Code of EthicsRECEIVE NEWS BY EMAIL
CODE OF ETHICS
This Code of Ethical Conduct (“Code”) applies to all members of the Board of Directors and employees of DPW Holdings, Inc. (the “Company”), including the Company’s principal executive officer, principal financial officer, principal accounting officer, controller or person performing similar functions (“Financial Managers”).
This Code covers a wide range of financial and non-financial business practices and procedures. This Code does not cover every issue that may arise, but it sets out basic principles to guide all directors and employees of the Company. If a law or regulation conflicts with a policy in this Code, the director or employee must comply with the law or regulation. If a director or employee has any questions about this Code or potential conflicts with a law or regulation, they should contact the Company’s Board of Directors, Audit Committee, or General Counsel.
This Code provides principles to which directors or employees are expected to adhere and advocate. In particular, each Financial Manager shall recognize that Financial Managers hold an important and elevated role in corporate governance. They are uniquely capable and empowered to ensure that the Company’s, its stockholders’, and other stakeholders’ interests are appropriately balanced, protected and preserved. The Code embodies rules regarding individual and peer responsibilities, as well as responsibilities to the Company, the stockholders, other stakeholders, and the public.
FINANCIAL CODE PRINCIPLES AND RESPONSIBILITIES
Directors and employees shall adhere to and advocate to the best of their knowledge and ability the following principles and responsibilities governing their professional and ethical conduct.
1. Act with honesty and integrity, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships. A “conflict of interest” exists when an individual’s private interests interfere or conflict in any way (or even appear to interfere or conflict) with the interests of the Company.
2. When disclosing information to constituents, provide them with information that is accurate, complete, objective, relevant, timely and understandable. Reports and documents that the Company files with the Securities and Exchange Commission or releases to the public shall contain full, fair, accurate, timely and understandable information. The principal executive officer and principal financial officer shall review the annual and quarterly reports and certifying and filing them with the Securities and Exchange Commission.
3. Comply with rules and regulations of federal, state, provincial and local governments, and other appropriate private and public regulatory agencies, including any stock exchange on which the company’s shares are listed.
4. Act in good faith, responsibly, with due care, competence and diligence, without misrepresenting material facts or allowing their independent judgment to be subordinated.
5. Protect and respect the confidentiality of information acquired in the course of their work except when authorized or otherwise legally obligated to disclose. Confidential information acquired in the course of their work shall not be used for personal advantage.
6. Achieve responsible use of and control over all assets and resources employed by or entrusted to them.
7. Promptly report Code violations to the Company’s Chairman of the Board and Audit Committee Chairman.
WAIVERS OF THE CODE
Any waiver of this Code for directors or Financial Managers may be made only by the Board of Directors upon recommendation of the Audit Committee, and will be promptly disclosed as required by law or the private regulatory body. Requests for waivers must be made in writing to the Company’s Chairman of the Board and Audit Committee Chairman prior to the occurrence of the violation of the Code.
REPORTING OF VIOLATIONS OF THE CODE, ILLEGAL OR UNETHICAL BEHAVIOR
Directors and employees should report observed violations of the Code and illegal or unethical behavior to the Company’s Chairman of the Board and Audit Committee Chairman. All reports will be treated in a confidential manner and it is the Company’s policy to not allow retaliation for reports made in good faith of misconduct by others. The Company’s Audit Committee will lead all investigations of alleged violations or misconduct. Directors and employees are expected to cooperate in internal investigations of misconduct and violations of this Code.
VIOLATIONS OF THE CODE
Directors or employees who violate the standards of this Code will be subject to disciplinary action, which may include termination of employment, civil action and/or referral to law enforcement agencies for criminal prosecution.
Insider Trading PolicyBACK TO TOP
INSIDER TRADING POLICY
THE NEED FOR A POLICY STATEMENT
The purchase or sale of securities while possessing material nonpublic (“insider”) information or the selective disclosure of such information to others who may trade is prohibited by United States. As an essential part of your work, many of you have access to material nonpublic information about DPW Holdings, Inc. and its subsidiary (collectively the “Company”) or about the Company’s business (including information about other companies with which the Company does or may do business). federal and state laws.
The Company has adopted this Policy Statement to avoid even the appearance of improper conduct on the part of any Company employee (not just so-called insiders). All Company employees have worked hard over the years to establish a reputation for integrity and ethical conduct. This Policy Statement is designed to further the reputation of the Company and each employee for integrity and good corporate citizenship.
