EX-99.3 8 c73767exv99w3.txt EX-99.3 CODE OF ETHICAL BUSINESS CONDUCT EXHIBIT 99.3 HILLENBRAND INDUSTRIES, INC. CODE OF ETHICAL BUSINESS CONDUCT HILLENBRAND INDUSTRIES, INC. CODE OF ETHICAL BUSINESS CONDUCT TABLE OF CONTENTS SECTION 1 Message of Chairman and Chief Executive Officer 1 SECTION 2 Policy 3 Administration and Enforcement 4 - Board of Directors and Ethics Committees 4 - Certification Statements and Candor 4 - Addressing Concerns and Violations 4 - Waivers 5 - Get Help to Avoid Violations 5 - Other Related Information 6 Standards and Guidelines 7 - Introduction 7 - Conflicts of Interest 7 - Common Sources of Conflicts 7 - Interest of Associate 7 - Interest of Relative 7 - Gifts 7 - Misuse of Information 7 - Definitions 7 - Specific Examples 8 - Position of Influence 8 - Availability 8 - Competitors 8 - Gifts 8 - Misuse of Information 9 - Corporate Opportunities 9 Confidential Information 9 Protection and Proper Use of Hillenbrand Assets 10 Fair Dealing 10 Compliance with Applicable Laws 11 Antitrust Compliance 12 - Basic Antitrust Rules of the Road 12 The Use of Inside Information and Trading In Securities 14 - Definitions 15 - Directors and Officers 16 Political Contributions 16 Employee Relations 17 - Equal Opportunity, Non-Discrimination, and Anti-Harassment 17 Regulatory Compliance 18 Environmental and Safety Compliance 18 Unlawful, Questionable or Sensitive Payments 18 - Commercial Bribery 19 - Bribery of Public Officials 19 Books and Records 19 Use of Agents, Consultants and Non-Employees 21 Reporting Illegal or Unethical Behavior 21 Other Policies 22 SECTION 3 Annual Certification 23
MESSAGE OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER Hillenbrand Industries, Inc. and its operating companies have a proud tradition of conducting our business on a high ethical plane based on honesty, integrity, and fair commercial competition. This Code of Ethical Business Conduct applies to all directors, officers and employees (with all three groups being referred to as "associates") of Hillenbrand Industries, Inc. and its operating companies and is intended to provide a clear understanding of the ethical principles of business conduct expected of each associate. When either the term "Company" or "Hillenbrand" is used in this Code of Ethical Business Conduct it stands for any and all of Hillenbrand Industries, Inc. and its operating companies. Accordingly, please read these standards carefully. Compliance with these standards is vital to the integrity and continued well being of our business and our associates. Our reputation for maintaining the highest standard of ethical conduct, fair dealing and honesty in all of our activities is founded on the personal integrity of Hillenbrand associates and our dedication to the following principles: - FAIRNESS - by observing all applicable laws and regulations and adhering to high standards of moral behavior. - RESPECT - coupled with a willingness to solicit, listen to and act appropriately in response to the expressed needs and desires of our shareholders, directors, coworkers, customers, business partners, neighbors and suppliers. - COMPETITION - belief in a free market as the best mechanism for producing new ideas and new products, encouraging creative people to be productive and allowing Hillenbrand to earn profits for its shareholders. - CANDOR - free discussion of projects, problems and ethical issues among our associates and with the legal and accounting professionals retained to assist us, together with candor in discussing our operations and their impact on the persons living around our facilities; and candor with suppliers and customers in buying and selling, while in each case protecting confidential information and trade secrets and demonstrating respect for individual privacy rights. - PRUDENCE - Belief in the prudent exercise of personal and corporate discretion. All actions of Hillenbrand associates in business or public life tend to enhance or subtract from its reputation. It is imperative, therefore, that the highest standards of conduct be observed in all our behavior. Today, all corporations are under high levels of scrutiny and are held to increasingly higher levels of accountability. As a result, the Board of Directors has reaffirmed its strong commitment that Hillenbrand business practices be conducted in accordance with the highest professional, ethical, legal and moral standards. Ethical conduct, whether in a business or personal context, can only result from a trained and sensitive awareness of right and wrong. All situations encountered in daily life can never be adequately anticipated by any set of rules intended to govern personal conduct. Nevertheless, we believe that we can identify certain broad areas in which ethical, legal and moral issues may be raised in a business context, and we have endeavored to articulate our general policies regarding conduct in those areas. In addition, we cannot forget that we function within society and each of us must adhere to and comply with the legal, moral and ethical standards of our society in the conduct of business. The Company's interest never can be served by individual corner-cutting in the interests of a seeming quick profit or temporary advantage. It is our responsibility not only to conduct ourselves in a responsible and honest manner, but also to ensure that others do the same. If we know of any breach of the Company's standards of business behavior, we are required to report violations. The ultimate responsibility for maintaining the Company's standards of business conduct rests with each of us. As individuals of integrity and honesty, we must behave in ways that will bring credit to ourselves and to our Company. Please read the Code of Ethical Business Conduct carefully. We are confident that each of us will comply with the Code and thereby help maintain our reputation for the highest standards of business integrity. Ray J. Hillenbrand Frederick W. Rockwood Chairman of the Board President and Chief Executive Officer 2 POLICY It is Hillenbrand's policy to conduct its business and operations according to the standards and guidelines of ethical business conduct stated in this Code and all applicable laws and regulations. 3 ADMINISTRATION AND ENFORCEMENT BOARD OF DIRECTORS AND ETHICS COMMITTEES. The Board of Directors of Hillenbrand Industries, Inc. is responsible for approval and oversight of the Company's Code of Ethical Business Conduct ("Code"). The Board's Audit Committee has responsibility for the implementation and administration of the Code, the review and assessment at least annually of the effectiveness of the Code and the recommendation to the Board of suggested changes in the Code. The President and Chief Executive Officer of Hillenbrand is charged with the responsibility of reviewing changes in laws applicable to Hillenbrand with Hillenbrand's General Counsel and recommending changes in this Code to the Audit Committee for its consideration and approval, subject to Board adoption. Accordingly, supplements to and revisions of this Code may be adopted from time to time. Such changes will become effective upon their adoption by the Board of Directors and revisions of the Code will be made available as promptly as possible. To assist the Audit Committee and provide guidance in situations where associates may have questions concerning the right course of action to take, Ethics Committees will be established at Hillenbrand