This Code applies to all directors, officers and employees of the company and its subsidiaries, who, unless otherwise specified, will be referred to jointly as employees. Agents and contractors of the company are also expected to read, understand and abide by this Code. This Code is meant to be a Sarbanes-Oxley Section 406 compliant Code of Ethics.
This Code should help guide your conduct in the course of our business. However, many of the principles described in this Code are general in nature, and the Code does not cover every situation that may arise. Use common sense and good judgment in applying this Code. If you have any questions about applying the Code, it is your responsibility to seek guidance from the Human Resources Department.
This Code is not the exclusive source of guidance and information regarding the conduct of our business. You should consult applicable policies and procedures in specific areas as they apply. The Code is intended to supplement, not replace, the employee handbook and the other policies and procedures of the company.
We are committed to continuously reviewing and updating our policies and procedures. The company therefore reserves the right to amend, alter or terminate this Code at any time and for any reason, subject to applicable law.
You are responsible for complying with all laws, rules, regulations and regulatory orders applicable to the conduct of our business. If you are located or engaging in business outside of the United States, you must comply with laws, rules, regulations and regulatory orders of the United States, including the Foreign Corrupt Practices Act and U.S. export rules and regulations, in addition to the applicable laws of other jurisdictions. If compliance with the Code should ever conflict with applicable law, you must comply with the applicable law and you should immediately notify the company of any such conflict. In the event of any actual or perceived conflict of any applicable laws, rules, regulations, orders or procedures, you must immediately inform your manager and then seek additional guidance from the company.
You should undertake to acquire knowledge of the legal requirements relating to your duties sufficient to enable you to recognize potential dangers and to know when to seek advice from managers or other appropriate personnel.
Violations of laws, rules, regulations and orders may subject you to individual criminal or civil liability, in addition to discipline by the company. Violations may also subject the company to civil or criminal liability or the loss of business.
Your decisions and actions in the course of your employment with the company should be based on the best interests of the company, and not based on personal relationships or benefits. You should seek to avoid situations where your personal activities and relationships conflict, or appear to conflict, with the interests of the company, except under guidelines approved by the Board of Directors. This includes situations where you may have or appear to have an indirect conflict through, for example, a significant other or a relative or other persons or entities with which you have a business, social, familial, personal or other relationship. A conflict may also arise when you take actions or have interests that make it difficult for you to perform your work for the company objectively and effectively. You must disclose to your manager any interest that you have that may, or may appear to, conflict with the interests of the company.
There are a variety of situations in which a conflict of interest may arise. While it would be impractical to attempt to list all possible situations, some common types of conflicts are discussed below.
The company files reports and other documents with regulatory authorities, including the U.S. Securities and Exchange Commission and The NASDAQ Stock Market. In addition, from time to time the company makes other public communications, such as issuing press releases.
Depending upon your position with the company, you may be called upon to provide information to help assure that the company’s public reports and communications are complete, fair, accurate and understandable. You are expected to use all reasonable efforts to provide complete, accurate, objective, relevant, timely and understandable answers to inquiries related to the company’s public disclosures.
Individuals involved in the preparation of public reports and communications must use all reasonable efforts to comply with our disclosure controls and procedures, which are designed to ensure full, fair, accurate, timely and understandable disclosure in our public reports and communications.
If you believe that any disclosure is materially misleading or if you become aware of any material information that you believe should be disclosed to the public, it is your responsibility to immediately bring this information to the attention of the Chief Financial Officer. Specifically, and without limitation to the foregoing, if you believe that questionable accounting or auditing conduct or practices have occurred or are occurring, you should notify the Chairman of the Audit Committee of the Board of Directors.
You should refer all calls or other inquiries from the press, market professionals or security holders to the Chief Financial Officer, who will see that the inquiry is directed to the appropriate persons within the company.
All communications made to public audiences on behalf of the company (or that could reasonably be perceived as being made on behalf of the company), including formal communications and presentations made to investors, customers or the press, require prior approval of the Chief Executive Officer or Chief Financial Officer.
As a public company, we are required to follow strict accounting principles and standards, to report financial information accurately and completely in accordance with these principles and standards, and to have appropriate internal controls and procedures to ensure that our accounting and financial reporting complies with all applicable laws. The integrity of our financial transactions and records is critical to the operation of our business and is a key factor in maintaining the confidence and trust of our employees, security holders and other stakeholders.
