SHAREHOLDER PROPOSALS
Under
the rules of the SEC, stockholder proposals intended to be presented at the
Companys 2018 annual meeting of stockholders in accordance with Rule 14a-8 must
be made in accordance with the by-laws of the Company and received by the
Company, at its principal executive offices, for inclusion in the Companys
proxy statement for that meeting, no later than October 31, 2017 (120 days prior
to the anniversary of this years mailing date). Failure to deliver a proposal
in accordance with these procedures may result in it not being deemed timely
received.
Submitting
a stockholder proposal does not guarantee that we will include it in our proxy
statement. Our nominating and corporate governance committee reviews all
stockholder proposals and makes recommendations to the board for actions on such
proposals.
In
addition, our Bylaws provide that any stockholder intending to nominate a
candidate for election to the board or to propose any business at our 2018
annual meeting, other than non-binding proposals presented pursuant to Rule
14a-8 under the Exchange Act, must give notice to the Corporate Secretary at our
principal executive offices, not earlier than the close of business on the 150th
day (September 30, 2017) nor later than the close of business on the 120th day
(October 31, 2017) prior to the first anniversary of the date of the preceding
years annual meeting as first specified in the notice of meeting (without
regard to any postponements or adjournments of such meeting after the notice was
first given). The notice must include the information specified in our Bylaws,
including information concerning the nominee or proposal, as the case may be,
and information concerning the proposing or nominating stockholders ownership
of and agreements related to our stock. If the 2018 annual meeting is held more
than 30 days before or after the first anniversary of the date of the 2017
annual meeting, the stockholder must submit notice of any such nomination and of
any such proposal that is not made pursuant to Rule 14a-8 by the later of the
90
th
day prior to the 2018annual meeting or the 10
th
day
following the date on which public announcement of the date of such meeting is
first made. We will not entertain any proposals or nominations at the meeting
that do not meet the requirements set forth in our Bylaws. If the stockholder
does not also comply with the requirements of Rule 14a-4(c)(2) under the
Exchange Act, we may exercise discretionary voting under proxies that we solicit
to vote in accordance with our best judgment on any stockholder proposal or
nomination. To make a submission or request a copy of our Bylaws, stockholders
should contact our Corporate Secretary. We strongly encourage stockholders to
seek advice from knowledgeable counsel before submitting a proposal or a
nomination.
SOLICITATION OF PROXIES
The
Company will pay the cost of the solicitation of proxies. Solicitation of
proxies may be made in person or by mail, telephone, or telecopy by directors,
officers, and employees of the Company. The Company does not intend to engage
the services of others to solicit proxies in person or by telephone or telecopy.
In addition, the Company may also request banking institutions, brokerage firms,
custodians, nominees, and fiduciaries to forward solicitation material to the
beneficial owners of Common Stock held of record by such persons, and the
Company will reimburse such persons for the costs related to such services.
It
is important that your shares be represented at the Annual Meeting. If you are
unable to be present in person, you may vote by telephone or via the Internet.
If you have received a paper copy of the proxy card by mail you may also sign,
date and return the proxy card promptly in the enclosed postage-prepaid
envelope.
29
HOUSEHOLDING OF PROXY MATERIALS
The
SEC has adopted rules that permit companies and intermediaries such as brokers
to satisfy delivery requirements for proxy statements and related notices with
respect to two or more stockholders sharing the same address by delivering a
single proxy statement or notice addressed to those stockholders. This process,
which is commonly referred to as house holding, potentially provides extra
convenience for stockholders and cost savings for companies. The Company and
some brokers household proxy materials, delivering a single proxy statement or
notice to multiple stockholders sharing an address unless contrary instructions
have been received from one or more of the affected stockholders. Once you have
received notice from your broker or us that they or we will be house holding
materials to your address, house holding will continue until you are notified
otherwise or until you instruct us to the contrary. If, at any time, you no
longer wish to participate in house holding and would prefer to receive a
separate proxy statement and related notices, or if you are receiving multiple
copies of the proxy statement and related notices and wish to receive only one,
please notify your broker if your shares are held in a brokerage account or us
if you hold registered shares. You may notify us by sending a written request to
Investor Relations, Orgenesis Inc., 20271 Goldenrod Lane, Germantown MD 208176,
or by calling us at (480) 659-6404.
By Order of the Board
/s/ Vered
Caplan
Vered Caplan
Chief Executive Officer
30
31
ORGENESIS INC.
20271 Goldenrod Lane
Germantown, Maryland 20876
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be
held May 11, 2017
THE BOARD OF DIRECTORS RECOMMENDS YOU
VOTE FOR THE
FOLLOWING:
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1.
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Election of Directors
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Nominees:
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01-VERED CAPLAN
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04- YARON ADLER
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02- GUY YACHIN
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05- HUGUES BULTOT
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03- DAVID SIDRANSKY
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06- ASHISH NANDA
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FOR ALL
[ ]
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WITHHOLD ALL
[
]
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FOR ALL EXCEPT
[ ]
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To withhold authority to vote for an individual
nominee(s), mark FOR ALL EXCEPT and write the numbers(s) of the
nominee(s) on the line below.
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________________________________________
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2.
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Approval of the Orgenesis Inc. 2017 Equity
Incentive Plan.
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FOR
[ ]
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AGAINST
[ ]
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ABSTAIN
[
]
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3.
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Advisory vote on executive compensation.
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FOR
[ ]
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AGAINST
[ ]
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ABSTAIN
[ ]
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The Board of Directors recommends you vote 3
YEARS
on the following proposal:
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1 Year
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2 Years
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3 Years
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ABSTAIN
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4.
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Advisory vote on the frequency of the advisory
vote on executive compensation.
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[ ]
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[ ]
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[ ]
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[ ]
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NOTE
: Such other business as may
properly come before the meeting or any adjournment thereof.
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Please sign exactly as your name(s) appear(s) hereon. When
signing as attorney, executor, administrator, or other fiduciary, please give
full title as such. Joint owners should each sign personally. All holders must
sign. If a corporation or partnership, please sign in full corporate or
partnership name, by authorized officer.
Date
______________________________
_______________________________________________
Signature
_______________________________________________
Signature
(Joint Owners)
32
EXHIBIT A
ORGENESIS, INC.
2017 EQUITY INCENTIVE PLAN
1.
DEFINITIONS
.
Unless otherwise specified or unless the context otherwise
requires, the following terms, as used in this Orgenesis, Inc. 2017 Equity
Incentive Plan, have the following meanings:
Administrator
means the
committee to which the Board of Directors has delegated the authority to grant
equity under the Plan.
Affiliate
means a corporation which, is a parent or
subsidiary of the Company, direct or indirect, in an unbroken chain of
corporations if, each of the corporations (except for the ultimate parent
corporation) owns stock possessing 50 percent or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
Agreement
means an agreement between the Company and a
Participant delivered pursuant to the Plan, in such form as the Administrator
shall approve.
Applicable Law
means the requirements relating to (a)
the adoption and administration of equity plans under Nevada law, (b) the offer
and issuance of equity under United States federal securities laws and
regulations and any applicable securities laws of any other jurisdiction, (c)
the Code, (d) any stock exchange or quotation system on which the Common Stock
is then listed or traded, and (e) any other the applicable laws or regulations.
Board of Directors
means the Board of Directors of the
Company.
Cause
means, with respect to a Participant (a)
dishonesty with respect to the Company or any Affiliate, (b) insubordination,
substantial malfeasance or non-feasance of duty, (c) unauthorized disclosure of
confidential information, (d) breach by a Participant of any provision of any
employment, consulting, advisory, nondisclosure, non-competition or similar
agreement between the Participant and the Company or any Affiliate, and (e)
conduct substantially prejudicial to the business of the Company or any
Affiliate; provided, however, that any provision in an agreement between a
Participant and the Company or an Affiliate, which contains a conflicting
definition of Cause for termination and which is in effect at the time of such
termination, shall supersede this definition with respect to that Participant.
The determination of the Administrator as to the existence of Cause will be
conclusive on the Participant and the Company.
Code
means the United States Internal Revenue Code of
1986, as amended, including any successor statute, regulation and guidance
thereto.
Common Stock
means common stock, par value $0.0001 per
share.
Company
means Orgenesis, Inc., a company formed under
the laws of State of Nevada.
Consultant
means any natural person who is an advisor or
consultant that provides bona fide services to the Company or its Affiliates,
provided that such services are not in connection with the offer or sale of
securities in a capital raising transaction, and do not directly or indirectly
promote or maintain a market for the Company's or its Affiliates' securities.
33
Disability
or
Disabled
means a permanent and
total disability in which an individual is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than 12 months.
Director
means a member of the Board of Directors.
Employee
means any employee of the Company or of an
Affiliate (including, without limitation, an employee who is also serving as an
officer or Director of the Company or of an Affiliate), designated by the
Administrator to be eligible to be granted one or more Stock Rights under the
Plan.
Exchange Act
means the Securities Exchange Act of 1934,
as amended. Fair Market Value of a Share of Common Stock means:
(1) If the Common
Stock is listed on a national securities exchange or traded in the
over-the-counter market and sales prices are regularly reported for the Common
Stock, the closing or, if not applicable, the last price of the Common Stock on
the composite tape or other comparable reporting system for the trading day on
the applicable date and if such applicable date is not a trading day, the last
market trading day prior to such date;
(2) If the Common Stock is not traded
on a national securities exchange but is traded on the over-the-counter market,
if sales prices are not regularly reported for the Common Stock for the trading
day referred to in clause (1), and if bid and asked prices for the Common Stock
are regularly reported, the mean between the bid and the asked price for the
Common Stock at the close of trading in the over- the-counter market for the
trading day on which Common Stock was traded on the applicable date and if such
applicable date is not a trading day, the last market trading day prior to such
date; and
(3) (3) If the Common Stock is neither
listed on a national securities exchange nor traded in the over-the-counter
market, such value as the Administrator, in good faith, shall determine in
compliance with Applicable Laws.
ISO
means an option intended to qualify as an incentive
stock option under Section 422 of the Code.
Non-Qualified Option
means an option which is not
intended to qualify as an ISO.
Option
means an ISO or Non-Qualified
Option granted under the Plan.
Participant
means an Employee, Director, or Consultant
of the Company or an Affiliate to whom one or more Stock Rights are granted
under the Plan. As used herein, "Participant" shall include "Participant's
Survivors" where the context requires.
Plan
means this Orgenesis, Inc. 2017 Equity Incentive
Plan.
Securities Act
means the Securities Act of 1933, as
amended.
Shares
means shares of the Common Stock as to which
Stock Rights have been or may be granted under the Plan or any shares of capital
stock into which the Shares are changed or for which they are exchanged within
the provisions of Paragraph 3 of the Plan. The Shares
issued under the Plan may be authorized and unissued shares or shares held by
the Company in its treasury, or both.
34
Stock-Based Award
means a grant
by the Company under the Plan of an equity award or equity based award which is
not an Option or Stock Grant.
Stock Grant
means a grant by the Company of Shares under
the Plan.
Stock Right
means a right to Shares or the value of
Shares of the Company granted pursuant to the Plan -- an ISO, a Non-Qualified
Option, a Stock Grant or a Stock-Based Award.
