The Hillman Group, Inc.
Code of Business Conduct and Ethics

Introduction

This Code of Business Conduct and Ethics (“Code”) describes The Hillman Group, Inc. (“Hillman’) policies for conducting its business in a legal, ethical and honest manner.  It applies worldwide to all employees and officers of Hillman and all of its consolidated subsidiaries and to the members of the Board of Directors of Hillman.

The purpose of this Code is to:

• detect and stop illegal, unethical or dishonest behavior that may occur as soon as reasonably possible after it is discovered;
• prevent the occurrence of illegal, unethical or dishonest behavior; and
• take appropriate actions to discipline those who engage in illegal, unethical or dishonest behavior or who otherwise violate this Code.

In addition to this Code, certain officers are required to comply with Hillman Section 406 of the Sarbanes-Oxley Act Code of Ethics.  These officers are relying upon your commitment to comply with this Code when they certify compliance with their obligations under the Hillman Section 406 of the Sarbanes-Oxley Act Code of Ethics.

Accuracy of Public Communications

All Company personnel are required to provide reliable and accurate data to, and otherwise assist, the Company’s Chief Executive Officer and senior financial officers to discharge their responsibilities to establish and maintain adequate and effective disclosure controls and procedures.  These controls are designed to provide assurances to the Company and its shareholders that disclosures of material information related to the Company and its consolidated subsidiaries in its periodic reports filed with, or submitted to, the Securities and Exchange Commission and other public communications are full, fair, accurate, timely and understandable.

Accuracy and Integrity of Books and Records

All Company books, records and accounts must accurately reflect the nature of the transactions recorded.  All assets and liabilities of the Company must be recorded in the regular books of account.  No undisclosed or unrecorded fund or asset may be established in any amount for any purpose.  No false or artificial entries may be made for any purpose.  No payment may be made, or purchase price agreed to, with the intention or understanding that any part of the payment is to be used for any purpose other than that described in the document supporting the payment.  This policy is not limited to accounting and auditing personnel.  It applies to all employees, including anyone negotiating and authorizing sales and purchase contracts, submitting expense reports, or preparing or paying invoices.

Ethics & Compliance in the International Community

The Company is committed to maintaining high standards of business conduct in the United States and abroad.  The Company and its employees must comply with all local laws of the countries in which the Company conducts business, applicable international and inter-governmental regulations and all U.S. laws that apply to international activities. If the substantive provisions of a local law are more restrictive than the Code,  you must comply with the local law.  Your business may have policies and  practices which require more of you than is required by this Code, and the same may be true of local law; in all of those instances you must follow the stricter Code, policy, practice or law.

In the event the Code is translated into local languages and a conflict exists between the English language version and the local language version, the English language version of the Code controls.

If you conduct business outside of the U.S., be sure you are familiar with the laws and regulations of each country in which you work and be aware of the following U.S. laws and regulations.  Violations of these laws can result in substantial fines, imprisonment and severe restrictions on the Company’s ability to do business.

Foreign Corrupt Practices Act and the Organization for Economic Cooperation and Development’s (“OECD”) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

The Foreign Corrupt Practices Act (“FCPA”) and the OECD Convention (and ratifying legislation enacted by the signatories to the OECD Convention, which include many countries in which the Company currently has operations) make it a crime to promise or give anything of value to a government official or political party in order to obtain or keep business or obtain any improper advantage.  It is also illegal to make payments to agents, sales representatives or other third parties if you have reason to believe your gift will be used illegally.

• Every officer, employee and agent of the Company must keep records that reflect all transactions and dispositions of Company assets for domestic and foreign business activities.
• Report FCPA and OECD Convention concerns to your business unit management and seek advice from the Legal Department for interpretation of the laws.
   

