Corporate Governance
MEDIANET GROUP TECHNOLOGIES, INC.
Code Of Business Conduct And Ethics
The following shall constitute the Code of Business Conduct and Ethics (the “Code of Business Conduct and Ethics”) of MediaNet Group Technologies, Inc. (“MediaNet”):
Introduction
MediaNet’s standards of conduct are summarized in this Code of Business Conduct and Ethics. Simply restating these standards, however, does not lead inevitably to ethical conduct. Each of us must continue to understand, support and live by these standards to enable us to achieve our business objectives in strict conformity with our Code of Business Conduct and Ethics. This Code of Business Conduct and Ethics covers a wide range of business practices and procedures. It does not cover every issue that may arise, but it sets out basic principles to guide all of our employees, officers and directors. All of our employees, officers and directors must conduct themselves accordingly and seek to avoid even the appearance of improper behavior. This Code of Business Conduct and Ethics should also be provided to and followed by our agents and representatives, including consultants. Violations of any of the provisions of this Code of Business Conduct and Ethics may result in discipline, up to and including termination of employment or service.
It is important for our employees, officers and directors to know what MediaNet expects of them when making decisions and conducting themselves in corporate activities. Of all corporate activities involving conduct, among the most important are the handling and use of confidential information, the avoidance of potential conflicts of interest and compliance with laws. Diligent observance of this Code of Business Conduct and Ethics, as well as all legal requirements, is, of course, essential to the proper conduct of our business. Violation of applicable laws may not only entail serious legal sanctions but, as in the case of violation of this Code of Business Conduct and Ethics, can also lead to disciplinary actions by MediaNet.
COMPLIANCE WITH LAWS, RULES AND REGULATIONS
Obeying the law, both in letter and in spirit, is the foundation on which our ethical standards are built. All employees, officers and directors must respect and obey the laws of the municipalities, states and countries in which we operate. Although not all employees, officers and directors are expected to know the details of these laws, it is important to know enough to determine when to seek advice from supervisors, managers or other appropriate personnel.
Conflicts of Interest
All employees, officers and directors must avoid any investments, business interests or other associations with third parties which interfere with or influence, or even appear to interfere with or influence, their objective judgment in furtherance of their responsibility to act in MediaNet’s best interests. A conflict of interest arises when an employee’s, officer’s or director’s judgment in acting on MediaNet’s behalf is or may be influenced by an actual or potential personal benefit for the employee, officer or director, or a member of the employee’s, officer’s or director’s family or household, from such an investment, business interest or some other association. The benefits may be direct or indirect, financial or non-financial, through family connections, personal associations or otherwise.
It is not possible to describe all the circumstances where a conflict of interest involving an employee, officer, director or a member of his or her family or household exists. The following examples are given only to guide employees, officers and directors in making judgments about possible sources of such conflicts:
- Owning an interest in the business of a supplier, competitor or customer.
- Acting as a consultant, employee, officer or director for a supplier, competitor or customer.
- Competing with, or aiding others in competing with, MediaNet in connection with the purchase, sale or other disposition of its property or products, or in connection with MediaNet’s provision of products or services.
- Acting on behalf of MediaNet in any transaction with any supplier, competitor or customer in which a member of one’s family or household is a principal, officer or representative.
- If any employee, officer or director finds himself or herself in a situation where a conflict of interest exists, he or she immediately should bring the matter to the attention of his or her supervisor, or other directors who will be responsible for contacting MediaNet’s Chief Financial Officer or MediaNet’s outside legal counsel for appropriate guidance.
Corporate Opportunities
Employees, officers and directors are prohibited from taking for themselves personally opportunities that are discovered through the use of corporate property, information or position without the consent of the Board of Directors. No employee, officer or director may use corporate property, information, or position for improper personal gain, and no employee, officer or director may compete with MediaNet directly or indirectly.
INSIDER TRADING
Employees, officers and directors who have access to confidential information are not permitted to use or share that information for stock trading purposes or for any other purpose except the conduct of our business. All non-public information about MediaNet should be considered confidential information. To use non-public information for personal financial benefit or to “tip” others who might make an investment decision on the basis of this information is not only unethical but also illegal. If you have any questions, please consult MediaNet’s Chief Financial Officer or legal counsel.
