Amended & Restated
Code of Business Conduct and Ethics for Employees, Executive Officers and Directors
Effective as of September 9, 2022
Ault Alliance, a Delaware corporation (the “Company”), strives to apply high ethical, moral and legal principles in every aspect of its business conduct. This Amended and Restated Code of Business Conduct and Ethics (this “Code”) is a guide for all Company personnel consisting of officers, employees and directors.
This Code applies to all Company personnel, and is addressed to each employee and director individually. It sets forth broad ethical principles that the Company has established for the conduct of its business, and outlines certain key legal requirements of which all Company personnel must be aware and with which all Company personnel must comply. This Code is not intended to cover every issue that may arise, and in the course of performing their duties and responsibilities for the Company, all personnel should act with these principles in mind and should use good judgment and common sense at all times.
This Code is designed to deter wrongdoing and promote the following:
- Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest;
- Avoidance of conflicts of interest, including disclosure to an appropriate Company representative of any material transaction or relationship that reasonably could be expected to give rise to such a conflict;
- Full, fair, accurate, timely, and understandable disclosure in reports and documents that the Company files with the Securities and Exchange Commission (“SEC”) and in other public communications made by the Company;
- Compliance with applicable governmental laws, rules and regulations;
- protection of Company assets, including corporate opportunities and confidential information;
- Prompt internal reporting of violations of this Code to an appropriate person; and
- Accountability for adherence to this Code.
Each director, officer and employee must act with integrity and observe the highest ethical standards of business conduct in his or her dealings with the Company’s customers, suppliers, partners, service providers, competitors, employees and anyone else with whom he or she has contact in the course of performing his or her job.
Company personnel who violate the standards contained in this Code will be subject to disciplinary action, possibly including termination of employment.
- Definition of Terms Used
(a) “Business Associate” means any supplier of services or materials, customer, consultant, professional advisor, lessor of space or goods, tenant, licensor, licensee or partner of the Company.
(b) “Company” includes Ault Alliance and each of its subsidiaries and affiliated business entities.
(c) “Insider” means any officer, director or employee of the Company.
(d) “Family Members” means as to a specific Insider, his or her Immediate Family Members and any company, partnership, limited liability company, trust or other entity that is directly or indirectly controlled by that Insider or by any Immediate Family Member of that Insider.
(e) “Immediate Family Member” includes the spouse (or life partner) and children of an Insider and any relative (by blood or marriage) of that Insider or spouse (or life partner) residing in the same household as such Insider.
(f) “Compliance Officer” shall mean Henry Nisser, General Counsel of the Company.
- Conflicts of Interest
A “conflict of interest” exists when an individual’s private interest (or the interest of a member of his or her family) interferes with or appears to interfere with the interests of the Company. A conflict of interest can arise when the individual (or a member of his or her family) acts or has interests that may make it difficult for him or her to objectively and effectively perform his or her work for the Company. Conflicts of interest also can arise when the individual, or a member of his or her family, receives improper personal benefits because of his or her position in the Company.
Unless approved by the Board, neither you nor any member of your immediate family can acquire a financial interest in, or accept employment with, an entity doing business with the Company if the interest or employment could conflict with your duties to the Company and the performance of such duties. For example, it is usually a conflict of interest for Company personnel to work simultaneously for a competitor, customer or supplier. Also, you cannot work for a competitor as an employee, consultant or board member.
Loans by the Company to, or guarantees by the Company of obligations of, employees or their family members are of special concern and could constitute improper personal benefits to the recipients of such loans or guarantees, depending on the facts and circumstances. Loans by the Company to, or guarantees by the Company of obligations of, any director or executive officer or their family members are expressly prohibited.
In addition, you and your immediate family members cannot accept material gifts or favors that could create the appearance that your business judgment could be affected by the receipt of such gifts or favors. You and members of your immediate family, however, can accept gifts of nominal value from existing sources, prospective sources or persons, firms or companies with whom the Company does or might do business.
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. You cannot offer gifts or favors to any employee, or a member of the employee’s immediate family, of a competitor, supplier or customer if the gifts or favors might place the recipient under any obligation to you or to the Company.
Conflicts of interest are prohibited as a matter of Company policy. You are required to bring any conflict of interest or potential conflict of interest to the attention of your immediate supervisor, the Compliance Officer or other appropriate person as described in Section 17. Conflicts of interest may not always be apparent, so if you have a question regarding whether a particular situation is a conflict of interest, you should consult with your immediate supervisor or contact the Compliance Officer. Executive officers or members of the Board should consult with the Chair or another member of the Audit Committee of the Board, which consists entirely of outside, independent directors.
- Corporate Opportunities
All directors, officers and employees owe a duty to the Company to advance its interests when the opportunity arises. Directors, officers and employees are prohibited from taking for themselves personally (or for the benefit of friends or family members) opportunities that are discovered through the use of Company assets, property, information or position. Directors, officers and employees may not use Company assets, property, information or position for personal gain (including gain of friends or family members). In addition, no director, officer or employee may compete with the Company.
- Non-Disclosure of Information
(a) No Insider or Family Member shall discuss with, or inform others about, any actual or contemplated business transaction by a Business Associate or the Company except in the performance of the Insider’s employment duties or in an official capacity and then only for the benefit of the Business Associate or the Company, as appropriate, and in no event for personal gain or for the benefit of any other third party.
(b) No Insider or Family Member shall give any information to any third party about any business transaction of the Company or its Business Associates that are proposed or in process unless expressly authorized to do so by the Compliance Officer.
(c) No Insider or Family Member other than the Company’s Chief Executive Officer or the Chief Financial Officer may discuss with any member of the press or media the Company or its Business Associates except with the prior authorization of the Compliance Officer. Insiders and Family Members shall refer all press inquiries to the Chief Executive Officer.
- Fair Dealing
The Company seeks to outperform its competition fairly and honestly through superior performance and not through unethical or illegal business practices. Company personnel must deal fairly with the Company’s customers, suppliers, partners, service providers, competitors, employees and anyone else with whom he or she has contact in the course of performing his or her job. Company personnel cannot steal proprietary information, possess trade secret information obtained without the owner’s consent, or induce such disclosures by past or present employees of other companies. You may not take unfair advantage of anyone through manipulation, concealment, abuse of confidential information, misrepresentation of material facts or any other intentional unfair practice. The knowing or deliberate falsification of any documents or data in connection with service to the Company will be the basis for immediate discharge and may subject the violator to civil and/or criminal penalties.
- Protection and Proper Use of Company Assets
Company personnel must endeavor to protect the Company’s assets and property and ensure their efficient use. Theft, carelessness, and waste have a direct adverse impact on the Company’s profitability and are prohibited. All payments with Company funds require approval by an authorized officer who has knowledge of the purpose of the payment, adequate substantiation of the identity of the payee and written contracts establishing the payment obligation. Company personnel must report any suspected incident of fraud or theft immediately for investigation. Moreover, Company personnel must use all assets and property of the Company only for legitimate business purposes.
The obligation of Company personnel to protect the Company’s assets extends to the Company’s intellectual property. Intellectual property includes trade secrets, patents, patent applications, trademarks, and copyrights, as well as business, marketing and service plans, clinical studies, regulatory dossiers, formulations, designs, databases, records, salary information and any non-public financial data and reports. Unauthorized use or distribution of this information violates Company policy and may subject the violator to civil and/or criminal penalties.
- Compliance with Laws, Rules and Regulations
Employees, officers and directors should comply, both in letter and spirit, with all applicable laws, rules and regulations in the cities, states and countries in which the Company operates. Although not all employees, officers and directors are expected to know the details of all applicable laws, rules and regulations, it is important to know enough to determine when to seek advice from appropriate personnel. Company personnel should contact the Compliance Officer with any questions as to the applicability of any law, rule or regulation or the appropriate manner of compliance therewith. The Compliance Officer will be responsible for conferring with legal counsel and resolving the issue.
- Insider Trading
Securities laws and regulations prohibit the misuse of material non-public (“inside”) information when purchasing, selling or recommending securities.
Inside information obtained by any Insider from any source must be kept strictly confidential. All inside information should be kept secure and access to files and computer files containing such information should be restricted. Insiders shall not use, act upon, or disclose to any third party including, without limitation, any Family Member, any material inside information, except as may be necessary for the Company’s legitimate business purposes to the extent approved, in advance, by the Compliance Officer. Questions and requests for assistance regarding inside information should be promptly directed to the Compliance Officer.
Information is generally considered “material” if (a) there is a substantial likelihood that a reasonable investor would find the information important in determining whether to trade in a security, or (b) the information, if made public, would likely affect the market price of a company’s securities. Inside information typically includes, but is not limited to, knowledge of pending Company business transactions, corporate finance activity, mergers or acquisitions, unannounced earnings and financial results and other significant developments affecting the Company.
Insiders and Family Members are prohibited from insider trading (buying or selling securities when in possession of material, nonpublic information) or tipping (passing such information on to someone who may buy or sell securities).
This prohibition on insider trading applies to Company securities and also to the securities of Business Associates if such person learns material, nonpublic information about them as a result of his or her position with the Company.
Information is generally considered “nonpublic” unless it has been adequately disclosed to the public, which means that the information must be publicly disclosed and adequate time must have passed for the securities markets to absorb the information. A delay of two business days is usually considered a sufficient period for routine information to be absorbed by the market. A longer period may be necessary for particularly significant or complex matters.
If an Insider leaves the Company, he or she must maintain the confidentiality of all inside information until it has been adequately disclosed to the public. If there is any question as to whether information regarding the Company or any Business Associate is material or has been adequately disclosed to the public, the Compliance Officer must be contacted.
The Company’s periodic reports and other documents filed with the SEC, including all financial statements and other financial information, must comply with applicable federal securities laws and SEC rules. Each director, officer and employee who contributes in any way to the preparation or verification of the Company’s financial statements and other financial information must ensure that the Company’s books, records and accounts are accurately maintained. Each director, officer and employee must cooperate fully with the Company’s accounting and internal audit departments, as well as the Company’s independent public accountants and counsel.
Each Insider who is involved in the Company’s disclosure process must:
- be familiar with and comply with the Company’s disclosure controls and procedures and its internal control over financial reporting; and
- take all necessary steps to ensure that all filings with the SEC and all other public communications about the financial and business condition of the Company provide full, fair, accurate, timely and understandable disclosure.
- Compliance with Internal Controls and Disclosure Controls
(a) The Company has adopted a system of internal controls that must be strictly adhered to by all Insiders in providing financial and business transaction information to and within the Company. The internal controls are the backbone of the integrity of the Company’s financial records and financial statements.
Each Insider shall promptly report to the Compliance Officer any actual or suspected breaches or violations of the Company’s internal controls that come to the attention of the Insider.
Each Insider shall promptly report to the Compliance Officer any actual or suspect fraudulent or questionable transactions or occurrences that come to the attention of the Insider. Potentially fraudulent transactions include, without limitation, embezzlement, forgery or alteration of checks and other documents, theft, misappropriation or conversion to personal use of Company assets, and falsification of records.
Each Insider is encouraged to bring to the attention of the Compliance Officer any changes that the Insider believes may improve the Company’s system of internal controls.
(b) The Company has adopted a system of disclosure controls and procedures to assure that all important information regarding the business and prospects of the Company is brought to the attention of the Chief Executive Officer and Chief Financial Officer of the Company. The accuracy and timeliness of compliance with those disclosure controls and procedures is critical to this system of disclosure controls is critical to enabling those officers to provide the financial statement and periodic report certifications required by Federal law.
