Audit Committee Charter
The primary purpose of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Mobetize Corp. (the “Company”) is to assist the Board in fulfilling its oversight responsibilities with respect to: (i) the Company’s accounting, auditing, and financial reporting processes; (ii) the integrity of the Company’s financial statements; (iii) the Company’s internal controls and procedures designed to promote compliance with accounting standards and applicable laws and regulations; and (iv) the appointment, and evaluation of the qualifications and independence, of the Company’s independent auditors.
The Committee shall be comprised of two or more members of the Board, one of whom shall satisfy the independence and financial literacy requirements of The Nasdaq Stock Market, Inc. (“Nasdaq”) and the Securities and Exchange Commission (the “SEC”). At least one member of the Committee shall have past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the member’s financial sophistication, as set forth in Rule 5605(c)(2)(A) of the Nasdaq Marketplace Rules, and, unless the Board shall otherwise determine, shall also be an “Audit Committee Financial Expert”, as defined by SEC regulations. Each member shall be free from any relationship that, in the opinion of the Board, would interfere with his or her exercise of independent judgment. The Board must determine that each member of the Committee: (i) qualifies as an “independent director” under Rule 5605(a)(2) of the Nasdaq Marketplace Rules, unless the Board determines that an exemption to such qualification is available under Nasdaq Rule 5605(c)(2)(B), (ii) meets the “independence” requirements under Section 10A of the Securities Exchange Act of 1934 (the “Exchange Act”) and (iii) satisfies the other requirements of Rule 5605(c)(2) of the Nasdaq Marketplace Rules.
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The members and the Chairman of the Committee shall be appointed annually by the Board. Members shall serve at the pleasure of the Board until their successors shall be duly elected and qualified or until their earlier resignation or removal by the Board.
The Committee shall meet at least four times annually, or more frequently as the Committee may determine. The Chairman or, in the event of his absence from any meeting, another member of the Committee designated by vote of the members in attendance at such meeting, will chair all meetings of the Committee and set the agendas for such meetings. Any other member of the Committee shall have the right to submit items to be included on the agenda for any Committee meeting.
Members of management, the Company’s independent auditors and others shall attend meetings to provide pertinent information, as necessary. As part of its goal of fostering open communication, during its regularly scheduled meetings the Committee shall meet in separate executive sessions with management and with the independent auditors to discuss any matters that the Committee or any of these groups believes should be discussed privately. The Chairman of the Committee shall report to the Board regularly regarding the Committee’s activities and actions, including at the first Board meeting following any Committee meeting.
The Committee shall keep regular minutes of its meetings and report the same to the Board from time to time and upon request.
Duties & Responsibilities
The Committee shall have and may exercise the powers of the Board in matters relating to the following duties and responsibilities, to the fullest extent permitted by law:
Independent Auditors – Appointment & Oversight
- The Committee shall be directly responsible for the appointment, compensation, retention, termination and oversight of the work of the Company’s independent auditors (including resolution of disagreements between management and the independent auditors regarding financial reporting). The independent auditors shall report directly to the Committee.
- The Committee shall approve in advance all auditing services (including comfort letters and statutory audits) performed by the independent auditors. The Committee shall approve in advance all non-audit services performed by the independent auditors as permitted under Section 10A of the Exchange Act. The Committee may delegate to one or more members the authority to grant pre-approvals required by this section, in which case the decision of such member or members shall be presented to the Committee at the next scheduled meeting of the Committee. All approvals shall be in accordance with the Committee’s Auditor Pre-Approval Policy, as amended from time to time.
- The Committee shall annually review and discuss with the independent auditors all relationships the independent auditors have with the Company in order to evaluate their continued independence. In this regard, the Committee shall (i) review on an annual basis the written disclosures and letter from the independent auditors required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditors’ communications with the audit committee concerning independence; (ii) discuss with the independent auditors any disclosed relationships or services that may impact their objectivity and independence; and (iii) satisfy itself as to the independence of the independent auditors.