Confidentiality
It is imperative that all employees, officers and directors keep confidential all information about MediaNet’s operations and business activities that has not been made public or that is not common knowledge among investors, competitors, customers, suppliers and others, including other employees, officers or directors who do not have a valid business reason for obtaining the information.
Employees, officers and directors must not disclose to others, or use for themselves or others, any confidential MediaNet information he or she has originated or acquired in connection with employment or service. This non-disclosure obligation not only applies to employees, officers and directors during their period of employment or service, but also after termination of employment or service or retirement. Any employee, officer or director who questions whether information he or she originates or acquires is confidential has a responsibility to determine its classification by asking his or her immediate supervisor or MediaNet’s outside legal counsel.
All MediaNet documents, records, memoranda and other written materials (and all copies) are solely MediaNet’s property and must be returned immediately to MediaNet on termination of employment or service.
It is not possible to list all the types of MediaNet information that must be treated as confidential. The following are examples of confidential information to assist in observing this important policy:
- Information about contractual arrangements between suppliers, contractors or customers that has not been publicly disclosed by management.
- Information about other MediaNet transactions, including proposed transactions such as acquisitions or dispositions of stock or assets, that has not been publicly disclosed by management.
- Financial, accounting and cost information about MediaNet that has not been publicly disclosed by management.
- Information that reveals MediaNet’s plans and strategies that have not been publicly disclosed by management.
Employees, officers and directors should be guided by the general principle that MediaNet considers confidential any information that is not officially disclosed or publicly known and which might be useful to or desired by others for any reason, such as using the information to buy or sell MediaNet stock or to compete against MediaNet or any of its subsidiaries. Officially disclosed information is considered to be that which is contained in official reports, news releases and other forms of communication that have been released by management to the public through established communication channels.
Competition and Fair Dealing
We seek to outperform our competition fairly and honestly. We seek competitive advantages through superior performance, never through unethical or illegal business practices. Stealing proprietary information, possessing trade secret information that was obtained without the owner’s consent, or inducing such disclosures by past or present employees of other companies is prohibited. Each employee, officer and director should endeavor to respect the rights of and deal fairly with MediaNet’s customers, suppliers, competitors and employees. No employee, officer or director should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other intentional unfair-dealing practice.
To maintain MediaNet’s valuable reputation, compliance with our quality processes and safety requirements is essential. In the context of ethics, quality requires that our products and services be designed and manufactured to meet our obligations to customers. All inspection and testing documents must be handled in accordance with all applicable regulations.
The purpose of business entertainment and gifts in a commercial setting is to create good will and sound working relationships, not to gain unfair advantage with customers. No gift or entertainment should ever be offered, given, provided or accepted by any MediaNet employee, officer, director, family member of an employee, officer, director or agent unless it: (1) is not a cash gift; (2) is consistent with customary business practices; (3) is not excessive in value; (4) cannot be construed as a bribe or payoff; and (5) does not violate any laws or regulations. Please discuss with your supervisor or other appropriate personnel any gifts or proposed gifts that you are not certain are appropriate.
Discrimination and Harassment
The diversity of MediaNet’s employees, officers and directors is a tremendous asset. We are firmly committed to providing equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment or any kind. Examples include derogatory comments based on racial or ethnic characteristics and unwelcome sexual advances.
Record-Keeping
MediaNet requires honest and accurate recording and reporting of information in order to make responsible business decisions. For example, only the true and actual number of hours worked should be reported.
Employees, officers and directors who regularly use business expense accounts must document and record these expenses accurately. If you are not sure whether a certain expense is legitimate, ask your supervisor or MediaNet’s Chief Financial Officer.
All of MediaNet’s books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect MediaNet’s transactions and must conform both to applicable legal requirements and to MediaNet’s system of internal controls. Unrecorded or “off the books” funds or assets should not be maintained unless permitted by applicable law or regulation.