Survivor
means a deceased Participant's legal
representatives and/or any person or persons who acquired the Participant's
rights to a Stock Right by will or by the laws of descent and distribution.
2.
PURPOSES OF THE
PLAN
.
The
Plan is intended to encourage ownership of Shares by Employees, Directors of and
certain Consultants to the Company and its Affiliates in order to attract and
retain such people, to induce them to work for the benefit of the Company or of
an Affiliate and to provide additional incentive for them to promote the success
of the Company or of an Affiliate. The Plan provides for the granting of ISOs,
Non-Qualified Options, Stock Grants and Stock-Based Awards.
3.
SHARES SUBJECT TO
THE PLAN.
The
number of Shares as to which Stock Rights (including ISOs) may be issued from
time to time pursuant to this Plan shall be the sum of: (i) 21,000,000 shares of
Common Stock, or the equivalent of such number of Shares after the
Administrator, in its sole discretion, has interpreted the effect of any stock
split, stock dividend, combination, recapitalization or similar transaction in
accordance with Paragraph 22 of this Plan.
If
an Option ceases to be outstanding, in whole or in part (other than by
exercise), or if the Company shall reacquire (at not more than its original
issuance price) any Shares issued pursuant to a Stock Grant or Stock-Based
Award, or if any Stock Right expires or is forfeited, cancelled, or otherwise
terminated or results in any Shares not being issued, the unissued or reacquired
Shares which were subject to such Stock Right shall again be available for
issuance from time to time pursuant to this Plan.
Notwithstanding
the foregoing, if a Stock Right is exercised, in whole or in part, by tender of
Shares or if the Company or an Affiliate's tax withholding obligation is
satisfied by withholding Shares, the number of Shares deemed to have been issued
under the Plan for purposes of the limitation set forth in Paragraph 3(a) above
shall be the number of Shares that were subject to the Stock Right or portion
thereof, and not the net number of Shares actually issued.
4.
ADMINISTRATION
OF THE PLAN
.
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Subject to the provisions of the Plan, the Administrator
is authorized to:
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a.
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Interpret the provisions of the Plan and all Stock Rights
and to make all rules and determinations which it deems necessary or
advisable for the administration of the Plan;
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b.
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Determine which Employees, Directors and Consultants
shall be granted Stock Rights;
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c.
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Determine the number of Shares for which a Stock Right or
Stock Rights shall be granted; provided however that in no event shall
Stock Rights with respect to more than 1,000,000 Shares be granted to any
Participant in any fiscal year;
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d.
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Specify the terms and conditions upon which a Stock Right
or Stock Rights may be granted;
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e.
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Amend any term or condition of any outstanding Stock
Right, other than reducing the exercise price or purchase price, provided
that (i) such term or condition as amended is not prohibited by the Plan;
(ii) any such amendment shall not impair the rights of a Participant under
any Stock Right previously granted without such Participant's consent or
in the event of death of the Participant the Participant's
Survivors; and (iii) any such amendment shall be made only after the
Administrator determines whether such amendment would cause any adverse tax
consequences to the Participant, including, but not limited to, the annual
vesting limitation contained in Section 422(d) of the Code and described in
Paragraph 6(B)(iv) below with respect to ISOs and pursuant to Section 409A of
the Code; and
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35
f. Adopt any sub-plans
applicable to residents of any specified jurisdiction as it deems necessary or
appropriate in order to comply with or take advantage of any tax or other laws
applicable to the Company or to Participants or to otherwise facilitate the
administration of the Plan, which sub-plans may include additional restrictions
or conditions applicable to Stock Rights or Shares issuable pursuant to a Stock
Right;
g. provided, however, that all such interpretations, rules,
determinations, terms and conditions shall be made and prescribed in the context
of not causing any adverse tax consequences under Section 409A of the Code and
preserving the tax status under Section 422 of the Code of those Options which
are designated as ISOs. Subject to the foregoing, the interpretation and
construction by the Administrator of any provisions of the Plan or of any Stock
Right granted under it shall be final, unless otherwise determined by the Board
of Directors. In addition, the Board of Directors may take any action under the
Plan that would otherwise be the responsibility of the Administrator.
To the extent permitted under Applicable Law, the Board of Directors or the
Administrator may allocate all or any portion of its responsibilities and powers
to any one or more of its members and may delegate all or any portion of its
responsibilities and powers to any other person selected by it. The Board of
Directors or the Administrator may revoke any such allocation or delegation at
any time.
5.
ELIGIBILITY FOR
PARTICIPATION
.
The
Administrator will, in its sole discretion, name the Participants in the Plan,
provided, however, that each Participant must be an Employee, Director or
Consultant of the Company or of an Affiliate at the time a Stock Right is
granted. Notwithstanding the foregoing, the Administrator may authorize the
grant of a Stock Right to a person not then an Employee, Director or Consultant
of the Company or of an Affiliate. The actual grant of such Stock Right shall be
conditioned upon such person becoming eligible to become a Participant at or
prior to the time of the execution of the Agreement evidencing such Stock Right.
ISOs may be granted only to Employees who are deemed to be residents of the
United States for tax purposes. Non-Qualified Options, Stock Grants and
Stock-Based Awards may be granted to any Employee, Director or Consultant of the
Company or an Affiliate. The granting of any Stock Right to any individual shall
neither entitle that individual to, nor disqualify him or her from,
participation in any other grant of Stock Rights or any grant under any other
benefit plan established by the Company or any Affiliate for Employees,
Directors or Consultants.
6.
TERMS AND
CONDITIONS OF OPTIONS
.
Each
Option shall be set forth in writing in an Option Agreement, duly executed by
the Company and, to the extent required by law or requested by the Company, by
the Participant. The Administrator may provide that Options be granted subject
to such terms and conditions, consistent with the terms and conditions
specifically required under this Plan, as the Administrator may deem appropriate
including, without limitation, subsequent approval by the shareholders of the
Company of this Plan or any amendments thereto. The Option Agreements shall be
subject to at least the following terms and conditions:
A.
Non-Qualified Options
: Each Option intended to be a Non-Qualified Option
shall be subject to the terms and conditions which the Administrator determines
to be appropriate and in the best interest of the Company, subject to the
following minimum standards for any such Non-Qualified Option:
36
(i)
Exercise
Price
: Each Option Agreement shall state the exercise price per share of the
Shares covered by each Option, which exercise price shall be determined by the
Administrator and shall be at least equal to the greater of the par value or the
Fair Market Value per share of Common Stock on the date of grant of the Option.
(ii)
Number of Shares
:
Each Option Agreement shall state the number of Shares to which it pertains.
(iii)
Vesting
: Each
Option Agreement shall state the date or dates on which it first is exercisable
and the date after which it may no longer be exercised, and may provide that the
Option rights accrue or become exercisable in installments over a period of
months or years, or upon the occurrence of certain performance conditions or the
attainment of stated goals or events.
(iv)
Additional
Conditions
: Exercise of any Option may be conditioned upon the Participant's
execution of a Share purchase agreement in form satisfactory to the
Administrator providing for certain protections for the Company and its other
shareholders, including requirements that:
a. The Participant's or the Participant's Survivors' right to sell or transfer
the Shares may be restricted; and
b. The Participant or the Participant's
Survivors may be required to execute letters of investment intent and must also
acknowledge that the Shares will bear legends noting any applicable
restrictions.
v.
Term of Option
: Each Option shall terminate not more
than ten years from the date of the grant or at such earlier time as the Option
Agreement may provide.
B.
ISOs
: Each Option intended
to be an ISO shall be issued only to an Employee who is deemed to be a resident
of the United States for tax purposes, and shall be subject to the following
terms and conditions, with such additional restrictions or changes as the
Administrator determines are appropriate but not in conflict with Section 422 of
the Code and relevant regulations and rulings of the Internal Revenue Service:
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i.
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Minimum standards
: The ISO shall meet the minimum
standards required of Non-Qualified Options, as described in Paragraph
6(A) above, except clause (i) and (v) thereunder.
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ii.
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Exercise Price
: Immediately before the ISO is
granted, if the Participant owns, directly or by reason of the applicable
attribution rules in Section 424(d) of the
Code:
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a.
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10%
or less
of the total combined voting power of
all classes of stock of the Company or an Affiliate, the exercise price
per share of the Shares covered by each ISO shall not be less than 100% of
the Fair Market Value per share of the Common Stock on the date of grant
of the Option; or
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b.
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More than 10% of the total combined voting power of all
classes of stock of the Company or an Affiliate, the exercise price per
share of the Shares covered by each ISO shall not be less than 110% of the
Fair Market Value per share of the Common Stock on the date of grant of
the Option.
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iii.
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Term of Option
: For Participants who
own:
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a.
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10%
or less
of the total combined voting power of
all classes of stock of the Company or an Affiliate, each ISO shall
terminate not more than ten years from the date of the grant or at such
earlier time as the Option Agreement may provide; or
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b.
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More than 10% of the total combined voting power of all
classes of stock of the Company or an Affiliate, each ISO shall terminate
not more than five years from the date of the grant or at such earlier
time as the Option Agreement may provide.
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37
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iii.
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Limitation on Yearly Exercise: The Option Agreements
shall restrict the amount of ISOs which may become exercisable in any
calendar year (under this or any other ISO plan of the Company or an
Affiliate) so that the aggregate Fair Market Value (determined on the date
each ISO is granted) of the stock with respect to which ISOs are
exercisable for the first time by the Participant in any calendar year
does not exceed $100,000.
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7. TERMS AND
CONDITIONS OF STOCK GRANTS.
Each
Stock Grant to a Participant shall state the principal terms in an Agreement,
duly executed by the Company and, to the extent required by law or requested by
the Company, by the Participant. The Agreement shall be in a form approved by
the Administrator and shall contain terms and conditions which the Administrator
determines to be appropriate and in the best interest of the Company, subject to
the following minimum standards:
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(a)
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Each Agreement shall state the purchase price per share,
if any, of the Shares covered by each Stock Grant, which purchase price
shall be determined by the Administrator but shall not be less than the
minimum consideration required by Applicable Law on the date of the grant
of the Stock Grant;
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(b)
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Each Agreement shall state the number of Shares to which
the Stock Grant pertains; and
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(c)
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Each Agreement shall include the terms of any right of
the Company to restrict or reacquire the Shares subject to the Stock Grant
and the purchase price therefor, if any, including the time period or
performance conditions or the attainment of stated goals or events upon
which such rights shall accrue.
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8. TERMS AND
CONDITIONS OF OTHER STOCK-BASED AWARDS.
The
Administrator shall have the right to grant other Stock-Based Awards based upon
the Common Stock having such terms and conditions as the Administrator may
determine, including, without limitation, the grant of Shares based upon certain
conditions, the grant of securities convertible into Shares and the grant of
stock appreciation rights, phantom stock awards or stock units. The principal
terms of each Stock-Based Award shall be set forth in an Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Agreement shall be in a form approved by the
Administrator and shall contain terms and conditions which the Administrator
determines to be appropriate and in the best interest of the Company. Each
Agreement shall include the terms of any right of the Company to terminate the
Stock-Based Award without the issuance of Shares, including time- based or
performance-based vesting conditions or the attainment of stated goals or events
upon which Shares shall be issued.