Industries, Inc. and its operating companies (that is, Hill-Rom, Forethought, Batesville Casket and Corporate). Each committee will be made up of the applicable company's highest-ranking human resources and financial officers, with the highest-ranking legal officer as the committee chairperson. It is the responsibility of the Chief Executive Officers, with assistance from the Ethics Committees for each company, to ensure that this Code has been read and understood by all associates, as well as all agents and representatives of the Company. The Ethics Committees will meet as necessary to implement this Code, but will meet no less than every three months barring extraordinary circumstances. The operating company Ethics Committees will promptly after each meeting report to the Hillenbrand Industries, Inc. Ethics Committee on compliance with the Code, the status of certifications statements by associates and any other relevant matters relating to the Code. CERTIFICATION STATEMENTS AND CANDOR. All Company officers and directors are required to certify at least once each fiscal year, by the last day of November (or such other date as may be selected by the Hillenbrand Industries, Inc. Ethics Committee), that they have read and understand the current version of the Code. Likewise all new associates are required to certify that they have read and understand the current version of the Code. During the first year of implementation there may be grace periods extended to various groups of associates (other than officers and directors) at the discretion of the Ethics Committee of Hillenbrand Industries, Inc. in order to foster the orderly communication and implementation of the Code. The certification statements for associates of each company will be reviewed by the Ethics Committees of each company, who will submit a report to the Hillenbrand Industries, Inc. Ethics Committee, who will then submit a consolidated report to the Audit Committee of the Board of Directors no later than the meeting of the Board of Directors held in conjunction with the annual meeting of shareholders in each year. All information disclosed in the certification statements shall be treated on a confidential basis, except to the extent reasonably necessary to protect Hillenbrand's interests or comply with legal or regulatory requirements. ADDRESSING CONCERNS AND VIOLATIONS. When in doubt about a particular situation, ask your manager, supervisor, Company lawyer or any of the members of your Company's Ethics Committee. These individuals will assist you to resolve your issue. Prompt and full disclosure is always the appropriate initial step towards solving any potential 4 conflict of interest problem. Discovery of events of a questionable, fraudulent or illegal nature that are, or may be, in violation of the guidelines stated in this Code should be reported immediately to your manager, supervisor, Company lawyer or any of the members of your Company's Ethics Committee. If such events involve members of management on the Ethics Committee, the matter should be reported to other members of the Committee or the Chief Executive Officer. Additionally, a 1-800 ethics hotline will be available for those who wish to remain anonymous. (1-866-43-ETHIC or 1-866-433-8442) Any concerns that you may have concerning accounting, internal accounting controls, auditing matters, violations of securities or other laws or breaches of fiduciary duty should be reported as well. In this regard, the General Counsel of Hillenbrand Industries, Inc. and other Company lawyers maintain an "open door" policy to all Hillenbrand associates concerning any of the matters addressed in this Code. THIS CODE OF ETHICS IS INTENDED TO CREATE AN OPPORTUNITY FOR ASSOCIATES TO EXPRESS CONCERNS RELATING TO CORPORATE ACCOUNTABILITY, ALLEGED VIOLATIONS OF COMPANY POLICY, FEDERAL AND STATE STATUTES, AND ALLEGATIONS OF CORPORATE MISDEEDS. THERE WILL BE NO DISCRIMINATION OR RETALIATION AGAINST ANY ASSOCIATE WHO REPORTS SUCH VIOLATIONS OR ALLEGATIONS IN GOOD FAITH. WAIVERS. This Code is intended to apply equally to all directors, officers, employees, representatives and agents of Hillenbrand. Accordingly, any waiver of the standards set forth in this Code by executive officers or directors may be made only by the Board of Directors or its Audit Committee and must be promptly disclosed to shareholders. GET HELP TO AVOID VIOLATIONS. Because the principles of responsibility, integrity and honesty are fundamental to how each of us should operate on behalf of the business, violation of this Code or any applicable laws, regulations or Company policies can result in disciplinary action, up to and including termination of employment or potential civil or criminal legal action. If you address a questionable situation before it occurs by seeking help from your manager, supervisor, Company lawyer or any of the members of your Company's Ethics Committee, there is the opportunity to avoid a violation with those serious consequences. Red flags that indicate you may need to seek advice include situations where: - An associate's interests and those of the Company seem to conflict; - An associate is in a position to receive a gift or personal favor from a customer or supplier; - The only good reason for accepting something from a customer or supplier is because you feel like you deserve it; - An associate will be communicating with a representative of a competitor; - An associate has the opportunity to disclose confidential information to someone outside the Company; - An associate has the opportunity to buy or sell Company stock or stock of a customer or supplier based on information not known to others; - If the facts were published on the front page of the newspaper you would be embarrassed; - A decision is emotionally difficult or involves a conflict between two positive values; or 5 - The reason for a decision is based on an answer like: "I deserve this;" "Everyone does it;" "It is no big deal;" "No one will find out;" "No one cares;" "It is not my responsibility;" or "The Company wants me to do this." OTHER RELATED INFORMATION. Certain sections in this Code are further explained in Hillenbrand's Corporate Compliance Manual or other policies and guidelines. Please refer to those materials for a more thorough understanding of these sections. Much of the Code outlines legal requirements. It is not intended to make you an expert in such areas. Instead, it is designed to alert you to problems you may face and enable you to know when you should obtain guidance from experienced legal counsel or members of the Ethics Committees. Please remember that difficulties usually can be avoided or minimized if legal counsel or any of the members of the Ethics Committees is consulted at the outset of business dealings, rather than at a later stage when arrangements have become so solidified that necessary changes may be difficult to make. 6 STANDARDS AND GUIDELINES INTRODUCTION. Each person who is an employee, officer or director of Hillenbrand is a Hillenbrand "associate" and has a responsibility to deal ethically in all aspects of the Company's business and to comply fully with all laws, regulations, and Company policies. Each individual is expected to assume the responsibility for applying these standards of ethical conduct and for acquainting himself/herself with the various laws, regulations, and Company policies applicable to his or her assigned duties. When in