It is important that all transactions are properly recorded, classified and summarized in our financial statements, books and records in accordance with our policies, controls and procedures, as well as all generally accepted accounting principles, standards, laws, rules and regulations for accounting and financial reporting. If you have responsibility for or any involvement in financial reporting or accounting, you should have an appropriate understanding of, and you should seek in good faith to adhere to, relevant accounting and financial reporting principles, standards, laws, rules and regulations and the company’s financial and accounting policies, controls and procedures. If you are a senior officer, you should seek to ensure that the internal controls and procedures in your business area are in place, understood and followed.
It is important that those who rely on records and reports—managers and other decision makers, creditors, customers and auditors—have complete, accurate and timely information. False, misleading or incomplete information undermines the company’s ability to make good decisions about resources, employees and programs and may, in some cases, result in violations of law. Anyone involved in preparing financial or accounting records or reports, including (without limitation) financial statements and schedules, must be diligent in assuring that those records and reports are complete, accurate and timely. Anyone representing or certifying as to the accuracy of such records and reports should make a diligent inquiry or review adequate to establish a good faith belief in their accuracy.
Even if you are not directly involved in financial reporting or accounting, you may be involved with financial records or reports of some kind—a voucher, time sheet, invoice or expense report. In addition, most employees have involvement with product, marketing or administrative activities, or performance evaluations, which can affect our reported financial condition or results. Therefore, the company expects you, regardless of whether you are otherwise required to be familiar with finance or accounting matters, to use all reasonable efforts to ensure that every business record or report with which you deal is accurate, complete and reliable.
Our auditors have a duty to review our records in a fair, independent and accurate manner. You are expected to cooperate with independent and internal auditors in good faith and in accordance with all applicable laws. In addition, and without limiting the foregoing, you must not fraudulently induce or influence, coerce, manipulate or mislead our independent or internal auditors regarding financial records, processes, controls or procedures or other matters relevant to their engagement. You may not engage, directly or indirectly, any outside independent auditors to perform any audit, audit-related, tax or other services, including consulting, without written approval from the Controller, Chief Financial Officer, and the Audit Committee of the Board of Directors.
If you have any questions as to what constitutes nonpublic information, please consult the Legal Department.
All nonpublic information must only be used for company’s business purposes. You have an obligation to use all reasonable efforts to safeguard the company’s nonpublic information. You may not disclose nonpublic information to anyone outside of the company, except when disclosure is required by law or when disclosure is required for business purposes and appropriate steps have been taken to prevent misuse of that information. This responsibility includes not disclosing nonpublic information in Internet discussion groups, chat rooms, bulletin boards or other electronic media. In cases where disclosing nonpublic information is required or necessary, you should coordinate with the Legal Department. The misuse of nonpublic information is contrary to company policy and may also be a violation of the law.
Each employee is required to sign an At Will Employment, Confidential Information, Invention Assignment, and Arbitration Agreement that addresses the use and disclosure of confidential information of the company.
You may not directly or indirectly—through, for example, significant others, family members or controlled entities—buy or sell stocks or other securities of the company or any other company based on nonpublic information obtained from your work at the company. In addition, you may not “tip” others by providing them nonpublic information under circumstances that suggest that you were trying to help them make an investment decision. These obligations are in addition to your obligations with respect to nonpublic information generally, as discussed above.
Under U.S. securities laws, it is unlawful for any person who has “material” nonpublic information about a company to trade in the stock or other securities of that company or to disclose such information to others who may trade. Material nonpublic information is information about a company that is not known to the general public and that a typical investor would consider important in making a decision to buy, sell or hold securities. Violations of U.S. securities laws may result in civil and criminal penalties, including disgorgement of profits, civil judgments, fines and jail sentences.
You should be aware that stock market surveillance techniques are becoming increasingly sophisticated, and the probability that U.S. federal or other regulatory authorities will detect and prosecute even small-level trading is significant. Insider trading rules are strictly enforced, even in instances when the financial transactions seem small.
The company has also adopted an Insider Trading Policy which can be found at www.lantronix.com and is hereby incorporated by reference. To the extent that the Insider Trading Policy applies to you, such Policy supersedes this section herein entitled “Prohibition on insider trading.” If you have any questions regarding trading in the company’s securities, contact the Chief Financial Officer for guidance.
The company is required by local, state, federal, foreign and other applicable laws, rules and regulations to retain certain records and to follow specific guidelines in managing its records. Records include (without limitation) paper documents, emails, compact discs, computer hard drives, floppy disks, microfiche, microfilm and all other recorded information, regardless of media or characteristics. Civil and criminal penalties for failure to comply with such guidelines can be severe for employees, agents, contractors and the company.