Business records and communications often become public, and we should avoid exaggeration, derogatory remarks, guesswork, or inappropriate characterizations of people and companies that can be misunderstood. This applies equally to e-mail, internal memos and formal reports. Records should always be retained or destroyed according to MediaNet’s record retention policies. In accordance with those policies, in the event of litigation or governmental investigation it is essential to follow the advice of MediaNet’s outside legal counsel. Whenever litigation or an investigation is pending or threatened every potentially relevant document must be preserved unless destruction has been approved by MediaNet’s outside legal counsel.
Protection and Proper Use of MEDIANET’s Assets
All employees, officers and directors should endeavor to protect MediaNet’s assets and ensure their efficient use. Theft, carelessness, and waste have a direct impact on MediaNet’s profitability. Any suspected incident of fraud or theft should be immediately reported for investigation. All MediaNet assets should be used for legitimate business purposes. MediaNet equipment should not be used for non-MediaNet business, though incidental personal use may be permitted.
The obligation of employees, officers and directors to protect our assets includes its proprietary information. Proprietary information includes intellectual property such as trade secrets, patents, trademarks, and copyrights, as well as business, marketing and service plans, engineering and manufacturing ideas, designs, know-how, databases, records, salary information and any unpublished financial data and reports. Unauthorized use or distribution of this information would violate MediaNet’s policy. It could also be illegal and result in civil or even criminal penalties.
Each employee, officer and director is personally accountable for MediaNet funds over which he or she has control. Anyone spending MediaNet money, or personal money that will be reimbursed, should always be sure MediaNet receives good value in return. Anyone approving or certifying the correctness of a voucher or bill should have reasonable knowledge that the purchases and amounts are proper.
ACCEPTANCE OF PAYMENTS
No employee, officer or director shall directly or indirectly seek or accept any payments, fees, services or other gratuities (irrespective of size or amount) outside the normal course of the employee’s, officer’s or director’s business duties from any person, company or organization which does or seeks to do business with MediaNet. Gifts of cash or cash equivalents of any amount are strictly prohibited. It is not inappropriate under this policy to be the recipient of common courtesies, sales promotional items of small value, occasional meals or reasonable entertainment appropriate to a business relationship and associated with business discussions; however, if possible, questions as to the appropriateness of any such courtesy should be reviewed by an immediate supervisor in advance of the receipt of the courtesy.
IMPROPER PAYMENTS AND Payments to Government Personnel
No employee, officer or director shall make, or cause to be made, any improper payment or offer any improper inducement to any actual or potential customer or to an intermediary as a bribe, kickback or similar payment which is directly or indirectly for the benefit of any individual (including any government official), company or organization in any country, and which is designed, directly or indirectly, to secure favored treatment for MediaNet. Under laws in a number of jurisdictions, it is a crime, punishable by imprisonment and substantial fines, to make payments of this kind to government officials. MediaNet’s policy, however, is broader in scope and is intended to apply regardless of whether the payment or use is lawful under the laws of a particular country. It is important that any questions about this policy be discussed with MediaNet’s Chief Financial Officer and its outside legal counsel before any payment is made which may be viewed as a possible violation of this policy.
The U.S. Foreign Corrupt Practices Act prohibits giving anything of value, directly or indirectly, to officials of foreign governments or foreign political candidates in order to obtain or retain business. It is strictly prohibited to make illegal payments to government officials of any country.
In addition, the U.S. government has a number of laws and regulations regarding business gratuities that may be accepted by U.S. government personnel. The promise, offer or delivery to an official or employee of the U.S. government of a gift, favor or other gratuity in violation of these rules would not only violate MediaNet policy but could also be a criminal offense. State and local governments, as well as foreign governments, may have similar rules. MediaNet’s Chief Financial Officer and its outside legal counsel can provide guidance to you in this area.
ANTITRUST COMPLIANCE
We require our employees, officers and directors to engage in fair competition and to comply fully with all antitrust laws. Except in limited circumstances (which must be first reviewed with our outside legal counsel), these laws severely restrict or prohibit anticompetitive activities such as entering into written or oral agreements to: fix, control or influence prices; boycott specific suppliers or customers; restrain trade by colluding with customers to allocate products or markets; or control trade by limiting the production of products or the delivery of services.