doubt, employees have the responsibility to seek clarification from their line management, or, if necessary, from legal counsel or members of the Ethics Committee for their company. CONFLICTS OF INTEREST: A CONFLICT OF INTEREST EXISTS WHEN AN INDIVIDUAL'S PRIVATE INTEREST CONFLICTS WITH THE INTERESTS OF HILLENBRAND, THAT IS, WHEN AN INDIVIDUAL'S LOYALTY TO HILLENBRAND AND CONDUCT OF RESPONSIBILITIES AND DUTIES TOWARDS HILLENBRAND IS PREJUDICED BY ACTUAL OR POTENTIAL BENEFIT FROM ANOTHER SOURCE. We are confident of the individual loyalty and honesty of our associates. Good relations with customers and suppliers and the integrity of our associates are critical sources of goodwill and absolutely necessary to our success. Associates should always be in a position so that personal interests or third parties do not influence their judgment on Company matters. No associate should be subject, or even reasonably appear to be subject, to influences, interests or relationships that conflict with the best interests of the Company. This means avoiding any activity that might compromise or seem to compromise the integrity of the Company or the associate. COMMON SOURCES OF CONFLICTS. Although it is impossible to prepare a list of all potential conflict of interest situations, conflicts of interest generally arise in four situations: 1. INTEREST OF ASSOCIATE. When an associate, a member of the associate's family or a trust in which the associate is involved, has a significant direct or indirect financial interest in, or obligation to, an actual or potential competitor, supplier or customer of the Company; 2. INTEREST OF RELATIVE. When an associate conducts business on behalf of the Company with a supplier or customer of which a relative by blood or marriage is a principal, partner, shareholder, officer, employee or representative; 3. GIFTS. When an associate, a member of the employee's household, a trust in which the employee is involved, or any other person or entity designated by the employee, accepts gifts, credits, payments, services or anything else of more than token or nominal value from an actual or potential competitor, supplier or customer; and 4. MISUSE OF INFORMATION. When employee misuses information obtained in the course of employment. DEFINITIONS. For these purposes, suppliers include those providing goods or services - such as consultants, transportation companies, financial institutions and equipment lessors. 7 Customers include not only those who buy products, but also those who exercise major influence over our customers. An interest amounting to one percent or less of any class of securities listed on a nationally recognized securities exchange or regularly traded over-the counter will not be regarded as a "significant" financial interest in a competitor, supplier or commercial customer in the absence of other complicating factors that should cause the employee to recognize that a conflict is present. Similarly, the existence of an interest-bearing loan, at normal rates prevailing at the time of the actual borrowing, from a recognized financial institution will not be regarded as "significant." However, any equity interest in a competitor, supplier or commercial customer that is not publicly traded must be treated as "significant" and should be reviewed promptly with legal counsel. SPECIFIC EXAMPLES. While it is not possible to describe every situation, it is useful to consider a few examples in which clear conflicts of interest are present so that ground rules can be established: POSITION OF INFLUENCE. If an associate or a member of that associate's family has a significant financial or other beneficial interest in an actual or potential supplier or customer, the associate may not, without full disclosure and specific written clearance by an Ethics Committee, influence decisions with respect to business with such supplier or customer. Such positions include situations where associates draw specifications for suppliers' raw materials, products or services; recommend, evaluate, test or approve such raw materials, products or services; or participate in the selection of, or arrangements with, suppliers. AVAILABILITY. A conflict of interest may exist when an associate undertakes to engage in an independent business venture or agrees to perform work or services for another business, civic or charitable organization to the extent that the activity prevents such associate from devoting the time and effort to the Company's business which his or her position requires. An employee shall not accept a position of directorship with another firm without the written consent of the chief executive of his or her operating company. COMPETITORS. An associate must not serve, advise, or be associated with any person or enterprise which is a competitor of the Company, whether as an employee, stockholder, partner, director or advisor, unless that capacity is through membership in trade associations, manufacturer's groups and the like, and involvement by the associate is at the request of the Company. GIFTS. It is Hillenbrand's policy that all business decisions be made impartially and fairly, and not on the basis of gifts or favors. Therefore, no associate, or any of his or her immediate family, may solicit or accept favors, gifts, loans or other benefits (including services, vacations, holidays, travel, accommodations, and discounts, as well as material goods) from any supplier, customer or competitor. The only exception to this policy is for casual entertainment or gifts (other than money) of nominal value which are customarily offered to others having a similar relationship with the supplier, customer or competitor, or if specific approval is obtained via a clearance from the Ethics Committee for the business that the associate works for. Associates should exercise judgment in deciding whether a gift or entertainment is of nominal value. It is always better to decline in circumstances where there is doubt. Items classified as advertising novelties that have wide circulation both within and without the Company (calendars, paperweights, etc.) do not violate the policy against receiving gifts. Permitting a supplier's representative to pick up the check at a meal is not offensive so long as business was discussed at arm's length and there are absolutely no implications 8 that an unusual event has been staged with the intention of subverting loyalty to the slightest degree. MISUSE OF INFORMATION. No information obtained as a result of employment or association with the Company may be used for personal profit or as the basis for a "tip" to others unless the Company has made such information generally available to the public. This is true whether or not direct injury to Hillenbrand appears to be involved. This requirement, as it relates to transactions with respect to stock and other securities, is described below. The requirement, however, is not limited to transactions relating to securities and includes any situation in which information may be used as the basis for unfair bargaining with an outsider. The public disclosure of confidential data and trade secrets relating to our business can have a material adverse effect on the Company and, as noted below, is prohibited. CORPORATE OPPORTUNITIES. A CORPORATE OPPORTUNITY IS AN OPPORTUNITY THAT IS DISCOVERED THROUGH THE USE OF COMPANY PROPERTY, OPPORTUNITY OR POSITION AS A HILLENBRAND ASSOCIATE. Associates are prohibited from