To the extent a Stock-Based Award is subject to
Section 409A of the Code, such Stock- Based Award shall be paid as provided in
the Agreement on the earliest to occur of:
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death,
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disability within the meaning of Section 409A of the
Code,
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separation from service with the Company and all of its
Affiliates or, in the case of a Specified Employee (which for these
purposes is a key employee of the Company or an Affiliate as defined in
Section 416(i) of the Code without regard to paragraph (5) thereof), 6
months after a separation from service with the Company and all of its
Affiliates,
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a "change in control event" within the meaning of Section
409A of the Code, or
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a fixed date as specified by the Administrator in the
applicable Agreement.
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Payment of a Stock-Based Award subject to Section 409A of the Code shall not be
accelerated, except as provided in regulations issued by the Secretary of the
Treasury under Section 409A of the Code.
The
Company intends that the Plan and any Stock-Based Awards granted hereunder to a
United States taxpayer be exempt from the application of Section 409A of the
Code, or meet the requirements of paragraphs (2), (3) and (4) of subsection (a)
of Section 409A of the Code, and be operated in accordance with Section 409A of
the Code, so that any compensation deferred under any Stock-Based Award
(and applicable investment earnings) shall not be included in income under
Section 409A of the Code. Any ambiguities in the Plan shall be construed to
affect the intent as described in this Paragraph 8.
9.
EXERCISE OF OPTIONS AND ISSUE OF SHARES
.
An
Option (or any part or installment thereof) shall be exercised by giving written
notice to the Company or its designee (in a form acceptable to the
Administrator, which may include electronic notice), together with provision for
payment of the aggregate exercise price in accordance with this Paragraph for
the Shares as to which the Option is being exercised, and upon compliance with
any other condition(s) set forth in the Option Agreement. Such notice shall be
signed by the person exercising the Option (which signature may be provided
electronically in a form acceptable to the Administrator), shall state the
number of Shares with respect to which the Option is being exercised and shall
contain any representation required by the Plan or the Option Agreement. Payment
of the exercise price for the Shares as to which such Option is being exercised
shall be made (a) in United States dollars in cash or such other currencies as
may be determined by the Administrator; or (b) at the discretion of the
Administrator, through delivery of shares of Common Stock held for at least six
months (if required to avoid negative accounting treatment) having a Fair Market
Value equal as of the date of the exercise to the aggregate cash exercise price
for the number of Shares as to which the Option is being exercised; or (c) at
the discretion of the Administrator, by having the Company retain from the
Shares otherwise issuable upon exercise of the Option, a number of Shares having
a Fair Market Value equal as of the date of exercise to the aggregate exercise
price for the number of Shares as to which the Option is being exercised; or (d)
at the discretion of the Administrator, in accordance with a cashless exercise
program established with a securities brokerage firm, and approved by the
Administrator; or (e) at the discretion of the Administrator, by any combination
of (a), (b), (c) and (d) above; or (e) at the discretion of the Administrator,
payment of such other lawful consideration as the Administrator may determine.
Notwithstanding the foregoing, the Administrator shall accept only such payment
on exercise of an ISO as is permitted by Section 422 of the Code.
Upon
confirmation of the exercise of the Option by the Company, the Company shall
then reasonably promptly deliver the Shares as to which such Option was
exercised to the Participant (or to the Participant's Survivors, as the case may
be). In determining what constitutes "reasonably promptly," it is expressly
understood that the issuance and delivery of the Shares may be delayed by the
Company in order to comply with any law or regulation (including, without
limitation, state securities or "blue sky" laws) which requires the Company to
take any action with respect to the Shares prior to their issuance. The Shares
shall, upon delivery, be fully paid, non-assessable Shares.
10.
PAYMENT IN CONNECTION WITH THE ISSUANCE OF STOCK GRANTS AND
STOCK-BASED AWARDS AND ISSUE OF SHARES
.
Any
Stock Grant or Stock-Based Award requiring payment of a purchase price for the
Shares as to which such Stock Grant or Stock-Based Award is being granted shall
be made (a) in United States dollars in cash or such other currencies as may be
determined by the Administrator; or (b) at the discretion of the Administrator,
through delivery of shares of Common Stock held for at least six months (if
required to avoid negative accounting treatment) and having a Fair Market Value
equal as of the date of payment to the purchase price of the Stock Grant or
Stock-Based Award; or (c) at the discretion of the Administrator, by any
combination of (a) and (b) above; or (d) at the discretion of the Administrator,
by payment of such other lawful consideration as the Administrator may
determine.
The
Company shall when required pursuant to the applicable Agreement, reasonably
promptly deliver the Shares as to which such Stock Grant or Stock-Based Award
was made to the Participant (or to the Participant's Survivors, as the case may
be), subject to any escrow provision set forth in the applicable Agreement. In
determining what constitutes "reasonably promptly," it is expressly understood
that the issuance and delivery of the Shares may be delayed by the Company in
order to comply with any law or regulation (including, without limitation, state
securities or "blue sky" laws) which requires the Company to take any action
with respect to the Shares prior to their issuance.
11.
RIGHTS AS A SHAREHOLDER
.
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No
Participant to whom a Stock Right has been granted shall have rights as a
shareholder with respect to any Shares covered by such Stock Right, except after
due exercise of an Option or issuance of Shares as set forth in any Agreement,
tender of the aggregate exercise or full purchase price, if any, for the Shares
being purchased and registration of the Shares in the Company's share register
in the name of the Participant.
12.
ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS
.
By
its terms, a Stock Right granted to a Participant shall not be transferable by
the Participant other than (i) by will or by the laws of descent and
distribution, or (ii) as approved by the Administrator in its discretion and set
forth in the applicable Agreement provided that no Stock Right may be
transferred by a Participant for value. Notwithstanding the foregoing, an ISO
transferred except in compliance with clause (i) above shall no longer qualify
as an ISO. The designation of a beneficiary of a Stock Right by a Participant,
with the prior approval of the Administrator and in such form as the
Administrator shall prescribe, shall not be deemed a transfer prohibited by this
Paragraph. Except as provided above during the Participant's lifetime, a Stock
Right shall only be exercisable by or issued to such Participant (or his or her
legal representative) and shall not be assigned, pledged or hypothecated in any
way (whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of any Stock Right or of any rights
granted thereunder contrary to the provisions of this Plan, or the levy of any
attachment or similar process upon a Stock Right, shall be null and void.
13.
EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN "FOR
CAUSE" OR DEATH OR DISABILITY
.
Except
as otherwise provided in a Participant's Option Agreement, in the event of a
termination of service (whether as an Employee, Director or Consultant) with the
Company or an Affiliate before the Participant has exercised an Option, the
following rules apply:
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a.
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A Participant who ceases to be an Employee, Director or
Consultant of the Company or of an Affiliate (for any reason other than
termination for Cause, Disability, or death for which events there are
special rules in Paragraphs 14, 15, and 16, respectively), may exercise
any Option granted to him or her to the extent that the Option is
exercisable on the date of such termination of service, but only within
such term as the Administrator has designated in a Participant's Option
Agreement.
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b.
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Except as provided in Subparagraph (c) below, or
Paragraph 15 or 16, in no event may an Option intended to be an ISO, be
exercised later than three months after the Participant's termination of
employment.
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c.
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The provisions of this Paragraph, and not the provisions
of Paragraph 15 or 16, shall apply to a Participant who subsequently
becomes Disabled or dies after the termination of employment, Director
status or consultancy; provided, however, in the case of a Participant's
Disability or death within three months after the termination of
employment, Director status or consultancy, the Participant or the
Participant's Survivors may exercise the Option within one year after the
date of the Participant's termination of service, but in no event after
the date of expiration of the term of the Option.
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d.
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Notwithstanding anything herein to the contrary, if
subsequent to a Participant's termination of employment, termination of
Director status or termination of consultancy, but prior to the exercise
of an Option, the Administrator determines that, either prior or
subsequent to the Participant's termination, the Participant engaged in
conduct which would constitute Cause, then such Participant shall
forthwith cease to have any right to exercise any Option.
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e.
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A Participant to whom an Option has been granted under
the Plan who is absent from the Company or an Affiliate because of
temporary disability (any disability other than a Disability as defined in
Paragraph 1 hereof), or who is on leave of absence for any purpose, shall
not, during the period of any such absence, be deemed, by virtue of such
absence alone, to have terminated such Participant's employment, Director
status or consultancy with the Company or with an Affiliate, except as the
Administrator may otherwise expressly provide; provided, however, that,
for ISOs, any leave of absence granted by the Administrator of greater than
ninety days, unless pursuant to a contract or statute that guarantees the
right to reemployment, shall cause such ISO to become a Non-Qualified
Option on the 181
st
day following such leave of
absence.
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f.
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Except as required by law or as set forth in a
Participant's Option Agreement, Options granted under the Plan shall not
be affected by any change of a Participant's status within or among the
Company and any Affiliates and the Participant continues to be an
Employee, Director or Consultant of the Company or any Affiliate;
provided, however, if a Participant's employment by either the Company or
an Affiliate shall cease (other than to become an employee of an Affiliate
or the Company) or the entity that employees the Participant is no longer
deemed an Affiliate, such termination shall affect the Participant's
rights under any Option granted to such Participant in accordance with the
terms of the Plan and the Participant's Option
Agreement.
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14.
EFFECT ON OPTIONS OF TERMINATION OF SERVICE
FOR CAUSE
.
Except
as otherwise provided in a Participant's Option Agreement, the following rules
apply if the Participant's service (whether as an Employee, Director or
Consultant) with the Company or an Affiliate is terminated for Cause prior to
the time that all his or her outstanding Options have been exercised:
a. All outstanding and unexercised
Options as of the time the Participant is notified his or her service is
terminated for Cause will immediately be forfeited.
b. Cause is not limited
to events which have occurred prior to a Participant's termination of service,
nor is it necessary that the Administrator's finding of Cause occur prior to
termination. If the Administrator determines, subsequent to a Participant's
termination of service but prior to the exercise of an Option, that either prior
or subsequent to the Participant's termination the Participant engaged in
conduct which would constitute Cause, then the right to exercise any Option is
forfeited.
15.
EFFECT ON OPTIONS OF TERMINATION OF SERVICE
FOR DISABILITY
.
Except
as otherwise provided in a Participant's Option Agreement, a Participant who
ceases to be an Employee, Director or Consultant of the Company or of an
Affiliate by reason of Disability may exercise any Option granted to such
Participant to the extent that the Option has become exercisable but has not
been exercised on the date of the Participant's termination of service due to
Disability. A Disabled Participant may exercise the Option only within the
period ending one year after the date of the Participant's termination of
service due to Disability, notwithstanding that the Participant might have been
able to exercise the Option as to some or all of the Shares on a later date if
the Participant had not been terminated due to Disability and had continued to
be an Employee, Director or Consultant or, if earlier, within the originally
prescribed term of the Option.
The
Administrator shall make the determination both of whether Disability has
occurred and the date of its occurrence (unless a procedure for such
determination is set forth in another agreement between the Company and such
Participant, in which case such procedure shall be used for such determination).
If requested, the Participant shall be examined by a physician selected or
approved by the Administrator, the cost of which examination shall be paid for
by the Company.
16.
EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT
.