Anti-Boycott Laws

As a U.S.-based company, all operations, including foreign subsidiaries, must comply with U.S. laws pertaining to foreign boycotts.  It is against the law to cooperate in any boycotts between foreign countries not sanctioned by U.S. law.  The Company must not:

• Refuse to do business with any country, company or person as a condition of the sale of goods or services to the boycotting country; or
• Respond to requests from boycotting countries for information about our business relationships with boycotted countries or blacklisted companies or individuals.

All requests for boycott support or boycott-related information must be reported to the U.S. government.  These requests may be oral or may appear among terms and conditions of anything from bid requests to shipping instructions.  It is not enough to simply ignore or delete the request.

• Please contact the Legal Department for a current list of countries subject to boycott.
• Report all requests for boycott support of boycott-related information to the Legal Department.

Treasury Embargo Sanctions / Specially Designated Global Terrorist Lists

The Treasury Department’s Office of Foreign Assets Control prohibits U.S. companies and their foreign subsidiaries from doing business with certain countries, agencies, and certain individuals and organizations, including specially designated global terrorists.  The regulations and their application to foreign subsidiaries vary depending on the country and the type of transaction and often change as U.S. foreign policy changes.

• If you are aware of any sensitive political issues with a country in which the Company is doing, or considering doing business, seek advice from the Human Resource Department

Export Control Restrictions

To prevent sensitive goods, technology and software from falling into the wrong hands, exports of these products and technical information to certain countries or individuals are restricted.  These restrictions may also apply to transfers between the Company and its foreign subsidiaries.

An “export” is defined as any method of conveying data to foreign individuals or companies, verbally or in writing, including sales, training and consulting, and product promotion, even if these activities occur in the U.S.

Because these control restrictions are designed to further U.S. foreign policy and national security goals, they are subject to change.  Obtain technical and legal guidance to identify the applicable rules before exporting such goods or technology.   

Honest and Ethical Conduct

The Company expects you to act honestly and ethically at all times and to comply fully with the policies comprising this Code.

Avoidance of Conflicts of Interest 

You are required to avoid conflicts between your personal interests and the interests of the Company and to disclose any activities, financial interests or relationships that may present an actual or potential conflict of interest.  You should therefore avoid any investment, interest or association that interferes or might interfere with the objective or independent exercise of your best judgment or with the performance of your responsibilities in the best interests of the Company. 

Specifically, you should:

• deal with all suppliers, customers, competitors, other employees and all other persons doing business with the Company in a fair and objective manner without favor or preference based upon personal financial considerations;
• not accept from or provide to any supplier, customer or competitor any gift, entertainment or other benefit, including payments or loans, except as expressly permitted under this Code;
• not own any financial interest in or hold any employment or managerial position  with any firm or corporation that is a competitor of, or that does or seeks to do business with the Company, if that interest or position might influence any decision in the performance of your duties; and
   

You should not seek or accept, or offer or give, any payments, fees, loans, services or gifts from or to any person or firm as a condition or result of doing business with the Company.   The Company’s policy does not prohibit gifts of nominal value, normal business meals and entertainment, the exchange of customary reciprocal courtesies between employees of the Company and their business associates, and similar customary and reasonable expenditures to promote general business goodwill.

The expenditure for, or receipt of, gifts and entertainment that are more than nominal in value must be authorized in writing by your supervisor.  The provisions contained in this paragraph do not apply to sales contests and incentive trips for the benefit of the Company that are authorized in writing by an officer of the Company. All such contests and incentive trips are to be conducted fairly and in accordance with applicable laws and are subject to the Company’s policies related to the approval of business related expenses.

With respect to gifts to and entertainment of government officials or employees, this policy is subject to the provisions on “Governmental Payments” described herein.

The Company’s objective is to compete in the marketplace by providing superior products and services at competitive prices.  No payment or anything of value in any form shall be given directly or indirectly to anyone anywhere in the world for the purpose of obtaining or retaining business, or to obtain any other favorable action.

Governmental Payments

You should not directly or indirectly give, offer or promise any form of bribe, gratuity or kickback to a United States official or employee, or any state, local or municipal official or employee. 