You should consult with the Legal Department regarding the retention of records in the case of actual or threatened litigation or government investigation. The Legal Department will notify you if a legal hold is placed on records for which you are responsible. A legal hold suspends all document destruction procedures in order to preserve appropriate records under special circumstances, such as litigation or government investigations. The Legal Department determines and identifies what types of records or documents are required to be placed under a legal hold. If a legal hold is placed on records for which you are responsible, you must preserve and protect the necessary records in accordance with instructions from the Legal Department. Records or supporting documents that are subject to a legal hold must not be destroyed, altered or modified under any circumstance. Destroying, altering or modifying any documents or other evidence during the pendency of any threatened or actual litigation may be a violation of applicable law and subjects the offender to serious criminal and/or civil liability. A legal hold remains effective until it is officially released in writing by the Legal Department. If you are unsure whether a document has been placed under a legal hold, you should preserve and protect that document while you check with the Legal Department.
You may, from time to time, provide or accept business amenities to aid in building legitimate business relationships. Business amenities may include (without limitation) gifts, meals, services, entertainment, reimbursements, loans, favors, privileges or other items of value.
Any business amenity should be consistent with customary business practice and should be reasonable and appropriate for the circumstance. Business amenities should not be lavish or excessive. Business amenities should not violate law or create an appearance of impropriety. You should avoid providing or accepting any cash payment, or other business amenity that can be construed as a bribe or payoff. All company funds expended for business amenities must be accurately recorded in the company’s books and records. We encourage you to contact the Legal Department if you have any questions as to whether a business amenity is permissible.
In some business situations outside of the United States, it is customary and lawful for business executives to present gifts to representatives of their business partners. These gifts may be of more than a nominal value, and under the circumstances, returning the gifts or paying for them may be an affront to the giver. If you find yourself in such a situation, you must report the gift to the Legal Department. In some cases, you may be required to turn the gift over to the company.
Special restrictions apply when dealing with government employees. For more information, see the section below on “Working with Governments”.
You must handle the nonpublic information of others responsibly and in accordance with our agreements with them. Nonpublic information of others includes (without limitation) notes, reports, conclusions and other materials prepared by a company employee based on the nonpublic information of others.
You should not knowingly accept information offered by a third party, including a customer, supplier or business partner, that is represented as nonpublic, or that appears from the context or circumstances to be nonpublic, unless an appropriate nondisclosure agreement has been signed by the company with the party offering the information. You should contact the Legal Department to coordinate the appropriate execution of nondisclosure agreements on behalf of the company.
Even after a nondisclosure agreement is in place, you should accept only the information that is necessary or appropriate to accomplish the purpose of receiving it, such as a decision on whether to proceed to negotiate a deal. If more detailed or extensive information is offered and it is not necessary or appropriate for your immediate purposes, it should be refused. If any such information is inadvertently received, it should be transferred to the Legal Department for appropriate disposition. You must coordinate closely with the Legal Department in the exchange of any nonpublic information of the company and any third party in order to ensure that all such information is disclosed and received in compliance with the applicable nondisclosure agreement.
Once the company has received nonpublic information, you should use all reasonable efforts to:
You may not unlawfully obtain or use the materials, products, intellectual property, proprietary or nonpublic information or other assets of anyone, including suppliers, customers, business partners and competitors. You may not coerce or improperly induce past or present employees of other companies to disclose proprietary or nonpublic information of their former or other employers.
It is our policy to lawfully compete in the marketplace. Our commitment to fairness includes respecting the rights of our competitors to compete lawfully in the marketplace and abiding by all applicable laws in the course of competing.
Most countries have well-developed bodies of law designed to encourage and protect free and fair competition. These laws are broad and far-reaching and regulate the company’s relationships with its distributors, resellers, suppliers and customers. Competition laws generally address the following areas: pricing practices (including predatory pricing, price fixing and price discrimination), discounting, terms of sale, credit terms, promotional allowances, secret rebates, exclusive dealerships or distributorships, product bundling, restrictions on carrying competing products, termination and many other practices.
Competition laws also govern, usually quite strictly, relationships between the company and its competitors. Collusion among competitors is illegal, and the consequences of any violation are severe. You must not enter into an agreement or understanding, written or oral, express or implied, with any competitor concerning prices, discounts or other terms or conditions of sale; profits or profit margins; costs; allocation of product, customers, markets or territories; limitations on production or supply; boycotts of customers or suppliers; or bids or the intent to bid, or even discuss or exchange information on these subjects.