No director, officer, employee or relative of such person who has material nonpublic information relating to the Company, may buy or sell securities of the Company, directly or indirectly, or engage in any other action to take personal advantage of that information, or pass on such information to others. This policy also applies to information relating to any other company, including customers or suppliers, obtained in the course of employment.
Transactions that may be necessary or justifiable for independent reasons (such as the need to raise money for an emergency expenditure) are no exception. Even the appearance of an improper transaction must be avoided to preserve the Company’s reputation for adhering to the highest standards of conduct.
LIABILITY OF SUPERVISORY PERSONS
The Company, as well as a director, officer or other Company manager, is subject to liability under the federal securities laws if the Company or such person knew or recklessly disregarded the fact that a person directly or indirectly under the Company’s or such person’s control was likely to engage in insider trading and failed to take appropriate steps to prevent such an act before it occurred. The penalties for such inaction can be significant.
If material nonpublic information is inadvertently disclosed, no matter what the circumstances, by any Company director, officer, employee, or their relatives, the person making or discovering that disclosure should immediately report the facts to the President of the Company or the Audit Committee of the Board of Directors.
DEFINITION OF MATERIAL NONPUBLIC INFORMATION
“Material” information is any information that a reasonable investor would likely consider important in a decision to buy, hold, or sell stock. In short, any information which could reasonably affect the price of the stock.
“Nonpublic” information is any information which has not been disclosed generally to the marketplace. Information about the Company that is not yet in general circulation should be considered nonpublic. Similarly, information received about another company in circumstances indicating that it is not yet in general circulation should be considered nonpublic. All information that you learn about the Company or its business plans in connection with your employment is potentially “insider” information until publicly disclosed or made available by the Company. You should treat all such information as confidential and proprietary to the Company. You may not disclose it to others, such as family, relatives, business or social acquaintances, who do not need to know it for legitimate business reasons. If this nonpublic information is also “material” you are required by law and this Company policy to refrain from trading and from passing the information on to others who may trade.
Common examples of information that will frequently be regarded as material, assuming the same has not been publicly disclosed by the Company, are projections of future earnings or losses, or financial liquidity problems; major marketing changes; news of a pending or proposed joint venture, merger, acquisition or tender offer; news of a significant sale of assets or the disposition of a subsidiary; changes in dividend policies or the declaration of a stock split or the offering of additional securities; changes in management; major personnel changes; significant new products or discoveries; significant litigation or government investigations; or the gain or loss of a substantial customer or supplier.
Remember, if your securities transactions become the subject of scrutiny, they will be viewed after-the-fact with the benefit of hindsight. As a result, before engaging in any transaction you should carefully consider how regulators and others might view your transaction in hindsight.
TRANSACTIONS BY FAMILY MEMBERS
The very same restrictions apply to your family members and others living in your household. Employees are expected to be responsible for the compliance of their immediate family and personal households.
TIPPING INFORMATION TO OTHERS
Whether the information is proprietary information about the Company or information that could have an impact on the price of the Company’s securities, you must not pass the information on to others, including family members and others living in your household or friends and casual acquaintances. Employees are expected to be responsible for the compliance of their immediate family and others living in the households. The above penalties apply whether or not you derive any benefit from another’s actions.
Accordingly, employees should not respond to inquiries from outsiders and should refer all such inquiries to the corporate officer designated in writing to respond to such inquiries.
It would be improper for an employee to enter a trade immediately after the Company has made a public announcement of material information, including earnings releases. Because the Company’s shareholders and the investing public should be afforded the time to receive the information and act upon it, as a general rule, you should not engage in any transactions until at least on full business day after material information has been released.
TRADING DURING WINDOW PERIODS
Investment by Company employees in the Company’s securities is encouraged. The most appropriate periods to buy or sell the Company’s securities is the period beginning on the third business day and ending on the twelfth business day following the release of quarterly or annual financial results (so-called “window periods”). In general, this is the period when there should be the least amount of inside information about the Company that is unavailable to the investing public. It is permissible to trade at other times. However, you may not buy or sell the Company’s securities even during window periods if you are in possession of material nonpublic information.
Any person who has any questions about specific transactions may obtain additional guidance from Bartel Eng & Schroder, counsel for the Company. Remember, however, the ultimate responsibility for adhering to the Policy Statement and avoiding improper transactions rests with you. It is imperative that you use your best judgment.