- The Committee shall annually obtain and review a report by the independent auditors describing: (i) the independent auditors’ internal quality-control procedures; and (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one or more independent audits carried out by the audit firm, and any steps taken to deal with such issues.
- The Committee shall confirm compliance by the independent auditors with laws and regulations relating to audit partner rotation.
- The Committee shall obtain, review and discuss quarterly reports from the independent auditors to the Committee with respect to critical accounting policies and practices, alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, including ramifications of the use of
such alternative disclosure and treatments, and the treatment preferred by the independent auditors and the impact of each on the quality and reliability of the Company’s financial reporting, and other material communications with management, such as any management letter or schedule of unadjusted differences. All material communications shall be promptly provided to each member of the Committee.
- The Committee shall review with the independent auditors and management the scope of the proposed audit plan for the current year, and at the conclusion thereof review such audit and any comments and recommendations of the independent auditors.
- The Committee shall discuss with management and the independent auditors any accounting adjustments that were noted or proposed by the independent auditors but not adopted or reflected.
- The Committee shall regularly review with the independent auditors any audit problems or difficulties encountered in the course of the audit work, including any restrictions on the scope of the independent auditors’ activities or access to requested information and any significant disagreements with management and management’s response thereto.
- The Committee shall annually review the qualifications, performance and independence of the independent auditors and the senior members of the independents auditors’ audit engagement team.
- The Committee shall annually prepare the report required by the proxy rules promulgated by the Securities & Exchange Commission to be included in the Company’s annual proxy statement.
- The Committee shall review and discuss with management and the independent auditors the Company’s annual audited financial statements and the Company’s quarterly financial statements (including disclosures made in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” portion thereof) prior to issuance or filing.
- The Committee shall discuss with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, as amended relating to the conduct of the audit.
- The Committee shall recommend to the Board, if appropriate, that the Company’s annual audited financial statements be included in the Company’s annual report on Form 10-K for filing with the Securities & Exchange Commission.
Accounting and Financial Reporting Processes and Risk Assessment
- The Committee shall periodically discuss with the independent auditors, without management being present, their judgments about the quality, appropriateness and acceptability of the Company’s accounting principles and financial disclosure practices, as applied in its financial reporting, and the completeness and accuracy of the Company’s financial statements.
- The Committee shall review with management and the independent auditors any legal, regulatory or compliance matters that could have a significant impact on the Company’s financial statements, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding the Company’s financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the Securities & Exchange Commission or other regulatory authorities.
- The Committee shall discuss generally the types of information to be disclosed and the presentation to be made in press releases regarding the Company’s earnings, including the use of non-GAAP financial data, and in financial information and earnings guidance (if any) otherwise publicly announced or given to ratings agencies or other third parties.
- The Committee shall review with management and, if necessary, the independent auditors and Company counsel, press releases announcing quarterly and annual financial results and other financial reporting information prior to their release.
- The Committee shall review any off-balance sheet transactions, arrangements and obligations (including contingent obligations) and any other relationships of the Company with unconsolidated entities that may have a current or future effect on the Company’s financial statements.
- The Committee shall review and discuss with management, and to the extent the Committee deems necessary or appropriate, the independent auditors, the Company’s disclosure controls and procedures that are designed to ensure that the reports the Company files with the Securities & Exchange Commission comply with the Securities & Exchange Commission’s rules and forms.
- The Committee shall review and discuss with management the Company’s major financial risk exposures, the Company’s system of internal controls and policies relating to risk assessment and management, including the steps management has taken to monitor and control such exposures.
- The Committee shall establish procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
- The Committee shall review the reports of the Chief Executive Officer and Chief Financial Officer (in connection with their required certifications for the Company’s filings with the Securities & Exchange Commission) regarding any significant deficiencies or material weaknesses in the design or operation of internal controls, and any fraud that involves management or other employees who have a significant role in the Company’s internal controls.
