Code of Ethics and Business Conduct
Effective: April 21, 2004
Evans & Sutherland Computer Corporation, including its subsidiaries, is committed to maintaining high professional and ethical standards in the conduct of its business. This Code of Ethics and Business Conduct has been adopted by the Board of Directors and reinforces our commitment to these standards. Every employee of E&S and its subsidiaries and every member of the Board of Directors of E&S are expected to follow the Code.
The Code establishes fundamental standards for other Company policies and guidelines that provide more information and guidance. This Code is also intended to conform to the requirements of the Sarbanes-Oxley Act of 2002 in that it applies to all E&S employees at all levels, including the Company's Chief Executive Officer, Chief Financial Officer, and other executive officers of the Company, senior managers of the Company, and other employees performing functions similar to those of a senior financial officer.
Code of Ethics and Business Conduct
In your business dealings on behalf of the Company, you are expected to follow this Code. While there is no complete list of actions that constitute ethical conduct or unethical conduct, you are expected to adhere to the following specific rules of conduct at all times. The style of commercial dealings may vary among certain industries and in different cultures, but adherence to this Code and legal requirements must always characterize our business activity.
Anti-Discrimination, Non-Harassment and Employee Relations
E&S is committed to providing a work environment free from harassment and discrimination in accordance with applicable state and federal laws. E&S policy prohibits workplace harassment and discrimination based on any status protected by federal, state or local law, including, but not limited to gender, age, race, religion, national origin and disability. This policy applies to directors, employees, contractors and vendors of the Company.
The Company recognizes that its continued success depends on the development and fair treatment of its employees. The Company is committed to providing equal opportunity for employment and advancement on the basis of skills, knowledge, experience and ability to perform the essential functions of the job.
If you feel you or another employee is being subjected to unlawful discrimination or harassment, you should provide a written or verbal complaint to your supervisor or any other supervisor of the Company, or to the Vice President of Human Resources as soon as possible. The law protects individuals from retaliation for reporting such conduct.
E&S expects employees to comply with Company human resource policies. The human resource policies are summarized in the Employee Handbook and cover important topics such as safety, security, drug and alcohol use, and job performance expectations. The policies provide for disciplinary actions including termination of employment in the event of policy violations.
Avoiding Conflicts of Interest
You must carefully avoid any personal activity, investment or association which interferes or could be reasonably expected to interfere with your ability to perform in your position or to comply with Company policies. Generally, a conflict of interest arises whenever your personal interests diverge from your responsibilities to the Company or from the Company's best interests. You may not exploit your position or relationship with the Company for personal gain or the gain of any family member, friend or personal or business associate. For example, it is a likely conflict of interest if you:
- cause the Company to engage in any business transaction with a relative, friend or personal or business associate, unless such relationship has been fully disclosed to the Company's Board of Directors and such transaction has been subsequently approved by the Board and noted in the minutes of the applicable Board meeting.
- use non-public Company, client or vendor information for your or another person's gain (including securities-related transactions based on such information).
- take personal advantage, or facilitate another person in taking advantage of a business opportunity that arises or is made known to you as a result of your relationship with the Company.
- have more than a nominal interest (as a stockholder, lender or otherwise) in any vendor, customer or competitor of the Company.
- obtain employment or join the board of directors (or similar governing body) of a direct competitor or take other actions to compete with the Company.
- work for a client or vendor while holding a position with E&S that deals directly or indirectly with the client or vendor.
- obtain outside employment that conflicts with your time and ability to perform your E&S duties.
- solicit donations using Company resources without approval by the Company.
- post, send, or communicate in any way proprietary, privileged, confidential, or any other sensitive Company information outside the Company.
- post any information about the Company on message boards, in chat rooms, or on other similar sites on the Internet.
There are other situations in which a conflict of interest, actual or apparent, may arise. You are expected to use reasonable judgment before taking action that could reasonably be construed as being in conflict with your professional obligations and the best interests of the Company.
Advancing Company Interests
You owe a duty to the Company to advance its interests when opportunities arise. You may not take for yourself opportunities that are discovered through the use of Company property, information or position without the consent of the Company's Board of Directors.