PRE-CLEARANCE OF TRADES BY DIRECTORS, OFFICERS, AND CERTAIN OTHER PERSONNEL
To provide assistance in preventing inadvertent violations to insure compliance with timely reporting, and to avoid even the appearance of an improper transaction (which could result, for example, where an officer engages in a trade while unaware of a pending major development), the procedure set forth below must be followed by the directors, officers, all persons reporting directly to the officers, and by other employees who may have access to material nonpublic information.
All transactions in securities of the Company (acquisitions, dispositions, transfers, etc.) by any member of the above-mentioned groups must be pre-cleared by the Company’s Chief Financial Officer or President.
If you contemplate a transaction, you should contact the Company’s Chief Financial Officer in advance. This requirement does not apply to stock option exercises or other periodic or regular savings plan or deferred compensation plan purchases. However, it would cover market sales of option stock following the exercise of the options (“cashless exercise” or “same day sales”).
The reasons for this requirement are several. In addition to better prevent trading on material non-public information, pre-clearance of all trades by reporting individuals (i.e. directors, executive officers, and 10% beneficial owners) will help to assure timely filing by such individuals of Form 4’s under Section 16(a) of the Securities Exchange Act of 1934 (“Exchange Act”). Under Section 16(b), a Form 4 must be filed before the end of the second business day following the day on which the transaction was executed, for each non-exempt acquisition or disposition of the Company’s equity securities by a reporting person. Because of the relatively short filing period, failure to timely file can occur and then the delinquent filing must be reported by the Company (naming the individual) in its annual report and proxy statement filed with the Securities and Exchange Commission.
Pre-clearance of all trades will also better enable the Company’s officers, directors, and 10% stockholders to avoid violations of the short-swing profit provisions of Section 16(b) of the Exchange Act. Under this rule, insiders can be required to disgorge any profits realized from the purchase and sale (or sale and purchase) of any non-exempt equity security of the Company within a six month period. Section 16(b) imposes strict liability; there is no requirement of intent to violate the section, nor are unintentional or inadvertent violations excused. Further, violation of Section 16(b) does not depend on the use or possession of inside information. Advising counsel in advance of any proposed transaction in the Company’s equity securities will allow for a review of previously filed Form 4’s so as to avoid any potential Section 16(b) liability.
If you believe that you may be in possession of material nonpublic information, do not disclose that information without first discussing the same with the Company’s President.
The Company recognizes the potential need of employees and allows employees to enter into 10b5-1 plan arrangements with brokerage and investment firms to facilitate the trading of Company securities. These arrangements should be pre-cleared by the Company’s Chief Financial Officer and the President prior to execution to insure full compliance with Rule 10b5-1.
Employees will be required to certify their understanding of and intent to comply with this Policy Statement. Officers and directors and other key employees may be required to certify compliance on an annual basis.
Nomination and Governance CommitteeBACK TO TOP
NOMINATION AND GOVERNANCE COMMITTEE
The Nomination and Governance Committee (the “Committee”) is responsible for identifying individuals qualified to become directors, and recommending to the board of directors (the “Board”) of DPW Holdings, Inc. (the “Company”) nominees for the next annual meeting of stockholders. The Committee leads the Board in its annual review of the Board’s performance and recommends to the Board director candidates for each committee for appointment by the Board. The Committee takes a leadership role in shaping corporate governance policies and practices, including recommending to the Board the corporate governance guidelines applicable to the Company and monitoring Company compliance with policies and guidelines.
The Committee will be composed entirely of directors who satisfy the definition of “independent” under the listing standards of NYSE. The Committee members shall be appointed by the Board and may be removed by the Board, at its discretion.
DUTIES AND RESPONSIBILITIES
The Committee shall have the following duties and responsibilities:
Review and assess the adequacy of the Company’s policies and practices in corporate governance, including the corporate governance guidelines of the Company, and recommend any proposed changes to the Board for approval.
Review and assess the adequacy of the Company’s Code of Ethics for selected executives and other internal policies and guidelines, and monitor that the principles described therein are being incorporated into the Company’s culture and business practices.
Review the appropriateness of the size of the Board relative to its various responsibilities. Review the overall composition of the Board, taking into consideration such factors as business experience and specific areas of expertise of each Board member, and make recommendations to the Board as necessary.