Each Insider shall strictly adhere to the system of disclosure controls, including the internal reporting responsibilities assigned to him or her by the Company.
Each Insider shall promptly report in accordance with Company policy any significant event or occurrence (whether positive or negative) that arises in the course of the Insider’s duties and responsibilities. Events or occurrences include those that affect or may affect the Company or its Business Associates, competitors or industry. General economic conditions need not be reported.
(c) Each Insider shall be candid in discussing matters concerning internal controls and business disclosures with the Company’s management, internal auditors, outside auditors, outside counsel and directors. Factual information is important. Opinions and observations are strongly encouraged.
- Discrimination and Harassment
The Company requires strict adherence to its policies and applicable laws regarding equal employment opportunities and discrimination in the workplace. The Company will not tolerate illegal discrimination or harassment. Relationship with colleagues and business relationships with competitors, suppliers and customers always must be conducted free of any discrimination, including based on race, color, creed, religion, age, sex, sexual preference, national origin, marital status, veteran status, handicap or disability.
- Health and Safety
The Company strives to provide all Company personnel with a safe and healthful work environment. You share responsibility for maintaining a safe and healthy workplace by following safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or condition.
The Company will not tolerate violence or threatening behavior in the workplace. In addition, Company personnel are required to report to work in condition to perform their duties, free from the influence of illegal drugs or alcohol. The Company will not tolerate the use of illegal drugs in the workplace.
The Company requires honest and accurate recording and reporting of information in order to make responsible business decisions. You must document and record accurately all of your business expenses. If you are unsure whether a particular expense is legitimate, you should ask the Company’s Chief Financial Officer. Executive officers or members of the Board should confer with a member of the Audit Committee. Rules and guidelines regarding business expenses are available from the Company’s account department.
All of the Company’s books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Company’s transactions and must conform both to applicable legal requirements and to the Company’s system of internal controls. Unrecorded or “off the books” funds or assets cannot be maintained unless permitted by applicable laws or regulations.
If the existence of a subpoena or impending government investigation becomes known to an Insider, he or she must immediately contact the Compliance Officer. Insiders must retain all records and documents that may be responsive to a subpoena or pertain to an investigation. Any questions regarding whether a record or document pertains to an investigation or may be responsive to a subpoena should be directed to the Compliance Officer before the record or document is disposed of. Insiders shall strictly adhere to the directions of the Compliance Officer in handling such records or documents.
Company personnel must avoid exaggeration, derogatory remarks, guesswork or inappropriate characterizations of people and companies in business records and communications. This prohibition applies equally to e-mail, internal memos and formal reports.
- Payments to Government Personnel or Candidates for Office
The United States Foreign Corrupt Practices Act prohibits giving anything of value, directly or indirectly, to officials of foreign governments or foreign political parties or candidates to obtain or retain business. Making payments to government officials of any country is illegal.
Kickbacks, bribes, rebates or other illegal consideration are prohibited, and must never be given or accepted by any Company personnel. All Company personnel dealing with government agencies must be aware of, and comply with, any agency rules limiting or prohibiting gifts or other favors.
The Company will not contribute directly or indirectly to political parties, candidates for office and/or political action committees unless approved by the Board of Directors or the Audit Committee, and by the CEO and the General Counsel, and only in accordance with applicable laws, provided, however, that the Executive Committee may authorize the Company to make contributions not in excess of $20,000 annually to a particular political party, candidate for office and/or political action committee, but not to exceed an aggregate of $200,000 annually.”
- Waivers of the Code of Business Conduct and Ethics
Any waiver of this Code for executive officers or directors requires the approval of the Board and must be disclosed promptly as required by applicable law, rules or regulations, including the SEC and the NYSE American, LLC.
- Condition of Employment or Service
All Insiders shall conduct themselves at all times in the best interests of the Company. Compliance with this Code shall be a condition of employment and of continued employment with the Company, and conduct not in accordance with this Code shall constitute grounds for disciplinary action, including termination of employment.
This Code is not an employment contract nor is it intended to be an all exclusive policy statement on the part of the Company. The Company reserves the right to provide the final interpretation of the policies it contains and to revise those policies as deemed necessary or appropriate.
- Compliance, Reporting and Enforcement
If you are concerned about a possible ethical or illegal situation or any violation of this Code or are not sure whether specific conduct meets applicable Company standards, you should discuss the situation with your immediate supervisor or contact the Compliance Officer. Executive officers or members of the Company’s board of directors should discuss the situation with a member of the Audit Committee.
Company personnel must report violations of laws, rules, and regulations of this Code to immediate supervisors, the Company’s chief financial officer, or the chairman of the Audit Committee. Executive officers or members of the Board must report such matters to a member of the Audit Committee.
After receiving a report of an alleged prohibited action, the Audit Committee or the Compliance Officer must promptly take all appropriate actions necessary to investigate. All directors, officers and employees are expected to cooperate in any internal investigation of misconduct.
The Company prohibits retaliation for reports of ethical misconduct made by Company personnel in good faith. If a situation requires that the identity of the person reporting any such misconduct not be disclosed, the Company will protect his or his anonymity, to the extent legally possible.
This Code may only be amended by the Board. The Company must report promptly any amendments pertaining to executive officers or senior financial officers as required by applicable laws, rules or regulations.
Download a copy of Code of Business Conduct and Ethics.
January 19, 2021
In order to take an active role in the prevention of insider trading violations by its officers, directors, employees and other related individuals, Ault Alliance (the “Company”) has adopted the policies and procedures described in this Memorandum.
I. Adoption of Insider Trading Policy.
The Company has adopted the Insider Trading Policy attached as Exhibit A (the “Policy”), which prohibits trading based on material, non-public information regarding the Company (“Inside Information”). The Policy covers officers, directors and all other employees of, or consultants to, the Company or its subsidiaries, as well as family members of such persons, and others, in each case where such persons have or may have access to Inside Information. The Policy (and/or a summary thereof) is to be delivered to all new directors, officers, employees and consultants on the commencement of their relationships with the Company and is to be circulated to all employees at least annually.
II. Designation of Certain Persons.
- The Company has determined that those persons listed on Exhibit B are the directors and officers who are subject to the reporting and penalty provisions of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder (“Section 16 Individuals”). Exhibit B may be amended by the Company from time to time.
- The Company has determined that those persons listed on Exhibit C, together with the Section 16 Individuals listed on Exhibit B, are subject to the preclearance requirement described in Section IV.A. below, in that the Company believes such persons have, or are likely to have, access to Inside Information on a more frequent basis than other employees. Exhibit C may be amended from time to time. Under special circumstances, certain persons not listed on Exhibit C may come to have access to Inside Information for a period of time. During such period, such persons should also be subject to the preclearance procedure described in Section IV.A. below.
III. Appointment of Compliance Person.
The Company has appointed the General Counsel of the Company (or his or her successor in office) as the Company’s Insider Trading Compliance Officer.
IV. Duties of Insider Trading Compliance Officer.
The duties of the Insider Trading Compliance Officer shall include, but not be limited to, the following:
- Preclearance of all transactions involving the Company’s securities by those individuals listed on Exhibit B and Exhibit C, in order to determine compliance with the Policy, insider trading laws, Section 16 of the Exchange Act and Rule 144 promulgated under the Securities Act of 1933, as amended (the “Securities Act”).
- Review of Rule 10b5-1 trading programs.
- Assistance in the preparation of Section 16 reports (Forms 3, 4 and 5) for all Section 16 Individuals.
- Mailing of reminders to all Section 16 Individuals regarding their obligations to report.
- Performance of cross checks of available materials, which may include Forms 3, 4 and 5, Form 144, officer and director questionnaires, and reports received from the Company’s stock administrator and transfer agent, to determine trading activity by officers, directors and others who have, or may have, access to Inside Information.
- Circulation of the Policy (and/or a summary thereof) to all employees, including Section 16 Individuals, on an annual basis, and provision of the Policy and other appropriate materials to new officers, directors and others who have, or may have, access to Inside Information.
INSIDER TRADING POLICY
and Guidelines with Respect to Certain Transactions in Company Securities
This Policy provides guidelines to employees, officers, directors and consultants of Ault Alliance (the “Company”) with respect to transactions in the Company’s securities.
Applicability of Policy
This Policy applies to all transactions in the Company’s securities, including common stock, options for common stock and any other securities the Company may issue from time to time, such as preferred stock, warrants and convertible debentures, as well as to derivative securities relating to the Company’s stock, whether or not issued by the Company, such as exchange traded options. It applies to all officers of the Company, all members of the Company’s Board of Directors, and all employees of, and consultants and contractors to, the Company and its subsidiaries who receive or have access to Material Nonpublic Information (as defined below) regarding the Company. This group of people, members of their immediate families, and members of their households are sometimes referred to in this Policy as “Insiders.” This Policy also applies to any person who receives Material Nonpublic Information from any Insider.
Any person who possesses Material Nonpublic Information regarding the Company is an Insider for so long as the information is not publicly known. Any employee can be an Insider from time to time and would at those times be subject to this Policy.
Statement of Policy
It is the policy of the Company to oppose the unauthorized disclosure of any nonpublic information acquired in the workplace and the misuse of Material Nonpublic Information in securities trading.
- Trading on Material Nonpublic Information. No director, officer or employee of, or consultant or contractor to, the Company, and no member of the immediate family or household of any such person, shall engage in any transaction involving a purchase or sale of the Company’s securities, including any offer to purchase or offer to sell, during any period commencing with the date that he or she possesses Material Nonpublic Information concerning the Company, and ending at the close of business on the second Trading Day following the date of public disclosure of that information, or at such time as such nonpublic information is no longer material. As used herein, the term “Trading Day” shall mean a day on which national securities exchanges are open for trading.
- Disclosure of Information to Others. The Company is required under Regulation FD of the federal securities laws to avoid the selective disclosure of Material Nonpublic Information. The Company has established procedures for releasing material information in a manner designed to achieve broad public dissemination of the information immediately upon its release. You may not, therefore, disclose information to anyone outside the Company, including family members and friends, other than in accordance with those procedures. You also may not discuss the Company or its business in an internet “chat room” or similar internet-based forum.
- Confidentially of Nonpublic Information. Nonpublic information relating to the Company is the property of the Company and the unauthorized disclosure of such information is forbidden.
Potential Criminal and Civil Liability and/or Disciplinary Action
- Liability for Insider Trading. Insiders may be subject to penalties of up to $5,000,000 and up to twenty years in prison for engaging in transactions in the Company’s securities at a time when they have knowledge of nonpublic information regarding the Company.
- Liability for Tipping. Insiders may also be liable for improper transactions by any person (commonly referred to as a “tippee”) to whom they have disclosed nonpublic information regarding the Company or to whom they have made recommendations or expressed opinions based on such information as to trading in the Company’s securities. The Securities and Exchange Commission (the “SEC”) has imposed large penalties even when the disclosing person did not profit from the trading. The SEC, the national securities exchanges and FINRA use sophisticated electronic surveillance techniques to uncover insider trading.
- Possible Disciplinary Actions. Employees of the Company who violate this Policy shall also be subject to disciplinary action by the Company, which may include ineligibility for future participation in the Company’s equity incentive plans and termination of employment.
Prohibition on Trading During Quarterly Blackout Periods. To ensure compliance with this Policy and applicable federal and state securities laws, the Company has adopted a policy that prohibits persons listed on Exhibit B or Exhibit C from buying or selling the Company’s securities during a regular quarterly “blackout” period (unless they have established a pre-arranged trading plan that complies with Rule 10b5-1 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Each blackout period begins on the last day of the last month of the fiscal quarter and continues until the end of the second full trading day after the public release of quarterly results.