It is the Company’s policy to comply in all respects with the United States Foreign Corrupt Practices Act and with all other laws applicable to payments to government officials.  It is the Company’s policy that no Company personnel may directly or indirectly pay, give or offer money or anything of value to any foreign government official, employee or representative, or to any foreign political party, or candidate for, or incumbent in any foreign political office, in order to assist in obtaining, retaining or directing business.  Accordingly, all laws of foreign countries must be strictly observed.

Corporate Opportunities

You may not take for yourself opportunities that are discovered through the use of Company property, information or your position, for personal gain or to compete with the Company.  You owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises.  You also owe a duty to not participate in activities adverse to the Company’s interests.

Confidential and Inside Information

You may be trusted with confidential knowledge and information about the Company and are expected to keep that in confidence. Disclosing such information could hurt the Company or give an unfair or illegal advantage to competitors, investors in our Preferred Trust or others. You should guard against improper or premature disclosure of confidential information to outsiders, or to employees who do not require the information to perform their jobs.

Confidential information can include information about employees, products, technology, financial data, customers suppliers and competitors, long range plans, trade secrets, business plans including potential acquisitions and divestitures, manufacturing systems and procedures, research and development work, and computer data that is not published or in the public domain. The use of confidential information for personal gain by an employee or anyone else goes against these guidelines and, in many cases, can be against the law.

Communication with the media, the investment community and the public is the responsibility of designated spokespersons within the Company.

Hillman provides electronic communication tools to help improve productivity and enable employees to provide efficient, high-quality work. Electronic communications include all aspects of voice, video and data communications such as voice mail, e-mail, EDI (Electronic Data Interchange), fax, Internet, on-line services, etc. These technologies allow for quick dissemination of information to a large audience. Consequently, you must guard against the circulation of confidential information through any electronic communication. Electronic communications practices are outlined in the Hillman Policies, Practices and Procedures Manual.   Hillman’s trade names and logos should be used only in accordance with Company  policies and only as authorized for legitimate Hillman business. 

Securities Trading

Except as specifically permitted by applicable law, you should not trade in or recommend the purchase or a sale of Company securities while you are in possession of “material information” regarding the operations or prospects of the Company that has not been publicly disclosed and disseminated to the investment community.  You should not trade in or recommend the purchase or sale of the securities of any other corporation of which you have obtained non-public “material information” in the course of your employment with the Company.

“Material information” is information which, if publicly disclosed, could reasonably be expected to affect the market value of the Company’s securities or to influence investor decisions with respect to those securities.  Specific examples of “material information” include generally unanticipated changes in the Company’s annual and quarterly revenues or earnings, changes in dividend rates or policies, significant acquisitions or divestitures, and changes in senior management.  Information regarding major new products, contract awards, expansion plans or significant litigation or regulatory proceedings may also fall in the category of “material information.”

Fair Dealing

The Company will engage only reputable, qualified individuals or firms as consultants, agents, representatives or distributors under compensation arrangements that are reasonable in relation to the services performed.  The engagement should be formalized in a written agreement.

The Company expects its employees and agents alike to conduct business with integrity wherever we do business, and ignorance of that standard is never an acceptable excuse for improper behavior, nor is it acceptable for improper behavior to be rationalized as being in the Company’s best interest.  No act of impropriety advances the interest of the Company.  You should endeavor to deal fairly with the Company’s customers, suppliers, competitors and employees.  You should not take unfair advantage of others through manipulation, concealment, abuse of privileged information, misrepresentations of material facts or any other unfair-dealing practice.

Protection and Proper Use of Company Assets

You should protect the Company’s assets and ensure their efficient use. Theft and waste have direct impact on the Company’s profitability.  All Company assets should therefore be used only for legitimate business purposes.  By way of example:

• Do not make personal use of Company assets which creates any additional costs for the Company, interferes with work duties or violates any Company policies;
• Do not allow Company property to be used to help carry out illegal acts.