- The Committee shall take steps to ensure that the Company shall not hire any person to perform a financial reporting oversight role who has provided more than ten hours of audit, review or attest services as part of the independent auditors’ audit engagement team within the past year. A financial reporting oversight role refers to a role in which an individual has direct responsibility for or oversight of those who prepare the Company’s financial statements and related information which will be included in the Company’s filings with the Securities & Exchange Commission, and also includes members of the Board who may have significant interaction with the independent auditors’ audit engagement team.
- The Committee shall, prior to the Company entering into any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the Securities & Exchange Commission (such transaction being a “Related Party Transaction”), review and approve such transaction and recommend to the Board that it approve such transaction; however, the Company may only enter into a Related Party Transaction approved by the Committee if the Board also approves such transaction. The Committee shall report to the Board any proposed Related Party Transaction that it does not approve. The Committee shall also review and report to the Board any questions of possible conflict of interest involving Board members, members of senior management or their immediate families.
- The Committee shall oversee the Company’s internal audit function, including (i) the appointment, replacement, dismissal and compensation of the Company’s senior most internal auditor and (ii) reviewing the internal audit department’s staffing, budget and responsibilities.
- The Committee shall annually review and evaluate the performance of the Committee, including compliance by the Committee with this Charter.
- The Committee shall annually review and assess the adequacy of this Charter and submit any proposed changes to the Board for approval.
- The Committee shall perform any other activities consistent with this Charter, and the Company’s Bylaws and Articles of Incorporation, as the Committee may deem necessary or appropriate for the fulfillment of its responsibilities under this Charter or as required by applicable law or regulation, or as may be determined by the Board.
- The Committee shall do every other act incidental to, arising out of or in connection with, or otherwise related to, the authority granted to the Committee hereby or the carrying out of the Committee’s duties and responsibilities hereunder.
Notwithstanding any of the foregoing, the legal liability of any of the Committee members shall be no greater than that of other members of the Board.
Committee Resources & Advisors
The Committee shall have the authority to retain, at the expense of the Company, such independent legal and other advisors as it shall deem necessary to carry out its duties, without Board or management approval. The Committee members will be provided with continuing education opportunities in financial reporting and other are as relevant to the Committee. The Company shall provide for appropriate funding, as determined by the Committee, in its capacity as a committee of the Board, for payment of: (i) compensation to any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company; (ii) compensation to any advisors engaged by the Committee as provided above; and (iii) ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.
Limitation of Committee’s Role
While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations, which matters are the responsibilities of management and the independent auditors.
Code Of Business Conduct & Ethics
Good corporate governance requires that Mobetize Corp. (the “Company”) provide a code of conduct for its officers, employees and directors within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and Item 406(b) of Regulation S-K of the Securities Exchange Act of 1934, as amended. This Code of Business Conduct and Ethics (the “Code”) reflects the Company’s commitment to conduct business in an honest and ethical manner.
Individuals, who work for or serve the Company, are an extension of the Company. Our commitment to honesty and ethical conduct only can be achieved if you, individually, accept your responsibility to promote integrity and demonstrate the highest level of ethical conduct in all of your activities.
Activities that may compromise the Company’s reputation or integrity must be avoided. While the Company realizes that not every situation is black or white, the key to compliance with this Code is exercising good judgment. This means following both the letter and the spirit of this Code and all applicable laws, doing the “right” thing, and acting ethically at all times, even when the law or this Code may not address specifically the issue at hand.
We rely in part on our managers to set an example for other employees and to supervise the actions of others. Every manager and supervisor is expected to take any action necessary to ensure compliance with this Code, to provide guidance and assist employees in resolving questions concerning the Code and to permit employees to express any concerns regarding compliance with this Code. No one has the authority to order another employee to act contrary to this Code.
Conflicts of Interest & Corporate Opportunities
You must avoid any situation in which your personal interests conflict or even appear to conflict with the Company’s interests. You owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises in the course of your employment or service. You should never compromise any of the Company’s legitimate interests.
You must perform your duties to the Company in an honest and ethical manner. You must handle all actual or apparent conflicts of interest between your personal and professional relationships in an ethical manner.
