Introduction
This Code
of Business Conduct and Ethics covers a wide range of
business practices and procedures for Particle Drilling
Technologies, Inc. (the “Company”). It does
not cover every issue that may arise, but it sets out
basic principles to guide all directors, officers and
employees of the Company. All of our directors, officers
and employees must conduct themselves accordingly and
seek to avoid even the appearance of improper behavior.
This Code should also be provided to and followed by the
Company’s agents and representatives, including
consultants.
In addition
to this Code, the Company has other policies and
procedures that apply to its chief executive officer,
principal financial officer, the principal accounting
officer and controller(s). These other policies and
procedures are included in a supplemental section in
this Code.
The Company
is committed to being a responsible corporate citizen.
This Code is an integral part of that commitment. Those
who violate the standards in this Code will be subject
to disciplinary action, which may include termination of
employment. If you are in a situation that you believe
may violate or lead to a violation of this Code, follow
the guidelines described in Section 19 of this
Code.
1.
Compliance with Laws, Rules and
Regulations
The Company
will comply with all applicable laws and regulations in
all of its global operations. For everyone at the
Company, this means following the letter of the law and
doing the right, ethical thing even when the right
actions go beyond the requirements of the law. There are
specific legal and regulatory requirements for many
functional areas and business processes within the
Company, including, in particular, product development,
finance, information systems, and manufacturing
functions, as well as internal controls, complaint
handling and document control processes. You have an
obligation to know and comply with those legal and
regulatory requirements and the Company policies that
impact your function. In many instances, the policies
referenced in this Code go beyond the requirements of
the law. Similarly, supervisors and managers must help
ensure familiarity with requirements for persons in
positions that report to them. Disregard of the law or
regulatory requirements cannot and will not be
tolerated. Violation of domestic or foreign laws or
regulations may subject you, as well as the Company, to
civil and criminal penalties. You should be aware that
conduct and records are subject to internal and external
audits. Therefore, it is in your best interest to know
and comply with the Company’s legal obligations. You are
required to report any suspected violations of
applicable law or regulations of this Code of Business
Conduct.
The
Company’s success in the global marketplace depends on
you knowing and adhering to the legal and regulatory
requirements that affect your job and geography.
Operating within legal guidelines and cooperating with
local, national and international authorities is at the
heart of our Code. Legal compliance is the starting
point. Meeting our legal obligations and cooperating
with local, national and international authorities lays
a solid foundation for the corporate values, legal and
compliance obligations, integrity, respect for people, a
dedication to quality and stewardship of our communities
that define us as a company.
2.
Conflicts of Interest
A “conflict
of interest” exists when a person’s private interest
interferes in any way with the interests of the Company.
A conflict situation can arise when an employee, officer
or director takes actions or has interests that may make
it difficult to perform his or her work objectively and
effectively. Conflicts of interest may also arise when
an employee, officer or director, or members of his or
her family, receives improper personal benefits as a
result of his or her position at the Company. Loans to,
or guarantees of obligations of, employees, officers,
directors and their family members may create conflicts
of interest.
It is
almost always a conflict of interest for a Company
employee to work simultaneously for a competitor,
customer or supplier. You are not allowed to work for a
competitor as a consultant or member of the Board of
Directors. The best policy is to avoid any direct or
indirect business connection with our customers,
suppliers or competitors, except on our
behalf.
Conflicts
of interest are prohibited as a matter of Company
policy, except under circumstances approved by the Board
of Directors. Conflicts of interest may not always be
clear-cut, so if you have a question, you should consult
with your supervisor or the Company’s legal counsel. Any
employee, officer or director who becomes aware of a
conflict or potential conflict should bring it to the
attention of a supervisor, manager or other appropriate
personnel or consult the procedures described in Section
19 of this Code.
3.
Insider Trading
In the
course of business, the Company will need to announce
“material” developments regarding its operations.
Material information is information that a typical
investor might consider important in deciding to buy,
sell or hold securities or information that, if made
public, would likely affect the market price of a
company’s securities. Information may be material even
if it relates to future, speculative or contingent
events and even if it is significant only when
considered in combination with publicly available
information. Examples of material information include
information about financial results, potential
acquisitions, testing results, regulatory or litigation
developments and major management changes.