Recommend to the Board the number, identity, and responsibilities of Board committees, and the Chair and members of each committee. This shall include advising the Board on committee appointments and removal from committees or from the board, rotation of committee members, and Chairs and committee structure and operations.
Consider criteria for identifying and selecting individuals who may be nominated for election to the Board, which shall reflect at a minimum all applicable laws, rules, regulations, and listing standards, including a potential candidate’s experience, areas of expertise and other factors relative to the overall composition of the Board.
Identify to the Board the proposed slate of nominees for election at the Company’s annual meeting of stockholders.
As the need arises, to fill vacancies, actively seek individuals qualified to become Board members for recommendation to the Board.
Consider unsolicited nominations for Board membership in accordance with guidelines developed by the Committee.
Conduct an annual review of the Committee’s performance, periodically assess the adequacy of its charter, and recommend changes to the board as needed.
Regularly report to the Board on the Committee’s activities.
Obtain advice and assistance, as needed, from internal or external legal, accounting, search firms, or other advisors, including the retention, termination, and negotiation of terms and conditions of the assignment.
Audit CommiteeBACK TO TOP
The primary responsibility of the Audit Committee (the “Committee”) is to assist the Board of Directors (the “Board”) of DPW Holdings, Inc. (the “Company”) in overseeing management’s conduct of the Company’s financial reporting process. The Committee performs this role by reviewing the financial reports and other financial information released by the Company, the annual independent audit of the Company’s financial statements by the Company’s independent auditors (the “Auditors”), and the Company’s legal compliance and ethics programs.
The Committee has sole responsibility for the retention, compensation, and oversight of the Auditors. The Auditors report directly to the Committee. The Committee also serves as an independent monitor of the Company’s financial reporting process and internal control over financial reporting. The Committee shall adopt procedures to allow the free flow of information to the Committee regarding the Company’s internal control over financial reporting and any concerns by officers or employees of the Company or the Auditors regarding accounting and auditing matters. In discharging its oversight role, the Committee is empowered to investigate any matters brought to its attention. In such investigations, the Committee shall have full access to all books, records, facilities, and personnel of the Company, and the power to retain outside counsel, auditors, or other experts. The Committee shall receive the funding reasonably necessary to retain the Auditors to perform its audit, and to retain any other experts required by the Committee to carry out its responsibilities.
The Committee shall be comprised of not less than two members of the Board, each of whom shall be an independent director in accordance with the rules of SEC and applicable law. Accordingly, no member shall have a relationship with the Company that interferes with the exercise of his or her independence from the Company and its management. Each member shall be able to read and understand fundamental financial statements, including a company’s balance sheet, income statement, and cash flow statement, and at least one member of the Committee shall be a financial expert, in that he or she has past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in the individual’s financial sophistication, as determined by the Board in accordance with the rules of the rules and regulations of the SEC and any other applicable law. Committee members shall be appointed by the Board.
The Committee shall meet at least quarterly. In addition, the Committee shall meet at least once annually with the Auditors, and with the chief financial officer (and other management as appropriate) in separate sessions to discuss any matters that the Committee or these other individuals believe should be discussed privately, and to resolve any disputes that may arise between management and the Auditors. The Committee shall also meet at least quarterly with management to discuss the Company’s system of internal control over financial reporting and management’s evaluation of the effectiveness of these controls.
A majority of Committee members shall constitute a quorum, but members of the Committee should endeavor to be present, in person or by telephone, at all meetings. The Chairperson of the Board may request that members of management and representatives of the Auditors be present at Committee meetings.
MINUTES OF MEETINGS
Minutes of each meeting shall be prepared and provided to Committee members and made available to the directors who are not members of the Committee.
The Committee’s job is one of oversight. While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. This is the responsibility of management and the Auditors.
The following is a list of the regular functions of the Committee. These functions are set forth as a guide, with the understanding that the Committee may diverge from this guide as appropriate:
1. The Committee shall have the sole authority to appoint the Auditors to be retained by the Company and approve the compensation of the Auditors. The Committee shall evaluate and have the sole authority to discharge or replace the Auditors (subject, if deemed appropriate, to shareholder ratification).
2. The Committee shall ensure the receipt from the Auditors of a formal written statement delineating all relationships between the Auditors and the company, and the Committee shall actively engage in a dialogue with the Auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of the Auditors, and for taking, or recommending that the full Board take appropriate action to oversee the independence of the Auditors audit. The Company shall provide for appropriate funding, as determined by the Committee, for payment of compensation to the Auditors retained by the Company for the purpose of rendering or issuing an audit report.