Health and Safety
MediaNet strives to provide each employee, officer and director with a safe and healthful work environment. Each employee, officer and director has responsibility for maintaining a safe and healthy workplace for all employees, officers and directors by following safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions.
Violence and threatening behavior are not permitted. Employees, officers and directors should report to work in condition to perform their duties, free from the influence of illegal drugs or alcohol. The use of illegal drugs in the workplace will not be tolerated.
POLITICAL CONTRIBUTIONS
There are three basic tenets in the matter of corporate and personal political contributions and actions.
First, MediaNet unequivocally forbids the use of corporate funds, resources or property for the support of political parties or political candidates for any office unless approved in advance by MediaNet’s Board of Directors or Chief Executive Officer.
Second, equally contrary to our Code of Business Conduct and Ethics is any pressure, direct or implied, that infringes upon the right of any employee, officer or director to decide whether, to whom, and in what amount he or she will make a personal political contribution or render personal services to individual candidates or political committees where permitted by applicable laws. Employees, officers and directors are free, and indeed are encouraged, to endorse, advocate, contribute to, or otherwise support any political party, candidate, or cause they may choose. However, in personal public political statements, references to an employee’s, officer’s or director’s affiliation with MediaNet should be avoided, and in any personal political activity it must be clear that the employee, officer or director is not acting on behalf of or using the resources of MediaNet. The Code of Business Conduct and Ethics is not, however, intended to discourage voluntary and lawful political contributions to any MediaNet sponsored political action committee.
Third, MediaNet seeks the resolution of regulatory and political issues affecting its interests solely on the basis of the merits involved.
CORPORATE CITIZENSHIP
We also have special responsibilities to be a good citizen in the communities in which we operate. We are sensitive to the economic role we play in those communities and we contribute to community as well as to national institutions, and encourage employees, officers and directors to take an active personal role in organizations dedicated to public service.
DISCLOSURE POLICY
It is MediaNet’s policy to provide full, fair, accurate, timely and understandable disclosure in all documents required to be filed with, furnished or submitted to the Securities and Exchange Commission and in all other public communications. We expect employees, officers and directors to act in a manner that supports this policy. In addition, employees, officers and directors are prohibited from directly or indirectly taking any action to fraudulently influence, coerce, manipulate or mislead MediaNet independent registered public accounting firm for the purpose of rendering the financial statements of the Company misleading.
Waivers of the Code of Business Conduct and Ethics
Any waiver of compliance with this Code of Business Conduct and Ethics for executive officers or directors may be made only by the Board or a Board committee and will be promptly disclosed to stockholders as required by law or applicable stock exchange regulation.
Reporting any Illegal or Unethical Behavior
Employees, officers and directors are encouraged to talk to the appropriate personnel about observed illegal or unethical behavior and when in doubt about the best course of action in a particular situation. It is MediaNet’s policy not to allow retaliation for reports of misconduct by others made in good faith by employees, officers or directors. Employees, officers and directors are expected to cooperate in internal investigations of misconduct.
Compliance Procedures
We must all work to ensure prompt and consistent action against violations of this Code of Business Conduct and Ethics. However, in some situations it is difficult to know right from wrong. Since we cannot anticipate every situation that will arise, it is important that we have a way to approach a new question or problem. These are the steps to keep in mind:
- Make sure you have all the facts. In order to reach the right solutions, we must be as fully informed as possible.
- Ask yourself: What specifically am I being asked to do? Does it seem unethical or improper? This will enable you to focus on the specific question you are faced with, and the alternatives you have. Use your judgment and common sense; if something seems unethical or improper, it probably is.
- Clarify your responsibility and role. In most situations, there is shared responsibility. Are your colleagues informed? It may help to get others involved and discuss the problem.
- Discuss the problem with your supervisor. This is the basic guidance for all situations. In many cases, your supervisor will be more knowledgeable about the question, and will appreciate being brought into the decision-making process. Remember that it is your supervisor’s responsibility to help solve problems.
- Seek help from MediaNet resources. In the rare case where it may not be appropriate to discuss an issue with your supervisor, or where you do not feel comfortable approaching your supervisor with your question, discuss it with the Human Resources manager or other appropriate personnel. If you prefer to write, address your concerns to MediaNet’s Chief Financial Officer.