Prior to
public announcement, you may have knowledge of material
non-public information about the Company or other
companies during your course of service at the Company.
You must exercise the utmost care in handling such
material non-public information to avoid legal and
ethical violations.
Company
policy and securities laws prohibit you from trading
securities based on material non-public information.
Information becomes public once it has been adequately
disclosed and the market has had time to digest the
information. Examples of adequate disclosure include the
company’s announcement of material information through
public means, such as news releases or securities
filings. A delay of one or two business days is
generally considered a sufficient period for routine
information to be absorbed by the market. Nevertheless,
a longer period of delay might be considered appropriate
in more complex disclosures. If you have questions about
whether the information you possess is material or
whether it has been made public, contact the Company’s
legal counsel before buying or selling securities.
Directors and members of senior management (business
group or geographic area vice president and above) and
directors should always consult with the Company’s legal
counsel before they or their immediate family members
trade in the Company’s securities.
You should
not disclose material non-public information to anyone,
including co-workers, unless the person receiving the
information has a legitimate need to know the
information for purposes of carrying out the company’s
business. You are also prohibited from disclosing
confidential information outside the company. Such
“tips” may result in friends, relatives or others
trading on the basis of inside information, which is
also prohibited by securities laws. In addition, if you
leave the company, you must maintain the confidentiality
of such information until it has been adequately
disclosed to the public.
Trading in
“put” and “call” options and certain other derivative
instruments on a corporation’s stock raises particular
concerns about the use of company information and your
interests in the company. Company policy prohibits you
from trading in puts and calls and certain other
derivative instruments on the Company’s stock and that
of its competitors.
Violators
of securities laws are subject to severe civil and
criminal punishments. These penalties may even apply
where the disclosing person did not engage in a
transaction or directly benefit from the
trading.
4.
Corporate Opportunities
Employees,
officers and directors are prohibited from taking for
themselves personally opportunities that are discovered
through the use of corporate property, information or
position without the consent of the Board of Directors.
No employee, officer or director may use corporate
property, information, or position for improper personal
gain, and no employee, officer or director may compete
with the Company directly or indirectly. Employees,
officers and directors owe a duty to the Company to
advance its legitimate interests when the opportunity to
do so arises.
5.
Competition and Fair Dealing
We seek to
outperform our competition fairly, honestly and in full
compliance with applicable laws, including antitrust
laws. We seek competitive advantages through superior
performance, never through unethical or illegal business
practices. Stealing proprietary information, possessing
trade secret information that was obtained without the
owner’s consent, or inducing such disclosures by past or
present employees of other companies is prohibited and
may be illegal. Each employee, officer and director
should endeavor to respect the rights of and deal fairly
and honestly with the Company’s customers, suppliers,
competitors and employees. No employee, officer or
director should take unfair advantage of anyone through
manipulation, concealment, abuse of privileged
information, misrepresentation of material facts, or any
other intentional unfair-dealing practice.
6.
Anti-Kickback, Bribery
In the
United
States, and in
many other countries, it is illegal to provide, offer or
accept a kickback or bribe. A kickback or bribe is any
money, fee, commission, credit, gift, gratuity, thing of
value or compensation of any kind that is provided,
directly or indirectly, and that has as one of its
purposes the improper obtaining or rewarding of
favorable treatment in a business transaction. The
Company’s policy on kickbacks and bribes is clear: They
are illegal and are not allowed.
7.
Business Courtesies and Gifts
The purpose
of business entertainment and gifts in a commercial
setting is to create goodwill and sound working
relationships, not to gain unfair advantage with
customers. No gift or entertainment should ever be
offered, given, provided or accepted by any Company
employee, officer or director, or by any of their family
members, if it: (i) is a cash gift, (ii) is
inconsistent with customary business practices,
(iii) is excessive in value, (iv) can be
construed as a bribe or payoff and (v) violates any
laws or regulations. Please discuss with your supervisor
any gifts or proposed gifts which you are not certain
are appropriate.
8.
Diversity
The Company
respects and welcomes diversity in its directors,
employees, customers, suppliers and others in the global
marketplace. The Company is committed to equal
employment opportunity without regard to race, color,
religion, sex, national origin, age, medical condition
or disability, sexual orientation, veteran status or any
other characteristic protected by law.