It should be noted that trading on dates that are outside of the quarterly blackout periods will not relieve anyone from liability if in possession of Material Nonpublic Information concerning the Company. Although the Company may from time to time recommend the suspension of trading by directors, officers, employees and others because of developments known to the Company and not yet disclosed to the public, each person is always individually responsible for compliance with the prohibitions against insider trading. Trading in the Company’s securities should not be considered a “safe harbor,” and all directors, officers and other persons should always use good judgment.
Preclearance of Trades
. No person listed on Exhibit B or Exhibit C is to purchase, sell, or otherwise engage in transactions in securities of the Company without obtaining, in writing, prior clearance of the transaction by the Insider Trading Compliance Officer. The proposed transaction will be reviewed for compliance with applicable regulatory requirements.
The Company may also find it necessary, from time to time, to require compliance with the preclearance process from certain employees, consultants and contractors other than and in addition to those persons listed on Exhibit B and Exhibit C.
Rule 10b5-1 trading programs.
The SEC has adopted a rule that permits insiders to trade in certain circumstances where it is clear that inside information was not a factor in the decision to trade. Rule 10b5-1 provides that an individual who buys or sells securities while aware of Material Nonpublic Information does not violate Rule 10b-5 if the buying or selling is in conformity with a binding contract, instruction or written plan that was put into place at a time when the individual was not aware of Material Nonpublic Information. Establishing such a pre-arranged trading plan provides an opportunity for an Insider to limit his or her potential insider trading liability. When trading arrangements are prearranged, it becomes clearer to the investing public (and potential plaintiffs) that the Insider’s purchases and sales are not being prompted by his or her knowledge of current developments within the Company, or such person’s feelings about the Company’s prospects.
The Company permits its directors and officers to set up Rule 10b5-1 trading programs. However, great care must be exercised in relying on new Rule 10b5-1, for the following reasons:
In order to meet the requirements of Rule 10b5-1, binding contracts, instructions and written plans must: (i) lock in the amount, price and dates of future trades; (ii) provide a formula or algorithm for determining future trades; or (iii) delegate discretion for determining amount, price and dates to a third party precisely as provided under the rule.
The ability to modify provisions once locked in is limited, and modification or termination of arrangements is risky.
Although Rule 10b5-1 may help directors and officers avoid liability under Rule 10b-5, it does not eliminate other relevant securities law requirements and prohibitions. Therefore, buying and selling in reliance on Rule 10b5-1 must also be designed to comply with the reporting and short-swing profit rules under Section 16 of the Exchange Act, the limitations on insider selling imposed by Rule 144 under the Securities Act, the prohibition on trading during administrative blackouts under 401(k) or other retirement plans, and, in some cases, certain other securities law requirements.
The liability avoidance provisions of Rule 10b5-1 are affirmative defenses. If the government can prove that an individual was aware of Material Nonpublic Information at the time of a purchase or sale, the burden of proving that trading was pursuant to an adequate contract, instruction or written plan will be on the individual. Compliance must be well documented and capable of proof in court.
- Procedures for Establishing Rule 10b5-1 Trading Programs.
If an officer or director wishes to establish an arrangement designed to comply with Rule 10b5-1, he or she must follow the procedures listed below:
- Arrangements must be in the form of a written contract.
- The contract must be reviewed and approved in advance by the Company’s Insider Trading Compliance Officer.
- The contract must be entered into when the officer or director is not in possession of any Material Nonpublic Information and not subject to any blackout.
- The contract must either:
- Specify the number of securities to be purchased or sold (i.e., a set number of shares or a set dollar amount) and the price and date on which the securities are to be purchased or sold;
- Include a written formula or algorithm, for determining the amount of securities to be purchased or sold and the price and date of their purchase or sale; or
- Effectively delegate to a third party who does not have access to any Inside Information all power to determine how, when or whether to effect purchases or sales.
- The officer or director will not be permitted to cancel or make any changes to the contract when in possession of any Material Nonpublic Information or during any blackout period.
- Cancellations or amendments must be approved in advance by the Company’s Insider Trading Compliance Officer and must be in writing.
- Please be aware that the Company will likely be required to publicly disclose any trading plan adopted by an officer or director. Additionally, the Company will need to establish a procedure with whoever is handling the 10b5-1 transactions to ensure:
- Prompt filing of a Form 4 after each transaction takes place (if applicable); and
- Compliance with SEC Rule 144 at the time of any sale.
Most sophisticated brokers, investment bankers and advisors have developed standard documentation for Rule 10b5-1 trading plans. If this type of plan is adopted, we strongly recommend the officer or director work with a brokerage firm that is experienced in these matters. In order to ensure compliance with Rule 10b5-1, please remember that any trading plan or amendment must be submitted to the Company’s Insider Trading Compliance Officer for review and approval in advance of entering the plan or amendment.
- Trading Restrictions during “Retirement Plan” Administrative Blackout Periods. Persons listed on Exhibit B or Exhibit C are prohibited from trading in any Company securities during administrative blackout periods under 401(k) and similar retirement plans (unless such persons have established a pre-arranged trading plan that complies with Rule 10b5-1 promulgated under the Exchange Act). Any profits realized from a prohibited transaction are recoverable by the Company, including through a shareholder derivative-type action, without regard to intent. In addition, unlike Section 16 of the Exchange Act, no matching transaction within the blackout period is required in order to impose the disgorgement penalty. The Company’s Insider Trading Compliance Officer will advise you whenever an administrative blackout is imposed with respect to the Company’s 401(k) or other retirement plans.
- Individual Responsibility. Every officer, director and employee have the individual responsibility to comply with this Policy against insider trading. An Insider may, from time to time, have to forego a proposed transaction in the Company’s securities even if he or she planned to make the transaction before learning of the Material Nonpublic Information and even though the Insider believes he or she may suffer an economic loss or forego anticipated profit by waiting.
Applicability of Policy to Inside Information Regarding Other Companies
This Policy and the guidelines described herein also apply to Material Nonpublic Information relating to other companies, including the Company’s customers, vendors or suppliers (“business partners”), when that Material Nonpublic Information is obtained in the course of employment with, or other services performed on behalf of, the Company. Civil and criminal penalties, and termination of employment, may result from trading on Inside Information regarding the Company’s business partners. All employees should treat Material Nonpublic Information about the Company’s business partners with the same care required with respect to information related directly to the Company.
Definition of Material Nonpublic Information
It is not possible to define all categories of material information. However, information should be regarded as material if there is a reasonable likelihood that it would be considered important to an investor in making an investment decision regarding the purchase or sale of the Company’s securities.
While it may be difficult under this standard to determine whether particular information is material, there are various categories of information that are particularly sensitive and, generally, should always be considered material. Examples of such information may include:
- Financial results;
- Projections of future earnings or losses;
- News of a pending or proposed merger;
- News of the disposition of a subsidiary;
- Impending bankruptcy or financial liquidity problems;
- Gain or loss of a substantial customer or supplier;
- Changes in dividend policy;
- Significant pricing discount changes;
- Stock splits;
- New equity or debt offerings;
- Significant litigation exposure due to actual or threatened litigation; and
- Major changes in senior management.
Either positive or negative information may be material.
Nonpublic information is information that has not been previously disclosed to the general public and is otherwise not available to the general public.
For purposes of this Policy, the Company considers that the exercise of stock options for cash under the Company’s stock option plans or the purchase of shares under the Company’s employee stock purchase plan (but not the sale of any such shares) is exempt from this Policy, since the other party to the transaction is the Company itself and the price does not vary with the market but is fixed by the terms of the option agreement or the plan.
Additional Information Directors and Officers
Directors and officers of the Company must also comply with the reporting obligations and limitations on short swing transactions set forth in Section 16 of the Exchange Act. The practical effect of these provisions is that officers and directors who purchase and sell the Company’s securities within a six-month period must disgorge all profits to the Company whether or not they had knowledge of any Material Nonpublic Information. Under these provisions, and so long as certain other criteria are met, neither the receipt of an option under the Company’s option plans, nor the exercise of that option nor the receipt of stock under the Company’s employee stock purchase plan is deemed a purchase under Section 16; however, the sale of any such shares is a sale under Section 16 and the purchase and sale must be reported on Form 4. Moreover, no officer or director may ever make a short sale of the Company’s stock. The Company has provided, or will provide, separate memoranda and other appropriate materials to its officers and directors regarding compliance with Section 16 and its related rules.
All Company officers, directors, employees and consultants will be required to certify in writing their understanding of and intent to comply with the Insider Trading Policy. In addition, Company officers, directors, employees and consultants may be required to certify their compliance with the Insider Trading Policy on an annual basis.
Please direct your questions as to any of the matters discussed in this Policy to the Company’s Insider Trading Compliance Officer.
ADOPTED AUGUST 13, 2020
- Mission Statement
- develop and recommend to the Board the Corporate Governance Guidelines of the Corporation appended hereto and oversee compliance therewith;
- assist the Board in effecting Board organization, membership and function including identifying qualified Board nominees;
- assist the Board in effecting the organization, membership and function of Board committees including the composition of Board committees and recommending qualified candidates therefor;
- evaluate and provide successor planning for the Chief Executive Officer and other executive officers; and
- to develop criteria for Board membership, such as independence, term limits, age limits and ability of former employees to serve on the Board and the evaluation of candidates’ qualifications for nominations to the Board its committees as well as removal therefrom, respectively.
- Objectives, Responsibilities and Authority
- periodically evaluate the desirability of, and recommend to the Board, any changes in the size and composition of the Board;
- identify and evaluate candidates for director in accordance with the general and specific criteria set forth herein or determined in accordance herewith;
- evaluate each new director candidate and each incumbent director before recommending that the Board nominate or renominate such individual for election or re-election (or that the Board elect such individual on an interim basis) as a director based on the extent to which such individual meets the general criteria set forth herein and will contribute significantly to satisfying the overall mix of specific criteria identified herein and remedying any deficiencies therein; each annual decision to nominate incumbent directors should be based on a careful consideration of each such individual’s contributions, including the value of his or her experience as a director of the Corporation, the availability of new director candidates who may offer unique contributions and the Corporation’s changing needs;
- diligently seek to identify potential director candidates who will strengthen the Board and remedy any perceived deficiencies in the specific criteria identified herein;
- establish procedures for soliciting and reviewing potential nominees from directors and for advising those who suggest nominees of the outcome of such review;
- submit to the Board the candidates for director to be recommended by the Board for election at each annual meeting of stockholders and to be added to the Board at any other times due to Board expansions, director resignations or retirement or otherwise;
- monitor performance of directors based on the general criteria and the specific criteria applicable to each such director and, if any serious problems are identified, work with such director to resolve such problems or, if necessary, seek such director’s resignation or recommend to the Board such person’s removal;
- develop and periodically evaluate initial orientation guidelines and continuing education guidelines for each member of the Board and each member of each Board committee regarding his or her responsibilities as a director generally and as a member of any applicable Board committee, and monitor and evaluate annually (and at any additional time a new member joins the Board or any Board committee) each director’s cooperation in fulfilling such guidelines which shall take into account all relevant factors, including the nature of each individual’s responsibilities and related background and any particular complexities relating to the Corporation’s business, financial statements or other characteristics and which guidelines may impose higher standards for directors who are members of certain Board committees than for those who are not and may, in appropriate circumstances, impose higher or lower requirements for a particular director based upon his or her background and/or occupation; and
- retain and terminate any search firm used to identify director candidates and to approve any such search firm’s fees and other terms of retention.