taking corporate opportunities for themselves. When an associate uses corporate property, corporate information or corporate position for personal gain, he or she is taking a corporate opportunity. You must use corporate opportunities only for advancing the legitimate business interests of Hillenbrand. CONFIDENTIAL INFORMATION The Company's success is largely dependent upon the strict adherence by associates to the Company's policy of nondisclosure of information that belongs to the Company and other confidential data. Of particular concern is the need to safeguard the Company's business plans and developments. The unauthorized disclosure of Company information (including business records, business data, personal and financial information, social security numbers, bank records, acquisition plans, divestiture plans, investment plans, and other strategic business plans) will not be tolerated. Under no circumstances should these matters be discussed informally as office gossip, over cocktails, at home or otherwise. Such discussions substantially increase the likelihood that the Company's strategic plans will become known to others prior to the time that the Company is prepared to execute them. Premature disclosure hurts the Company's planning flexibility and may make it impossible to conclude the proposed project. Much time and effort are spent in developing the Company's strategic plans. Remember the success of the Company is largely dependent upon the strict adherence by all associates to the Company's policy of nondisclosure of confidential information. The sharing of such information with others may: (a) result in penalties under state and federal securities laws; (b) constitute the theft of trade secrets, which is a crime; (c) generate criticism and embarrassment to the employee and the Company; (d) compromise the Company's ability to achieve its strategic objectives and (e) violate the privacy rights of an individual. If each associate refrains from discussing confidential aspects of the Company's business and operations with anyone inside the Company who is not otherwise familiar with the confidential information and everyone outside the Company, each employee will avoid liability and embarrassment to himself or herself and damage to the Company. Information obtained from third-parties (including business records, business data, personal and financial information, social security numbers, bank records) should, likewise, be kept confidential. For example, you must not attempt to obtain trade 9 secrets, proprietary information or other confidential information relating to competitors from job candidates or newly hired employees. PROTECTION AND PROPER USE OF HILLENBRAND ASSETS Associates are responsible for using Hillenbrand resources and property (including time, materials, equipment, and proprietary information) for Hillenbrand business purposes only, and not for his or her personal benefit. Inventions and ideas developed using Hillenbrand assets and during Hillenbrand time belong to Hillenbrand, and should not be disclosed, used or commercialized other than by Hillenbrand. These inventions are Hillenbrand property and must be disclosed to your supervisor, manager or legal counsel for appropriate further action. Hillenbrand assets may be used only for Hillenbrand purposes. We are expected to engage in only Hillenbrand business related activities during business hours. Associates must not perform non-Hillenbrand business or solicit business for a non-Hillenbrand business while working on Hillenbrand time. FAIR DEALING Each of us is expected to deal fairly with Hillenbrand's actual and potential customers, suppliers, competitors and associates. No associate should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresent material facts when conducting Hillenbrand's business, or any other unfair-dealing practice. Be honest in all your dealings. We should avoid even the appearance of wrongdoing and, at all times, should conduct our business according to the highest ethical standards. We should compete solely on the merits of our products and services, as well as our ability to service what we offer, and not engage in any form of unfair competition. Furthermore, we will not condone the use of competitors' or other third parties' confidential information obtained during past employment or which has been obtained, directly or indirectly, by improper means such as misappropriating confidential information, bribing, contacting a competitor's employees, or misrepresenting the fact that you are an employee of a competitor. If consultants or other persons are retained by the Company to gather competitive information, the same rules would apply. Some additional guidelines are: - Do not disparage a competitor's products or services. - Be accurate and truthful in all dealings with customers and be careful not to misrepresent the quality, features, or availability of our products or services. - Do not interfere with an agreement made between a potential customer and a supplier competing with us. - Never engage in industrial spying or commercial bribery. Besides being responsible for their actions toward others, employees are obliged to retain certain documents that they create or receive. Each associate must strictly observe Record Retention Guidelines. The application of the laws of fair competition is complex and sometimes ambiguous. When questions arise, consult with legal counsel. 10 COMPLIANCE WITH APPLICABLE LAWS While Hillenbrand is involved in highly competitive business activities and hence must compete vigorously, it must do so in strict compliance with all laws and regulations applicable to its activities. When Hillenbrand's internal policies are more stringent than local laws, Hillenbrand's policy must be observed and followed. No associate should at any time take any action on behalf of the Company that he or she knows or has reason to suspect violates any applicable law or regulation. The following sections outline basic principles of the laws relating to antitrust, inside information, the trading of securities, proprietary information, political contributions, employee relations, environmental regulation and certain other matters. These laws are explained because of their particular importance to our existing and anticipated business activities. It should be understood, however, that this policy is not limited to them, but extends to all applicable laws and regulations. 