- You may report ethical violations in confidence and without fear of retaliation. If your situation requires that your identity be kept secret, your anonymity will be protected. MediaNet does not permit retaliation of any kind against employees, officers or directors for good faith reports of ethical violations.
- Always ask first, act later: If you are unsure of what to do in any situation, seek guidance before you act.
MEDIANET GROUP TECHNOLOGIES, INC
Policy adopted by the board of directors
relating to insider trading in Company securities
and confidentiality of information
MediNet Group Technologies has registered its common stock with the Securities and Exchange Commission (the “SEC”). As a result, we have a responsibility towards our shareholders to establish rigorous internal procedures regarding the flow of information within the Company and from the Company to the public. Moreover, many employees directly or indirectly hold shares of the Company’s common stock and, under United States securities laws, our Company is required to take steps to ensure that employee decisions regarding the purchase and sale of shares are made only on the basis of the same level of information concerning the Company as other shareholders. In other words, the Company is required to take steps to ensure that employees do not trade on “inside information.”
The Board of Directors has adopted the following Policy which applies to all personnel (including directors and officers) of our Company and its subsidiaries, their family members, and specially designated outsiders who have access to the Company’s material, nonpublic information arising from our legal and ethical responsibilities as a public Company.
SCOPE of policy
- This Policy covers all directors, officers and employees of the Company and its subsidiaries, their family members (collectively referred to as “Insiders”), and any outsiders whom the Insider Trading Compliance Officer may designate as Insiders because they have access to material nonpublic information concerning the Company.
- The Policy applies to any and all transactions in the Company’s securities, including its common stock and options to purchase common stock, its preferred stock and any other type of securities that the Company may issue, such as convertible or non-convertible notes or debentures, warrants and exchange-traded options or other derivative securities.
- The Policy will be delivered to all Insiders and designated outsiders and to all new insiders and designated outsiders at the start of their employment or relationship with the Company. Upon first receiving a copy of the Policy or any revised versions, each Insider must sign an acknowledgment that he or she has received a copy and agrees to comply with the Policy’s terms. Section 16 Individuals and Key Employees, as defined below, may be required to certify compliance with the Policy on an annual basis.
SECTION 16 INDIVIDUALS AND KEY EMPLOYEES
Section 16 Individuals. The Company has identified those persons as the directors and officers who are subject to the reporting provisions and trading restrictions of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the underlying rules and regulations promulgated by the SEC. Section 16 Individuals must obtain prior approval of all trades in Company securities from the Insider Trading Compliance Committee in accordance with the procedures set forth in Section VI.A below. The Company may amend Exhibit A from time to time to reflect the addition, resignation or departure of Section 16 Individuals.
Key Employees. The Company has identified those persons listed on Exhibit B attached hereto as Key Employees who, because of their position with the Company and their access to material nonpublic information, must obtain the prior approval of all trades in Company securities from the Insider Trading Compliance Committee in accordance with the procedures set forth in Section VI.A.8 below. The Company may amend Exhibit B from time to time to reflect the addition, resignation or departure of Key Employees.
INSIDER TRADING COMPLIANCE OFFICER AND COMPLIANCE COMMITTEE
The Company has designated the General Counsel as its Insider Trading Compliance Officer (the ‘Compliance Officer’). The Insider Trading Compliance Committee (the “Compliance Committee”) will consist of the Compliance Officer and such other persons as the Board of Directors may designate from time to time. The Compliance Committee will review and either approve or prohibit all proposed trades by Section 16 Individuals and Key Employees in accordance with the procedures set forth in Section VI.A below. The Compliance Committee will also be responsible for reviewing and approving all proposed Rule 10b5-1 Plans prior to their implementation.
In addition to the trading approval duties described in Section VI.A below, the duties of the Compliance Officer will include the following:
Administering this Policy and monitoring and enforcing compliance with all Policy provisions and procedures.
Responding to all inquiries relating to this Policy and its procedures.
From time to time, designating and internally announcing blackout periods, both regularly scheduled and special, during which no Insiders may trade in Company securities.