- evaluate at least annually the performance, authority, operations, charter and composition of each standing or ad hoc Board committee, including this charter (including any authority of a committee to delegate to a subcommittee) and the performance of each committee member and recommend any changes considered appropriate in the authority, operations, charter, number or membership of each committee and, if any serious problems are identified with a committee member, the Nominating and Corporate Governance Committee shall work with such person to resolve such problems or, if necessary, seek such person’s resignation or recommend to the Board such person’s removal from the applicable committee(s); and
- submit to the Board annually (and at any additional times that any committee members are to be selected) candidates for membership on each Board committee and for the chairperson of each committee.
- assist the Board in evaluating the performance of and other factors relating to the retention of the Chief Executive Officer and assist the Board in overseeing the evaluation of the performance of other executive officers, subject to the Chief Executive Officer’s primary responsibility for evaluating the performance of other executive officers; and
- develop and periodically review and revise as appropriate, a management succession plan and related procedures including consideration and recommendation of candidates for successor to the Chief Executive Officer to the Board and, with appropriate consideration of the Chief Executive Officer’s recommendations, consideration and recommendation of candidates for successors to other executive officers, in each case when vacancies shall occur in those offices.
- develop and recommend to the Board Corporate Governance Guidelines and any changes therein, setting forth the corporate governance principles applicable to the Corporation and, at least annually, review and reassess the adequacy of such Corporate Governance Guidelines;
- oversee compliance with the Corporation’s Corporate Governance Guidelines and report on such compliance to the Board and review requests for waivers compliance with the Corporation’s Corporate Governance Guidelines;
- review potential conflicts of interest involving directors and determine whether such directors may vote on issues as to which there may be a conflict;
- monitor and make recommendations to the Board on other matters of Board policy and practices relating to corporate governance; and
- review and make recommendations to the Board regarding proposals of stockholders that relate to corporate governance.
- Review compliance with the Corporation’s Related Party Transactions Policy; and
- With respect to equity issuances, the Nominating and Corporate Governance Committee shall review and exercise overview of all equity issuances, including making recommendations to the Board with respect to any equity issuance.
- Composition, Membership and Qualification
The number of members comprising the Nominating and Corporate Governance Committee shall be as determined by the Board consistent with the Corporation’s Certificate of Incorporation and Bylaws and applicable law, as the same may be amended from time to time but shall not be less than three (3) members, each of whom shall be independent non-employee directors. A majority of the full Board shall appoint the members of the Nominating and Corporate Governance Committee annually and as vacancies or newly created positions occur. Members of the Nominating and Corporate Governance Committee may also be removed, at any time, with or without cause, by a majority of the full Board. The Board shall designate the Chairman of the Nominating and Corporate Governance Committee.
The Board shall, in the exercise of its business judgment, determine the “independence” of directors within the meaning of applicable law, SEC rules and NYSE American regulations for this purpose. Members of the Nominating and Corporate Governance Committee shall also qualify as “non-employee directors” within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, and as “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended.
- Meetings and Other Actions
The Nominating and Corporate Governance Committee shall meet at least once a year and at such additional times as may be necessary to carry out its responsibilities. Meetings may be called by the Chairman of the Nominating and Corporate Governance Committee or the Chairman of the Board. All meetings of and other actions by the Nominating and Corporate Governance Committee shall be held and taken pursuant to the by-laws of the Corporation including by-law provisions governing notice of meetings and waiver thereof, action by written consent and other related matters.
A majority of the Nominating and Corporate Governance Committee members shall constitute a quorum for the transaction of business. The action of a majority of those present at a meeting at which a quorum is attained, shall be the act of the Nominating and Corporate Governance Committee when only two (2) members are present and this constitutes a quorum, the unanimous vote of the two (2) members, shall constitute the act of the Nominating and Corporate Governance Committee.
The Nominating and Corporate Governance Committee shall meet in executive session without the presence of any members of management as often as it deems appropriate. The Nominating and Corporate Governance Committee shall meet as required and report thereon from time to time to the Board. Reports of meetings of and actions taken at meetings or by consent by the Nominating and Corporate Governance Committee shall be made by the Chairman or his or her delegate to the Board at its next regularly scheduled meeting following the Nominating and Corporate Governance Committee meeting or action and shall be accompanied by any recommendations from the Nominating and Corporate Governance Committee to the Board.
Except as expressly provided by this charter, the Corporation’s Certificate of Incorporation, Bylaws or Corporate Governance Guidelines or as required by law, regulations or NYSE American rules, the Nominating and Corporate Governance Committee shall establish its own rules of procedure.
- Nominating Criteria
- A) General Criteria. Director selection should include at least enough independent directors, as defined under applicable law and rules, to satisfy the requirement that a majority of the Corporation’s directors be independent and such independent directors should have appropriate skills, experiences and other characteristics to provide qualified persons to fill all Board committee positions required to be filled by independent directors. Subject to the right of the Nominating and Corporate Governance Committee and the Board to decide otherwise when deemed appropriate, the Chief Executive Officer of the Corporation should be a director and, depending on the circumstances, certain other members of management, as well as certain individuals having relationships with the Corporation that prevent them from being independent directors, may be appropriate members of the Board. Each director should:
- be an individual of the highest character and integrity and have an inquiring mind, vision, a willingness to ask hard questions and the ability to work well with others;
- be free of any conflict of interest that would violate any applicable law or regulation or interfere with the proper performance of a director’s responsibilities;
- be willing and able to devote sufficient time to the affairs of the Corporation and be diligent in fulfilling the responsibilities of a director and Board committee member (including developing and maintaining sufficient knowledge of the Corporation and its industry, reviewing and analyzing reports and other information important to Board and committee responsibilities, preparing for, attending and participating in Board and committee meetings and satisfying appropriate orientation and continuing education guidelines); and
- have the capacity and desire to represent the best interests of the stockholders as a whole and not primarily a special interest group or constituency.
- B) Specific Criteria. In addition to the foregoing general criteria, the Nominating and Corporate Governance Committee shall develop, reevaluate at least annually and modify as appropriate a set of specific criteria outlining the skills, experiences (whether in business or in other areas such as public service, academia or scientific communities), particular areas of expertise, specific backgrounds and other characteristics that should be represented on the Board to enhance the effectiveness of the Board and Board committees. The specific criteria should:
- take into account any particular needs of the Corporation based on its business, size, ownership, growth objectives, community, customers and other characteristics and will need to be adjusted and refocused as these Corporation characteristics change and evolve; and
- prepare, at least annually, a list of any specific criteria so identified that are not adequately represented on the Board and, when practical, the Nominating and Corporate Governance Committee should indicate the most significant deficiencies that should be given the highest- priority in recruiting new director candidates possessing the missing criteria.
- Additional Resources
ADOPTED AUGUST 13, 2020
- Purpose of the Audit Committee
- Composition of the Audit Committee
- Responsibilities of the Audit Committee
- Independent auditors:
- to appoint, compensate, retain, oversee, evaluate and terminate the independent auditors, who must report directly to the Committee;
- to pre-approve all audit and non-audit services to be provided by the independent auditors; in this regard, the Committee may, in its discretion, (A) delegate to one or more of its members the authority to pre-approve any audit or non-audit services to be performed by the independent auditors, provided that any such approvals are presented to the Committee at its next scheduled meeting, and (B) pre-approved services using pre-approval policies and procedures, provided that (1) such policies and procedures are detailed as to the particular services to be provided, (2) the Committee is informed about each such particular service and (3) such policies and procedures do not result in the delegation of the Committee’s authority to management;
- to ensure that the independent auditors shall submit to the Committee annually a formal written statement (the “Auditors’ Statement”) describing all relationships between the independent auditors and the Corporation, consistent with the Independence Standards Board Standard No. 1;
- to discuss with the dependent auditors any relationships or services disclosed in the Auditors’ Statement that may impact the quality of audit services or the objectivity and independence of the Corporation’s independent auditors;
- to actively engage in dialogue with the independent auditors with respect to any disclosed relationship or services that may impact the independence of the auditors;
- to obtain from the independent auditors in connection with any audit a timely report relating to the Corporation’s annual audited financial statements describing all critical accounting policies and practices used, all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative treatments and any material written communications between the independent auditors and management, such as any management letter or schedule of unadjusted differences;
- to obtain from the independent auditors annually a formal written statement of the fees billed in each of the last two fiscal years for each of the following categories of services rendered by the independent auditors: (i) the audit of the Corporation’s annual financial statements included in the Corporation’s Annual Report on Form 10-K and the review of the financial statements included in the Corporation’s Quarterly Reports on Form 10-Q or services that are normally provided by the independent auditors in connection with statutory and regulatory filings or engagements; (ii) assurance and related services not included in clause (i) that are reasonably related to the performance of the audit or review of the Corporation’s financial statements, in the aggregate and by each service; (iii) tax compliance, tax advice and tax planning services, in the aggregate and by each service; and (iv) all other products and services rendered by the independent auditors, in the aggregate and by each service; and
- to discuss with management the timing and process for implementing the rotation of the lead audit partner, the concurring partner and any other active audit engagement team partner;
- Financial reporting principles, policies, internal audit controls, and procedures:
- to meet with management, the independent auditors and, if appropriate, the director of the internal audit department
- to discuss the scope and results of the annual audit;
- to discuss the annual audited financial statements and quarterly financial statements;
- to discuss any significant matters arising from any audit, including any audit problems or difficulties, whether raised by management, the internal auditing department or the independent auditors, relating to the Corporation’s financial statements;
- to discuss any difficulties the independent auditors encountered in the course of the audit, including any restrictions of their activities or access to requested information and any significant disagreements with management; and
- to discuss any management or internal control letter issued, or proposed to be issued, by the independent auditors to the Corporation;
- to inquire of the Corporation’s chief executive officer and chief financial officer as to the existence of any significant deficiencies in the design or operation of internal controls that could adversely affect the Corporation’s ability to record, process, summarize and report financial data, any material weakness in internal controls, and any fraud, whether or not material, that involves management or other employees who have a significant role in the Corporation’s internal controls;
- to establish procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters, and for the confidential, anonymous submission by the Corporation’s employees of concerns regarding questionable accounting or auditing matters; and
- to establish hiring policies for employees or former employees of the independent auditors.
- to meet with management, the independent auditors and, if appropriate, the director of the internal audit department
- Reporting and recommendations:
- to prepare any report or other disclosures or any recommendations of the Committee, required by the rules of the SEC to be included in the Corporation’s annual report;
- to review and reassess the adequacy of this Charter at least annually and recommend any changes to the full Board;
- to report its activities to the full Board on a regular basis; provided, however, that any formal written report prepared by the Committee or a third party on behalf of the Committee must be approved by a majority of the members of the Committee prior to delivery of such report to the Board; and
- to make such recommendations with respect to the above and other matters as the Committee may deem necessary or appropriate.
- Debt financing:
- The Committee shall review all proposed debt financing, including loans and Future Receipts Agreements, which are greater than $250,000 submitted to it for review by management. The Committee will make a written recommendation to the full Board and, if approved by the Committee, set for such approval in resolutions of the Committee. The full Board will vote on whether to enter the transaction. The Committee shall not delegate its responsibilities under this section to any other party or entity.
- For purposes hereof, “Future Receipts Agreements” shall mean agreements whereby the Corporation receives funds in exchange for a promise to pay back the funds received using future receipts or future receivables of the Corporation and include agreements whereby the Corporation is required to make repayment regardless of whether or not the Corporation has any receipts or receivables.