11 ANTITRUST COMPLIANCE At the heart of the antitrust laws is the conviction that the economy and the public will benefit most if businesses compete vigorously, free from unreasonable restraints. Compliance with the antitrust laws is the policy of the Company and the responsibility of each associate. Failure to comply could result in serious consequences for the Company and offending associates. Violations of many antitrust laws are crimes, subjecting the Company and the individuals to heavy fines, and individuals to possible imprisonment as well. In addition, the Company may be required to pay treble damages and be ordered to refrain from engaging in the activity. Frequently, such orders will extend across the entire product line of a company, although the violations relate only to a single product. And, of course, Hillenbrand may be damaged in its reputation even in those cases in which it ultimately prevails in a legal action. Many elements of the U.S. antitrust laws are applicable to international transactions in which any United States person or corporation is a party where it may be shown that the transaction has any substantial effect on the foreign commerce (e.g., imports or exports) of the United States. Once it is found that the international transaction falls within the jurisdiction of the United States antitrust laws, those laws are applied in precisely the same manner as they are applied with respect to domestic transactions. Transactions deemed to be per se violations if engaged in domestically will similarly be deemed to be per se violations if engaged in overseas, and the rule of reason (which requires the evaluation of factual evidence in certain cases to determine whether a challenged activity has substantial anticompetitive effects) will be similarly applied on both sides of the border. While it is not possible within this Code to address all areas covered by antitrust laws, the following guidelines are intended to address some of the most common antitrust situations that may face associates. In all of your dealings on behalf of Hillenbrand, be guided by the following rule: Whenever you are in doubt, consult with legal counsel at the earliest possible moment. For a more detailed explanation of the following rules and guidelines for drafting documents regarding competitors, please contact one of our lawyers. BASIC ANTITRUST RULES OF THE ROAD: - DO NOT DISCUSS PRICES, TERMS AND CONDITIONS OF SALE, DISCOUNTS, CREDIT TERMS OR SIMILAR SUBJECTS WITH YOUR COMPETITORS. - DO NOT PARTICIPATE IN BENCHMARKING OR STATISTICAL REPORTING OF COMPETITIVE INFORMATION AMONG COMPETITORS WITHOUT CLEARANCE FROM LEGAL COUNSEL. - DO NOT "SIGNAL" COMPETITORS REGARDING PRICING STRATEGIES AND DO NOT USE CUSTOMERS OR OTHER THIRD PARTIES TO "SEND THE MESSAGE" ABOUT HOW THE INDUSTRY SHOULD BEHAVE. - DO NOT AGREE WITH A COMPETITOR TO STAY OUT OF EACH OTHER'S MARKETS OR TO STAY AWAY FROM EACH OTHER'S CUSTOMERS. - DO NOT DISCUSS CURRENT OR FUTURE OUTPUT, COSTS, MARKETING STRATEGIES OR OTHER COMPETITIVELY-SENSITIVE INFORMATION WITH COMPETITORS. 12 - DO NOT PRICE BELOW COST WITHOUT CONSULTING LEGAL COUNSEL. - DO NOT COERCE RETAIL DEALERS INTO SETTING SPECIFIC PRICES. - DO NOT TIE (THAT IS, CONDITION) THE SALE OF ONE PRODUCT TO ANOTHER. - DO NOT AGREE WITH DEALERS OR CUSTOMERS TO TAKE ANY ACTION VIS-A-VIS ANOTHER DEALER OR CUSTOMER. - DO NOT AGREE WITH COMPETITORS NOT TO DEAL WITH, BUY FROM OR SELL TO A CUSTOMER OR SUPPLIER. - DO NOT LEAVE OPEN-ENDED OR UNSOLICITED OFFERS FROM COMPETITORS TO JOIN A CONSPIRACY HANGING IN THE AIR. The standards for conspiracy to violate the antitrust laws are extremely broad and conspiracies have been found even where competitors never met or exchanged words. It is a mistake to think that the prohibited types of agreements identified above must be either formal or conspiratorial. The unlawful agreement may often be no more than an informal understanding reached at a seemingly innocent occasion like a trade association meeting or on the golf course, or simply an understanding based on the sharing of competitive information which naturally tends to produce uniform action. Since there is often no written evidence or testimony that clearly establishes that there was an unlawful agreement, proof of such an agreement usually depends on circumstantial evidence - conversations, memoranda, or the exchange of competitive information which seems to suggest that there may have been an unlawful understanding about prices, production, customers, sales, territories, or the like. If discussion of prohibited subjects should arise in a meeting where competitors are present, you should clearly disassociate yourself from the conversation and leave the meeting so that other participants present will remember that you left the meeting and your reason for leaving. Simply walking away from an improper conversation about price, market allocation or bid rigging is NOT sufficient. You MUST document this conversation and consult with legal counsel. - AVOID INFORMAL CONTACT WITH COMPETITORS TO THE EXTENT POSSIBLE. Trade associations are a frequent source of antitrust complaints. Accordingly, membership and participation in trade associations should be carefully and regularly monitored to make sure that they serve a valuable business purpose and that their benefits are not outweighed by the antitrust risks. Because trade associations are meeting places for competitors, typically the association's articles and by-laws carefully set forth the scope and activities of the association in language that, if followed, is above reproach. However, any forum where competitors meet can become a vehicle for potential antitrust concern. Small local group meetings are perhaps more dangerous than larger more formal groups, as generally their activities are not monitored and the minutes of their meeting, if any, are often incomplete. Even more dangerous are "rump sessions" following the more formal proceedings where competitors get together over drinks and discuss company business. References to such meetings in expense reports can be troublesome because as time elapses, memories dim and, as we have seen in various industry-wide antitrust investigations and litigations, a witness when questioned about such informal gatherings is often faced with saying that he has no recollection of the subjects discussed. This can be awkward, particularly where there are many such incidents. The best advice is to avoid to the extent possible such informal contact with competitors. Any price change or uniform activity among competitors that occurs shortly after such a meeting becomes very suspect. 13 - IF PARTICIPATION IN A MEETING WITH COMPETITORS SERVES A VALUABLE AND LEGITIMATE BUSINESS PURPOSE NOT OUTWEIGHED BY THE ANTITRUST RISK, FORMAL PROCEDURES, INCLUDING THE CIRCULATION OF AGENDAS PRIOR TO THE MEETINGS AND THE MEMORIALIZATION OF DETAILED MINUTES OF THE PROCEEDINGS, SHOULD BE FOLLOWED AT ALL MEETINGS. There should be someone present at all association meetings, such as counsel, or a chairman, who will indicate when the topic under discussion creates a possible risk of antitrust exposure and who will make certain that further discussion of such topic is dropped. THE USE OF INSIDE INFORMATION AND TRADING IN SECURITIES There is always one question every associate must ask before buying or selling, or recommending that others buy or sell, Hillenbrand shares: "Am I in possession of material nonpublic information?" If the answer is yes, you may not buy or sell Hillenbrand shares. The federal securities laws prohibit the purchase or sale of any security by a person who possesses material nonpublic information (commonly known as "insider trading") until such information has been disclosed. This includes not only orders for purchases and sales of stock and convertible securities but also options, warrants, puts and calls. You should wait until the information has been publicly released and the public has had sufficient time to absorb it, that is two business days from the time of disclosure by the Company. The federal securities laws also prohibit the passing of such information to another person who may trade in any security based upon such information (known as "tipping"). Because of the taint that can attach even to allegations of insider trading, the Company and its associates should attempt to avoid even the appearance of impropriety in this regard. Remember, transactions