Except as otherwise provided in a Participant's Option Agreement, in the event
of the death of a Participant while the Participant is an Employee, Director or
Consultant of the Company or of an Affiliate, such Option may be exercised by
the Participant's Survivors to the extent that the Option has become exercisable
but has not been exercised on the date of death. If the Participant's Survivors
wish to exercise the Option, they must take all necessary steps to exercise the
Option within one year after the date of death of such Participant,
notwithstanding that the decedent might have been able to exercise the Option as
to some or all of the Shares on a later date if he or she had not died and had
continued to be an Employee, Director or Consultant or, if earlier, within the
originally prescribed term of the Option.
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17.
EFFECT OF TERMINATION OF SERVICE ON STOCK GRANTS AND STOCK- BASED AWARDS.
In
the event of a termination of service (whether as an Employee, Director or
Consultant) with the Company or an Affiliate for any reason before the
Participant has accepted a Stock Grant or a Stock-Based Award and paid the
purchase price, if required, such grant shall terminate.
For
purposes of this Paragraph 17 and Paragraph 18 below, a Participant to whom a
Stock Grant or a Stock-Based Award has been issued under the Plan who is absent
from work with the Company or with an Affiliate because of temporary disability
(any disability other than a Disability as defined in Paragraph 1 hereof), or
who is on leave of absence for any purpose, shall not, during the period of any
such absence, be deemed, by virtue of such absence alone, to have terminated
such Participant's employment, Director status or consultancy with the Company
or with an Affiliate, except as the Administrator may otherwise expressly
provide.
In
addition, for purposes of this Paragraph 17 and Paragraph 18 below, any change
of employment or other service within or among the Company and any Affiliates
shall not be treated as a termination of employment, Director status or
consultancy so long as the Participant continues to be an Employee, Director or
Consultant of the Company or any Affiliate.
18.
EFFECT ON STOCK GRANTS AND STOCK BASED AWARDS OF TERMINATION OF
SERVICE OTHER THAN FOR CAUSE
.
Except
as otherwise provided in a Participant's Agreement, in the event of a
termination of service for any reason (whether as an Employee, Director or
Consultant), other than for Cause for which event there are special rules in
Paragraph 19 below, before all forfeiture provisions or Company rights of
repurchase shall have lapsed, then the Company shall have the right to cancel or
repurchase that number of Shares subject to a Stock Grant or Stock-Based Award
as to which the Company's forfeiture or repurchase rights have not lapsed.
With
respect to a termination for a Disability, the Administrator shall make the
determination both as to whether Disability has occurred and the date of its
occurrence (unless a procedure for such determination is set forth in another
agreement between the Company and such Participant, in which case such procedure
shall be used for such determination). If requested, the Participant shall be
examined by a physician selected or approved by the Administrator, the cost of
which examination shall be paid for by the Company.
19.
EFFECT ON STOCK GRANTS OR STOCK BASED-AWARDS OF TERMINATION OF
SERVICE
FOR CAUSE
.
Except
as otherwise provided in a Participant's Agreement, the following rules apply if
the Participant's service (whether as an Employee, Director or Consultant) with
the Company or an Affiliate is terminated for Cause:
a. All Shares subject to any Stock
Grant or Stock Based-Award that remain subject to forfeiture provisions or as to
which the Company shall have a repurchase right shall be immediately forfeited
to the Company as of the time the Participant is notified his or her service is
terminated for Cause.
b. Cause is not limited to events which have occurred
prior to a Participant's termination of service, nor is it necessary that the
Administrator's finding of Cause occur prior to termination. If the
Administrator determines, subsequent to a Participant's termination of service,
that either prior or subsequent to the Participant's termination the Participant
engaged in conduct which would constitute Cause, then all Shares subject to any
Stock Grant or Stock Based- Award that remained subject to forfeiture provisions
or as to which the Company had a repurchase right on the date of termination
shall be immediately forfeited to the Company
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20.
PURCHASE FOR
INVESTMENT.
Unless the offering and sale of the Shares shall have been effectively
registered under the Securities Act, the Company shall be under no obligation to
issue Shares under the Plan unless and until the following conditions have been
fulfilled:
a. The person(s) who receives a Stock
Right shall warrant to the Company, prior to the receipt of Shares, that such
person is acquiring such Shares for his or her own account, for investment, and
not with a view to, or for sale in connection with, the distribution of any such
Shares, in which event the person acquiring such Shares shall be bound by the
provisions of the following legend (or a legend in substantially similar form)
which shall be endorsed upon the certificate(s) evidencing the Shares issued
pursuant to such exercise or such grant:
"The shares represented by this
certificate have been taken for investment and they may not be sold or otherwise
transferred by any person, including a pledgee, unless (1) either (a) a
Registration Statement with respect to such shares shall be effective under the
Securities Act of 1933, as amended, or (b) the Company shall have received an
opinion of counsel satisfactory to it that an exemption from registration under
such Act is then available, and (2) there shall have been compliance with all
applicable state securities laws."
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b.
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At the discretion of the Administrator, the Company shall
have received an opinion of its U.S. counsel that the Shares may be issued
in compliance with the Securities Act without registration
thereunder.
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The
Company may delay issuance of the Shares until completion of any action or
obtaining of any consent which the Company deems necessary under any Applicable
Law.
20.
DISSOLUTION OR LIQUIDATION
OF THE COMPANY
.
Upon
the dissolution or liquidation of the Company, all Options granted under this
Plan which as of such date shall not have been exercised and all Stock Grants
and Stock-Based Awards which have not been accepted, to the extent required
under the applicable Agreement, will terminate and become null and void;
provided, however, that if the rights of a Participant or a Participant's
Survivors have not otherwise terminated and expired, the Participant or the
Participant's Survivors will have the right immediately prior to such
dissolution or liquidation to exercise or accept any Stock Right to the extent
that the Stock Right is exercisable or subject to acceptance as of the date
immediately prior to such dissolution or liquidation. Upon the dissolution or
liquidation of the Company, any outstanding Stock-Based Awards shall immediately
terminate unless otherwise determined by the Administrator or specifically
provided in the applicable Agreement.
22.
ADJUSTMENTS
.
Upon
the occurrence of any of the following events, a Participant's rights with
respect to any outstanding Stock Right granted to him or her hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in a
Participant's Agreement:
A.
Stock Dividends and Stock Splits
. If (i) the shares of Common Stock shall
be subdivided or combined into a greater or smaller number of shares or if the
Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, or (ii) additional shares or new or different shares
or other securities of the Company or other non- cash assets are distributed
with respect to such shares of Common Stock, each Stock Right and the number of
shares of Common Stock deliverable thereunder shall be appropriately increased
or decreased proportionately, and appropriate adjustments shall be made
including, in the exercise or purchase price per share, to reflect such events.
The number of Shares subject to the limitations in Paragraphs 3 and 4(c) shall
also be proportionately adjusted upon the occurrence of such events.
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B.
Corporate Transactions
. If the Company is to be consolidated with or
acquired by another entity in a merger, sale of all or substantially all of the
Company's assets other than a transaction to merely change the state of
incorporation or other internal reorganization of the Company (a "Corporate
Transaction"), the Administrator or the board of directors of any entity
assuming the obligations of the Company hereunder (the "Successor Board"),
shall, as to outstanding Options, either (i) make appropriate provision for the
continuation of such Options by substituting on an equitable basis for the
Shares then subject to such Options either the consideration payable with
respect to the outstanding shares of Common Stock in connection with the
Corporate Transaction or securities of any successor or acquiring entity; or
(ii) upon written notice to the Participants, provide that such Options must be
exercised (either (a) to the extent then exercisable or, (b) at the discretion
of the Administrator, any such Options being made partially or fully exercisable
for purposes of this Subparagraph), within a specified number of days of the
date of such notice, at the end of which period such Options which have not been
exercised shall terminate; or (iii) terminate such Options in exchange for
payment of an amount equal to the consideration payable upon consummation of
such Corporate Transaction to a holder of the number of shares of Common Stock
into which such Option would have been exercisable (either (A) to the extent
then exercisable or, (B) at the discretion of the Administrator, any such
Options being made partially or fully exercisable for purposes of this
Subparagraph) less the aggregate exercise price thereof. For purposes of
determining the payments to be made pursuant to Subclause (iii) above, in the
case of a Corporate Transaction the consideration for which, in whole or in
part, is other than cash, the consideration other than cash shall be valued at
the fair value thereof as determined in good faith by the Board of Directors.
With
respect to outstanding Stock Grants, the Administrator or the Successor Board,
shall make appropriate provision for the continuation of such Stock Grants on
the same terms and conditions by substituting on an equitable basis for the
Shares then subject to such Stock Grants either the consideration payable with
respect to the outstanding Shares of Common Stock in connection with the
Corporate Transaction or securities of any successor or acquiring entity. In
lieu of the foregoing, in connection with any Corporate Transaction, the
Administrator may provide that, upon consummation of the Corporate Transaction,
each outstanding Stock Grant shall be terminated in exchange for payment of an
amount equal to the consideration payable upon consummation of such Corporate
Transaction to a holder of the number of shares of Common Stock comprising such
Stock Grant (to the extent such Stock Grant is no longer subject to any
forfeiture or repurchase rights then in effect or, at the discretion of the
Administrator, all forfeiture and repurchase rights being waived upon such
Corporate Transaction).
In
taking any of the actions permitted under this Paragraph 22B, the Administrator
shall not be obligated by the Plan to treat all Stock Rights, all Stock Rights
held by a Participant, or all Stock Rights of the same type, identically.
C.
Recapitalization or Reorganization
. In the event of a recapitalization or
reorganization of the Company, other than a Corporate Transaction pursuant to
which securities of the Company or of another corporation are issued with
respect to the outstanding shares of Common Stock, a Participant upon exercising
an Option or accepting a Stock Grant after the recapitalization or
reorganization shall be entitled to receive for the price paid upon such
exercise or acceptance, if any, the number of replacement securities which would
have been received if such Option had been exercised or Stock Grant accepted
prior to such recapitalization or reorganization.
D.
Adjustments to Stock-Based Awards
. Upon the happening of any of the
events described in Subparagraphs A, B or C above, any outstanding Stock-Based
Award shall be appropriately adjusted to reflect the events described in such
Subparagraphs. The Administrator or the Successor Board shall determine the
specific adjustments to be made under this Paragraph 22, including, but not
limited to the effect of any Corporate Transaction, and, subject to Paragraph 4,
its determination shall be conclusive.
E.
Modification of Options
. Notwithstanding the foregoing, any adjustments
made pursuant to Subparagraph A, B or C above with respect to Options shall be
made only after the Administrator determines whether such adjustments would (i)
constitute a "modification" of any ISOs (as that term is defined in Section
424(h) of the Code) or (ii) cause any adverse tax consequences for the
holders of Options, including, but not limited to, pursuant to Section 409A of
the Code. If the Administrator determines that such adjustments made with
respect to Options would constitute a modification or other adverse tax
consequence, it may refrain from making such adjustments, unless the holder of
an Option specifically agrees in writing that such adjustment be made and such
writing indicates that the holder has full knowledge of the consequences of such
"modification" on his or her income tax treatment with respect to the Option.
This paragraph shall not apply to the acceleration of the vesting of any ISO
that would cause any portion of the ISO to violate the annual vesting limitation
contained in Section 422(d) of the Code, as described in Paragraph 6(B)(iv).