You should avoid situations in which your immediate family, financial or other personal interests conflict, or even appear to conflict, with those of the Company. You may not engage in activities that compete with the Company or place the Company’s interests at risk. You should not take, for your own benefit, opportunities discovered in the course of employment that may otherwise benefit the Company. The following are examples of actual or potential conflicts:
- you, or a member of your immediate family, receive improper personal benefits (including but not limited to the receipt of gifts) as a result of your position in the Company;
- you use the Company’s property for your personal benefit;
- you engage in activities that interfere with your loyalty to the Company or your ability to perform Company duties or responsibilities effectively;
- you work simultaneously (whether as an employee or a consultant) for a competitor, customer or supplier;
- you, or a member of your immediate family, have a financial interest in a customer, supplier, or competitor which is significant enough to cause divided loyalty with the Company or the appearance of divided loyalty (the significance of a financial interest depends on many factors, such as size of investment in relation to your income, net worth and/or financial needs, your potential to influence decisions that could impact your interests, and the nature of the business or level of competition between the Company and the supplier, customer or competitor);
- you, or a member of your immediate family, acquire an interest in property (such as real estate, patent or other intellectual property rights or securities) in which you have reason to know the Company has, or might have, a legitimate interest;
- you, or a member of your immediate family, receive a loan or a guarantee of a loan from a customer, supplier or competitor (other than a loan from a financial institution made in the ordinary course of business and on an arm’s-length basis);
- you make gifts or payments, or provide special favors, to customers, suppliers or competitors (or their immediate family members) with a value significant enough to cause the customer, supplier or competitor to make a purchase, or take or forego other action, which is beneficial to the Company and which the customer, supplier or competitor would not otherwise have taken; or
- you are given the right to buy stock in other companies or you receive cash or other payments in return for promoting the services of an advisor, such as an investment banker, to the Company.
- The existence of a conflict is not always readily apparent. If you become aware of a conflict described above or any other conflict, potential conflict, or have a question as to a potential conflict, you should consult with higher levels of management or the Company’s Audit Committee and/or follow the procedures described in Sections 9 and 10 of this Code. If you become involved in a situation that gives rise to an actual conflict, you must inform higher levels of management or the Company’s Audit Committee of the conflict. Our Audit Committee is identified in Section 10 of this Code.
All confidential information concerning the Company is the property of the Company and must be protected.
Confidential information includes all non-public information that might be of use to competitors, or harmful to the Company or its customers, if disclosed. You must maintain the confidentiality of such information entrusted to you by the Company, its customers and its suppliers, except when disclosure is authorized by the Company or required by law.
Examples of confidential information include, but are not limited to: the Company’s trade secrets; business trends and projections; information about financial performance; new product or marketing plans; research and development ideas or information; manufacturing processes; information about potential acquisitions, divestitures and investments; stock splits, public or private securities offerings or changes in dividend policies or amounts; significant personnel changes; and the acquisition, loss or changes of or to existing or potential major contracts, orders, suppliers, customers or finance sources.
Your obligation with respect to confidential information extends beyond your activities in the workplace. In that respect, it applies to communications with your immediate family members and continues to apply even after your employment or director relationship with the Company terminates.
You should never trade securities on the basis of confidential information acquired through your employment or fiduciary relationship with the Company.
Under both federal law and Company policy, you are not permitted to purchase or sell Company stock, directly or indirectly, on the basis of material non-public information concerning the Company. Any person possessing material non-public information about the Company must not engage in transactions involving Company securities until this information has been released to the public.
Generally, material information is information that would be expected to affect the investment decisions of a reasonable investor or the market price of the stock. You are not allowed to trade in the stock of other publicly held companies, such as existing or potential customers or suppliers, on the basis of material confidential information obtained in the course of your employment or service as a director. It also is illegal to recommend a stock to (i.e., “tip”) someone else on the basis of such information. If you have a question concerning appropriateness or legality of a particular securities transaction, consult with corporate counsel. Directors, officers and certain other employees of the Company are subject to additional responsibilities under the Company’s insider trading compliance policy, a copy of which has been provided to each such director, officer and employee.