Gifts, Entertainment and Political Contributions
You must not accept any gift, gratuity or special privilege in excess of modest value (as reasonably judged by you) except items given or received in the normal course of business (including reasonable entertainment), or:
- where it is given on a personal occasion, such as a marriage or retirement;
- where refusal of such item would cause offense to the giver or embarrassment to the Company, in which case you may accept it on behalf of the Company, provided that (i) report its receipt to your supervisor and (ii) you turn it over to the Company; or
- where the item is the participation in a customer, vendor, advisor or trade association social activity and where (i) you believe that your participation will not affect your judgment with respect to the affairs of the Company, and (ii) if the value of such participation is reasonably believed by you to exceed $500, your participation is approved by your supervisor, or in the case of an executive officer or director of the Company, a majority of our independent directors.
Many governmental bodies strictly prohibit the receipt of any gratuity or gift by their employees, including meals and entertainment, and you must strictly follow those prohibitions.
Company decisions regarding the purchasing of materials, supplies and services must be made in accordance with Company procurement policies. These policies require procurement on the basis of factors such as competitive price, quality and performance. It is impermissible to accept or request anything of value that could be reasonably interpreted as a bribe or kickback. A bribe or a kickback includes any item or favor provided for the purpose of improperly obtaining favorable treatment or seeking a competitive advantage.
If you do business in foreign countries, you must become knowledgeable of customs and laws involving the exchange of gifts or the paying of certain fees. It is the Company's policy to comply with all applicable laws on these matters, particularly the U.S. Foreign Corrupt Practices Act ("FCPA"). This law restricts payments to officials of foreign government, political parties, and candidates for office.
You are free to engage in political activity and make political contributions on your own time and using your own resources. However, you may not make any direct or indirect political contribution in the name of or on behalf of the Company or any subsidiary where such contribution is prohibited by law.
Safeguarding Company Assets
You have the responsibility to safeguard the Company's property against loss, damage, theft, or misuse. In addition to tangible property such as computer equipment and software, Company property includes intellectual property (e.g., patents, trademarks, and copyrights) and proprietary and confidential (i.e., non-public) information. Included is information regarding the Company, customers, vendors, technology, finances, and other business information, which, if made available to the Company's competitors or the public, would be advantageous to such competitors and detrimental to the Company. You are expected to secure all Company property within your control to prevent its theft or unauthorized use or reproduction. On the termination of your relationship with the Company, you must return all Company property and continue to honor your commitments to respect proprietary and confidential information.
The Company's computer systems, electronic mail (email), telephone, voice mail, and Internet access are employer-provided technologies and Company property. The use of systems is primarily for Company operations and not for personal use. Non-business use should be on an infrequent basis and not interfere or conflict with business use. You may not use these assets to display, transmit or store inappropriate materials at any time. The Company reserves the right to place constraints on the use of these systems, to monitor use of these systems, and to disclose any such monitoring results to law enforcement officials.
Avoiding Securities Trading Using Inside Information
You may not trade in the securities of the Company when you are in possession of material, non-public information about the Company, except as expressly permitted under SEC regulations. Generally, information is "material" if it would influence a reasonable investor's decision to buy or sell securities of the Company. If you obtain material, non-public information about the Company, you are also prohibited from communicating (or "tipping") such information to others, including family members, friends and other personal or business associates for use in trading in the companies securities. A violation of these prohibitions can result in civil and criminal proceedings being brought against you and other persons involved and may result in the immediate termination of employment with the Company.
Material information is generally factual information that a reasonable investor would want to know before making an investment decision. Examples of material information may include:
- Financial results, forecasts, and developments
- Possible or proposed mergers, acquisitions, joint ventures or divestitures
- Awards and losses of contracts
- Product developments
These prohibitions continue for as long as the information you know remains material and non-public. If you have questions, you should obtain guidance from the Chief Financial Officer before trading in the Company's securities.
Proper Accounting, Financial Reporting, and Business Records
E&S accounting records are relied upon to produce reports for the Company's management, creditors, shareholders, regulators, and others. All Company accounting records and reports must be kept and presented in accordance with the laws of each applicable jurisdiction and must accurately, timely and fairly reflect in reasonable detail the Company's assets, liabilities, revenues and expenses. Unrecorded or "off the books" funds or assets should not be maintained.