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23.
ISSUANCES OF
SECURITIES
.
Except
as expressly provided herein, no issuance by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares subject to Stock Rights. Except as expressly provided
herein, no adjustments shall be made for dividends paid in cash or in property
(including without limitation, securities) of the Company prior to any issuance
of Shares pursuant to a Stock Right.
24.
FRACTIONAL SHARES
.
No
fractional shares shall be issued under the Plan and the person exercising a
Stock Right shall receive from the Company cash in lieu of such fractional
shares equal to the Fair Market Value thereof.
25.
CONVERSION OF ISOs INTO
NON-QUALIFIED OPTIONS; TERMINATION OF
ISOs.
The
Administrator, at the written request of any Participant, may in its discretion
take such actions as may be necessary to convert such Participant's ISOs (or any
portions thereof) that have not been exercised on the date of conversion into
Non-Qualified Options at any time prior to the expiration of such ISOs,
regardless of whether the Participant is an Employee of the Company or an
Affiliate at the time of such conversion. At the time of such conversion, the
Administrator (with the consent of the Participant) may impose such conditions
on the exercise of the resulting Non-Qualified Options as the Administrator in
its discretion may determine, provided that such conditions shall not be
inconsistent with this Plan. Nothing in the Plan shall be deemed to give any
Participant the right to have such Participant's ISOs converted into
Non-Qualified Options, and no such conversion shall occur until and unless the
Administrator takes appropriate action. The Administrator, with the consent of
the Participant, may also terminate any portion of any ISO that has not been
exercised at the time of such conversion.
26.
WITHHOLDING.
In
the event that any U.S. federal, other country, state, or local income taxes,
employment taxes, Federal Insurance Contributions Act ("F.I.C.A.") withholdings
or other amounts are required by Applicable Law to be withheld from the
Participant's salary, wages or other remuneration in connection with the
issuance of a Stock Right or Shares under the Plan or for any other reason
required by Applicable Law, the Company may withhold from the Participant's
compensation, if any, or may require that the Participant advance in cash to the
Company, or to any Affiliate of the Company which employs or employed the
Participant, the statutory minimum amount of such withholdings unless a
different withholding arrangement, including the use of shares of the Company's
Common Stock or a promissory note, is authorized by the Administrator (and
permitted by law). For purposes hereof, the fair market value of the shares
withheld for purposes of payroll withholding shall be determined in the manner
set forth under the definition of Fair Market Value provided in Paragraph 1
above, as of the most recent practicable date prior to the date of exercise. If
the Fair Market Value of the shares withheld is less than the amount of payroll
withholdings required, the Participant may be required to advance the difference
in cash to the Company or the Affiliate employer. The Administrator in its
discretion may condition the exercise of an Option for less than the then Fair
Market Value on the Participant's payment of such additional withholding.
27.
NOTICE TO COMPANY OF
DISQUALIFYING DISPOSITION
.
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Each
Employee who receives an ISO must agree to notify the Company in writing
immediately after the Employee makes a Disqualifying Disposition of any Shares
acquired pursuant to the exercise of an ISO. A Disqualifying Disposition is
defined in Section 424(c) of the Code and includes any disposition (including
any sale or gift) of such Shares before the later of (a) two years after the
date the Employee was granted the ISO, or (b) one year after the date the
Employee acquired Shares by exercising the ISO, except as otherwise provided in
Section 424(c) of the Code. If the Employee has died before such Shares are
sold, these holding period requirements do not apply and no Disqualifying
Disposition can occur thereafter.
28.
TERMINATION OF THE
PLAN
.
The
Plan will terminate on February __, 2027, the date which is ten years from the
earlier
of the date of its adoption by the Board of Directors and the
date of its approval by the shareholders of the Company. The Plan may be
terminated at an earlier date by vote of the shareholders or the Board of
Directors of the Company; provided, however, that any such earlier termination
shall not affect any Agreements executed prior to the effective date of such
termination. Termination of the Plan shall not affect any Stock Rights
theretofore granted.
29.
AMENDMENT OF THE PLAN AND
AGREEMENTS
.
The
Plan may be amended by the shareholders of the Company. The Plan may also be
amended by the Administrator, including, without limitation, to the extent
necessary to qualify any or all outstanding Stock Rights granted under the Plan
or Stock Rights to be granted under the Plan for favorable federal income tax
treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code or any other tax
regulation of any applicable jurisdiction, and to the extent necessary to
qualify the Shares issuable under the Plan for listing on any national
securities exchange or quotation in any national automated quotation system of
securities dealers or other exchange. Any amendment approved by the
Administrator which the Administrator determines is of a scope that requires
shareholder approval shall be subject to obtaining such shareholder approval.
Other than as set forth in Paragraph 22 of the Plan, the exercise price of an
Option may not be reduced without stockholder approval.
Any
modification or amendment of the Plan shall not, without the consent of a
Participant, adversely affect his or her rights under a Stock Right previously
granted to him or her. With the consent of the Participant affected, the
Administrator may amend outstanding Agreements in a manner which may be adverse
to the Participant but which is not inconsistent with the Plan. In the
discretion of the Administrator, outstanding Agreements may be amended by the
Administrator in a manner which is not adverse to the Participant.
30. EMPLOYMENT OR OTHER
RELATIONSHIP.
Nothing
in this Plan or any Agreement shall be deemed to prevent the Company or an
Affiliate from terminating the employment, consultancy or Director status of a
Participant, nor to prevent a Participant from terminating his or her own
employment, consultancy or Director status or to give any Participant a right to
be retained in employment or other service by the Company or any Affiliate for
any period of time.
31. GOVERNING LAW.
This
Plan shall be construed and enforced in accordance with the laws of Nevada.
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EXHIBIT B
ORGENESIS, INC.
CORPORATE CODE OF CONDUCT AND ETHICS
FOREWORD
This
Corporate Code of Conduct and Ethics, referred to as the "Code," is intended to
provide our associates, as defined below, with a clear understanding of the
principles of business conduct and ethics that are expected of them. The
standards set forth in the Code apply to us all. Every associate of the company
must acknowledge his or her review of an agreement to comply with the Code as a
condition of his or her relationship with the company. The term "associate"
means every full and part-time employee of the company and its subsidiaries, all
members of the company's senior management, including the company's Chief
Executive Officer and Chief Financial Officer, and every member of the company's
Board of Directors, even if such member is not employed by the company.
Many
of the standards outlined on the following pages will be familiar, for they
reflect the fundamental values of fairness and integrity that are a part of our
daily lives. Applying these standards to our business lives is an extension of
the values by which we are known as individuals and by which we want to be known
as a company. To that end, the company has made the Code publicly available on
its website.
It
is our responsibility to conduct ourselves in an ethical business manner and
also to ensure that others do the same. If any one of us violates these
standards, he or she can expect a disciplinary response, up to and including
termination of any employment or other relationship with the company, and
possibly other legal action. If any breach of the Code is known to you, you are
obligated to report violations to the Corporate Compliance Officer, to any
member of the Compliance Committee, or to the third party reporting service that
the company has retained to receive such reports, as described in more detail
below. Through establishing a confidential and anonymous option to accept and
process such reports, we ensure that the good faith efforts of all of us to
comply with the Code are not undermined.
The
ultimate responsibility for maintaining our Code rests with each of us. As
individuals of personal integrity, we can do no less than to behave in a way
that will continue to bring credit to ourselves and our company.
While
it is impossible for this Code to describe every situation that may arise, the
standards explained in this Code are guidelines that should govern our conduct
at all times. If you are confronted with situations not covered by this Code, or
have questions regarding the matters that are addressed in the Code, you are
urged to consult with the Corporate Compliance Officer, a member of the
Compliance Committee, or another member of management.
The
provisions of the Code regarding the actions the company will take are
guidelines which the company intends to follow. There may be circumstances,
however, that in the company's judgment require different measures or actions
and in such cases it may act.
This
document is not an employment contract between the company and any of its
associates.
10
1. IMPLEMENTATION OF THE CODE
The
following questions and answers address the company's implementation of the
Code. The company has attempted to design procedures that ensure maximum
confidentiality, anonymity, and, most importantly, freedom from the fear of
retaliation for complying with and reporting violations under the Code.
In
addition, each associate shall sign the Associates Agreement to Comply in
substantially the form attached hereto as
Appendix A
annually, or at such
other interval as may be determined by the Audit Committee of the Board of
Directors or the Board of Directors from time to time.
Q: Who is responsible for administering, updating and enforcing
the Code?
A:
The company's Board of Directors has appointed a
Corporate Compliance Officer and a Compliance Committee that includes the
Corporate Compliance Officer and at least one additional member to administer,
update and enforce the Code. Ultimately, the Board of Directors of the company
must ensure that the Corporate Compliance Officer and the Compliance Committee
fulfill their responsibilities.
The
Corporate Compliance Officer has overall responsibility for overseeing the
implementation of the Code. Specific responsibilities of the position are to:
-
Develop the Code based on legal requirements, regulations and ethical
considerations that are raised in the company's operations;
-
Ensure that the Code is distributed to all associates and that all
associates acknowledge the principles of the Code;
-
Work with the company's Audit Committee to provide a reporting mechanism
so that associates have a confidential and anonymous method of reporting not
only suspected violations of the Code but concerns regarding federal
securities or antifraud laws, accounting issues, or any federal law relating
to fraud against stockholders;
-
Implement a training program around the Code;
-
Audit and assess compliance success with the Code;
-
Serve as a point person for reporting violations and asking questions
under the Code; and
-
Revise and update the Code as necessary to respond to detected violations
and changes in the law.
The
Compliance Committee is comprised of the Corporate Compliance Officer, and one
other Associate. The primary responsibilities of the Compliance Committee are
to:
-
Assist the Corporate Compliance Officer in developing and updating the
Code;
-
Develop internal procedures to monitor and audit compliance with the Code;
-
Serve as point persons for reporting violations and asking questions under
the Code;
-
Set up a mechanism for anonymous reporting of suspected violations of the
Code by associates and refer, when appropriate, such reports to the Audit
Committee;
-
Conduct internal investigations, with the assistance of counsel, of
suspected compliance violations;
-
Evaluate disciplinary action for associates who violate the Code;
-
In the case of more severe violations of the Code, make recommendations
regarding disciplinary action to the Board of Directors or a committee
thereof; and
-
Evaluate the effectiveness of the Code and improve the Code.
48
The
Compliance Committee will provide a summary of all matters considered under the
Code to the Board of Directors or a committee thereof at each regular meeting
thereof, or sooner if warranted by the severity of the matter. All proceedings
and the identity of the person reporting will be kept confidential to the extent
required by applicable law.
Q: How can I contact the Corporate Compliance Officer and the
Compliance Committee?
A:
The names of the Corporate Compliance Officer and
each member of the Compliance Committee are listed below. Any one of these
individuals can assist you in answering questions or reporting violations or
suspected violations under the Code.
__________________
Corporate
Compliance Officer
The members of the Compliance Committee may change from time to
time. You are encouraged to consult the copy of the Code that is included on the
company's website to obtain the most current membership of the Compliance
Committee.