3. The Committee shall review the appointment and replacement of the lead independent audit partner to ensure rotation in accordance with applicable law. The Committee shall request and review reports of the Auditors on all material written communications between the Auditors and management.
4. At least once each fiscal quarter, the Committee shall discuss with management and the Auditors: (i) all significant deficiencies and material weaknesses in the design or operation of the Company’s internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize, and report financial information; (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting, (iii) the resolution of any identified weaknesses, and (iv) the assessments of such internal control over financial reporting, and any significant changes in the internal control over financial reporting, required to be disclosed in the Company’s filings with the SEC or other publicly available documents.
5. The Committee shall review the scope of the audit and plan for the annual audit prior to its implementation.
6. The Committee shall adopt procedures for the receipt, retention, and treatment of complaints received by the Company, and for the confidential, anonymous submission of concerns to the Committee by the Company’s employees, relating to accounting, internal accounting controls or auditing matters.
7. The Committee shall review and approve any related-party transactions involving the Company to the extent required by NYSE.
8. The Committee shall review the adequacy of this Charter on an annual basis. In addition, the Committee shall perform such other functions as necessary and appropriate under law, the rules of NYSE MKT LLC, the Company’s certificate of incorporation or bylaws, and the resolutions and other directives of the Board.
Compensation CommiteeBACK TO TOP
The Compensation Committee (the “Committee”) is a committee of the Board of Directors (the “Board”). The Committee is responsible for reviewing and recommending executive compensation policies and practices to the Board, reviewing and recommending to the Board salaries, bonuses and other benefits paid to Company officers, and administering Company stock option plans and other benefit plans.
The Committee shall consist of three or more directors, all of whom satisfy the definition of “independent” under the listing standards of NYSE American. The Committee members shall be appointed by the Board and may be removed by the Board, at its discretion. In addition, a person may serve on the Compensation Committee only if the Board of Directors determines that he or she (i) is a “Non-employee Director” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, and (ii) satisfies the requirements of an “outside director” for purposes of Section 162(m) of the Internal Revenue Code.
Notwithstanding the foregoing, if the Committee is comprised of at least three members, the Board, under exceptional and limited circumstances, may appoint one director who is not “independent” under NYSE American rules provided that (a) the Board determines that the director’s membership on the Committee is in the best interests of the Company and its shareholders; (b) the director may not be an officer or employee of the Company or an immediate family member of an officer or employee; and (c) the director may not serve on the Committee for more than two years. The Company shall disclose in the proxy statement for the next annual meeting the nature of the relationship and the reasons for the Board’s determination.
DUTIES AND RESPONSIBILITIES
The Committee’s duties and responsibilities include:
* reviewing and recommending to the Board the Company’s compensation philosophy and overseeing the administration of related compensation and benefit programs, policies and practices;
* recommending to the Board the compensation of the President & CEO;
* establishing performance goals and objectives for the President & CEO and measuring the President and CEO’s performance against those goals and objectives pursuant to any corporate performance-based plans, including those approved by shareholders;
* recommending to the Board employment agreements and offers of employment provided to the President & CEO;
* recommending to the Board the Company’s submissions to shareholders on executive compensation matters, including advisory votes on executive compensation and the frequency of such votes;
* reviewing and certifying in writing awards to the Company President & CEO under corporate performance-based plans, including those approved by shareholders;
* recommending to the Board the terms of any awards or option grants under any stock option or other equity-based plans;
* reviewing and recommending to the Board the compensation of members of the Board of Directors including, without limitation, annual member fees and any equity grants;
* performing such other duties and carrying out such other responsibilities as are consistent with this Charter; and
* recommending to the Board the compensation of any other officers of the Company (to the extent required by applicable listing standards).
RESOURCES AND AUTHORITY OF THE COMMITTEE
The Committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, independent legal counsel or other adviser (the “Consultant”). The Committee shall be directly responsible for the appointment, termination, compensation and oversight of the work of any Consultant retained by the Committee. The Company must provide for appropriate funding, as determined by the Committee, for payment of reasonable compensation to a Consultant retained by the Committee.
The Committee shall meet at least one (1) time each year and at such other times as it deems necessary to fulfill its responsibilities. The Committee shall report regularly to the Board with respect to its activities and make recommendations to the Board of Directors as appropriate.