- Other matters:
- The Committee, with the assistance of the Corporation’s General Counsel acting as the Compliance Officer (the “Compliance Officer”), shall review, reassess and update as necessary the Code of Business Conduct and Ethics at least annually;
- The Committee shall review Whistleblower complaints (as described in the Whistleblower Policy), in consultation with and under the supervision of the Compliance Officer and or the Corporation’s outside legal counsel, as applicable, and present an account of the review to the full Board at each regularly scheduled meeting, as necessary.
- All Corporation employees shall be required to cooperate with Committee investigations. Any failure to cooperate shall be grounds for discipline by the Board. This applies to all Corporation employees and consultants, including, but not limited to, the CEO and CFO;
- The Committee shall receive annually a report listing all trades in the Corporation’s securities engaged in by executive officers who are subject to Section 16 of the Exchange Act;
- The Corporation’s Independent Registered Public Accounting Firm (a “Firm”) shall be rotated every five (5) years beginning no later than the Corporation’s fiscal year ended December 31, 2025; and
- The Committee shall compile a list of potential independent auditors and conduct the necessary preemptive due diligence to ensure that the Corporation is not without a Firm for more than thirty (30) days upon the resignation or termination of its current Firm.
- Resources and Authority of the Audit Committee
The Compensation Committee (the “Committee”) is a committee of the Board of Directors (the “Board”). The Committee is responsible for reviewing and recommending executive compensation policies and practices to the Board, reviewing and recommending to the Board salaries, bonuses and other benefits paid to Company officers, and administering Company stock option plans and other benefit plans.
The Committee shall consist of three or more directors, all of whom satisfy the definition of “independent” under the listing standards of NYSE American. The Committee members shall be appointed by the Board and may be removed by the Board, at its discretion. In addition, a person may serve on the Compensation Committee only if the Board of Directors determines that he or she (i) is a “Non-employee Director” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and (ii) satisfies the requirements of an “outside director” for purposes of Section 162(m) of the Internal Revenue Code. Notwithstanding the foregoing, if the Committee is comprised of at least three members, the Board, under exceptional and limited circumstances, may appoint one director who is not “independent” under NYSE American rules provided that (a) the Board determines that the director’s membership on the Committee is in the best interests of the Company and its shareholders; (b) the director may not be an officer or employee of the Company or an immediate family member of an officer or employee; and (c) the director may not serve on the Committee for more than two years. The Company shall disclose in the proxy statement for the next annual meeting the nature of the relationship and the reasons for the Board’s determination.
DUTIES AND RESPONSIBILITIESThe Committee’s duties and responsibilities include:
- reviewing and recommending to the Board the Company’s compensation philosophy and overseeing the administration of related compensation and benefit programs, policies and practices;
- recommending to the Board the compensation of the President & CEO;
- establishing performance goals and objectives for the President & CEO and measuring the President and CEO’s performance against those goals and objectives pursuant to any corporate performance-based plans, including those approved by shareholders;
- recommending to the Board employment agreements and offers of employment provided to the President & CEO;
- recommending to the Board the Company’s submissions to shareholders on executive compensation matters, including advisory votes on executive compensation and the frequency of such votes;
- reviewing and certifying in writing awards to the Company President & CEO under corporate performance-based plans, including those approved by shareholders;
- recommending to the Board the terms of any awards or option grants under any stock option or other equity-based plans;
- reviewing and recommending to the Board the compensation of members of the Board of Directors including, without limitation, annual member fees and any equity grants;
- performing such other duties and carrying out such other responsibilities as are consistent with this Charter; and
- recommending to the Board the compensation of any other officers of the Company (to the extent required by applicable listing standards).
RESOURCES AND AUTHORITY OF THE COMMITTEE
The Committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, independent legal counsel or other adviser (the “Consultant”). The Committee shall be directly responsible for the appointment, termination, compensation and oversight of the work of any Consultant retained by the Committee. The Company must provide for appropriate funding, as determined by the Committee, for payment of reasonable compensation to a Consultant retained by the Committee.
MEETINGSThe Committee shall meet at least one (1) time each year and at such other times as it deems necessary to fulfill its responsibilities. The Committee shall report regularly to the Board with respect to its activities and make recommendations to the Board of Directors as appropriate.
Effective as of January 19, 2021 Ault Alliance, Inc. (“AULT”) has established the Ault Alliance Executive Committee (the “Committee”) as a permanent internal body to provide financial, legal and advisory support to the Executive Chairman of Ault Alliance (the “Executive Chairman”), assist in coordinating the activities of Ault Alliance and its subsidiaries (collectively, the “AULT Group”), and perform such other duties and responsibilities as the Board of Directors of AULT (the “Board”) may from time to time determine.
- Charter Approval and Review
- Membership of the Committee
- Executive Chairman of the Board;
- Chief Executive Officer and Vice Chairman of the Board; and
- President, General Counsel & member of the Board.
The members of the Committee shall continue to serve on the Committee for as long as they hold their respective office unless the Board determines otherwise.
- Authority and Responsibilities
The Committee is appointed by the Board to act for and on behalf of the Board and AULT, to the fullest extent permitted by law, including by (1) directing the operational management and policies of AULT, (2) authorizing AULT to enter into contracts (including contracts with executive officers of the AULT Group, to the extent such power is not delegated exclusively to the Compensation Committee of the Board) and make expenditures accordingly, (3) authorizing AULT to incur indebtedness (which authorization shall constitute the specific direction of the Board), (4) taking any and all actions that, in the judgment of the Committee, are not consequential enough to submit to the full Board and (5) taking any and all such further action between meetings of the Board when prompt action is needed before the Board’s next regularly scheduled meeting and, when, in the judgment of the Committee, it is not practical to convene a Board meeting. The principal responsibility of the members of the Committee is to exercise their business judgment to act in what they reasonably believe to be in the best interests of AULT and its stockholders. In discharging that obligation, members of the Committee should be entitled to rely on the honesty and integrity of the AULT Group’s senior executives and its outside advisors and auditors, to the fullest extent permitted by law.
Not in diminution of the general powers granted in foregoing paragraph, the Committee shall have the following specific powers, which shall include, but not be limited to, the following:
- (a) To provide financial, legal and advisory support to the Executive Chairman in the overall management of the AULT Group.
- (b) To approve:
- (i) the purchase of goods and services up to $2,000,000;
- (ii) acquisitions and dispositions provided that the cash amount of the acquisition is no higher than $3,000,000, provided that the Executive Chairman shall, as promptly as practicable after the consummation of any acquisition or disposition pursuant hereto, inform the Board of any such acquisition or disposition and provided, further, that no such acquisition by AULT shall consist in any part of the issuance of an equity or equity-linked security;
- (iii)subject to the Audit Committee’s consent, the incurrence of debt by AULT in an amount up to $3,000,000, provided that the Executive Chairman shall, as promptly as practicable after the incurrence of any debt pursuant hereto, inform the Board of any such debt incurrence and provided, further, that no such debt to be incurred by AULT shall constitute or include an equity or equity-linked security;
- (iv) the engagement of consultant services that are not, in the sole discretion of the Committee, entered in the ordinary course of business;
- (v)intercompany contracts and arrangements;
- (vi) material treasury and capital market instruments and arrangements, including hedging transactions;
- (vii) annual operating and investment budgets for all members of the AULT Group;
- (viii) the designation, hiring, engagement or termination of any officer or other employee of the AULT Group (exclusive of non-managerial, secretarial, ministerial positions);
- (ix) the repurchase any debt or equity securities;
- (x) the negotiation of the disposition of any subsidiary of AULT and, where the subsidiary is not significant to the AULT Group in the sole and absolute discretion of the Committee, the disposition of any such subsidiary;
- (xi) prior to public dissemination, the release of any nonpublic information relating to the AULT Group, including approval of any press release or similar disclosure;
- (xii) the engagement or dismissal of any of the AULT Group’s independent registered public accounting firm(s); and
- (xiii) the taking of any action, authorization or approval, or entry into any binding agreement with respect to the foregoing.
- (c) To review the monthly and quarterly operating and financial performance of the AULT Group and determine what changes/corrective actions, if any, ought to be taken.
- (d) To review and propose to the Board for approval the AULT Group strategy.
- (e) To review, determine and approve (and, when appropriate in the discretion of the Committee, recommend to the Board) modifications or changes to the AULT Group’s organizational structure.
- (f) To coordinate the activities of the AULT Group.
- (g) To facilitate the implementation and dissemination of AULT Group policies, procedures, rules, standards, guidelines and best practices.
- (h) To allocate options to employees and consultants under any of AULT’s stock incentive plans as well as any other type of equity performance award that AULT may presently or in the future utilize, provided, that any issuance of options or other equity performance awards to directors and executive officers shall remain solely within the discretion of the Compensation Committee.
- (i) To review and provide guidance on any major salary or benefit program changes as well as provide advice on setting the parameters for AULT’s annual reviews and bonus policies.
- (j) To enter into any banking or investment banking relationships on behalf of AULT or any member of the AULT Group, or create, incur, or assume any indebtedness other than in connection with a plan approved by the Board or Committee.
- (k) To mortgage, pledge, assign in trust or otherwise encumber any property or assets, or assign any monies owed or to be owed, except for customary liens contained in or arising under operating or similar agreements executed by or binding on AULT or any member of the AULT Group.
- (l) Amend, modify or change in any material respect any loan or credit document or any other material agreement to which AULT is a party;
- (m) To receive regular reports on the activities of the AULT Group in order to support the executive functions and lines of business in understanding the legal, regulatory, and market factors affecting the AULT Group.
- (n) To assist and support the Executive Chairman in effectively representing the AULT Group’s interests and act as a point of contact for key stakeholders such as employees, customers, regulatory bodies, the media, government and other relevant bodies.
- (o) To assist and support the Executive Chairman in his representation of the AULT Group and contribute to and positively impact the AULT Group’s external image and reputation, it being accepted, acknowledged and agreed that any enumerated authority or power hereby conferred to the Committee is expressly reserved to it and that no such authority or power is to be undertaken by any officer or other individual within the AULT Group.
In addition, during intervals between meetings of the Board, the Committee shall review and, in its judgment, approve the settlement or compromise of any litigation or claim against AULT or any of its subsidiaries that does not directly relate to a claim under an insurance policy issued, in each case by a subsidiary of AULT (individually and collectively referred to herein as “insurance litigation”), for an amount, whether to be paid in one or more of a series of related payments, that exceeds $1,000,000; provided however notwithstanding the foregoing, that each of the Executive Chairman, the Chief Executive Officer as well as the President and General Counsel, is authorized to effect the settlement or compromise of any non-insurance litigation or claim on behalf of AULT or any of its subsidiaries, and to delegate to appropriate officers of AULT or any of its subsidiaries their authority to settle or compromise any such claim on behalf of AULT or any of its subsidiaries, for an amount, whether to be paid in one or more of a series of related payments, that does not exceed $1,000,000.
- Scope of Functions
The Committee is primarily a decision-making body along with being an information forum and a platform for discussion of issues. The Committee shall ensure that no material decisions be made by an officer or other individual of the AULT Group without its express prior written approval. This policy shall be widely disseminated to all officers and other individuals employed by the AULT Group. Violation of this policy shall constitute grounds for immediate dismissal and/or termination, as the case may be, and constitute “Cause” under any employee’s employment or consulting agreement with any member of the AULT Group.
In carrying out its functions, the Committee will always ensure the protection of commercially sensitive information and will comply with applicable codes of conduct, ethics, and law.