9.
Harassment
Ethical
personal conduct on the job means treating others with
respect and fairness. Workplace harassment is any
unwelcome or unwanted attention or discriminatory
conduct based on an individual’s race, color, religion,
sex, national origin, age, medical condition or
disability, sexual orientation, veteran status or any
other illegal or inappropriate basis. It can also
include verbal, nonverbal or physical abuse. Something
that is considered harmless by one individual may be
perceived as harassment by another. You are expected to
conduct yourself in a manner appropriate to the
workplace, to keep all work environments free of
harassment, and to conduct relationships with
appropriate behavior and integrity. Harassment creates
an intimidating or hostile work environment, and
disrupts or interferes with another’s work performance.
Everyone has the right to work in an environment free of
workplace harassment. If workplace harassment does
occur, you should report incidents as soon as possible
to management, a human resources representative or the
Company’s legal counsel.
10.
Employee Privacy
The Company
respects every employee’s right to confidentiality of
certain employment records, including certain health
information, as well as the privacy of personal
activities outside of business hours. The Company
collects and maintains personal information that relates
to each employee, including medical and benefit
information. Special care is taken to limit access to
personal information to company personnel with a need to
know such information for a legitimate purpose.
Employees who are responsible for maintaining personal
information and those who are provided access to such
information must not disclose private information in
violation of applicable law or in violation of the
Company’s policies.
The Company
has rights of access to all company property, including
computers, and all communications, electronic mail and
voice-mail messages, records and information created in
the business setting.
The Company
emphasizes the need for balance between work, personal
and family life, and encourages employees to pursue
interests and activities outside the workplace. Personal
interests and beliefs, however, must not be imposed on
other employees or upon the company. Personal
statements, for example on the Internet, must not appear
to represent the views of the Company.
The Company
encourages you to become involved in political
activities of your choice. However, activities should
not interfere with your ability to perform your job and
should not imply participation or endorsement on the
part of the Company.
11. Health,
Safety and the Environment
The Company
strives to provide each employee with a safe and healthy
work environment. Each employee has responsibility for
maintaining a safe and healthy workplace for all
employees by following safety and health rules and
practices and reporting accidents, injuries and unsafe
equipment, practices or conditions.
Violence
and threatening behavior are not permitted. Employees
should report to work in condition to perform their
duties, free from the influence of drugs or alcohol. The
use of illegal drugs in the workplace will not be
tolerated. Weapons may not be carried into, stored or
used in the Company’s facilities.
The Company
is committed to environmental protection, both
domestically and internationally, and expects employees
to abide by the letter and spirit of applicable
environmental laws.
12.
Record-Keeping and Disclosures
The Company
requires honest and accurate recording and reporting of
information in order to make responsible business
decisions. For example, only the true and actual number
of hours worked should be reported.
Many
employees, officers and directors regularly use business
expense accounts, which must be documented and recorded
accurately. If you are not sure whether a certain
expense is legitimate, ask your supervisor or the
Company’s controller.
All of the
Company’s books, records, accounts and financial
statements must be maintained in reasonable detail, must
appropriately reflect the Company’s transactions and
must conform both to applicable legal requirements and
to the Company’s system of internal controls. Unrecorded
or “off the books” funds or assets shall not be
maintained.
Business
records and communications often become public, and we
should avoid exaggeration, derogatory remarks,
guesswork, or inappropriate characterizations of people
and companies that can be misunderstood. This applies
equally to e-mail, internal memos, and formal reports.
Records should always be retained or destroyed according
to the Company’s record retention policies. In
accordance with those policies, in the event of
litigation or governmental investigation please consult
the Company’s legal counsel.
Full, fair,
accurate, timely and understandable disclosure shall be
made by the Company in all reports and documents that
the Company files with or submits to the Securities and
Exchange Commission, and in all public communications
made by the Company. Any employee, officer or director
who becomes aware or believes that any disclosure that
the Company has made or intends to make is inaccurate or
misleading should immediately contact his supervisor or
the Company’s General Counsel.
13.