Our goal is to conduct our business with integrity.
You should make every effort to deal honestly with the Company’s customers, suppliers, competitors, and employees. Under federal and state laws, the Company is prohibited from engaging in unfair methods of competition, and unfair or deceptive acts and practices. You should not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair dealing.
Examples of prohibited conduct include, but are not limited to:
- bribery or payoffs to induce business or breaches of contracts by others;
- acquiring a competitor’s trade secrets through bribery or theft; or
- making false, deceptive or disparaging claims or comparisons about competitors or their products or services.
Protection & Proper Use of Company Assets
You should endeavor to protect the Company’s assets and ensure their proper use.
Company assets, both tangible and intangible, are to be used solely for legitimate business purposes of the Company and only by authorized employees or consultants. Intangible assets include intellectual property such as trade secrets, patents, trademarks and copyrights, business, marketing and service plans, engineering and manufacturing ideas, designs, databases, Company records, salary information, and any unpublished financial data and reports. Unauthorized alteration, destruction, use, disclosure or distribution of Company assets violates Company policy and this Code. Theft or waste of, or carelessness in using, these assets have a direct adverse impact on the Company’s operations and profitability and will not be tolerated.
The Company provides computers, voice mail, electronic mail (e-mail), internet access, and other Company resources to certain employees for the purpose of achieving the Company’s business objectives. As a result, the Company has the right to access, reprint, publish, or retain any information created, sent or contained in any of the Company’s computers or e-mail systems of any Company machine. You may not use any Company resource for any illegal purpose, or in any manner that is contrary to the Company’s policies or the standards embodied in this Code.
You should not make copies of, or resell or transfer (externally or internally), copyrighted publications, including software, manuals, articles, books, and databases being used in the Company, that were created by another entity and licensed to the Company, unless you are authorized to do so under the applicable license agreement. In no event should you load or use, on any Company computer, any software, third party content or database without receiving the prior written permission to do so. You must refrain from transferring any data or information to any Company computer other than for Company use. You may use a handheld computing device or mobile phone in connection with your work for the Company, but must not use such device or phone to access, load or transfer content, software or data in violation of any applicable law or regulation or without the permission of the owner of such content, software or data. If you should have any questions, please consult with the Company’s Chief Financial Officer.
Compliance with Laws & Regulations
The Company seeks to comply with both the letter and spirit of the laws and regulations in all countries in which it operates.
The Company is committed to total compliance with the laws and regulations of the cities, states and countries in which it operates. You must comply with all applicable laws, rules and regulations in performing your duties for the Company. Various federal, state and local laws and regulations define and establish obligations with which the Company, its officers, employees, directors and agents must comply. Under certain circumstances, local country law may establish requirements that differ from this Code. You are expected to comply with all local country laws in conducting the Company’s business. If you violate these laws or regulations in performing your duties for the Company, you not only risk individual indictment, prosecution and penalties, and civil actions and penalties, you also subject the Company to the same risks and penalties. Any violation of these laws may subject you to immediate disciplinary action, up to and including termination of your employment or affiliation with the Company.
Ethics Obligations for Employees with Financial Reporting Responsibilities
Senior management bears a special responsibility for promoting integrity throughout the Company.
The Company’s Chief Executive Officer, Chief Financial Officer, principal accounting officer or controller and persons performing similar functions, persons who meet the requirements of Item 406 of Regulation S-K, and such other Company officers as are designated from time to time by the Audit Committee, shall be deemed the Senior Officers of the Company. Senior Officers have a responsibility to foster a culture throughout the Company as a whole that mandates the fair and timely reporting of the Company’s results of operations and financial condition and other financial information. Due to this special role, Senior Officers are also bound by the following senior management code of ethics, and by accepting the Code of Business Conduct and Ethics, each agrees that he or she will:
- perform his or her duties in an honest and ethical manner;
- address all actual or apparent conflicts of interest between his or her personal and professional relationships in an ethical manner;
- undertake all necessary actions to ensure complete, accurate, thorough, timely, and understandable disclosure in reports and documents that the Company files with, or submits to, government agencies and in other public communications; and
- proactively encourage and provide an example of ethical behavior in the work environment.