Under the authority and oversight of the Audit Committee, the Chief Executive Officer and Chief Financial Officer are ultimately responsible for the integrity of the Company's financial accounting and reporting. It falls to all employees and directors to ensure that false or intentionally misleading entries are not made in the Company's accounting records. The Company expects those involved in preparing, maintaining and presenting financial records to comply with generally accepted accounting principles and internal accounting controls.
In support of this objective, the Company has implemented a procedure for you to anonymously report complaints or concerns regarding accounting, internal accounting controls or auditing matters directly to the Audit Committee Ombudsman. This procedure and instructions for contacting the Audit Committee Ombudsman are posted on the E&S internal Web site.
Business records and communications often become public, so you should avoid exaggeration, derogatory remarks, guesswork, or inappropriate characterizations of people and companies that can be misunderstood or misinterpreted. This applies equally to email, internal memos, and formal reports.
If you become aware of any investigation, litigation, administrative proceeding or other governmental or regulatory proceeding, you must immediately consult with the Chief Financial Officer regarding any Company records relating to that matter. If necessary, the Chief Financial Officer will obtain legal advice regarding the appropriate steps that should be taken. Federal and state law provides for imprisonment and severe penalties for any person who alters, mutilates, conceals or destroys a record or an object with intent to impair the availability of such item or influence the investigation of a governmental department or agency, or that is the subject of litigation.
Protection of Information
The Company expects you to respect confidential information. Confidential information typically includes all non-public information. This includes information entrusted to you by the Company or its customers, suppliers, competitors and employees. E&S employees and contractors are required to sign a confidentiality agreement. The Company expects you to abide fully by the terms and intent of any confidentiality or non-disclosure agreement to which you or the Company is a party or by which you or the Company is bound. You must comply with all agreements and laws concerning use and disclosure of information both during and after your employment or other relationship with the Company.
The unauthorized acquisition, use or disclosure of confidential, privileged or proprietary information of the Company, any of the Company's competitors or any of the Company's customers, suppliers or employees is prohibited. You must respect obligations of confidentiality when dealing with such confidential information and not make unauthorized use of any such information for any reason. Particular care must be taken when dealing with any employee or ex-employee of any competitor, supplier or customer and with family, friends and other personal and business associates. You must not post any information about the Company on any message boards, chat rooms, or similar sites on the Internet. Unauthorized disclosures of information may result in disciplinary action including termination of employment and personal liabilities, penalties, and criminal prosecution.
All requests for news and information must be directed to the Corporate Marketing Department, Chief Executive Officer or Chief Financial Officer. Only the CEO, CFO, and named E&S marketing communications representatives designated by the CEO or CFO are authorized to make public any news or information about Evans & Sutherland that may be significant to the financial markets.
E&S will handle and safeguard personal information that it acquires about you in accordance with applicable privacy laws. Personal information is data related to you by which you can be identified and located, such as employment records.
Compliance with Laws
You are expected to comply at all times with all federal, state, local and foreign laws and regulations affecting the Company and its business. Although you are not expected to know the details of all these laws, it is important to know enough to determine when to seek advice from management or other appropriate personnel. If you are uncertain about the existence or effect of a particular law on your conduct, you should consult with management. Management may consult with the Company's legal advisors to determine appropriate action. Following are some of the laws with which you must comply:
- property, services, sales, income and other tax laws
- health and safety laws applicable to the Company's facilities, operations or products
- securities regulations
- import or export laws
- patent, copyright, and trademark laws
All employees and directors worldwide must comply with Company policies applicable to international business transactions and with the legal requirements of each country in which they conduct Company business, as well as with all U.S. laws applicable in other countries.
The U.S. Foreign Corrupt Practices Act (the "FCPA") applies to business transactions both inside the United States and in other countries. Its requirements relate to accurate and complete financial books and records, transactions with foreign government officials and restrictions on the use of funds for unlawful or improper purposes. Violation of the FCPA can bring severe penalties and it is mandatory that all employees and directors living or working in foreign countries become familiar with the FCPA and its requirements.
Compliance with Antitrust Laws
The antitrust laws of the U.S. are intended to protect and promote vigorous and fair competition. Violation of these laws could give rise to civil or criminal prosecution.
The following agreements, arrangements or understandings with competitors, whether oral or in writing, should always be avoided:
- Agreements to fix prices or boycott specified suppliers.