Associates
are encouraged to exhaust all internal alternatives and await the results of all
internal investigations prior to making any form of external communication. We
have instituted the procedures described in this Code, including procedures to
make anonymous submissions, to facilitate the use of internal investigations.
Individuals
are encouraged, but not required, to leave a name or at least a contact number
when submitting a report. Such information will facilitate a more thorough
investigation. The Corporate Compliance Officer will strive to maintain the
integrity and confidentiality of all compliance-related communications. However,
in certain circumstances, the identity of the person raising the issue may
become known or need to be revealed, particularly if federal or state
enforcement authorities become involved in the investigation. The company cannot
guarantee confidentiality when material evidence of a violation of the law is
disclosed or if the person is identified during the normal course of an
investigation.
Q: How can I report any concerns that I have in a confidential
and anonymous manner?
A:
The company, as authorized and directed by the Audit
Committee, has retained a third party reporting service that each associate may
contact to report any suspected violations of the Code, federal securities or
antifraud laws, accounting issues, or any federal law relating to fraud against
stockholders. Associates may also report to this service any other concerns an
associate may have with respect to the company's business or operations.
Associates may make such reports on a completely anonymous and confidential
basis.
The third party service, will, in turn, provide reports directly to
the Audit Committee regarding the confidential reports it receives. The third
party service provider (the "Hotline") may be reached 24 hours a day, 7 days a
week by sending an email to:
corpcompliance@orgenesis.com
.
11.GENERAL REQUIREMENTS
Each
associate of the company is expected to be honest, fair, and accountable in all
business dealings and obligations, and to ensure:
-
the ethical handling of conflicts of interest between personal and
professional relationships;
49
-
full, fair, accurate, timely and understandable disclosure in the reports
required to be filed by the company with the Securities and Exchange
Commission and in other public communications made by the company; and
-
compliance with applicable governmental laws, rules and regulations.
hi. CONFLICTS OF INTEREST
Associates
should avoid any situation that may involve, or even appear to involve, a
conflict between their personal interests and the interests of the company. In
dealings with current or potential customers, suppliers, contractors, and
competitors, each associate should act in the best interests of the company to
the exclusion of personal advantage. For purposes of this section, a
"significant" amount or interest shall be deemed to be any amount in excess of
$25,000. Associates are prohibited from any of the following activities which
could represent an actual or perceived conflict of interest:
-
No associate or immediate family member of an associate shall have a
significant financial interest in, or obligation to, any outside enterprise
which does or seeks to do business with the company or which is an actual or
potential competitor of the company, without prior approval of the Compliance
Committee, or in the case of executive officers or members of the Board of
Directors, the full Board of Directors or a committee thereof; provided
however, that this provision shall not prevent any associate from investing in
any mutual fund or owning up to 1% of the outstanding stock of any publicly
traded company.
-
No associate shall conduct a significant amount of business on the
company's behalf with an outside enterprise which does or seeks to do business
with the company if an immediate family member of the associate is a principal
or officer of such enterprise, or an employee of such enterprise who will play
a significant role in the business done or to be done between the company and
such enterprise, without prior approval of the Compliance Committee, or in the
case of executive officers or members of the Board of Directors, the full
Board of Directors or a committee thereof.
-
No executive officer or employee, or an immediate family member of an
executive officer or an employee, shall serve as a director, officer or in any
other management or consulting capacity of any actual competitor of the
company.
-
No director, or an immediate family member of a director, shall serve as a
director, officer or in any other management or consulting capacity of any
actual competitor of the company, without the prior approval of the full Board
of Directors or a committee thereof.
-
No associate shall use any company property or information or his or her
position at the company for his or her personal gain.
-
No associate shall engage in activities that are directly competitive with
those in which the company is engaged.
-
No associate shall divert a business opportunity from the company to such
individual's own benefit. If an associate becomes aware of an opportunity to
acquire or profit from a business opportunity or investment in which the
company is or may become involved or in which the company may have an existing
interest, the associate should disclose the relevant facts to the Corporate
Compliance Officer or a member of the Compliance Committee. The associate may proceed to take advantage of such opportunity
only if the company is unwilling or unable to take advantage of such
opportunity as notified in writing by the Compliance Committee.
50
-
No associate or immediate family member of an associate shall receive any
loan or advance from the company, or be the beneficiary of a guarantee by the
company of a loan or advance from a third party, except for customary advances
or corporate credit in the ordinary course of business or approved by the
Compliance Committee. Please see Section IV.E. below, "Corporate Advances",
for more information on permitted corporate advances.
As
used herein, an "immediate family member" in respect of any person 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
such person, and any person (other than a tenant or employee) sharing the
household of such person.
In
addition, the Audit Committee of the Board of Directors will review and approve,
in advance, all related-party transactions, as required by the Securities and
Exchange Commission, The Nasdaq Stock Market, LLC or any other regulatory body
to which the company is subject.
Each
associate should make prompt and full disclosure in writing to the Corporate
Compliance Officer or a member of the Compliance Committee of any situation that
may involve a conflict of interest. Failure to disclose any actual or perceived
conflict of interest is a violation of the Code.
IV. PROTECTION AND PROPER USE OF COMPANY ASSETS
Proper
protection and use of company assets and assets entrusted to it by others,
including proprietary information, is a fundamental responsibility of each
associate of the company. Associates must comply with security programs to
safeguard such assets against unauthorized use or removal, as well as against
loss by criminal act or breach of trust. The provisions hereof relating to
protection of the company's property also apply to property of others entrusted
to it (including proprietary and confidential information).
A.
Proper Use of Company Property
The
removal from the company's facilities of the company's property is prohibited,
unless authorized by the company. This applies to furnishings, equipment, and
supplies, as well as property created or obtained by the company for its
exclusive use - such as client lists, files, personnel information, reference
materials and reports, computer software, data processing programs and data
bases. Neither originals nor copies of these materials may be removed from the
company's premises or used for purposes other than the company's business
without prior written authorization from the Compliance Committee.
The
company's products and services are its property; contributions made by any
associate to their development and implementation are the company's property and
remain the company's property even if the individual's employment or
directorship terminates.
Each
associate has an obligation to use the time for which he or she receives
compensation from the company productively. Work hours should be devoted to
activities directly related to the company's business.
51
B.
Confidential Information
The
company provides its associates with confidential information relating to the
company and its business with the understanding that such information is to be
held in confidence and not communicated to anyone who is not authorized to see
it, except as may be required by law. The types of information that each
associate must safeguard include (but are not limited to) the company's plans
and business strategy, unannounced products and/or contracts, sales data,
significant projects, customer and supplier lists, patents, patent applications,
trade secrets, manufacturing techniques and sensitive financial information,
whether in electronic or conventional format. These are costly, valuable
resources developed for the exclusive benefit of the company. No associate shall
disclose the company's confidential information to an unauthorized third party
or use the company's confidential information for his or her own personal
benefit.
C.
Accurate Records and Reporting
Under
law, the company is required to keep books, records and accounts that accurately
and fairly reflect all transactions, dispositions of assets and other events
that are the subject of specific regulatory record keeping requirements,
including generally accepted accounting principles and other applicable rules,
regulations and criteria for preparing financial statements and for preparing
periodic reports filed with the Securities and Exchange Commission. All company
reports, accounting records, sales reports, expense accounts, invoices, purchase
orders, and other documents must accurately and clearly represent the relevant
facts and the true nature of transactions. Reports and other documents should
state all material facts of a transaction and not omit any information that
would be relevant in interpreting such report or document. Under no circumstance
may there be any unrecorded liability or fund of the company, regardless of the
purposes for which the liability or fund may have been intended, or any improper
or inaccurate entry knowingly made on the books or records of the company. No
payment on behalf of the company may be approved or made with the intention,
understanding or awareness that any part of the payment is to be used for any
purpose other than that described by the documentation supporting the payment.
In addition, intentional accounting misclassifications (e.g., expense versus
capital) and improper acceleration or deferral of expenses or revenues are
unacceptable reporting practices that are expressly prohibited.
The
company has developed and maintains a system of internal controls to provide
reasonable assurance that transactions are executed in accordance with
management's authorization, are properly recorded and posted, and are in
compliance with regulatory requirements. The system of internal controls within
the company includes written policies and procedures, budgetary controls,
supervisory review and monitoring, and various other checks and balances, and
safeguards such as password protection to access certain computer systems.
The
company has also developed and maintains a set of disclosure controls and
procedures to ensure that all of the information required to be disclosed by the
company in the reports that it files or submits under the Securities Exchange
Act is recorded, processed, summarized and reported within the time periods
specified by the Securities and Exchange Commission's rules and forms.
Associates
are expected to be familiar with, and to adhere strictly to, these internal
controls and disclosure controls and procedures.
Responsibility
for compliance with these internal controls and disclosure controls and
procedures rests not solely with the company's accounting personnel, but with
all associates involved in approving transactions, supplying documentation for
transactions, and recording, processing, summarizing and reporting of
transactions and other information required by periodic reports filed with the
Securities and Exchange Commission.
Because the integrity of the company's
external reports to stockholders and the Securities and Exchange Commission depends on the integrity of
the company's internal reports and record-keeping, all associates must adhere to
the highest standards of care with respect to our internal records and
reporting. The company is committed to full, fair, accurate, timely, and
understandable disclosure in the periodic reports required to be filed by it
with the Securities and Exchange Commission, and it expects each associate to
work diligently towards that goal.
52
Any
associate who believes the company's books and records are not in accord with
these requirements should immediately report the matter to the Hotline, the
Corporate Compliance Officer or a member of the Compliance Committee. The
company has adopted explicit non- retaliation policies with respect to these
matters, as described in Section VIII below.
D.
Document Retention
Numerous
federal and state statutes require the proper retention of many categories of
records and documents that are commonly maintained by companies. In
consideration of those legal requirements and the company's business needs, all
associates must maintain records in accordance with these laws.
Any
record, in paper or electronic format, relevant to a threatened, anticipated or
actual internal or external inquiry, investigation, matter or lawsuit may not be
discarded, concealed, falsified, altered, or otherwise made unavailable, once an
associate has become aware of the existence of such threatened, anticipated or
actual internal or external inquiry, investigation, matter or lawsuit.
When
in doubt regarding retention of any record, an associate must not discard or
alter the record in question and should seek guidance from the Corporate
Compliance Officer or a member of the Compliance Committee. Associates should
also direct all questions regarding document retention and related procedures to
the Corporate Compliance Officer or a member of the Compliance Committee. In
addition, from time to time, the company may adopt additional specific written
policies and procedures with respect to document retention or amend existing
policies and procedures. All associates will be notified if such policies and
procedures are adopted or if existing policies and procedures are amended.
E.
Corporate Advances
Under
law, the company may not loan money to associates except in limited
circumstances. It shall be a violation of the Code for any associate to advance
company funds to any other associate or to himself or herself except for usual
and customary business advances for legitimate corporate purposes which are
approved by a supervisor or pursuant to a corporate credit card for usual and
customary, legitimate business purposes. It is the company's policy that any
advance to an associate over $1,000 be approved in advance by the Compliance
Committee.
Company
credit cards are to be used only for authorized, legitimate business purposes.
An associate will be responsible for any unauthorized charges to a company
credit card.
v.