- Meetings of the Committee
The Committee shall meet with the frequency the Executive Chairman deems necessary for the Committee to discharge properly its responsibilities, which will generally be weekly meetings and at such other times as the Executive Chairman deems appropriate.
At all meetings of the Committee, a majority of the members of the Committee shall constitute a quorum for the transaction of business, and the act of a majority of the members present at any meeting at which there is a quorum shall be the act of the Committee. In the event of a tie where only two members are in attendance, resolution of the applicable matter shall be determined at the Committee’s next following meeting where all three members of the Committee are present.
Absent unusual circumstances, Committee members are expected to attend all Committee meetings and to review any materials provided in advance of the meeting. Attendance by telephone or other communications equipment is permitted if all persons participating in the meeting can hear each other.
The Executive Chairman will serve as the chairman of the Committee and shall preside over the Committee meetings and the Secretary will serve as the secretary of the Committee. In the absence of the Executive Chairman or the Secretary at a Committee meeting, the Executive Chairman will designate a member of the Committee to chair the meeting and/or act as secretary of the meeting, as the case may be.
The Executive Chairman may direct appropriate members of management and staff to prepare draft agendas and related background information for each Committee meeting. Any background materials, together with the agenda, should be distributed to the Committee members in advance of the meeting.
The AULT Group’s officers and other personnel, as the Committee deems appropriate, shall be invited to attend and participate in Committee meetings from time to time to provide the Committee with regular updates on the activities carried out by their respective division. In addition, to the extent appropriate and not prohibited by law, the Committee may request, through the secretary of the Committee, that any director, officer or employee of the AULT Group be invited to attend and participate in Committee meetings from time to time to brief the Committee on a particular topic.
- Resources of the Committee
Effective Date: August 13, 2020
- Introduction Under the Code of Business Conduct and Ethics (“Code of Ethics”) of Ault Alliance, Inc. (the “Corporation”), all employees must report to the Corporation’s Compliance Officer any activity that would cause or appear to cause a conflict of interest on his or her part. The Board of Directors (the “Board”) of the Corporation recognizes that certain transactions present a heightened risk of conflicts of interest or the perception thereof. Therefore, the Board has adopted this Related Party Transactions Policy (the “Policy”) to ensure that all Related Party Transactions (as defined below) be subject to review, approval or ratification in accordance with the procedures set forth below.
- Definitions For purposes of this Policy, the following terms shall have the following meanings:
- A. “Immediate Family Member” means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a person, and any person (other than a tenant or an employee) sharing the household of such person.
- B. “Related Party” means:
- a related party according to the definitions as set forth in SEC Item 404 of Regulation S-K, 17 C.F.R. §229.404 and the Instructions thereto;
- any entity where:
- an officer, director, or consultant of the Corporation serves as an officer, director, or consultant of the entity;
- an officer, director, or consultant of the Corporation has a 10% or greater beneficial ownership interest in the entity, either individually or through his/her interest in another entity; or
- an officer, director, or consultant of the Corporation exercises voting control of the entity through ownership of securities in that entity either individually or through his/her interest in another entity; and
- Avalanche International Corp. (d/b/a MTIX International, Inc.), Alzamend Neuro, Inc., Ault & Company, Inc., Philou Ventures, LLC and any of their respective subsidiaries, affiliates and successors in interest.
- “Related Party Transaction” means any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness), in which (i) the Corporation or any of its subsidiaries is or will be a participant, (ii) the aggregate amount involved will or may be expected to exceed $120,000 in any fiscal year, and (iii) any Related Party has or will have a direct or indirect material interest. This also includes any material amendment or modification to an existing Related Party Transaction.
- Procedures. It is the responsibility of the Nomination and Corporate Governance Committee of the Board (the “Committee”) to administer this Policy.
- Prior to entering a Related Party Transaction, the Related Party (or if the Related Party is an Immediate Family Member of an executive officer or director of the Corporation, such executive officer or director) shall notify the Corporation’s Compliance Officer of the facts and circumstances of the proposed transaction. The Compliance Officer will undertake an evaluation of the Related Party Transaction and, in his discretion, consult with the Corporation’s outside securities legal counsel. If that evaluation indicates that the Related Party Transaction would require the approval of the Committee, the Compliance Officer and other members of the Corporation’s management will report the Related Party Transaction, together with a summary of the material facts (as defined below), to the Committee for consideration at the next regularly scheduled Committee meeting or such other time as the Committee may determine.
- Such material facts shall include, but not be limited, to:
- A general description of the transaction(s), including the material terms and conditions
- The name of the Related Party and the basis on which such person or entity is a Related Party.
- The Related Party’s interest in the transaction(s), including the Related Party’s position or relationship with, or ownership of, any entity that is a party to or has an interest in the transaction(s).
- The approximate dollar value of the transaction(s), and the approximate dollar value of the Related Party’s interest in the transaction(s) without regard to amount of profit or loss.
- In the case of a transaction providing for periodic payments or installments, the aggregate amount of all periodic payments or installments expected to be made.
- In the case of indebtedness, the aggregate amount of principal to be outstanding and the rate or amount of interest to be payable on such indebtedness.
- Any other material information regarding the transaction(s) or the Related Party’s interest in the transaction(s).
The Committee shall review all the relevant facts and circumstances of all Related Party Transactions that require the Board’s approval and recommend to the Board to either approve or disapprove of the entry into the Related Party Transaction, subject to the exceptions described below. In determining whether to recommend to the Board to approve or ratify a Related Party Transaction, the Committee shall take into account, among other factors it deems appropriate, (i) whether the transaction was undertaken in the ordinary course of business of the Corporation, (ii) whether the Related Party Transaction was initiated by the Corporation, a subsidiary or the Related Party, (iii) whether the transaction with the Related Party is proposed to be, or was, entered into on terms no less favorable to the Corporation than terms generally available to an unaffiliated third party, (iv) the purpose of, and the potential benefits to the Corporation of, the Related Party Transaction, (v) the approximate dollar value of the amount involved in the Related Party Transaction, particularly as it relates to the Related Party, (vi) the Related Party’s interest in the Related Party Transaction, and (vii) any other information regarding the Related Party Transaction or the Related Party that would be material to investors in light of the circumstances of the particular transaction.
The Committee shall review all relevant information available to it about the Related Party Transaction. The Committee may recommend to the Board to approve the Related Party Transaction only if the Committee determines in good faith that, under all the circumstances, the transaction is in the best interests of the Corporation and its stockholders. The Board, in its sole discretion, may impose such conditions as it deems appropriate on the Corporation or the Related Party in connection with the approval of the Related Party Transaction.
If a Related Party Transaction involves a Related Party who is a director or an Immediate Family Member of a director, such director may not participate in any discussion or vote regarding approval or ratification of approval such transaction. However, such director shall provide all material information concerning the Related Party Transaction to the Committee and the Board. Such director may be counted in determining the presence of a quorum at a meeting of the Committee or the Board that considers such transaction.
If the Corporation becomes aware of a Related Party Transaction that has not been approved under this Policy, the Related Party Transaction shall be reviewed in accordance with the procedures set forth herein and, if the Board determines it to be appropriate, ratified at the Board’s next regularly scheduled meeting. In any case where the Board determines not to ratify a Related Party Transaction that has been commenced without approval, the Board may direct additional actions including, but not limited to, immediate discontinuation or rescission of the transaction, or modification of the transaction to make it acceptable for ratification.
- Ongoing Transactions. If a Related Party Transaction will be ongoing, the Committee may recommend to the Board that it establish guidelines for the Corporation’s management to follow in its ongoing dealings with the Related Party. Thereafter, the Committee, on at least an annual basis, shall review and assess ongoing relationships with the Related Party and make recommendations to the Board, if necessary, to ensure that they are in compliance with the Committee’s guidelines and that the Related Party Transaction remains appropriate.
- Standing Pre-Approval for Certain Interested Transactions. The Board has reviewed the types of Related Party Transactions described below and determined that each of the following types of Related Party Transactions shall be deemed to be pre-approved or ratified, as applicable, by the Board, even if the aggregate amount involved will exceed $120,000, unless specifically determined otherwise by the Board. In connection with each regularly scheduled meeting of the Committee, a summary of each new Related Party Transaction deemed pre-approved pursuant to this paragraph shall be provided to the Committee for its review and the Committee shall update the Board at the Board’s next regularly scheduled meeting.
- Director Compensation: In consultation with the Compensation Committee, any compensation paid to a director if the compensation is required to be reported in the Corporation’s proxy statement under Item 402 of Regulation S-K.
- Transactions Where All Shareholders Receive Proportional Benefits: Any transactions, arrangements or relationships where the Related Party’s interest arises solely from the ownership of the Corporation’s common stock and all holders of the Corporation’s common stock received the same benefit on a pro rata basis (e.g., dividends or stock splits).
- Transactions Involving Competitive Bids: Any transactions, arrangements or relationships involving a Related Party where the rates or charges involved are determined by competitive bids.
- Regulated Transactions: Any transactions, arrangements or relationships with a Related Party involving the rendering of services as a common or contract carrier, or public utility, at rates or charges fixed in conformity with law or governmental authority.
- Existing Policies and Procedures. Related Party Transactions must also comply with the Corporation’s existing policies and procedures, including the Code of Ethics.
Effective Date: August 13, 2020
Ault Alliance, Inc. (the “Corporation”) is committed to high standards of ethical, honest and legal business conduct. In line with this principle and the Corporation’s commitment to open communication, the Corporation’s Board of Directors (the “Board”) has established this Whistleblower Policy (the “Policy”) to provide a safe and reliable avenue for employees and others to bring to the Corporation’s attention, confidentially and anonymously if desired, illicit or illegal conduct and reassurance that they will be protected from reprisals, retaliation, discrimination or harassment for raising such concerns. This Policy is binding upon you as an employee, officer or director of the Corporation or any of its subsidiaries. If you have any questions about this Policy, please contact Henry Nisser, the Corporation’s General Counsel, at (646) 650-5044 or firstname.lastname@example.org.Policy Overview
It is the policy of the Corporation to encourage employees and others when they, in good faith, reasonably believe that questionable conduct has occurred, is occurring or is about to occur, to immediately report those concerns. For purposes of this Policy, good faith is evident when the report is made without malice or consideration of personal benefit and the employee, as the reporting individual, has a reasonable basis to believe that the report is true; provided, however, that a report need not be proven to be true to be made in good faith. Good faith is lacking when the report is known to be malicious or false, fictitious, fraudulent or without a reasonable belief in the truth and accuracy of the reported information. A party who knowingly and intentionally files a false report or provides false or deliberatively misleading information in connection with an investigation of a report may face disciplinary action, up to and including termination of employment or other legal proceedings.
The Corporation strictly prohibits retaliation, adverse action, discipline, threats, intimidation, or other form of retaliation by any of the Corporation’s officers, directors or employees against any employee who in good faith reports or participates in an investigation of reported complaints of questionable or illicit conduct. Notwithstanding the foregoing, the employee’s right to protection from retaliation does not extend immunity for any complicity in the matters that are the subject of the investigation. Whether you are an employee, an officer or director, we ask that you bring to light good faith concerns regarding the Corporation’s business practices.
We ask that you follow this Policy to report good faith concerns regarding any of the following:Suspected violations of our Code of Business Conduct and Ethics, which we refer to in this Policy as “Ethics Violations;”
- Suspected violations of any other Corporation policies or procedures, which we refer to in this Policy as “Corporate Policy Violations;”
- Questionable accounting, violations of internal accounting controls, or any other auditing or financial matters, or the reporting of fraudulent financial information, which we refer to in this Policy as “Fraudulent Auditing and Accounting Activities;” and
- Suspected violations of law or fraudulent activities other than Fraudulent Auditing and Accounting Activities, which we refer to in this Policy as “Legal Violations,” and collectively with Ethics Violations and Corporate Policy Violations, the “Violations.”