Equal Employment Opportunity Laws and Diversity

Hillman values diversity in its workforce and attempts to foster an appreciation of the different cultural values of its increasingly diverse employee population.  It is the Company’s policy to provide employment opportunities without regard to race, religion, color, national origin, sex, age, ancestry, gender, veteran status, marital status, disability or any other reason prohibited by federal, state or local laws in the United States.  The Company requires you to abide by all employment and labor laws applicable to the operating unit or office where you work.  To that end, it is the policy of the Company to maintain a work environment free from discrimination or harassment of any type.  The Company believes that every employee has the right to work in an environment free of discrimination, including sexual, gender, race, national origin, age, or disability.  Other countries in which the Company does business may also have laws prohibiting various types of discrimination. 
 

Competition Laws

The Company maintains a policy of compliance with applicable competition laws, which are known as the antitrust laws in some countries.  United States competition laws govern the Company’s conduct and transactions in dealing with competitors, customers and suppliers.  Other countries in which the Company does business may also have competition laws that are applicable to the Company.  Severe criminal and civil penalties may be imposed on the Company and its employees if an employee authorizes or participates in a violation of the competition laws.  Therefore, it is important to understand and strictly follow Company policies so the Company and its employees may avoid even the appearance of a violation of the competition laws.

In order to avoid activities that may raise inferences of a violation or result in allegations of a violation of competition laws, you should not engage in practices prohibited by the Company's policy, including the following activities:

• Reaching an understanding or making an agreement with competitors to limit competition by setting price levels or terms or conditions of sale, limiting production or establishing joint procedures relating to distribution, sales territories or customers is against the law.
• Making arrangements or contracts that involve exclusive dealing, tie-in sales or other restrictive agreements with customers or suppliers, differences in price and other terms of sale between customers and quantity discounts may not comply with the law and should not be entered without the advice of the Company’s attorneys.
• Hiring competitors’ employees to obtain confidential information, or urging  competitive personnel or customers to disclose anything that could be regarded as confidential information may also violate the law.  Please contact the Legal Department prior to hiring an employee from a competitor or entering into discussions with competitive personnel.

On occasion, you may have the opportunity to communicate with competitors. While chance meetings may be seen as opportunities to learn more about our competition, employees are cautioned to exercise judgment in what they discuss. Any discussion or communication of any kind with a competitor that relates to pricing, production, customer information, marketing, inventories, product development, sales goals, market studies and other proprietary or confidential information is prohibited. It may be illegal to share this kind of information and could subject the employee and the Company to civil or criminal penalties.  Purchases from and sales to competitors are allowed, however, if done in accordance with Company policy. Antitrust Compliance manuals are available from the Human Resource Department.

Health and Safety Laws

It is the Company’s policy that all Company personnel will be provided with a safe and healthy work environment, and that all Company personnel are required to comply with all applicable occupational health and safety laws.

Environmental Laws

The Company recognizes and believes in the importance of safeguarding natural resources and the global environmental heritage.  The Company believes that environmental goals can and should be consistent with economic health.

The Company pledges to protect environmental quality and human welfare in our communities; and to implement environmentally sound policies designed to prevent, mitigate and, where appropriate, remedy impacts on the environment of the community.

The Company pledges to our fellow employees that we will continuously strive to make Hillman the best possible company for which to work.  The Company is committed to the goal of providing a safe and healthy workplace.

The Company can best meet its commitment to the environment, our employees, and our neighbors by following these principles of conduct.