Reporting Violations of Company Policies & Receipt of Complaints Regarding Financial Reporting or Accounting Issues
You should report any violation or suspected violation of this Code to the appropriate Company personnel or via the Company’s anonymous and confidential reporting procedures.
The Company’s efforts to ensure observance of, and adherence to, the goals and policies outlined in this Code require that you promptly bring to the attention of the Audit Committee, any material transaction, relationship, act, failure to act, occurrence or practice that you believe, in good faith, is inconsistent with, in violation of, or reasonably could be expected to give rise to a violation of, this Code. You should report any suspected violations of the Company’s financial reporting obligations or any complaints or concerns about questionable accounting or auditing practices in accordance with the procedures set forth below.
Here are some approaches to handling your reporting obligations:
- in the event you believe a violation of the Code, or a violation of applicable laws and/or governmental regulations has occurred, or you have observed or become aware of conduct which appears to be contrary to the Code, immediately report the situation to your supervisor, or the Audit Committee. Supervisors or managers who receive any report of a suspected violation must report the matter to the Audit Committee.
- if you have or receive notice of a complaint or concern regarding the Company’s financial disclosure, accounting practices, internal accounting controls, auditing, or questionable accounting or auditing matters, you must immediately advise your supervisor, or the Audit Committee.
Should you wish to report any such matters anonymously or confidentially, then you may do so as follows:
- Mail a description of the suspected violation or other complaint or concern to:Audit Committee Mobetize Corp.8105 Birch Bay Square Street, Suite 205Blaine, Washington 98230
Other Guiding Principles
- Use common sense and good judgment. Act in good faith. You should become familiar with and understand the requirements of this Code. If you become aware of a suspected violation, do not try to investigate it or resolve it on your own. Instead, promptly disclose the violation to the appropriate parties in order to assure a thorough and timely investigation and resolution. The circumstances should be reviewed by appropriate personnel as quickly as possible, since a delay may affect the results of an investigation. A violation of the Code, or of applicable laws and/or governmental regulations, is a serious matter and could have legal implications. Allegations of such behavior are not taken lightly, and should not be made to embarrass someone, or put him or her in a false light. Reports of suspected violations always should be made in good faith.
- Internal investigation. When an alleged violation of this Code, applicable laws and/or governmental regulations is reported, the Company will take appropriate action in accordance with the compliance procedures outlined in Section 10 of the Code. You are expected to cooperate in internal investigations of alleged misconduct or violations of the Code or of applicable laws or regulations.
- No fear of retaliation. It is the Company’s policy that there will be no intentional retaliation against any person who provides truthful information to a company or law enforcement official concerning a possible violation of any law, regulation or Company policy, including this Code. Persons who retaliate may be subject to civil, criminal and administrative penalties, as well as disciplinary action, up to and including termination of employment. In cases in which you report a suspected violation in good faith and are not engaged in the questionable conduct, the Company will attempt to keep its discussions with you confidential to the extent reasonably possible. In the course of its investigation, the Company may find it necessary to share information with others on a “need to know” basis. No retaliation will be taken against you by the Company for reporting alleged violations while acting in good faith. Similarly, if you believe you are being retaliated against, as a result of your having reported a suspected violation in good faith, you should immediately report that information to your supervisor or the Audit Committee.
The Company has established this Code as part of its overall policies and procedures. To the extent that other Company policies and procedures conflict with this Code, you should follow this Code. The Code applies to all Company directors and Company employees, including all officers, in all locations.
The Code is based on the Company’s core values, good business practices and applicable law. The existence of a Code, however, does not assure that officers, employees and directors will comply with it or act in a legal and ethical manner. To achieve optimal legal and ethical behavior, the individuals subject to this Code must know and understand the Code as it applies to them and as it applies to others. You must promote the Code and assist others in knowing and understanding it.
- Compliance. You are expected to become familiar with and understand the requirements of this Code. Most importantly, you must comply with it.