From time to time and as requested- by the Company or Insiders, considering and determining whether the period covered by a particular blackout period, either regularly scheduled or special, shall be amended and, if so, internally announcing such amendment.
Providing copies of this Policy and other appropriate materials to all Insiders, and such other persons who the Compliance Officer determines have access to material nonpublic information concerning the Company.
Administering, monitoring and enforcing compliance with all federal and state insider trading laws and regulations, including without limitation Sections 10(b), 16, 20A and 21A of the Exchange Act and the rules and regulations promulgated thereunder, and Rule 144 under the Securities Act of 1933 (the “Securities Act”); and assisting in the preparation and filing of all required SEC reports relating to insider trading in Company securities, including without limitation Forms 3, 4, 5 and 144 and Schedules 13D and 13G.
Consulting with legal counsel and revising the Policy as necessary to reflect changes in federal or state insider trading laws and regulations.
Maintaining as Company records originals or copies of all documents required by the provisions of this Policy or the procedures set forth herein, and copies of all required SEC reports relating to insider trading, including without limitation Forms 3, 4, 5 and 144 and Schedules 13D and 13G.
Maintaining the list of Section 16 Individuals and Key Employees and updating them periodically to reflect additions to or deletions from each category of individuals.
The Compliance Officer may designate one or more individuals who may perform the Compliance Officer’s duties or the duties of the other member of the Compliance Committee in the event that the Compliance Officer or other Committee member is unable or unavailable to perform such duties.
DEFINITION OF “MATERIAL NONPUBLIC INFORMATION”
“MATERIAL” INFORMATION
The materiality of information depends upon the circumstances. Information about the Company is “material” if it would reasonably be expected to affect the investment or voting decisions of a reasonable shareholder or investor, or if the disclosure of the information would be expected to significantly alter the total mix of the information in the marketplace about the Company. Information may be material for this purpose even if it would not alone determine the investor’s decision. In simple terms, material information is any type of information which could reasonably be expected to affect the price of Company securities. Material information can be positive or negative and can relate to virtually any aspect of the Company’s business or to any type of security, debt or equity. While it is not possible to identify all information that would be deemed “material”, the following types of information ordinarily would be considered material:
• Financial performance and changes in financial performance or liquidity.
• Certain Company projections and strategic plans.
• Potential mergers and acquisitions or the sale of Company assets or subsidiaries.
• The potential acquisition or disposition of property or other significant assets.
• The procurement of significant credit facilities and/or other finance sources, or the loss thereof.
• Stock splits, public or private securities/debt offerings, or changes in Company dividend policies or amounts.
• Changes in senior management.
• Actual or threatened litigation, or the resolution of such litigation.
We emphasize that the above list is merely illustrative.
“NONPUBLIC” INFORMATION
Information is “nonpublic” if it is not available to the general public. Nonpublic information learned on the part of a director, officer, or employee belongs to the company and should be protected, like any other company asset, and used only for company purposes.
In order for information to be considered public, it must be widely disseminated in a manner making it generally available to investors, such as through disclosure by the filing of a Form 10-Q, Form 10-K, Form 8-K or other report with the SEC, or disclosure by press release to a national business and financial wire service (such as Dow Jones or Reuters), a national news service, or a national newspaper (such as The Wall Street Journal).
The circulation of rumors, even if accurate and reported in the media, does not constitute effective public dissemination. In addition, even after a public announcement of material information, a reasonable period of time must elapse in order for the market to react to the information. Generally, one should allow approximately two full trading days following publication as a reasonable waiting period before such information is deemed to be public.
CONSULT THE COMPLIANCE OFFICER FOR GUIDANCE
Any Insiders who are unsure whether the information that they possess is material or nonpublic must consult the Compliance Officer for guidance before trading in any Company securities or discussing or divulging such information.
Definition of “trading”
The term “trading” applies to purchases, sales, or pledges of any stock or other securities of the Company, including the Company’s publicly-traded notes or debentures.
Trading includes the cashless exercise of stock options, selling stock acquired from an option exercise, selling or buying the Company’s securities in street name or within an IRA account and trading in puts, calls, or publicly-traded options.
The above examples are not intended to limit the possible ways that trading can occur.