If requested, we also ask that you provide truthful information in connection with an inquiry or investigation by a court, an agency, law enforcement, or any other governmental body.Whom Does This Policy Cover?
This Policy applies to all employees, officers and directors of the Corporation or any of its subsidiaries, all of whom are referred to collectively as “employees” or “you” throughout this Policy. In this Policy, “we,” and “our” refers to the Corporation and its subsidiaries.
As an employee, if you are aware of a potential Violation or Fraudulent Auditing and Accounting Activity and do not report it according to this Policy, your inaction may be considered a Violation in itself, which may result in disciplinary action, up to and including termination of your employment or any other relationship that you may have with the Corporation or any of its subsidiaries.Reporting and Investigation
If you believe that any Violation or Fraudulent Auditing and Accounting Activity has occurred or is occurring or have a good faith concern regarding conduct that you reasonably believe may be a Violation or Fraudulent Auditing and Accounting Activity, we encourage you to promptly take one or more of the following actions:
- Discuss the situation with your manager;
- If you are uncomfortable speaking with your manager or believe your manager has not properly handled your concern or is involved in the Violation or Fraudulent Auditing and Accounting Activity, contact the General Counsel.
- If you do not believe your concern is being adequately addressed, or you are not comfortable speaking with the General Counsel directly, report your concern using one of the methods listed below, through which you may choose to identify yourself or remain anonymous:
- by mail to Ault Alliance, Inc., 100 Park Avenue, 16th Floor, Suite 1658A, New York, NY 10017, Attn.: General Counsel;
- by mail to Ault Global Holdings, Inc., 201 Shipyard Way, Suite E, Newport Beach, CA 92663, Attn.: Robert Smith, Chairman of the Audit Committee;
- by email to email@example.com;
- by email to firstname.lastname@example.org; or
- via our reporting hotline by phone at (833) 779-4577 (employees will be advised of the hotline number at the commencement of employment and the hotline number will also be included in the employee handbook for future reference).
This Policy provides a mechanism for the Corporation to be made aware of any alleged wrongdoings and address them as soon as possible. However, nothing in this Policy is intended to prevent any employee from reporting information to federal or state law enforcement agencies when an employee has reasonable cause to believe that the violation of a federal or state statute has occurred. A report to law enforcement, regulatory, or administrative agencies may be made instead of, or in addition to, a report directly to the Corporation through the reporting hotline or any other reporting method specified in this Policy.
If a whistleblower brings his or her complaint to an outside regulator or other governmental entity, he or she will be protected by the terms of this Policy just as if he or she directed the complaint to the Audit Committee and/or the General Counsel.
If an employee is subject to an adverse employment decision as a result of whistleblowing, the employee may file a complaint with the Department of Labor, or other government agency, within 90 days of the alleged violation (a failure to report such claims within the 90-day window does not foreclose any other available legal remedy).
The Policy shall reward successful whistleblowers under certain circumstances. Accordingly, the minimum award to a whistleblower uncovering a Violation involving corruption, fraud and/or similar unlawful activities at the Corporation shall be $25,000, in addition to any award that the employee may be entitled to from any government agencies.
The earlier a concern is expressed, the easier it is to take action. To that end, employees are encouraged to bring concerns pursuant to this Policy as soon as possible. Although the employee is not expected to prove the truth of an allegation, the employee should be able to provide reasonable factual support to enable the Corporation to respond to or investigate the complaint, and make a proper assessment of the nature, extent and urgency of the matter that is the subject of the complaint. To the extent possible, the complaint should contain specific information regarding: (i) the alleged event, matter or issue that is the subject of the complaint; (ii) the name of each person involved; (iii) if the complaint involves a specific event or events, the approximate date and location of each event; and (iv) any additional information, documentation or other evidence available to support the complaint. All reports of a Violation or Fraudulent Auditing and Accounting Activity will be taken seriously and will be promptly and thoroughly investigated. The specific action taken in any particular case depends on the nature and gravity of the conduct or circumstances reported and the results of the investigation. However, unless otherwise prohibited by applicable law, the Corporation may, in its reasonable discretion, determine not to commence an investigation if a complaint contains only unspecified or broad allegations of wrongdoing without appropriate informational support. The Corporation will acknowledge receipt of the report to the sender within a reasonable period following receipt if the sender chooses not to be anonymous and supplies contact information for response.
If a Violation or Fraudulent Auditing and Accounting Activity has been reported, investigated, and confirmed, the Corporation will take prompt and appropriate corrective action proportionate to the seriousness of the offense. The person(s) responsible for the misconduct, or those failing to cooperate or who provide false information during an investigation, will be subject to disciplinary action, up to and including termination of employment or any other working relationship that the offending party may have with the Corporation. Reasonable and necessary steps will also be taken to prevent any further Violation or Fraudulent Auditing and Accounting Activity.Handling Reports
Reports of Violations, Fraudulent Auditing and Accounting Activity, or other questionable conduct that are submitted by any means specified in this Policy will be handled as follows:
All reports received relating to accounting and auditing, including Fraudulent Auditing and Accounting Activity, will be entered on an accounting and auditing matters log, which will include, among other things: (1) the date the report was received, (2) a description of the report, (3) the reporting party (if provided), and (4) the status and disposition of an investigation of the report.
The General Counsel will promptly report to the Audit Committee: (1) reports of Ethics Violations or Fraudulent Auditing and Accounting Activity, including any such reports that are received by the General Counsel, but were not initially directed to the Audit Committee, (2) any Violation or Fraudulent Auditing and Accounting Activity involving the Corporation’s executive officers or directors, and (3) such other matters as the General Counsel deems significant. The Audit Committee shall direct and oversee an investigation of such reports in consultation and under the supervision of either the General Counsel or the Corporation’s outside legal counsel, as well as any reports initially directed to the Audit Committee, as it determines to be appropriate. The Audit Committee may, in its sole discretion if in its judgment the circumstances so warrant, elect to consult the Corporation’s outside legal counsel rather than the General Counsel and shall be required to do so if the complaint in question involves a member of the Corporation’s senior management.
The General Counsel shall provide the Audit Committee with a quarterly report of all accounting or auditing reports received and an update of pending investigations. The Audit Committee may request special treatment for any report and may assume the direction and oversight of an investigation of any such report.
All other reports will be logged separately and shall be reviewed under the direction and oversight of the General Counsel, who will forward them to the appropriate person or department for investigation (for example, labor and employment matters will be forwarded to the Human Resources Department), unless the General Counsel determines that other treatment is necessary.
Copies of the log and complaints will be maintained in accordance with the Corporation’s document retention policy.Confidentiality
Information disclosed during the course of the investigation will, to the extent practical and appropriate, remain confidential in compliance with the Corporation’s Code of Business Conduct and Ethics, except as may be reasonably necessary under the circumstances to facilitate the investigation, take remedial action, or comply with applicable law.
For any Violation or Fraudulent Auditing and Accounting Activity not reported through an anonymous report, the Corporation will advise the reporting party that the Violation or Fraudulent Auditing and Accounting Activity has been addressed and, if possible, of the specific resolution. However, due to confidentiality obligations, there may be times when the Corporation cannot provide the details regarding the corrective or disciplinary action that was taken.No Retaliation
The Corporation strictly prohibits and does not tolerate unlawful retaliation against any employee or officer for reporting a Violation or Fraudulent Auditing and Accounting Activity or suspected Violation or Fraudulent Auditing and Accounting Activity in good faith or otherwise cooperating in an investigation of a Violation or Fraudulent Auditing and Accounting Activity. All forms of unlawful retaliation are prohibited, including adverse action, discipline, harassment, threats, intimidation, demotion, suspension, transfer to a lesser position, denial of promotions, benefits or compensation, termination or any other manner of discrimination, for reporting under or complying with this Policy. The Corporation considers retaliation a Violation in itself, which will result in disciplinary action, up to and including termination of employment or any other working relationship with the Corporation.
If you have been subject to any conduct that you believe constitutes retaliation for having made a report in compliance with this Policy or for having participated in any investigation relating to an alleged Violation or Fraudulent Auditing and Accounting Activity, please immediately report the alleged retaliation to the General Counsel, ideally within ten (10) days of the offending conduct. If, for any reason, you do not feel comfortable discussing the alleged retaliation with the General Counsel, please report the alleged retaliation through the one of the other means other than the Hotline referenced above.
Your complaint of retaliation should be as detailed as possible, including the names of all individuals involved and any witnesses. The Corporation will directly and thoroughly investigate the facts and circumstances of all perceived retaliation and will take prompt corrective action, if appropriate.
Additionally, any manager or supervisor who observes retaliatory conduct must report the conduct to the General Counsel so that an investigation can be made and corrective action taken, if appropriate.
Bringing any alleged retaliation to our attention promptly enables us to honor our values, and to investigate the reported retaliation promptly and appropriately in accordance with the procedures outlined above.
Any employee, regardless of position or title, who has been determined to have engaged in retaliation in violation of this Policy, will be subject to appropriate disciplinary action, up to and including termination of employment or any other working relationship with the Corporation.Modification
The Corporation expressly reserves the right to change, modify, or delete the provisions of this Policy without notice.Administration
The General Counsel is responsible for the administration of this Policy. All employees are responsible for consulting and complying with the most current version of this Policy. If you have any questions regarding this Policy or concerning the scope or delegation of authority, please contact Henry Nisser at (646) 650-5044 or email@example.com.
AULT ALLIANCE ROLE OF THE BOARD OF DIRECTORS (Adopted by the Board of Directors and Effective on August 13, 2020; as amended on October 28, 2021.) The following guidelines have been approved by the Board of Directors (the “Board”) of Ault Alliance (the “Corporation”). These guidelines, in conjunction with the Corporation’s Certificate of Incorporation, Bylaws and Board committee charters, form the framework for the governance of the Corporation.
Role of the Board of Directors. The Board oversees and provides policy guidance on the business and affairs of the Corporation. The Board monitors overall corporate performance, the integrity of the Corporation’s internal control over financial reporting as well as disclosure controls and procedures and the effectiveness of its legal compliance programs. The Board selects the Chief Executive Officer of the Corporation (the “CEO”), appoints officers, and oversees management. The Board also oversees the Corporation’s strategic and business planning process. The Board also reviews and assesses risks facing the Corporation and management’s approach to addressing such risks. The Board recognizes that the long-term interests of stockholders are advanced by responsibly addressing the concerns of all stakeholders, including employees, customers, business partners, suppliers, governmental officials and the public at large. The Board oversees the conduct of the business and supervises management, which is responsible for the day-to-day conduct of the business. The Board must assess and ensure systems are in place to manage the risks of the Corporation’s business with the objective of preserving the Corporation’s assets. In its supervisory role, the Board, through the CEO, sets the attitude and disposition of the Corporation towards compliance with applicable laws, environmental, safety and health policies, financial practices and reporting. In addition to its primary accountability to stockholders, the Board and the CEO are also accountable to government authorities and other stakeholders, such as employees, communities, and the public.
