will be provided to all suppliers and is available on the Nexly Corporation Intranet at [Specify Intranet Link] and on the public website [Specify Website Link].
• 5.3. Acknowledgement: Suppliers are required to acknowledge in writing that they have received, reviewed, and understand the Supplier Code of Conduct and agree to comply with its provisions.

6. Corrective Action and Remediation

Nexly Corporation is committed to working with its suppliers to address any instances of non-compliance with the Ethical Sourcing Policy and the Supplier Code of Conduct.

• 6.1. Identifying and Reporting Issues:
  • Internal Reporting: Nexly employees are required to report any concerns or suspected violations of the Ethical Sourcing Policy to their manager, the Ethical Sourcing Committee (or equivalent), or the designated point of contact within the Procurement Department.
  • Supplier Reporting: Suppliers are encouraged to report any concerns or issues related to their operations or those of their sub-tier suppliers. A mechanism should be established for suppliers to report any violations confidentially.
• 6.2. Investigation and Verification:
  • Prompt Investigation: Any reports of violations will be investigated promptly and thoroughly.
  • Verification: Nexly will verify the facts of any alleged violations, which may involve conducting audits, reviewing documentation, and interviewing individuals.
• 6.3. Corrective Action Plans:
  • Development: If a violation is confirmed, the supplier will be required to develop and implement a corrective action plan (CAP) to address the issues. The CAP will outline the specific actions the supplier will take to remediate the violation and prevent future occurrences.
  • Review and Approval: The CAP must be reviewed and approved by Nexly, with input from the Ethical Sourcing Committee (or equivalent) and/or Legal Counsel.
  • Timeline: The CAP will include a specific timeline for implementation.
• 6.4. Remediation and Monitoring:
  • Implementation: The supplier will implement the CAP within the agreed-upon timeframe.
  • Monitoring: Nexly will monitor the supplier's progress in implementing the CAP. This may involve follow-up audits, document reviews, and ongoing communication.
  • Support: Nexly may provide support and guidance to help the supplier improve its practices.
• 6.5. Consequences of Non-Compliance:
  • Severity: The consequences of non-compliance will depend on the severity of the violation and the supplier's willingness to cooperate in implementing a CAP.
  • Actions: Potential actions may include:
    • Withholding payments.
    • Suspension of the supplier relationship.
    • Termination of the supplier relationship.
    • Public disclosure of the violation (where appropriate and permitted by law).

7. Training and Awareness

Nexly Corporation is committed to providing training and awareness programs to ensure that all employees and suppliers understand their responsibilities under this Ethical Sourcing Policy.

• 7.1. Employee Training:
  • Policy Training: All employees will receive initial and ongoing training on the Ethical Sourcing Policy and the Supplier Code of Conduct.
  • Role-Specific Training: Employees in the Procurement Department, Legal Counsel, the Ethical Sourcing Committee (or equivalent), and other relevant departments will receive more in-depth training on ethical sourcing best practices, supplier assessment, and auditing procedures.
  • Training Frequency: Training will be provided [Specify Frequency, e.g., annually], or more frequently as needed.
• 7.2. Supplier Training & Awareness:
  • Policy Communication: Nexly will communicate the Ethical Sourcing Policy and the Supplier Code of Conduct to all suppliers.
  • Training Opportunities: Nexly may provide training and workshops to its suppliers on ethical sourcing best practices, as appropriate.
• 7.3. Awareness Programs and Communications: The Company will conduct ongoing awareness campaigns to reinforce the importance of ethical sourcing.

8. Policy Review & Amendments

This Ethical Sourcing Policy will be reviewed and updated regularly to ensure its continued relevance, effectiveness, and compliance with applicable laws, regulations, and industry best practices.

• Review Frequency: This Policy will be reviewed at least [Specify Frequency, e.g., annually] or more frequently as needed.
• Review Process: The review process will involve:
  • Input from Stakeholders: Seeking input from relevant stakeholders, including the Ethical Sourcing Committee (or equivalent), the Head of Procurement, Legal Counsel, the Head of Sustainability, and suppliers.
  • Benchmarking: Reviewing industry best practices and the ethical sourcing policies of other companies.
  • Legal Compliance: Ensuring that the Policy complies with all applicable laws, regulations, and industry standards.
  • Performance Evaluation: Assessing the effectiveness of the ethical sourcing program, including the identification of any gaps or areas for improvement.
• Policy Amendments and Communication: Any amendments to this Ethical Sourcing Policy will be approved by [Specify Approving Authority, e.g., the Board of Directors or the Ethical Sourcing Committee] and communicated to all employees and suppliers through [Specify Communication Channels, e.g., company-wide email, intranet posting, supplier portals, training sessions]. All suppliers will acknowledge the updated policies.
• Policy Ownership: The Ethical Sourcing Committee (or equivalent), with support from the Head of Procurement, Legal Counsel, and other relevant departments, is responsible for maintaining and updating this Policy.

9. Policy Accessibility

Nexly Corporation will make this Ethical Sourcing Policy readily accessible to all employees, suppliers, and other relevant parties.

• Availability: This Policy will be readily accessible through the Nexly Corporation Intranet at [Insert Intranet Link] and the Nexly Corporation public website at [Insert Website Link].
• Distribution: This Policy will be provided to all new employees during their onboarding process.
• Supplier Access: This Policy and the Supplier Code of Conduct will be provided to all suppliers.
• Acknowledgment: Employees and suppliers will be required to acknowledge that they have read, understood, and agree to abide by this Policy.
• Updates: All updates to this Policy will be communicated to employees and suppliers through the established communication channels (e.g., email, intranet postings, supplier portals, training sessions).