are always viewed in hindsight. The insider trading regulations were designed to ensure that all investors have equal access to material information regarding a company's securities. Therefore, the federal securities laws and regulations and Hillenbrand Industries policy prohibit any person having material nonpublic information regarding Hillenbrand Industries, Inc. from buying or selling Hillenbrand Industries stock when such information has not been published to the general public. Family members and friends who have gained confidential information from such associates are also prohibited from trading Hillenbrand Industries stock. Accordingly, any references to associates below apply equally to these other individuals. A good rule of thumb regarding timing of purchases and sales of Company securities is to trade only during the period after two calendar days after an earnings announcement until one month prior to an earnings announcement at the end of the fiscal quarter. Even during that period, however, you may not purchase or sell or otherwise engage in transactions involving Company securities if you possess material inside information not disclosed by the earnings announcement. Associates who have material nonpublic information regarding Hillenbrand stock or another company's stock should (1) not disclose that information to anyone inside or outside the Company; (2) avoid buying or selling stock in Hillenbrand Industries or another company until such knowledge has been made public; (3) avoid recommending or suggesting to another to buy or sell stock in Hillenbrand or in another company until such information has been made public. It is particularly important to exercise care 14 and refrain from discussing nonpublic information in public places such as elevators, airplanes, taxis, or restaurants where discussions might be overheard. Violations of these rules may result in Hillenbrand Industries receiving a fine, which could involve millions of dollars. Associates may be subject to large fines, treble damages based on unlawful profits, and a jail term. Associates face sanctions imposed by Hillenbrand for violation of these standards. Hillenbrand has established rigidly defined channels through which data proposed for public release must flow. No disclosure of inside information that could be material should be made without first consulting the Company's procedures on this subject or the Company's Chief Financial Officer, Investor Relations Officer, General Counsel, or Director of Public Affairs and Public Communications. DEFINITIONS. MATERIAL INFORMATION is information that is viewed as important enough to affect your or anyone else's decision to buy, sell or hold the Company's shares or securities. Information about the following could be material: quarterly or annual earnings results; mergers, acquisitions, tender offers, joint ventures, divestitures or other changes in assets; dividends; stock splits; management changes or changes in control; public or private sale of a significant amount of additional debt or equity securities; major litigation; significant labor disputes; major plant closings; establishment of a program to buy the Company's own shares; the award of a significant contract; new products or discoveries, or developments regarding customers or suppliers; change in auditors or disagreements with auditors; and deterioration in the Company's credit status. The foregoing list is intended to be illustrative and is not intended to be complete. Any questions regarding whether information is material or nonpublic, or whether there has been an inadvertent disclosure of such information, should be directed immediately to legal counsel. NONPUBLIC INFORMATION is information that has not yet been disclosed to the investing public. Information is considered to be public knowledge when it has been published in newspapers or other media or has been disclosed in a press release. Until formally released to the public through a press release or filing with the Securities and Exchange Commission, material information concerning Hillenbrand plans, projects, successes or failures is considered "inside" information and, therefore, confidential. Information that has been publicly disseminated such that investors have had the opportunity to evaluate it, or that has been filed with governmental agencies as a matter of public record, is considered public and is available to anyone upon request. Examples include press releases, annual and quarterly earnings reports to stockholders, published speeches, reports to the Commission (e.g., reports on Forms 10-K, 10-Q, and 8-K), registration statements, prospectuses and proxy materials. Information appearing on our Web site (www.hillenbrand.com) is public. 15 DIRECTORS AND OFFICERS. Hillenbrand's directors and certain of its officers and shareholders are subject to more restrictive rules concerning the purchases and sales of Company securities, reporting requirements, and recapture of short-swing profits under the securities laws. Those extensive restrictions have been communicated to directors and officers separately. However, compliance with those rules is part of Hillenbrand's policy of full compliance with all applicable laws governing securities. POLITICAL CONTRIBUTIONS Political contributions by corporations in federal elections, whether by direct or indirect use of corporate funds or resources, are unlawful. While the limitations on political contributions by corporations in state elections vary from state to state, it is the Company's policy not to make any political contributions in such elections except with the prior approval of the Company's Board of Directors. While individual participation in the political process and in campaign contributions is proper and is encouraged by the Company, an associate's contribution must not be made, or even appear to be made, with the Company's funds; nor should the selection of a candidate or of a party be, or seem to be coerced by the Company. Fines and jail sentences may be imposed on officers and directors who violate the political contribution laws, and the Company may be fined. No direct or indirect pressure in any form is to be directed toward employees to make any political contribution or participate in the support of a political party or the political candidacy of any individual. 