FAIR DEALING WITH CUSTOMERS, SUPPLIERS, COMPETITORS, AND
ASSOCIATES
The
company does not seek to gain any advantage through the improper use of favors
or other inducements. Good judgment and moderation must be exercised to avoid
misinterpretation and adverse effect on the reputation of the company or its
associates. Offering, giving, soliciting or receiving any form of bribe to or
from an employee of a customer or supplier to influence that employee's conduct
is strictly prohibited.
53
A.
Giving Gifts
Cash
or cash-equivalent gifts must not be given by an associate to any person or
enterprise. Gifts, favors and entertainment may be given to non-governmental
employees if what is given:
-
is consistent with customary business practice;
-
is not excessive in value and cannot be construed as a bribe or pay-off;
-
is not in violation of applicable law or ethical standards; and
-
will not embarrass the company or the associate if publicly disclosed.
See
also subsection E below for considerations relating to gifts to foreign
officials and Section VI. B below for considerations relating to gifts to
government employees.
B.
Receiving Gifts
Gifts,
favors, entertainment or other inducements may not be accepted by associates or
members of their immediate families from any person or organization that does or
seeks to do business with, or is a competitor of, the company, except as common
courtesies usually associated with customary business practices. If the gift is
of more than token value, the Compliance Committee must approve its acceptance.
An
especially strict standard applies when suppliers are involved. If a gift unduly
influences or makes an associate feel obligated to "pay back" the other party
with business, receipt of the gift is unacceptable.
It
is never acceptable to accept a gift in cash or cash equivalent. Even cash gifts
of token value must be declined and returned to the sender.
C.
Unfair Competition
Although
the free enterprise system is based upon competition, rules have been imposed
stating what can and what cannot be done in a competitive environment. The
following practices can lead to liability for "unfair competition" and should be
avoided. They are violations of the Code.
Disparagement
of Competitors.
It is not illegal to point out weaknesses in a competitor's
service, product or operation; however, associates may not spread false rumors
about competitors or make misrepresentations about their businesses. For
example, an associate may not pass on anecdotal or unverified stories about a
competitor's products or services as the absolute truth (e.g., the statement
that "our competitors' diagnostic testing procedures have poor quality
control").
Disrupting
a Competitor's Business.
This includes bribing a competitor's employees,
posing as prospective customers or using deceptive practices such as enticing
away employees in order to obtain secrets or destroy a competitor's
organization. For example, it is not a valid form of "market research" to visit
a competitor's place of business posing as a customer.
Misrepresentations
of Price and Product.
Lies or misrepresentations about the nature, quality
or character of the company's services and products are both illegal and
contrary to company policy. An associate may only describe our services and
products based on their documented specifications, not based on anecdote or his
or her belief that our specifications are too conservative.
54
D.
Antitrust Concerns
Federal
and state antitrust laws are intended to preserve the free enterprise system by
ensuring that competition is the primary regulator of the economy. Every
corporate decision that involves customers, competitors, and business planning
with respect to output, sales and pricing raises antitrust issues. Compliance
with the antitrust laws is in the public interest, in the interest of the
business community at large, and in our company's interest.
Failing
to recognize antitrust risk is costly. Antitrust litigation can be very
expensive and time-consuming. Moreover, violations of the antitrust laws can,
among other things, subject you and the company to the imposition of
injunctions, treble damages, and heavy fines. Criminal penalties may also be
imposed, and individual employees can receive heavy fines or even be imprisoned.
For this reason, antitrust compliance should be taken seriously at all levels
within the company.
A
primary focus of antitrust laws is on dealings between competitors. In all
interactions with actual or potential competitors all associates must follow
these rules:
-
Never agree with a competitor or a group of competitors to charge the same
prices or to use the same pricing methods, to allocate services, customers,
private or governmental payor contracts or territories among yourselves, to
boycott or refuse to do business with a provider, vendor, payor or any other
third party, or to refrain from the sale or marketing of, or limit the supply
of, particular products or services.
-
Never discuss past, present, or future prices, pricing policies, bundling,
discounts or allowances, royalties, terms or conditions of sale, costs, choice
of customers, territorial markets, production quotas, allocation of customers
or territories, or bidding on a job with a competitor.
-
Be careful of your conduct. An "agreement" that violates the antitrust laws
may be not only a written or oral agreement, but also a "gentlemen's
agreement" or a tacit understanding. Such an "agreement" need not be in
writing. It can be inferred from conduct, discussions or communications of any
sort with a representative of a competitor.
-
Make every output- and sales-related decision (pricing, volume, etc.)
independently, in light of costs and market conditions and competitive prices.
-
Carefully monitor trade association activity. These forums frequently
create an opportunity for competitors to engage in antitrust violations.
Another
focus of antitrust law is how a company deals with customers, suppliers,
contractors and other third parties. The following practices could raise issues,
and associates should always consult with the Corporate Compliance Officer or
the Compliance Committee before doing any of the following: Refuse to sell to
any customers or prospective customer; Enter into any new distribution or
supply agreement which differs in any respect from those previously approved;
Condition a sale on the customer's purchasing another product or service, or on
not purchasing the product of a competitor; Agree with a customer on a minimum
or maximum resale price of our products; or
55
Impose restrictions on the geographic area to which our customers may resell our
products.
If
our company has a dominant or potentially dominant position with respect to a
particular product or market, especially rigorous standards of conduct must be
followed. In these circumstances, all associates should:
-
Consult with the Corporate Compliance Officer or the Compliance Committee
before selling at unreasonably low prices or engaging in any bundling
practices; and
-
Keep the Corporate Compliance Officer or the Compliance Committee fully
informed of competitive strategies and conditions in any areas where the
company may have a significant market position.
Finally,
always immediately inform the Corporate Compliance Officer or the Compliance
Committee if local, state or federal law enforcement officials request
information from the company concerning its operations.
E.
Unfair Practices in International Business
Under
the Foreign Corrupt Practices Act ("FCPA"), associates of the company are
prohibited from making certain gifts to foreign officials. "Foreign officials"
include not only persons acting in an official capacity on behalf of a foreign
government, agency, department or instrumentality, but also representatives of
international organizations, foreign political parties and candidates for
foreign public office. The gift is "corrupt" under the FCPA if it is made for
the purpose of:
-
influencing any act or decision of a foreign official in his official
capacity;
-
inducing a foreign official to do or omit to do any act in violation of his
lawful duty; inducing a foreign official to use his position to affect any
decision of the government; or
-
inducing a foreign official to secure any "improper advantage."
A
gift is still "corrupt" even when paid through an intermediary. Any associate
who has any questions whatsoever as to whether a particular gift might be
"corrupt" under the FCPA, please contact the Corporate Compliance Officer or any
member of the Compliance Committee.
VI. GOVERNMENT RELATIONS
Associates must adhere to the highest standards of ethical conduct in all
relationships with government employees and must not improperly attempt to
influence the actions of any public official.
A.
Government Procurement and Funding
The U.S. government, governments of other countries and many state, regional and
local governments have adopted comprehensive laws and regulations governing the
purchase of products from private contractors or the provision of funds to the
private sector for research and development. These laws and regulations are
intended to assure that governmental entities receive pricing, terms, and/or
conditions equivalent to those granted to the company's most favored commercial
counterparties and that there is full and open competition in contracting.
When
selling products or services to, or seeking funding from, government agencies,
the company is accountable for complying with all applicable laws, regulations,
and requirements. Certifications to, and contracts with, government agencies are
to be signed by a company associate authorized by the Board of Directors to sign
such documents, based upon knowledge that all requirements have been fully
satisfied.
56
B.
Payments to Officials
Payments
or gifts shall not be made directly or indirectly to any government official or
associate if the gift or payment is illegal under the laws of the country having
jurisdiction over the transaction, or if it is for the purpose of influencing or
inducing the recipient to do, or omit to do, any act in violation of his or her
lawful duty. Under no circumstances should gifts be given to any government
employees.
C.
Political Contributions
Company
funds, property or services may not be contributed to any political party or
committee, or to any candidate for or holder of any office of any government.
This policy does not preclude, where lawful, company expenditures to support or
oppose public referendum or separate ballot issues, or, where lawful and when
reviewed and approved in advance by the Compliance Committee, the formation and
operation of a political action committee.
VII. COMPLIANCE WITH LAWS, RULES AND REGULATIONS
A.
Insider Trading Policy
The
company expressly forbids any associate from trading on material non-public
information or communicating material non-public information to others in
violation of the law. This conduct is frequently referred to as "insider
trading." This policy applies to every associate of the company and extends to
activities both within and outside their duties to the company, including
trading for a personal account.
The
concept of who is an "insider" is broad. It includes officers, directors and
employees of a company. In addition, a person can be a "temporary insider" if he
or she enters into a special confidential relationship in the conduct of a
company's affairs and as a result is given access to information solely for the
company's purpose. A temporary insider can include, among others, a company's
investment advisors, agents, attorneys, accountants and lending institutions, as
well as the employees of such organizations. An associate may also become a
temporary insider of
another company
with which our company has a
contractual or other relationship.
Trading
on inside information is not a basis for liability unless the information is
material. This is information that a reasonable investor would consider
important in making his or her investment decisions, or information that is
likely to have a significant effect on the price of a company's securities.
Information
is non-public until it has been effectively communicated to the marketplace.
Tangible evidence of such dissemination is the best indication that the
information is public. For example, information found in a report filed with the
Securities and Exchange Commission or appearing in a national newspaper would be
considered public.
Each
associate should be familiar with and abide by the company's Insider Trading
Policy. A copy of this policy is given to all new associates of the company and
is available from the Corporate Compliance Officer or any member of the
Compliance Committee.
B.
Equal Employment Opportunity
The
company makes employment-related decisions without regard to a person's race,
color, religious creed, age, sex, sexual orientation, marital status, national
origin, ancestry, present or past history of mental disorder, mental
retardation, learning disability or physical disability, including, but not
limited to, blindness and genetic predisposition, or any other factor unrelated
to a person's ability to perform the person's job. "Employment decisions" generally mean decisions relating to hiring,
recruiting, training, promotions and compensation, but the term may encompass
other employment actions as well.
57
The
company encourages its associates to bring any problem, complaint or concern
regarding any alleged employment discrimination to the attention of the Chief
Financial Officer. Associates who have concerns regarding conduct they believe
is discriminatory should also feel free to make any such reports to the
Corporate Compliance Officer, a member of the Compliance Committee, or the
Hotline.
C.
Sexual Harassment Policy
The
company is committed to maintaining a collegial work environment in which all
individuals are treated with respect and dignity and which is free of sexual
harassment. In keeping with this commitment, the company will not tolerate
sexual harassment of associates by anyone, including any supervisor, co-worker,
vendor, client or customer, whether in the workplace, at assignments outside the
workplace, at company-sponsored social functions or elsewhere.
Each
associate should be familiar with and abide by the company's Sexual Harassment
Policy. A copy of this policy is given to all associates of the company and is
available from the Corporate Compliance Officer or any member of the Compliance
Committee.
D.
Health, Safety & Environment Laws
Health,
safety, and environmental responsibilities are fundamental to the company's
values. Associates are responsible for ensuring that the company complies with
all provisions of the health, safety, and environmental laws of the United
States and of other countries where the company does business.
The
penalties that can be imposed against the company and its associates for failure
to comply with health, safety, and environmental laws can be substantial, and
include imprisonment and fines.
