CALIFORNIA TRANSPARENCY ACT DISCLOSURE

On January 1, 2012, the California Transparency in Supply Chains Act of 2010 (SB 657) went into effect in the State of California. As a result, many companies manufacturing or selling products in California are required to disclose their efforts (if any) to address the issues of human trafficking and slavery, thereby allowing consumers to make more informed choices regarding the products they buy and the companies they choose to support.

Harbor Freight Tools USA, Inc. and its subsidiaries (collectively, "Harbor Freight") strive to maintain high standards of corporate integrity and ethical behavior. Harbor Freight expects that its suppliers will conduct their businesses not only in a lawful manner but also in compliance with the same high standards of integrity and ethics. In order to establish guidelines for such standards, Harbor Freight has established a Supplier Code of Conduct and Compliance Manual ("Code of Conduct").

The Code of Conduct sets forth and highlights important legal, ethical, and other requirements for parties who wish to be Harbor Freight suppliers. Specifically, the Code of Conduct states that suppliers must not support, promote or engage in the practice of slavery or human trafficking, and it requires suppliers to comply with the laws regarding slavery and human trafficking of the country or countries in which they are doing business. Harbor Freight suppliers are further expected to take reasonable and necessary steps to help ensure that their sub-contractors and sub-suppliers conduct business in compliance with the Code of Conduct.  Harbor Freight has a zero tolerance policy on Slavery, Human Trafficking and Child Labor.

Since 2012, Harbor Freight requires its suppliers to certify that products comply with the laws regarding slavery and human trafficking of the country or countries in which they are doing business. Suppliers are expected to promptly take corrective action to address any deficiencies identified with respect to compliance with Harbor Freight's Code of Conduct. If a supplier is found to be in violation of the Code of Conduct, Harbor Freight will notify the supplier that it reserves the right to terminate its relationship for failure to comply.  Since 2013, Harbor Freight has been conducting compliance verifications, utilizing internal and external resources to perform on-site audits.  This program ensures compliance to our Code of Conduct as well as provides an opportunity for us to guide continual improvement in factory safety and working conditions. 

In addition, Harbor Freight has internal policies that maintain internal accountability standards for employees and business partners to uphold our general principles. Harbor Freight has training for employees whose duties involve the Harbor Freight Supply Chain around risk identification relating to human trafficking and slavery. If an employee needs guidance on a legal or ethical issue, or has witnessed, or has knowledge of an illegal or unethical activity, he or she has been instructed to report the matter to his or her manager or company officer. All reports of alleged violations will be investigated by Harbor Freight. If the results of an investigation indicate that corrective action is required, the Company will decide the appropriate disciplinary steps to take, including possible dismissal and legal proceedings. If appropriate, the investigation may be turned over to the applicable authorities, and outside investigators may assist in the inquiry. Disregard or deliberate ignorance of the law is not tolerated and may lead to disciplinary action.

Harbor Freight takes the issues of slavery and human trafficking very seriously and will continue doing its part by responsibly managing its supply chains in an effort to eradicate human trafficking and slavery.

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