Confidential Information
Employees,
officers and directors must maintain the confidentiality
of confidential information entrusted to them by the
Company or others with whom the Company does business,
except when disclosure is authorized by the Company’s
Legal Department or required by laws or regulations.
Confidential information includes all non-public
information that might be of use to competitors, or
harmful to the Company or others with whom the Company
does business, if disclosed. It also includes
information that suppliers, customers and other
companies have entrusted to us. The obligation to
preserve confidential information continues even after
employment ends.
14.
Protection and Proper Use of the Company’s
Assets
All
employees, officers and directors should endeavor to
protect the Company’s assets and ensure their efficient
use. Theft, carelessness, and waste have a direct impact
on the Company’s profitability. Any suspected incident
of fraud or theft should be immediately reported for
investigation. The Company’s equipment should not be
used for non-Company business, though incidental
personal use may be permitted.
The
obligation of employees, officers and directors to
protect the Company’s assets includes its proprietary
information. Proprietary information includes
intellectual property such as trade secrets, patents,
trademarks, and copyrights, as well as exploration,
production and marketing plans, engineering and
manufacturing ideas, designs, databases, records, salary
information and any unpublished financial data and
reports. Unauthorized use or distribution of this
information is a violation of Company policy. It could
also be illegal and result in civil or even criminal
penalties.
15.
Payments to Government Personnel
The U.S.
Foreign Corrupt Practices Act prohibits giving anything
of value, directly or indirectly, to officials of
foreign governments or foreign political candidates in
order to obtain or retain business. It is strictly
prohibited to make illegal payments to government
officials of any country.
In
addition, the U.S. Government has a number of laws and
regulations regarding business gratuities that may be
accepted by U.S. Government personnel. The promise,
offer or delivery to an official or employee of the U.S.
Government of a gift, favor or other gratuity in
violation of these rules would not only violate Company
policy but could also be a criminal offense. State and
local governments, as well as foreign governments, may
have similar rules. The Company’s legal counsel can
provide guidance to you in this area.
16. Waivers
of this Code of Business Conduct and
Ethics
Only the
Board of Directors or a committee of the Board of
Directors may make any waiver of this Code for executive
officers or directors, and such waivers will be promptly
disclosed if required by law or stock exchange
regulation. Only the Company’s Chief Executive Officer
may make any waiver of this Code for other employees of
the Company.
17.
Reporting Illegal or Unethical Behavior
Employees
are encouraged to talk to supervisors, managers or other
appropriate personnel about observed illegal or
unethical behavior, as well as observed violations of
this Code or any other Company policy, and when in doubt
about the best course of action in a particular
situation.
It is the
policy of the Company not to allow retaliation for
reports of misconduct by others made in good faith by
employees. Employees, officers and directors are
expected to cooperate in internal investigations of
misconduct.
18.
Response and Discipline for Violations
You are
responsible and accountable for adhering to this Code of
Business Conduct. Subject to applicable law and
agreements, if you violate the provisions outlined in
this Code, you will be subject to appropriate
disciplinary action, up to and including
termination.
Violators
of the laws and government regulations previously
mentioned in this Code could expose themselves and the
Company to substantial criminal penalties (including
prison terms for individuals) and civil
damages.
19.
Compliance Procedures
All laws
applicable to the Company or the conduct of its
business, regardless of where located, must be observed.
If a law conflicts with a policy in this Code, you must
comply with the law; however, if a local custom or
policy conflicts with this Code, you must comply with
this Code. If you have any questions about these
conflicts, you should ask your supervisor how to handle
the situation.
We must all
work to ensure prompt and consistent action against
violations of this Code and laws and regulations
applicable to the Company . Since we cannot anticipate
every situation that will arise, it is important that we
have a way to approach a new question or problem. These
are the steps to keep in mind:
·
Make sure
you have all the facts. In order to reach the right
solutions, we must be as fully informed as
possible.
·
Ask
yourself: What specifically am I being asked to do? Does
it seem unethical or improper? This will enable you to
focus on the specific question you are faced with, and
the alternatives you have. Use your judgment and common
sense; if something seems unethical or improper, it
probably is.
·
Clarify
your responsibility and role. In most situations, there
is shared responsibility. Are your colleagues informed?
It may help to get others involved and discuss the
problem.