The principal responsibilities of the Board required to ensure the overall stewardship of the Corporation are as follows: (i) the Board must ensure that there are long-term goals and a strategic planning process in place. The CEO, with the involvement of the Board, must establish long-term goals for the Corporation. The CEO formulates the Corporation’s strategy, policies and proposed actions and presents them to the Board for approval. The Board brings objectivity and judgment to this process. The Board ultimately approves the strategy; (ii) the Board must have an understanding of the principal risks associated with the Corporation’s businesses, and must ensure that appropriate systems are in place which effectively monitor and manage those risks. The risks can span the Corporation’s entire business; (iii) the Board must ensure that processes are in place to enable it to supervise and measure management’s, and in particular the CEO’s, performance in carrying out the Corporation’s stated objectives. These processes should include appropriate training, development and succession of management; (iv) the Board must ensure that the Corporation has a communications program in place so that the Corporation effectively communicates with stockholders, other stakeholders and the public in general, and that appropriate measures are in place to receive feedback from stockholders; (v) the Board must monitor and ensure compliance with the Code of Business Conduct and Ethics adopted by the Corporation; and (vi) the Board must develop the Corporation’s approach to corporate governance, including developing a set of corporate governance principles and guidelines that are specifically applicable to the Corporation. The following duties are sufficiently important to warrant the attention of all directors and cannot be delegated to Board committees: (i) the power to fill a vacancy among the directors; (ii) the power to designate committees and the appointment of directors on such committees; and (iii) the power to appoint or remove officers appointed by the directors.
- Director Independence. A majority of the Board shall consist of directors who meet the criteria for independence set Director Independence forth in the listing standards issued by The NYSE American (the “NYSE”) and set forth in its Company Guide (the “NYSE Rules”).
- Board Membership Criteria. The Nominating and Governance Committee is responsible for reviewing with the Board, on an annual basis, the appropriate skills and characteristics required of Board members individually as well as the Board as a whole. Except as may be required by rules promulgated by the NYSE and the U.S. Securities and Exchange Commission (the “SEC”) and as set forth herein, it is the current belief of the Board that there are no specific minimum qualifications that must be met by each candidate for the Board, nor are there specific qualities or skills that are necessary for one or more of the members of the Board to possess. In evaluating the qualifications of the candidates, the Nominating and Governance Committee will consider many factors, including, issues of character, judgment, independence, diversity, age, expertise, diversity of experience, length of service, other commitments and the like. The Nominating and Governance Committee will evaluate such factors, among others, and does not assign any particular weighting or priority to any of these factors. The Nominating and Governance Committee will consider each individual candidate in the context of the current perceived needs of the Board as a whole. While the Board has not established specific minimum qualifications for director candidates, the Board believes that candidates and nominees must reflect a Board that is comprised of directors who (a) are predominantly independent, (b) are of high integrity, (c) have qualifications that will increase overall Board effectiveness and (d) meet other requirements as may be required by applicable rules of the NYSE and the SEC.
In the event that a Board member changes his or her employment status or principal professional position or area of responsibility after first being elected to the Board, such Board member must notify the Nominating and Governance Committee of such change. In the event that a Board member accepts employment with, or enters into a consulting, board membership or other professional relationship with, a competitor of the Corporation, a major customer of the Corporation, or another entity in which a conflict with the interests of the Corporation could reasonably be expected to result, the Nominating and Governance Committee will evaluate the appropriateness of such Board member’s continuing service as a member of the Board, considering, among other factors, the requirements of the Corporation’s Code of Business Conduct and Ethics. The Corporation has adopted a policy that the maximum number of boards of directors of publicly traded companies on which a non-employee member of the Board may serve is four. This number includes the Corporation’s board of directors. Members of the Board who are also employees of the Corporation must disclose and obtain approval of Nominating and Governance Committee prior to serving as a member of the board of directors, strategic advisory board (or any other similar governing or advisory body) of any other entity (regardless of whether such entity is publicly traded or not). In addition, each Board member must ensure that other existing and anticipated future commitments do not materially interfere with the member’s service as a director. Directors should advise the Nominating and Governance Committee of any invitations to join the board of directors of any other public company prior to accepting another directorship.
- Board Size. The Corporation’s Bylaws provide that the authorized number of directors shall be established from time to time by resolution of the Board or by amendment to the Bylaws. Currently, the Board consists of eight members. The Nominating and Governance Committee will annually assess the Board’s size.
- Term of Office. The Corporation’s Bylaws provide for the directors to be elected annually. The Board does not believe it should establish term limits, because the Board believes that directors who over time have developed increasing insight into the Corporation and its operations provide an increasing contribution to the Board as a whole.
- Selection of New Directors. Directors will be elected annually by the stockholders at their annual meeting (the “Annual Meeting”). The Nominating and Governance Committee, which consists solely of independent directors (as defined by Rule 803(a) of the NYSE Rules), is responsible for, among other things, identifying and evaluating potential director candidates and either selecting candidates for nomination to the Board or making recommendations to the Board concerning director nominees, and for recommending appointment of directors for membership on Board committees and the selection of Board committee chairs.
It is the policy of the Board that the Nominating and Governance Committee consider both recommendations and nominations for candidates to the Board from stockholders so long as such recommendations and nominations comply with the Certificate of Incorporation and Bylaws of the Corporation and applicable laws, including the rules and regulations of the SEC and the NYSE. Stockholders may recommend director nominees for consideration by the Nominating and Governance Committee by writing to the Corporate Secretary of the Corporation and providing evidence of the stockholder’s ownership of Corporation stock and specifying the nominee’s name, home and business address and other contact information, detailed biographical data and qualifications for Board membership, and information regarding any relationships between the recommended candidate and the Corporation within the last three fiscal years and his or her qualifications for Board membership.
Following verification of the stockholder status of the person submitting the recommendation, all properly submitted recommendations will be promptly brought to the attention of the Nominating and Governance Committee. Stockholders who desire to nominate persons directly for election to the Board at the Corporation’s Annual Meeting must meet the deadlines and other requirements set forth in the Corporation’s Bylaws and the rules and regulations of the SEC. Any vacancies on the Board occurring between the Corporation’s annual meetings of stockholders may be filled by persons selected by a majority of the directors then in office, and any director so elected will serve for the remaining term of the class of directors in which the vacancy occurred.
- Director Responsibilities. The fundamental role of the directors is to exercise their business judgment to act in what they reasonably believe to be the best interests of the Corporation and its stockholders. In fulfilling that responsibility the directors should be able to rely on the honesty and integrity of the Corporation’s senior management and expert legal, accounting, financial and other advisors. The directors should have the benefit of directors’ and officers’ insurance, paid by the Corporation, to indemnification to the fullest extent allowed under the Corporation’s charter and Delaware law, and to exculpation as provided by Delaware law and the Corporation’s charter. Board members are expected to prepare for, attend and participate in all Board and applicable committee meetings, and to spend the time needed and meet as often as necessary to properly discharge their obligations. Information and data that is important to the Board’s understanding of the business to be conducted at a Board or committee meeting should generally be distributed in writing to the directors prior to the meeting, so that Board meeting time may be conserved, and discussion time focused on questions that the Board has about the materials. Particularly sensitive subject matters may be discussed at the meeting without advance distribution of written materials.
The Board does not have a policy on whether or not the roles of Chief Executive Officer and Chairman of the Board should be separate and, if they are to be separate, whether the Chairman should be selected from the non-employee directors or be an employee. The Board believes these issues should be considered as part of the Board’s broader succession planning process. The Board believes that management speaks for the Corporation. Individual Board members may occasionally meet or otherwise communicate with various constituencies that are involved with the Corporation, but it is expected that Board members would do this with the knowledge of management and, in most instances, absent unusual circumstances or as contemplated by the committee charters, at the request of management. The Board encourages the attendance of members of the Board at the annual meetings of stockholders of the Corporation.
- Number and Composition of Board Committees. The Board currently has four committees: Audit, Compensation, Nominating and Governance and Executive. The Board may from time to time establish a new committee or dissolve an existing committee depending on the circumstances. All members of the Audit Committee will meet the independence requirements of Rules 803(a) and 803(b)(2) of the NYSE Rules and Rule 10A-3(b)(1) of the Securities Exchange Act of 1934, as amended. All members of the Compensation and Nominating and Governance Committees will be independent directors as defined by Rule 803(a) of the NYSE Rules. The Board will be responsible to make determinations as to the independence of directors and their determinations will be based on a review of the facts and circumstances of each director or nominee. At least one member of the Audit Committee will have past employment experience in finance, accounting, requisite professional certification in accounting, or other comparable experience or background which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities. Each committee is chaired by an independent director who primarily drives the agenda, frequency and length of committee meetings and who has unlimited access to management, Corporation information and independent advisors, as necessary and appropriate. The Board intends to rotate, from time-to-time committee assignments and committee chair positions, possibly with the exception of the Audit Committee. Committee charters are posted on the Corporation’s website.
- Executive Sessions. Executive sessions of solely independent directors will be held regularly.
- Code of Business Conduct and Ethics. The Board expects all directors, as well as officers and employees, to display the highest standard of ethics, consistent with the Corporation’s values and standards. The Corporation has and will continue to maintain a Code of Business Conduct and Ethics, a copy of which is posted here. The Board expects directors, officers and employees to acknowledge their compliance with the Code of Business Conduct and Ethics. The Nominating and Governance Committee and, with specific regard to senior financial officers, the Audit Committee periodically review compliance with the Code of Business Conduct and Ethics, and the Board must approve any waivers of the Code of Business Conduct and Ethics for directors or executive officers. Directors are expected to report to the Board any non-compliance with the Code of Business Conduct and Ethics, including any possible conflict of interest between the director and the Corporation and the Board will promptly take appropriate action.
- Succession Planning and Executive Compensation. The Nominating and Governance Committee plans for CEO succession and reviews senior management selection and succession planning. In fulfilling such responsibilities, the Nominating and Governance Committee may from time to time undertake specific reviews concerning management succession planning. The compensation of the CEO and other senior officers will be determined by the Compensation Committee, which will consist solely of independent directors (as defined by applicable NYSE Rules).
- Board Compensation. The Corporation compensates non-employee directors for their Board and Board committee service. Employee directors are not paid additional compensation for their services as directors. The Nominating and Governance Committee will review the amount and form of director compensation and provide recommendations to the Board as to such compensation based upon the committee’s consideration of the responsibilities and time commitment of Corporation directors, as well as board compensation practices of similarly situated public companies. The Nominating and Governance Committee shall have full authority to engage, at the Corporation’s expense, third-party consultants to advise the Committee on compensation levels and compensation components.
- Board Access to Senior Management. Directors are encouraged to talk directly to any member of senior management regarding any questions or concerns the directors may have. Senior management will be invited to attend Board meetings from time-to-time to discuss their respective areas of responsibility and enhance the flow of relevant Corporation information to the Board.
- Director Education. The Corporation encourages directors to attend director education programs accredited by national accrediting bodies (such as the National Association of Corporate Directors and Institutional Stockholder Services) and offered by universities and professional educational organizations.
- Evaluation of Board Performance. The Board and each Board committee will conduct a self-evaluation annually. Committees assess their performance relative to their charter and to best practices. The Nominating and Governance Committee oversees this self-evaluation process and assesses Board performance. This Committee recommends changes to improve the Board, the Board committees and individual director effectiveness. From time-to-time the Committee may engage, at the Corporation’s expense, an independent advisor to evaluate Board effectiveness and to suggest changes to improve Board performance.
- Chief Executive Officer Performance Review. The Compensation Committee will review the performance of the Chief Executive Officer to determine whether the CEO is providing the high-quality leadership for the Corporation, from a short, intermediate and long-term perspective.
- Authority to Retain Advisors. The Board and each Board committee shall have the authority, at the Corporation’s expense, to retain and terminate independent financial, legal or other advisors as the Board and any such committee deems necessary.
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