- CEO Responsibility. The Company’s Chief Executive Officer shall be responsible for ensuring that this Code is established and effectively communicated to all officers, employees and directors. Although the day-to-day compliance issues will be the responsibility of the Company’s managers, the Chief Executive Officer has ultimate accountability with respect to the overall implementation of and successful compliance with the Code.
- Corporate Compliance Management. The Chief Executive Officer and the Audit Committee shall be responsible for assuring that the Code becomes an integral part of the Company’s culture. The current members of the Audit Committee are Dr. Malek Ladki, and Donald Duberstein. Any complaints or concerns related to the Company’s financial disclosures, accounting, internal controls and auditing matters, will be promptly directed to the Audit Committee.
- Internal Reporting of Violations. The Company’s efforts to assure observance of, and adherence to, the goals and policies outlined in this Code mandate that all officers, employees and directors of the Company report suspected violations in accordance with Section 9 of this Code.
- Screening of Employees. The Company shall exercise due diligence when hiring and promoting employees and, in particular, when conducting an employment search for a position involving the exercise of substantial discretionary authority, such as a member of the executive team, a senior management position or an employee with financial management responsibilities. The Company will make reasonable inquiries into the background of each individual who is a candidate for such a position. All such inquiries shall be made in accordance with applicable law and good business practice.
- Access to the Code. The Company shall assure that employees, officers and directors may access this Code on the Company’s web site. In addition, each current employee will be provided with a copy of the Code. New employees will receive a copy of the Code as part of their new hire information.
- Monitoring. The officers of the Company shall be responsible to review the Code with all of the Company’s managers. In turn, the Company’s managers with supervisory responsibilities should review the Code with their direct reports. Managers are the “go to” persons for employee questions and concerns relating to this Code, especially in the event of a potential violation. Managers or supervisors will immediately report any violations or allegations of violations to the Audit Committee. Managers will work with the Audit Committee in assessing areas of concern, potential violations, any needs for enhancement of the Code or remedial actions to effect the Code’s policies and overall compliance with the Code and other related policies.
- Auditing. Resources selected by the Audit Committee will be responsible for auditing the Company’s compliance with the Code.
- Internal Investigation. When an alleged violation of the Code is reported, the Company will take prompt and appropriate action in accordance with the law and regulations and otherwise consistent with good business practice. If the suspected violation appears to involve either a possible violation of law or an issue of significant corporate interest, or if the report involves a complaint or concern of any person, whether an employee, a shareholder or other interested person regarding the Company’s financial disclosure, internal accounting controls, questionable auditing or accounting matters or practices or other issues relating to the Company’s accounting or auditing, then the manager or investigator should immediately notify the Audit Committee and/or his or her manager or other corporate officer. If a suspected violation involves any director or executive officer, or if the suspected violation concerns any fraud, whether or not material, involving management or other employees who have a significant role in the Company’s internal controls, the Audit Committee or any person who received such report should immediately report the alleged violation to the Board of Directors. The Board of Directors shall assess the situation and determine the appropriate course of action. At a point in the process consistent with the need not to compromise the investigation, a person who is suspected of a violation shall be apprised of the alleged violation, and shall have an opportunity to provide a response to the investigator.
- Disciplinary Actions. Subject to the following sentence, the Board of Directors, after consultation with legal counsel, shall be responsible for implementing the appropriate disciplinary action in accordance with the Company’s policies and procedures for any employee who is found to have violated this Code. Any violation of applicable law or any deviation from the standards embodied in this Code will result in disciplinary action, up to and including termination of employment. Any employee engaged in the exercise of substantial discretionary authority, including any officer, who is found to have engaged in a violation of law or unethical conduct in connection with the performance of his or her duties for the Company, shall be removed from his or her position and not assigned to any other position involving the exercise of substantial discretionary authority. In addition to imposing discipline upon employees involved in non-compliant conduct, the Company also will impose discipline, as appropriate, upon an employee’s supervisor, if any, who directs or approves such employee’s improper actions, or is aware of those actions but does not act appropriately to correct them, and upon other individuals who fail to report known non-compliant conduct.