16 EMPLOYEE RELATIONS EQUAL OPPORTUNITY, NON-DISCRIMINATION, AND ANTI-HARASSMENT. It is the Company's philosophy that ethical business practices are not limited to dealings with third parties but also include the Company's employees. In this respect, business ethics begin at home. It is therefore the policy of the Company that all associates, including managerial personnel, and all others having supervisory responsibilities, have an obligation: - To respect each associate as an individual and to be courteous, considerate, and fair to each associate in order that personal dignity may be maintained; - To treat each associate, applicant, supplier or business associate fairly without regard to race, color, sex, age, religion, national origin, ethnicity, disability, veteran status, or any other characteristics as established by law with respect to all opportunities, terms, conditions, and privileges of employment; - To provide all employees with a work environment free from discrimination or harassment of any kind, including harassment of a sexual, racial, ethnic or religious nature or on the basis of one's age or disability; - To encourage associates to voice their opinions freely about the policies and practices of the Company, and to provide an orderly system by which employees will be given consideration of any job or personal problem which they may have; - To provide and maintain safe, clean and orderly work facilities and areas; - To offer competitive standards of pay and benefits on a non-discriminatory basis; and - To operate in compliance with all applicable federal, state and local laws governing the Company's relationship with its associates. You should be aware that the law forbids discrimination or harassment on the basis of an individual's membership in a protected class or protected status, including discrimination on the basis of race, color, sex, age, religion, national origin, ethnicity, veteran status, disability, or handicapped status. For further information on your rights, obligations and appropriate actions related to perceived incidents of harassment or discrimination, please contact one of the lawyers or human resource professionals at your company. Awareness of concerns or discovery of events that are, or may be in violation of this Code of Ethical Business Conduct should immediately be reported to your manager, supervisor, Company lawyer or any of the members of your Company's Ethics Committee. 17 REGULATORY COMPLIANCE Each business segment of Hillenbrand Industries and its subsidiaries are touched in some fashion by government regulations. Examples of these requirements are as varied as the safe medical device rules of the Food and Drug Administration (FDA) for hospital beds; the "Funeral Rule" of the Federal Trade Commission (FTC) for the casket and preneed industries; and the Interstate Commerce Commission (ICC) rules governing our truck fleet. Each employee is expected to be knowledgeable of, and to comply with, the respective regulatory rules governing his or her industry. It is the responsibility of the manager of each facility to understand the terms and conditions of all permits and authorizations applicable to operations under his or her control as well as applicable laws and regulations, and to ensure best good faith efforts to attain and maintain compliance therewith. Failure to comply with the appropriate regulations and permits may result in significant corporate penalties, fines, and possibly the forced removal of products from the market. ENVIRONMENTAL AND SAFETY COMPLIANCE All aspects of the Company's operations are subject to comprehensive regulations, including comprehensive federal, state and local environmental regulation. The Company's facilities are subject to construction and operating permits and authorizations that describe in detail the conditions under which the facilities can be legally operated. It is the Company's policy to comply fully with the lawful terms and conditions of all permits and authorizations and with the provisions of all applicable environmental laws and regulations. The Occupational Safety and Health Act regulates both physical safety and exposure to harmful or hazardous substances in the workplace. In addition, the Toxic Substances Control Act regulates all chemical substances or mixtures that may present an unreasonable risk of injury to human health or the environment. Compliance with these statutes and implementing regulations is also the responsibility of the manager of each facility. The environmental and safety and health laws, and applicable regulations, are detailed and complex. Should you be faced with an environmental or safety and health issue with which you are unfamiliar, you should contact legal counsel. UNLAWFUL, QUESTIONABLE OR SENSITIVE PAYMENTS Hillenbrand does not seek to gain any advantage through the improper use of business courtesies or other inducements. Gifts and entertainment of nominal value, or business courtesies, are occasionally used to create goodwill with Hillenbrand's customers, suppliers or others. If they go beyond that and make the recipient feel obliged to offer any special consideration to Hillenbrand's they are unacceptable. The Company's policy is to avoid even the appearance of favoritism based on business courtesies. In order to avoid even the appearance of improper payments, no payments are to be made by the Company in cash, other than approved cash payrolls and documented petty cash disbursements. No corporate checks are to be written to "cash," "bearer" or third-party designees of the person entitled to payment. 18 COMMERCIAL BRIBERY. Payment (other than for purchase of a product or procurement of a service) or giving of a gift, credit, payment, service or anything else of other than token or nominal value to suppliers or customers or their agents, employees or fiduciaries may constitute a commercial bribe, which may also be a violation of law. Cash payments may never be made to employees of competitors, suppliers, or customers. Commercial bribery is also against the policy of the Company; and no employee may engage in such bribery on behalf of the Company. Associates should exercise good judgment and moderation and should offer business courtesies to customers only to the extent that they are in accordance with reasonable practices in the marketplace. All gifts and entertainment, regardless of their nature or value, must be properly recorded on expense report forms or other appropriate accounting document. BRIBERY OF PUBLIC OFFICIALS. Bribery, or the giving of money or anything else of value in an attempt to influence the action of a public official, is unlawful. No associate is authorized to pay any bribe or make any other illegal payment on behalf of the Company, no matter how small the amount. This prohibition extends to payments to consultants, agents and other intermediaries when the employee has reason to believe that some part of the payment of the "fee" will be used for a bribe or otherwise to influence government action. The practice of making "facilitating payments" in foreign countries may not be illegal in certain circumstances (e.g., small payments made to minor functionaries who, unless compensated, would delay or refuse to perform administrative functions to which Hillenbrand is clearly entitled). To the extent that such payments are legal and considered necessary, they may be made only in those countries where they are a recognized and open practice, and only following approval by legal counsel. Any such facilitating payment must be properly recorded and accounted for so that Hillenbrand may comply with all tax and other applicable laws. Laws and regulations require our businesses to be in contact with public officials on a wide variety of matters. Associates dealing with public officials should be familiar with lobbying laws and public disclosure requirements, particularly those that apply to registrations and filings. BOOKS AND RECORDS The Foreign Corrupt Practices Act makes it illegal to obtain or retain business through payments to improperly influence foreign officials and governments. It is not limited to businesses operating abroad, nor to the making of illegal foreign payments. It contains, in fact, significant internal accounting control and record-keeping requirements that apply to all of our operations. Specifically, the Company must maintain books, records and accounts in reasonable detail to accurately and fairly reflect all of the Company's transactions. The Company and its subsidiaries