E.
Health Care Regulations
The
company is committed to full compliance with federal and state laws, including
laws prohibiting fraud and abuse such as the federal and state anti-kickback
laws and federal and state false claims laws.
The
federal anti-kickback statute prohibits the knowing and willful payment of
remuneration to a physician, hospital or other source with the intent to induce
the physician, hospital or other source to refer patients or recommend any items
or services paid for by any federal health care program. There are certain "safe
harbor" exceptions to this statute; however, their application is very
complicated. A violation of the federal anti-kickback statute can result in
severe penalties, including criminal conviction, fines and exclusion from
Medicare and Medicaid programs. Many other jurisdictions, including many states,
have similar anti-kickback laws governing items or services payable under
government programs and/or by private insurance companies.
Federal
and state laws also contain numerous provisions prohibiting the submitting of
claims that are false or fraudulent. Claims that (i) provide misleading or
incomplete information to customers regarding health care products or services,
(ii) fail to include proper documentation or show a failure to obtain proper
diagnosis information and (iii) bill for services not rendered, coded improperly
or otherwise not rendered in the manner required, have resulted in penalties to
providers under false claims statues. A violation of a false claims statute can
result in severe consequences including criminal conviction.
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As
the application of federal and state anti-kickback and false claims laws is very
complicated and nuanced, it is imperative that an associate with questions about
the application of these laws contact the Corporate Compliance Officer or a
member of the Compliance Committee for guidance in advance of taking any action.
VIII.
REPORTING VIOLATIONS UNDER THE CODE: NON- RETALIATION POLICY
A.
Obligation to Make Reports; Procedure
Any associate of the company having any information or knowledge regarding the
existence of any violation or suspected violation of the Code has a duty to
report the violation or suspected violation to the Hotline, the Corporate
Compliance Officer, or any other member of the Compliance Committee. Associates
are also encouraged to raise any issues or concerns regarding the company's
business or operations. Failure to report suspected or actual violations is
itself a violation of the Code and may subject the associate to disciplinary
action, up to and including termination of employment or legal action. Reports
may be made on a completely confidential and anonymous basis. To the extent any
investigation is necessitated by a report, the company will endeavor to keep the
proceedings and the identity of the reporting associate confidential to the
fullest extent required by applicable law.
Associates
are encouraged to exhaust all internal alternatives and await the results of all
internal investigations prior to making any form of external communication. We
have instituted the procedures described in this Code, including procedures to
make anonymous submissions, to facilitate the use of internal investigations.
Individuals
are encouraged, but not required, to leave a name or at least a contact number
when submitting a report. Such information will facilitate a more thorough
investigation. The Corporate Compliance Officer will strive to maintain the
integrity and confidentiality of all compliance-related communications. However,
in certain circumstances, the identity of the person raising the issue may
become known or need to be revealed, particularly if federal or state
enforcement authorities become involved in the investigation. The company cannot
guarantee confidentiality when material evidence of a violation of the law is
disclosed or if the person is identified during the normal course of an
investigation.
B.
Anti-Retaliation Pledge
Any associate who in good faith reports a suspected violation under the Code by
the company, or its agents acting on behalf of the company, or who in good faith
raises issues or concerns regarding the company's business or operations, to the
Hotline, the Corporate Compliance Officer or any other member of the Compliance
Committee, may not be fired, demoted, reprimanded or otherwise harmed for, or
because of, the reporting of the suspected violation, issues or concerns,
regardless of whether the suspected violation involves the associate, the
associate's supervisor or senior management of the company.
In addition, any associate who in good faith reports a suspected violation under
the Code which the associate reasonably believes constitutes a violation of a
federal statute by the company, or its agents acting on behalf of the company,
to a federal regulatory or law enforcement agency, may not be reprimanded,
discharged, demoted, suspended, threatened, harassed or in any manner
discriminated against in the terms and conditions of the associate's employment for, or because of, the reporting of the suspected
violation, regardless of whether the suspected violation involves the associate,
the associate's supervisor or senior management of the company.
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IX. QUESTIONS UNDER THE CODE AND WAIVER PROCEDURES
Associates
are encouraged to consult with the Corporate Compliance Officer and Compliance
Committee about any uncertainty or questions they may have under the Code.
If
any situation should arise where a course of action would likely result in a
violation of the Code but for which the associate thinks that a valid reason for
the course of action exists, the associate should contact the Corporate
Compliance Officer or a member of the Compliance Committee to obtain a waiver
prior to the time the action is taken. No waivers will be granted after the fact
for actions already taken.
Except as noted below, the Compliance Committee
will review all the facts surrounding the proposed course of action and will
determine whether a waiver from any policy in the Code should be granted.
Waiver
Procedures for Executive Officers and Directors.
Waiver requests by an
executive officer or member of the Board of Directors shall be referred by the
Compliance Committee, with its recommendation, to the Board of Directors or a
committee thereof for consideration. If either (i) a majority of the independent
directors on the Board of Directors, or (ii) a committee comprised solely of
independent directors agrees that the waiver should be granted, it will be
granted. The company will disclose the nature and reasons for the waiver on a
Form 6-K (or Form 8-K) to be filed with the Securities and Exchange Commission
within four days or as otherwise permitted by the rules of the Securities and
Exchange Commission and the The Nasdaq Stock Market, LLC. If the Board denies
the request for a waiver, the waiver will not be granted and the associate may
not pursue the intended course of action.
It
is the company's policy only to grant waivers from the Code in limited and
compelling circumstances.
x.
FREQUENTLY ASKED QUESTIONS AND ANSWERS
The
following questions and answers address each associate's obligation to comply
with the Code. The company has attempted to design procedures that ensure
maximum confidentiality and, most importantly, freedom from the fear of
retaliation for complying with and reporting violations under the Code.
Q:
Do I have a duty to report violations under the Code?
A:
Yes, participation in the Code and its compliance program is mandatory. You must
immediately report any suspected or actual violation of the Code to the Hotline,
the Corporate Compliance Officer or a member of the Compliance Committee. The
company will keep reports confidential to the fullest extent required by
applicable law. Failure to report suspected or actual violations is itself a
violation of the Code and may subject you to disciplinary action, up to and
including termination of employment or legal action.
Q:
I'm afraid of being fired for raising questions or reporting violations under
the Code. Will I be risking my job if I do?
A:
The Code contains a clear non-retaliation policy, meaning that if you in good
faith report a violation of the Code by the company, or its agents acting on
behalf of the company, to the Hotline, the Corporate Compliance Officer or
another member of the Compliance Committee, the company will undertake to
protect you from being fired, demoted, reprimanded or otherwise harmed for
reporting the violation, even if the violation involves you, your supervisor, or
senior management of the company. Note, however, that while you will not be
disciplined for reporting a violation, you may be subject to discipline with
respect to the underlying conduct or violation. You are entitled to make the
report on a confidential and anonymous basis. To the extent an investigation must be initiated, the company will keep
confidential any report you make to the Corporate Compliance Officer or another
member of the Compliance Committee to the extent required by applicable law.
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In
addition, if you in good faith report a suspected violation under the Code which
you reasonably believe constitutes a violation of a federal statute by the
company, or its agents acting on behalf of the company, to a federal regulatory
or law enforcement agency, you may not be reprimanded, discharged, demoted,
suspended, threatened, harassed or in any manner discriminated against in the
terms and conditions of your employment for reporting the suspected violation,
regardless of whether the suspected violation involves you, your supervisor or
senior management of the company.
Associates
are encouraged to exhaust all internal alternatives and await the results of all
internal investigations prior to making any form of external communication. We
have instituted the procedures described in this Code, including the protections
described above and procedures to make anonymous submissions, to facilitate the
use of internal investigations.
Q:
How are suspected violations investigated under the
Code?
A:
When a suspected violation is reported to the Hotline, the Corporate Compliance
Officer or a member of the Compliance Committee, the Compliance Committee will
gather information about the allegation by interviewing the associate reporting
the suspected violation, the associate who is accused of the violation and/or
any co-workers or associates of the accused associates to determine if a factual
basis for the allegation exists. The reporting associate's immediate supervisor
will not be involved in the investigation if the reported violation involved
that supervisor. The company will keep the identity of the reporting associate
confidential to the fullest extent required by applicable law.
If
the report is not substantiated, the reporting associate will be informed and at
that time will be asked for any additional information not previously
communicated. If there is no additional information, the Corporate Compliance
Officer will close the matter as unsubstantiated.
If
the allegation is substantiated, the Compliance Committee will make a judgment
as to the degree of severity of the violation and the appropriate disciplinary
response. In more severe cases, the Compliance Committee will make a
recommendation to the Board of Directors of the company for its approval. The
Board's decision as to disciplinary and corrective action will be final. In the
case of less severe violations, the Corporate Compliance Officer may refer the
violation to the Human Resources Department for appropriate disciplinary action.
The
Compliance Committee shall provide a summary of all matters considered under the
Code to the Board of Directors or a committee thereof at each regular meeting
thereof, or sooner if warranted by the severity of the matter.
Q:
Do I have to participate in any investigation under the Code?
A:
Your full cooperation with any pending investigation under the Code is
a condition of your continued relationship with the company. The refusal to
cooperate fully with any investigation is a violation of the Code and grounds
for discipline, up to and including termination.
Q: What are the consequences of violating the Code?
A:
As explained above, associates who violate the Code may be subject to
discipline, up to and including termination of employment. Associates who
violate the Code may simultaneously violate federal, state, local or foreign
laws, regulations or policies. Such associates may be subject to prosecution,
imprisonment and fines, and may be required to make reimbursement to the
company, the government or any other person for losses resulting from the
violation. They may be subject to punitive or treble damages depending on the
severity of the violation and applicable law.
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Q: What if I have questions under the Code or want to obtain a waiver under any
provision of the
Code?
A:
The Corporate Compliance Officer and any member of the Compliance
Committee can help answer questions you may have under the Code. Particularly
difficult questions will be answered with input from the Compliance Committee as
a whole. In addition, Section IX of the Code provides information on how you may
obtain a waiver from the Code; waivers will be granted only in very limited
circumstances. You should never pursue a course of action that is unclear under
the Code without first consulting the Corporate Compliance Officer or the
Compliance Committee, and if necessary, obtaining a waiver from the Code.
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APPENDIX A
ASSOCIATE'S AGREEMENT TO COMPLY
I
have read the Orgenesis, Inc. Corporate Code of Conduct and Ethics (the "Code").
I have obtained an interpretation of any provision about which I had a question.
I agree to abide by the provisions of the Code. Based on my review, I
acknowledge that
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To the best of my knowledge, I am not in violation of, or
aware of any violation by others of, any provision contained in the Code;
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OR
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I have made a full disclosure on the reverse side of this
acknowledgement of the facts regarding any possible violation of the
provisions set forth in the Code.
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In addition, I understand that I am required to
report any suspected or actual violation of the Code, and that I may make such
reports on a fully anonymous basis through the mechanisms described in this
Code. I understand that I am required to cooperate fully with the company in
connection with the investigation of any suspected violation. I understand that
my failure to comply with the Code or its procedures may result in disciplinary
action, up to and including termination.
By:
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Date: ________________________________
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Name (Please print):
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Department/Location:
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