INSIDER TRADING POLICY OF
AS ADOPTED BY THE BOARD OF DIRECTORS ON SEPTEMBER 24, 2008
In the course of their employment with
the Company or its subsidiaries, directors, officers and employees
frequently come into possession of confidential and highly sensitive
information concerning the Company or other corporations with which the
Company has contractual relationships or may be negotiating
Much of this information has a
potential for affecting the market price of securities issued by the
corporations involved. Under some circumstances, federal securities
laws impose potentially onerous civil and criminal penalties on persons
who improperly disclose or use material, non-public information, in
connection with a purchase or sale of securities.
In 1988, Congress passed insider
trading legislation that explicitly empowers the Securities and Exchange
Commission (“SEC”) to seek substantial civil penalties from any person
who at the time of an insider trading violation, “directly or indirectly
controlled the person who committed such violation,” i.e., an employer.
Civil penalties for persons who control violators can equal the greater
of $1,000,000 or three times the profit gained or losses avoided.
Employers may also be subject to criminal penalties of $2,500,000 for
insider trading violations committed by employees. Accordingly, when
the maximum criminal penalty is combined with the maximum civil penalty,
employers of persons who trade on the basis of insider information may
be liable for up to $3,500,000 – even for employee violations that yield
a small profit gained or loss avoided.
The statute provides that any
“controlling person” may be liable for civil penalties up to the amount
specified above if the controlled person both (i) knew or recklessly
disregarded the fact that the employee was likely to engage in a
violation and (ii) failed to take appropriate steps to prevent that
violation before it occurred. Moreover, in recent years, the SEC and
governmental prosecutors have been vigorously enforcing the insider
trading laws against both individuals and institutions.
Given all of these factors, the
Company has determined to provide specific guidance concerning the
propriety of various personal transactions, and to impose specific
procedures in certain cases to attempt to reasonably ensure that neither
the Company nor its employees violates insider trading laws.
Explanation of the Law.
The federal securities laws and regulations have been held to prohibit
the purchase or sale of a security at a time when the person trading in
that security possesses material non-public information concerning the
issuer of the security, or the market for the security, which has not
yet become a matter of general public knowledge and which has been
obtained or is being used in breach of a duty to maintain the
information in confidence. Communication of non-public information to a
third party, under circumstances where improper trading can be
anticipated, is also prohibited. “Material non-public information”
includes information that is not available to public at large which
could affect the market price of the security and to which a reasonable
investor would attach importance in deciding whether to buy, sell or
retain the security.
Common examples of information that
will frequently be regarded as material are: impending bankruptcy or
financial liquidity problems; projections by a corporation’s officers of
future earnings or losses; news of a pending or proposed merger or
acquisition, or a tender offer or exchange offer; news of a significant
sale of assets or the disposition of a subsidiary; changes in dividend
policies or the declaration of a stock split or the offering of
additional securities; changes in management; significant new products
or discoveries; or the gain or loss of a substantial customer or
supplier. It should be noted that either positive or adverse
information may be material.
Information is considered to be
available to the public only when it has been released to the public
through appropriate channels (e.g., by means of a press release or a
statement from one of the corporation’s senior officers) and enough time
has elapsed to permit the investment market to absorb and evaluate the
information. Once public release has occurred, information will
normally be regarded as absorbed and evaluated within two or three
business days thereafter.
As long as an officer, director or employee has material non-public
information relating to the Company or any other corporation with which
the Company has a contractual relationship, it is Company policy that
the officer, director or employee may not buy or sell securities of that
corporation. Equally important, the information may not be passed along
avoid potential liability, under the Company’s policy a director,
officer or other employees of the Company must not purchase or sell
securities of the Company or of any other issuer of a security at
a time when such officer, director or employee is aware of any material
non-public information about the issuer, regardless of how that
information was obtained. The officer, director or employee also must
not permit any member of his or her immediate family or anyone acting on
his behalf, or anyone to whom he has disclosed the information, to
purchase or sell such securities.
After the information has been
publicly disclosed through appropriate channels, a reasonable time
should be allowed to elapse (at least three business days) before
trading in the security, to allow for public dissemination and
evaluation of the information.
The Company is available to advise and
provide assistance. Any person who has a question regarding the
propriety of a proposed transaction or who has a question about the
policy is encouraged to contact Mr. Robert W. Schleizer.