STOCK TRADING COMPLIANCE POLICIES - NIRI



STOCK TRADING COMPLIANCE POLICIES

(Company Name)

In order to educate its Directors, officers and employees in the prevention of insider trading violations by its Directors, officers, employees and other related individuals, the Company has adopted the following policies and procedures. These are effective as of [insert date], and supersede any previous policies and procedures.

Any questions regarding this Policy should be directed to the Legal Department.

 

 

(a) INSIDER TRADING POLICY

It shall be in violation of Company Policy to trade Company stock based on possession of Material Nonpublic Information.

 

I. Application of Insider Trading Policy

The Policy applies to all Directors, officers and employees of the Company who are in position of Material Nonpublic Information (as defined below).  In addition, the Policy applies to any person who may have Material Nonpublic Information of the Company, including consultants, contractors, and family members of Company employees. These groups of people are sometimes referred to in this Policy as "Insiders".

Any person who possesses Material Nonpublic Information regarding the Company is an Insider for so long as the information is not publicly known.  Any such person can be an Insider from time-to-time based on his/her possession of Material Nonpublic Information, and would at those times be subject to this Policy.

II. Definition of Material Nonpublic Information

Material Nonpublic Information is information that has not been publicly released by the Company and which is material to the Company’s business.

Information is material if there is a reasonable likelihood that it would be considered important by an investor when making an investment decision about the Company.  The Company's quarterly financial results are one example of potentially material information.  Thus, if you are in possession of any such financial information at or near the end of a fiscal quarter, and prior to public announcement, you should not trade in the Company's stock without first contacting the Legal Department.

While it may be difficult under this standard to determine whether particular nonpublic information is material, there are various categories of information that are particularly sensitive and, as a general rule, should always be considered potentially material.  Examples of such information may include:

Financial results:

· Projections of future earnings or losses

· News of a pending or proposed merger or acquisition

· News of the disposition of a subsidiary

· Impending bankruptcy or financial liquidity problems

· Gain or loss of a substantial customer or supplier

· New product announcements of a significant nature

· Significant product defects or modifications

· Significant pricing changes

· Stock splits

· New equity or debt offerings

· Significant litigation exposure due to actual or threatened litigation

· Major changes in senior management.

Either positive or negative information may be material.

III. Trading on Material Nonpublic Information.

Insiders are prohibited from purchasing or selling securities of the Company until the third Trading Day following the public disclosure of that information, or until the information is no longer material.

IV. Insider Trading Liability

Any Insider who purchases or sells the Company’s stock (or derivative securities thereof, such as options, puts, calls, etc.) based on Material Nonpublic Information regarding the Company, may be criminally liable under the Securities & Exchange Commission’s rules prohibiting insider trading. There may also be civil penalties up to $1,000,000 for violations of the insider trading laws.

V. Individual Responsibility

Every Director, officer, and employee has the individual responsibility to comply with this Policy. The guidelines set forth in this Policy with respect to the definition of Material Nonpublic Information are guidelines only, and appropriate judgment should be exercised in connection with any trade in the Company's securities.

An Insider is prohibited from purchasing or selling 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 an anticipated profit by waiting.  An effective 10b5-1 trading program, approved by the Legal Department, may be seen as an exception to this Policy.

VI. Applicability of Policy to Material Nonpublic 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.  All employees should treat Material Nonpublic Information about the Company's customers, vendors or suppliers with the same care as is required with respect to information related directly to the Company and should not use this Material Nonpublic Information to trade in the securities of the Company's business partners.

VII. Tipping

Insiders shall not disclose, or provide "tips" regarding Material Nonpublic Information concerning the Company or any of its customers, vendors or suppliers to any other person (including family members). As noted above, anyone to whom such a tip is given automatically becomes an Insider.

 

 

(b) POLICY AGAINST SHORT SALES

VIII. Short Sales

No Director, officer, or employee of the Company, and no member of the immediate family or household of any such person, shall, directly or indirectly, sell any security of the Company that such individual does not own (a "Short Sale").

 

 

(c) SECTION 16 OFFICERS AND DIRECTORS

TRADING POLICY

IX. Preclearance of Trades

The Company has determined that all Directors and Section 16 Officers of the Company should refrain from trading in the Company's securities, even during the Trading Window, without first complying with the Company's "preclearance" process.

Each Officer and Director should contact the General Counsel’s office prior to any purchase or sale of the Company's securities. The Company may 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 Directors and Section 16 Officers.

 

X. Black-Out Period and Recommended Trading Window for Directors and Section 16 Officers

The Company strongly recommends that Directors and Section 16 Officers purchase or sell the Company’s securities during the Trading Window.

The Trading Window is the Period in any fiscal quarter commencing at the close of business on the second “Trading Day” following the date of public disclosure of the financial results for a particular fiscal quarter or year and continuing until one fiscal month prior to the end of the next fiscal quarter.  A “Trading Day” is defined as a day on which national stock exchanges and the National Association of Securities Dealers Inc. Automated Quotation System (NASDAQ) are open for trading.

If public disclosure occurs on a Trading Day before the markets close, then the date of disclosure shall be the first Trading Day following the public disclosure.  If public disclosure occurs after the markets close on a Trading Day, the first Trading Day shall be the day following the date of public disclosure. The safest period for trading in the Company's securities, assuming the absence of Material Nonpublic Information, is probably the first ten days of the Trading Window.

The purpose behind the suggested self-imposed "Trading Window" period is to help establish a diligent effort to avoid any improper transaction.

It should be noted, however, that even during the Trading Window, any person possessing Material Nonpublic Information concerning the Company should not engage in any transactions in the Company's securities until such information has been known publicly for at least two Trading Days, whether or not the Company has recommended a suspension of trading to that person.  Trading in the Company's securities during the Trading Window should not be considered a "safe harbor," and all Directors, officers and other persons should use good judgment at all times.

 

XI. Sarbanes Oxley Section 402 and Cashless (aka Same Day Sales) Option Exercises

Section 402 of the Sarbanes-Oxley Act of 2002 prohibits loans from the Company to any Director or Executive Officer. At the present time, it is unclear whether the cashless exercise of options would constitute a loan prohibited under Section 402.

Therefore, until further notice, Directors and Executive Officers must deliver CASH to the Company in an amount equal to the exercise price of any options they are exercising plus any required withholding tax at the same time the Director or Executive Officer exercises his/her options.

 

XII. Certain Exceptions

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 (ESPP) are exempt from the provisions affecting insider trades.  However, employees are prohibited from selling any shares received upon: (i) the exercise of stock options (including same-day sales or cash-less exercises) or (ii) the purchase of shares under the ESPP while in possession of Material Nonpublic Information.

Additional Resources

John Brinkley, “Avoiding the Inside Scoop," IR Update, April 2012.



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