- Retention of Reports and Complaints. All reports and complaints made to, or received by, the Audit Committee shall be logged into a record maintained for this purpose by the Audit Committee and this record of such report shall be retained for not less than five (5) years.
- Required Government Reporting. Whenever conduct occurs that requires a report to the government, the Audit Committee, after consultation with legal counsel, shall be responsible for complying with such reporting requirements.
- Corrective Actions. Subject to the following sentence, in the event of a violation of this Code, the manager and Audit Committee should assess the situation to determine whether the violation demonstrates a problem that requires remedial action as to Company policies and procedures. If a violation has been reported to the Audit Committee, that committee shall be involved in the determination of appropriate remedial or corrective actions. Corrective action may include providing revised public disclosure, retraining Company employees, modifying Company policies and procedures, improving monitoring of compliance under existing procedures and other action necessary to detect similar non-compliant conduct and prevent it from occurring in the future. Any corrective action shall be documented, as appropriate.
Complete, Timely & Understandable Disclosure
It is of crucial importance that all disclosure in reports and documents that the Company files with, or submits to, the Securities & Exchange Commission, and in other public communications made by the Company is full, fair, accurate, timely and understandable. You must take all steps available to aid the Company in these responsibilities consistent with your role within the Company. In particular, you are required to provide prompt and accurate answers to all inquiries made to you in connection with the Company’s preparation of its public reports and disclosure.
The Company’s Chief Executive Officer and Chief Financial Officer are responsible for designing, establishing, implementing, reviewing and evaluating, on a quarterly basis, the effectiveness of the Company’s disclosure controls and procedures (as such term is defined by applicable Securities & Exchange Commission rules). The Company’s Chief Executive Officer, Chief Financial Officer, principal accounting officer or controller and persons performing similar functions, persons who meet the requirements of Item 406 of Regulation S-K, and such other Company officers as are designated from time to time by the Audit Committee, shall be deemed the Senior Officers of the Company Senior Officers shall take all steps necessary and suitable to ensure that all disclosure in reports and documents filed with or submitted to the Securities & Exchange Commission, and all disclosure in other public communication made by the Company is full, fair, accurate, timely and understandable.
Senior Officers are also responsible for implementing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Generally Accepted Accounting Principles. Senior Officers shall take all necessary steps to ensure compliance with established accounting procedures, the Company’s system of internal controls and Generally Accepted Accounting Principles. Senior Officers shall make sure that the Company maintains and keeps books, records, and accounts, which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company. Senior Officers also shall assure that the Company devises and implements a system of internal accounting controls sufficient to provide reasonable assurances that:
- transactions are executed with management’s general or 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 for assets;
- access to assets is permitted, and receipts and expenditures are made, only in accordance with management’s general or specific authorization; and
- the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences, all to permit prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the Company’s financial statements.
Any attempt to enter inaccurate or fraudulent information into the Company’s accounting system will not be tolerated and will result in disciplinary action, up to and including termination of employment.
Publication of the Code of Business Conduct and Ethics; Amendments and Waivers
The most current version of this Code will be posted and maintained on the Company’s web site and filed as an exhibit to the Company’s next succeeding Annual or Quarterly Report filed with the Securities & Exchange Commission. The Report shall disclose that the Code is maintained on the Company’s web site and shall disclose that substantive amendments and waivers also will be posted on our web site.
Only substantive amendments relating to the specified elements of this Code of Business Conduct and Ethics must be disclosed. Any waiver of the Code for executive officers or directors may be made only by the Board of Directors, and must be promptly disclosed to shareholders. Any amendment to the Code of Business Conduct and Ethics, or the approval of any waivers by the Board of Directors, will be disclosed within five (5) business days of such action (a) on the Company’s web site for a period of not less than twelve (12) months and (b) in a Form 8-K filed with the Securities and Exchange Commission. Such disclosure shall include the reasons for any waiver. The Company will retain the disclosure relating to any such amendment or waiver for not less than five (5) years.