• Conserve energy and natural resources through prudent use and reuse, where appropriate.
• Work hard at continually eliminating waste and pollution at its source; otherwise reduce, reuse and recycle.
• Properly dispose of or effectively treat any waste not economically reused.
• Design, operate, and assess our facilities ensuring the protection of the safety and health of our employees and our neighbors, including visitors and contractors that visit our facilities.
• Make hygiene, safety and environment a priority in developing new products and processes.
• Recognize, anticipate, respond and communicate significant environmental aspects/impacts in a timely manner to employee and community concerns regarding our products and operations.
• Participate in the public debate on regulatory issues to the end of accomplishing sound and economic regulatory theory.
• Manage all operations in a lawful manner and meet other relevant and appropriate requirements with regard to environment, safety, and health.
• Periodically audit and assess our performance against stated goals and the principles of our regulatory management system.

Political Activities and Contributions

We encourage all employees to participate fully in the political process, as individuals, and to make voluntary contributions to candidates of your choice.

Company contributions, either direct or indirect, to political parties or candidates for federal, state or local office are illegal and strictly prohibited.

Employees who participate in political activities must make it clear that they do not act or speak for Hillman. The Company cannot and will not endorse any political candidates or party.

Money Laundering

Money laundering is the conversion of money or property gained from illegal activities into money that appears to have been legally earned.  It is the Company’s policy to comply fully with all applicable anti-money laundering laws, including relevant laws and regulations in the United States and in all other countries where the Company does business.  In that regard, it is the Company’s policy to conduct business only with clients who are engaged in legitimate and lawful business activities, and to engage in transactions with funds that are derived solely from lawful activities and legitimate sources, and not to have any involvement in activity that facilitates money laundering or funds terrorism or any other criminal activity.  

Compliance and Reporting

You are expected to comply with this Code and all other policies and procedures of the Company in all respects. To the extent legally permissible under local laws, any employee who fails to return the attached Compliance Certificate covering the policies set forth in this Code, submits a Compliance Certificate containing a false statement or material omission, or who knowingly violates this Code, or knowingly permits a subordinate to do so, shall be subject to disciplinary action, including demotion or dismissal.  From time to time the Company may require you to sign additional certificates covering the policies set forth in this Code.

Compliance review briefings are held periodically in order to discuss various matters raised in this Code. Each employee is expected to attend such briefings.  In addition, certain employees are required by the Company to complete web-based training modules covering this Code and ethics in general.   

If you become aware of any acts or transactions that may be in violation of this Code, you are expected to properly disclose such information. If you believe this Code may have been violated, you should raise the issue immediately with your supervisor.  If the issue is not resolved, you should contact the Company’s Human Resource Department  .  Issues presented to the Human Resource Department will be treated confidentially and anonymously.  If you are a member of the Board of Directors of the Company, you should report violations of this Code directly to the Audit Committee or General Counsel.  In addition, if you have concerns about accounting, internal accounting controls or auditing matters, you should report violations of this Code by calling Hillman's Ethics Hotline at 1-800-826-6762.

Confidentiality regarding those who make compliance reports and those potentially involved is maintained to the extent possible.

Prohibition Against Retaliation

The Company prohibits reprisals for good faith reporting of actual or possible violations of this Code, or for participating in investigations or proceedings involving this Code.  Retaliation in any form against any Company personnel who report a possible violation of this Code, or who assist in the investigation of a possible violation of this Code, is itself a violation of this Code and will be disciplined appropriately.  In certain circumstances there may be criminal penalties for retaliation, including fines and imprisonment. 

Waivers

Any waiver of this Code for directors or senior executive or financial officers of the Company may be made only by the Company’s Board of Directors.   Any waiver of this Code for executive officers or directors may be made only by the Board or a Board committee and will be promptly disclosed as required by law or stock exchange regulation.

Questions

Questions about situations not discussed in this document should be addressed to your supervisor or to the corporate Human Resources Department. 

The Hillman Code of Business Conduct and Ethics is not intended to confer contractual rights of any kind upon any employee or other person identified therein, or to create contractual obligations of any kind for the Company. Because the Company’s goals related in the Code of Business Conduct and Ethics are subject to change, the Company retains the rights to change the Code of Business Conduct and Ethics in its sole discretion, at any time, with or without notice.