The mere exercise of a stock option with a determinate exercise price (i.e., purchasing and holding the stock) is not considered a trading transaction nor are bona fide gifts of stock. However, as previously noted, a cashless exercise of a stock option is considered trading.
STATEMENT OF COMPANY POLICY AND PROCEDURES
PROHIBITED ACTIVITIES
No Insider may trade in Company securities while possessing material nonpublic information concerning the Company. Notwithstanding the foregoing, an Insider may, in the discretion of the Compliance Committee, trade in Company securities pursuant to an established Rule 10b5-1 Plan which complies with the provisions of Rule 10b5-1 of the Exchange Act and which has been reviewed and approved by the Compliance Committee (an “Approved Sales Plan”).
The Compliance Officer may not trade in Company securities unless the trade(s) has/have been approved by the other members of the Compliance Committee in accordance with the procedures set forth herein.
No Insider may “tip” or disclose material nonpublic information concerning the Company to any outside person (including family members, analysts, individual investors, and members of the investment community and news media), unless required as part of that Insider’s regular duties for the Company and authorized by the Compliance Officer. In any instance in which such information is disclosed to outsiders, the Company will attempt to take such steps as are necessary to preserve the confidentiality of the information, including requiring the outsider to sign a confidentiality agreement. All inquiries from outsiders regarding material nonpublic information about the Company must be forwarded to the Compliance Officer.
No Insider may give trading advice of any kind about the Company to anyone while possessing material nonpublic information about the Company, except that Insiders should advise others not to trade if doing so might violate the law or this Policy. The Company strongly discourages all Insiders from giving trading advice concerning the Company to third parties even when the Insiders do not possess material nonpublic information about the Company.
No Insider may trade in any interest or position relating to the future performance of Company securities, such as a put, call or short sale.
No Insider may (a) trade in the securities of any other public company while possessing material nonpublic information concerning that company (unless the trading is pursuant to an established Rule 10b5-1 Plan) (b) “tip” or disclose material nonpublic information concerning any other public company to anyone, or (c) give trading advice of any kind to anyone concerning any other public company while possessing material nonpublic information about that company.
No Trading During Blackout Periods. No Insiders may trade in Company securities during any regularly scheduled or special black-out periods that the Compliance Officer may designate. No Insiders may disclose to any outside third party that a special blackout period has been designated.
Section 16 Individual/Key Employee Trades. Other than pursuant to an established Rule 10b5-1 Plan which has been reviewed and pre-approved by the Compliance Committee, no Section 16 Individual or Key Employee may trade in Company securities until the person trading has notified the Compliance Officer in writing of the amount and nature of the proposed trade(s), the person trading has certified to the Compliance Officer in writing no earlier than two business days prior to the proposed trade(s) that (i) he or she is not in possession of material nonpublic information concerning the Company and (ii) the proposed trade(s) do not violate the trading restrictions of Section 16 of the Exchange Act and comply with the safe-harbor provisions of Rule 144 of the Securities Act, and the Compliance Committee has approved the trade(s), and the Compliance Officer has certified the Committee’s approval in writing.
Notwithstanding the foregoing provisions, no Section 16 Individual or Key Employee may trade in Company securities until the person trading or their authorized agent has certified to the Compliance Officer in writing no earlier than two business days prior to the proposed trade(s) that the proposed trade(s) do not violate the trading restrictions of Section 16 of the Exchange Act and comply with the safe-harbor provisions of Rule 144 of the Securities Act
Rule 10b5-1 Plans. No Insider may establish or implement a Rule 10b5-1 Plan until such plan is reviewed and approved by the Compliance Committee. Once established, no Insider may alter or amend instruction regarding the sale or purchase of securities under such Plan while in possession of material nonpublic information.
No Obligation to Approve Trades. The existence of the foregoing approval procedures does not in any way obligate the Compliance Officer or Compliance Committee to approve any trades or any Rule 10b5-1 Plan requested by Section 16 Individuals, Key Employees or hardship applicants. The Compliance Officer or Compliance Committee may reject any trading requests and shall not be required to provide reasons for their actions.
EMPLOYEE BENEFIT PLANS
Employee Stock Purchase Plans. No officer or employee may alter instructions regarding the purchase or sale of Company securities in such plans while in the possession of material nonpublic information.