will maintain a system of internal accounting controls sufficient to reinforce policy compliance and provide reasonable assurance that: - Transactions are executed in accordance with management's general and specific authorization; - Transactions are recorded as necessary (a) to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements, and (b) to maintain accountability of assets; 19 - Access to Company assets and funds is permitted only in accordance with management's general or specific authorization; - The accounts recorded on the Company's balance sheet are reconciled to the underlying accounting detail at reasonable intervals and, where appropriate, compared to the physical assets. Appropriate actions are taken with respect to significant differences. These record-keeping requirements are in addition to all other Company financial policies. No employee will knowingly fail to implement a system of appropriate internal controls or falsify any book, record or account. Violations of the Foreign Corrupt Practices Act can result in fines and imprisonment, or both, for individual associates, and penalties against the Company. All associates are strictly responsible for ensuring the accuracy and reliability of the Company's accounts. As a result, all associates are responsible for following Company procedures for carrying out and reporting business transactions, including appropriate schedules of authorization controls. The Company has established accounting control standards and procedures. It is the policy of the Company that all books and records conform to generally accepted accounting principles in each of the respective countries in which Hillenbrand may do business and to all applicable laws and regulations. In addition to the matters above specifically addressed, this policy also incorporates the following requirements: - The Company's policy prohibits the existence or creation of any undisclosed, secret or unrecorded funds, assets or liabilities. - No payment on behalf of the Company will be approved or made with the intention or understanding that any part of the payment is to be used for purposes other than described by the documents supporting the payment. - No false or fictitious entries will be made in the financial statements or underlying financial records and no employee shall engage in any arrangement that results in such an act. - The Company's policies prohibit the use of Company assets or funds for purposes other than specifically authorized by management. - All associates are forbidden to use, authorize, or condone the use of "off the books" bookkeeping, secret accounts, unrecorded bank accounts, "slush" funds, falsified books, or any other device that could be utilized to distort accounts, records, or reports of the Company. - Any false, fictitious, or misleading accounting entry made to conceal or disguise any "unlawful or questionable payment" described in these standards is prohibited. A false, fictitious, or misleading accounting entry is one that is not posted to the proper account. - Over billing practices in international transactions that are designed and used unlawfully to transfer assets from one country to another are prohibited. 20 The policy of accurate and fair recording also applies to an employee's maintenance of time reports, expense accounts and other personal Company records. USE OF AGENTS, CONSULTANTS AND NON-EMPLOYEES Agents, consultants, or other non-employees cannot be used to circumvent this Code, the law or our policies. Employees will not retain agents, consultants, or other non-employees or representatives to engage in practices that are contrary to our Code or any law or regulation. REPORTING ILLEGAL OR UNETHICAL BEHAVIOR We must report violation of laws, regulations, or these standards and guidelines on ethical business conduct. Hillenbrand actively supports ethical behavior. When not certain of the best course of action in a specific situation, you should seek clarification and help from supervisors, managers and appropriate personnel. Hillenbrand will not tolerate any attempt by any associate to retaliate against another as a result of good faith reports of illegal or unethical behavior. Federal law provides whistleblower protection for employees. Thus, any associate is prohibited from discharging, demoting, suspending, or in any manner threatening, harassing or discriminating against an associate who provides information about violation of the law or this Code, or assists in the investigation of violation of the law or this Code, or participates in bringing or brings a lawsuit. Discovery of events of a questionable, fraudulent or illegal nature or that are, or may be, in violation of the standards and guidelines stated in this Code should be reported immediately to your manager, supervisor or any of the members of your Company's Ethics Committee. If such events involve members of senior management on the Ethics Committee, the matter should be reported to other members of the Committee or the Chief Executive Officer. Additionally, a 1-800 number will be available for those who wish to remain anonymous. (1-866-43-ETHIC or 1-866-433-8442) 21 OTHER POLICIES This Code of Conduct contains only general information and guidelines. It is not intended to address all the possible applications of, or exceptions to, the general policies described. Hillenbrand has adopted and in the future may adopt certain financial, personnel, and other policies, procedures, rules and standards of associate performance that continue in force. This Code is intended to supplement and clarify those policies, rules and standards. Since all associates are obligated to observe the requirements of applicable laws and regulations, failure to receive and review a copy of any supplement or revision will not be an acceptable excuse for a failure to observe the requirements of any applicable law or regulation then in effect of which the associate had knowledge or reasonably should have had knowledge. 22 ANNUAL CERTIFICATION I have reviewed, have been provided an opportunity to ask questions, and understand the Hillenbrand Industries, Inc. Code Of Ethical Business Conduct dated October 31, 2002, as amended if amended ("Code"). To the best of my knowledge and belief, neither I nor any member of my immediate family has any interest or connection, or has since October 1 of the preceding fiscal year engaged in any activity, that might contravene the terms of the Code. Furthermore, except as noted below, I am not aware of any other associate who has engaged in any activity that might violate the terms of the Code. The foregoing statements are true (check one box): [ ] Without exception. [ ] Except as reported in full detail below and on a separate sheet attached to this report letter or reported anonymously through the 1-800 ethics hotline provided in the Code. ----------------------------------------------- (Signature) ----------------------------------------------- (Position and Company Name) ----------------------------------------------- (Department) ----------------------------------------------- (Location) ----------------------------------------------- (Date) -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ----------------------------------------------- Statement of Disclosure or Concern (Attach additional sheets if necessary.) This completed form should be returned to the highest-ranking human resources officer of your company. 23