- Agreements to allocate products, territories or markets.
- Agreements to exchange competitively sensitive information, especially prices.
- Agreements that limit the production or sale of our products.
You should adhere to applicable antitrust laws and obtain advice from the Company's Chief Executive Officer before engaging in any conduct or practice that may involve antitrust laws. If any competitor initiates a discussion involving the subjects above, you should immediately excuse yourself from the conversation and immediately report the matter to the Chief Executive Officer.
The foregoing does not apply to disclosure of information in connection with acquisition transactions, or to related non-compete provisions.
You should deal fairly with customers, vendors, competitors or others and avoid manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing or practice. The use of bribes, kickbacks or other corrupt practices is strictly prohibited.
It is the Company's policy to be truthful in the advertising, marketing, and promotion of its products. All such statements shall be in compliance with the guidelines of the Federal Trade Commission (FTC), as well as other applicable federal and state laws and regulations. Aggressive marketing should not include misstatements, innuendo or unfounded rumors about the Company's competition. The Company's sales and marketing personnel are expected to comply with all applicable fair competition and anti-trust laws.
Correcting and Reporting Mistakes
It is expected that you will occasionally make mistakes. These are normally correctable and, therefore, forgivable. Mistakes should never be covered up, but rather should be immediately and fully disclosed to Company management and promptly corrected. The covering-up or falsification of any Company, client or third-party record or report is strictly prohibited.
You are expected to immediately alert management or, if appropriate, the Company Ombudsman or the Audit Committee Ombudsman whenever you discover or suspect violations of this Code.
In no event will you face retaliation from the Company for making good faith reports of suspected or actual misconduct. The Company's management will attempt to prevent retaliation from being committed by any employee, officer or director. An employee, officer, or director who penalizes you for trying to follow these ethical standards will be subject to corrective action, including the possibility of immediate dismissal. Nevertheless, if you wish to remain anonymous in reporting misconduct, you may do so by sending an anonymous note marked "Personal and Confidential" containing appropriate details of the alleged misconduct, together with any relevant documents to any or all of the Company's Chief Executive Officer, Chief Financial Officer, Company Ombudsman or Audit Committee Ombudsman in care of the Company's main office address, 770 Komas Drive, Salt Lake City, Utah 84108, USA. Alternatively, you may confidentially report misconduct using the telephone Ombudsman Hotline (801) 588-1011.
Code and Policy Violations
A failure by any employee or director to comply with this Code, any applicable law or regulation governing the Company and the conduct of its business, or any other Company policy or rule may result in disciplinary action up to and including termination of employment or engagement and, if warranted, the institution of civil or criminal proceedings. Although protections exist under various laws for individuals who report Code or other violations, filing a complaint does not excuse a complainant's own misconduct or violation.
It ultimately falls to you to be a guardian of the Company's ethics and standards of professional conduct. It is as important to abide by the spirit of the Company's standards as it is to comply with the particular standards and guidelines described in this Code. You are expected to conduct yourself in a manner consistent with this Code in all aspects of your work. If you have any questions concerning this Code, you should consult your supervisor.
If at any time you are unsure about the ethical nature of a proposed course of conduct, you should ask yourself the following questions:
- Will my actions be ethical in every respect and fully comply with applicable laws and with Company policies?
- Will my actions be improper or have the appearance of impropriety?
- Will my actions be questioned by my supervisors, associates, customers, advisors, family and/or members of the general public?
- Am I trying to misrepresent to anyone the propriety of my actions?
If you are uncomfortable with your response to any of the above questions, you should not take the contemplated course of action without first discussing it further with your management within the Company or, if appropriate, with outside legal counsel.
This Code is available for viewing on the Company's Internet Web site at www.es.com and may be filed each year as an exhibit to the Company's Annual Report on Form 10-K. The Company will publicly disclose (i) any change to this Code that applies to any officer or director of the Company, or any other person performing functions similar to those of a senior financial officer, and (ii) the grant of a waiver to any such individual of any provision of this Code (which waiver will be subject to prior approval by the Company's independent directors). Such public disclosure will be made by the filing with the Securities and Exchange Commission (the "SEC") of a Report on Form 8-K and/or the prompt disclosure of such change on the Company's internet website. Nothing in this Code constitutes a contract of employment with any individual.