·
Discuss the
problem with your supervisor. This is the basic guidance
for all situations. In many cases, your supervisor will
be more knowledgeable about the question, and will
appreciate being brought into the decision-making
process. Remember that it is your supervisor’s
responsibility to help solve problems.
·
Seek help
from Company resources. In the rare case where it may
not be appropriate to discuss an issue with your
supervisor or where you do not feel comfortable
approaching your supervisor with your question, discuss
it locally with the general manager of your division or
your Human Resources representative. If that also is not
appropriate, call or write to the Company’s General
Counsel, or the Chairman of the Audit Committee, whose
contact information may be obtained from the Human
Resources department.
·
You may
report ethical violations in confidence and without fear
of retaliation. If your situation requires that your
identity be kept secret, your anonymity will be
protected. The Company does not permit retaliation of
any kind against employees for good faith reports of
ethical violations.
·
Always ask
first, act later. If you are unsure of what to do in any
situation, seek guidance before you act.
Supplemental
Public Company Code Requirements for
Senior
Financial Officers
Particle
Drilling Technologies, Inc. (the “Company”) has a
Code of Business Conduct and Ethics applicable to all
directors and employees of the Company. The Company’s
chief executive officer, principal financial officer,
the principal accounting officer and controller(s)
(collectively, the “Senior
Financial Officers”) are
bound by the provisions set forth therein relating to
ethical conduct, conflicts of interest and compliance
with law. In addition to the Code of Business Conduct
and Ethics, the Senior Financial Officers are subject to
the following additional specific policies:
1.
The Senior
Financial Officers shall conduct themselves in an honest
and ethical manner when acting for the Company, and
shall avoid conflicts of interest between personal and
professional relationships.
2.
The Senior
Financial Officers are responsible for full, fair,
accurate, timely and understandable disclosure in
reports and documents that the Company files with, or
submits to, the Securities and Exchange Commission and
in other public communications made by the Company.
Accordingly, it is the responsibility of each Senior
Financial Officer promptly to bring to the attention of
the Audit Committee any material information of which he
or she may become aware that affects the disclosures
made by the Company in its public filings and other
public communications or otherwise assist the Audit
Committee in fulfilling its responsibilities.
3.
Each Senior
Financial Officer shall promptly bring to the attention
of the Audit Committee any information he or she may
have concerning (a) significant deficiencies in the
design or operation of internal controls which could
adversely affect the Company’s ability to record,
process, summarize and report financial data or
(b) any fraud, whether or not material, that
involves management or other employees who have a
significant role in the Company’s financial reporting,
disclosures or internal controls.
4.
Each Senior
Financial Officer shall promptly bring to the attention
of the General Counsel or the Chief Executive Officer
and to the Audit Committee any information he or she may
have concerning any violation of these policies,
including any actual or apparent conflicts of interest
between personal and professional relationships,
involving any management or other employees who have a
significant role in the Company’s financial reporting,
disclosures or internal controls.
5.
Each Senior
Financial Officer shall promptly bring to the attention
of the General Counsel or the Chief Executive Officer
and to the Audit Committee any information he or she may
have concerning evidence of a violation of the laws,
rules or regulations applicable to the Company, its
subsidiaries and the operation of their businesses, by
the Company, its subsidiaries or any agent thereof, or
of violation of the these policies.
6.
The Board
of Directors shall determine, or designate appropriate
persons to determine, appropriate actions to be taken in
the event of violations of the these policies by the
Company’s Senior Financial Officers. Such actions shall
be reasonably designed to deter wrongdoing and to
promote accountability for adherence to these policies,
and shall include written notices to the individual
involved that the Board of Directors has determined that
there has been a violation, censure by the Board of
Directors, demotion or re-assignment of the individual
involved, suspension with or without pay or benefits (as
determined by the Board of Directors) and termination of
the individual’s employment. In determining what action
is appropriate in a particular case, the Board of
Directors or such designee shall take into account all
relevant information, including the nature and severity
of the violation, whether the violation was a single
occurrence or repeated occurrences, whether the
violation appears to have been intentional or
inadvertent, whether the individual in question had been
advised prior to the violation as to the proper course
of action and whether or not the individual in question
had committed other violations in the
past.