Stock Option Plans. The trading prohibitions and restrictions of this Policy apply to all sales of securities acquired through the exercise of stock options granted by the Company, but not to the acquisition of securities through such exercises.
PRIORITY OF STATUTORY OR REGULATORY TRADING RESTRICTIONS
The trading prohibitions and restrictions set forth in this Policy will be superseded by any greater prohibitions or restrictions prescribed by federal or state securities laws and regulations, e.g., short-swing trading by Section 16 Individuals or restrictions on the sale of securities subject to Rule 144 under the Securities Act of 1933. Any Insider who is uncertain whether other prohibitions or restrictions apply should ask the Compliance Officer and/or seek legal counsel.
POTENTIAL CIVIL, CRIMINAL AND DISCIPLINARY SANCTIONS
This Policy has been established to assist the company and Insiders understand and comply with various laws and legal obligations. This Policy identifies a number of acts that should or should not be taken in furtherance of such compliance efforts. Although the violation of certain of the policies contained herein will under certain circumstances constitute a violation of law and/or a legal duty, not all violations of this Policy constitute a violation of law or a legal duty that exists independent of this Policy. The potential sanctions associated with a violation of this Policy must be assessed based upon the actions or omissions that are the subject of the violation.
CIVIL AND CRIMINAL PENALTIES
The consequences of prohibited insider trading or tipping can be severe. Persons violating insider trading or tipping rules may be required to disgorge the profit made or the loss avoided by the trading, pay the loss suffered by the person who purchased securities from or sold securities to the insider tipee, pay civil penalties up to three times the profit made or loss avoided, pay a criminal penalty of up to $1 million, and serve a jail term of up to ten years. These penalties are cumulative (i.e. all of them can be imposed) and a “tipper can be liable for these penalties even if he or she made no profit.” The Company and/or the supervisors of the person violating the rules may also be subject to major civil or criminal penalties.
COMPANY DISCIPLINE
Violation of this Policy or federal or state insider trading or tipping laws by any director, officer or employee, or their family members, may subject the director to dismissal and the officer or employee to disciplinary action by the Company up to and including termination for cause.
REPORTING OF VIOLATIONS
Any Insider who violates this Policy or any federal or state laws governing insider trading or tipping, or knows of any such violation by any other Insiders, must report the violation immediately to the Compliance Officer. Upon learning of any such violation, the Compliance Officer, in consultation with the other Compliance Committee member and the Company’s legal counsel, will determine whether the Company should release any material nonpublic information, or whether the Company should report the violation to the SEC or other appropriate governmental authority.
The Sarbanes-Oxley Act of 2002 amends Section 16 of the Exchange Act to accelerate the filing due dates for certain beneficial ownership reporting forms on Forms 3, 4 and 5 (the “Section 16 Reports”) of Section 16 Individuals to the second business day following a transaction that effects a change in the ownership of our securities.
Given the amended short time frame for Section 16 Individuals to file their Section 16 Reports, it is critically important that Section 16 Individuals comply with the procedures set forth in Section VI.A.8 hereto to ensure compliance with the new accelerated reporting requirements. These procedures will help prevent inadvertent violations of the federal securities laws, will help avoid the appearance of insider trading and will prevent potentially embarrassing proxy disclosures.
INQUIRIES
Please direct all inquiries regarding any of the provisions or procedures of this Policy to the Compliance Officer.
EXAMPLES OF MATERIAL NONPUBLIC INFORMATION
While it is not possible to identify all information that would be deemed “material nonpublic information”, the following types of information ordinarily would be included in the definition if not yet publicly released by the Company:
• Financial performance and changes in financial performance or liquidity.
• Company projections and strategic plans.
• Potential mergers and acquisitions or the sale of Company assets or subsidiaries.
• The potential acquisition or disposition of property or other significant assets.
• The procurement of significant credit facilities and/or other finance sources, or the loss thereof.
• Stock splits, public or private securities/debt offerings, or changes in Company dividend policies or amounts.
• Changes in senior management.
• Actual or threatened litigation, or the resolution of such litigation.