The company is committed to obeying both the letter and spirit of these laws, which are often referred to as antitrust, consumer protection, competition or unfair competition laws. Although the spirit of these laws is straightforward, their application to particular situations can be quite complex. To ensure that the company complies fully with these laws, you should have a basic knowledge of them and should promptly involve our Legal Department when potentially questionable situations arise.
Special rules govern our business and other dealings with governments. Employees, agents and contractors of the company should use all reasonable efforts to comply with all applicable laws and regulations governing contact and dealings with governments, government employees and public officials. If you deal with governments, government employees or public officials, you should undertake to understand the special rules that apply. If you have any questions concerning government relations, you should contact the Legal Department.
You must cooperate with appropriate government inquiries and investigations in accordance with applicable law. It is important, however, to protect the legal rights of the company with respect to its nonpublic information; provided, that all government or other legal requests for company information, documents or investigative interviews should be first referred to the Legal Department. You should work with the Legal Department in responding to requests by regulatory authorities to ensure appropriate responses and to avoid inappropriate disclosure of attorney-client privileged materials, trade secret information or other nonpublic information. The goal of this policy is to respond to the fullest extent required by government or other legal requests while at the same time protecting the rights and privileges of the company to the extent permitted by applicable law. This policy should not be construed to prevent an employee from disclosing information to a government or law enforcement agency where the employee has reasonable cause to believe that the information discloses a violation of, or noncompliance with, a state or federal statute or regulation.
You may not offer any payment or business amenity to a public official or a government employee if doing so could reasonably be construed as having any connection with the company’s business, even if it has a nominal value or no value at all. You should be aware that what may be permissible in dealings with commercial businesses may be deemed illegal and possibly criminal in dealings with the government. You should contact the Legal Department for guidance on any such issues.
Whether you are located in the United States or abroad, you are also responsible for fully complying with the Foreign Corrupt Practices Act. The Foreign Corrupt Practices Act makes it illegal to offer, pay, promise to pay or authorize to pay any money, gift or other item of value to any foreign official, political party or candidate to assist the company or another to obtain or retain business. All managers and supervisory personnel are expected to monitor continued compliance with the Foreign Corrupt Practices Act. The Company has a policy in relation to the Foreign Corrupt Practices Act which can be found on the Company website at www.lantronix.com and is hereby incorporated by reference.
You must obtain approval from the Legal Department for any work activity that requires lobbying communication with any member or employee of a legislative body or with any government official or employee in the formulation of legislation. Work activity covered by this policy includes, but is not limited to, meetings with legislators or members of their staffs or with senior executive branch officials on behalf of the company. Preparation, research and other background activities that are done in support of such lobbying communication are also covered by this policy even if the communication ultimately is not made.
A number of countries maintain controls on the destinations to which products or software may be exported. Some of the strictest export controls are maintained by the United States against countries that the U.S. government considers unfriendly or as supporting international terrorism. The U.S. regulations are complex and apply both to deemed exports from the United States and to deemed exports of products from other countries when those products contain U.S.-origin components or technology. For example, software created in the United States is subject to these regulations even if duplicated and packaged abroad. In some circumstances, an oral presentation containing technical data made to foreign nationals in the United States or access by foreign nationals to certain technology may constitute a controlled export. The Legal Department can provide you with guidance on which countries are prohibited destinations for company products or whether a proposed technical presentation or the provision of controlled technology to foreign nationals may require a U.S. government license.
You must use your best efforts to ensure that activities and work matters with which you are involved comply with all applicable export controls and regulations. You should seek guidance from the Legal Department in any areas that require clarification of such controls and regulations.
Except as otherwise expressly provided in the Code, the Board of Directors or its designated committee must review and approve any matters requiring special permission under the Code for a member of the Board of Directors or an executive officer. Except as otherwise expressly provided in the Code, the Chief Financial Officer and the Legal Department must review and approve any matters requiring special permission under the Code for any other employee, agent or contractor.
Any waiver of any provision of this Code for a member of the Board of Directors or an executive officer must be approved in writing by the Board of Directors or its designated committee and promptly disclosed, along with the reasons for the waiver, to the extent required by law or regulation. Any waiver of any provision of this Code with respect to any other employee, agent or contractor must be approved in writing by the Chief Financial Officer and the Legal Department.
Copies of approvals and waivers will be retained by the company.
You should promptly report violations or suspected violations of this Code to the Legal Department at [email protected] or at Lantronix, Inc., Attn: Legal Department, 7535 Irvine Center Drive, Suite 100, Irvine, CA 92618. If you wish to remain anonymous, send an anonymous letter addressed to the Legal Department to the aforementioned address or use the whistleblower hotline by phone at 800-683-6217 or by filing an online complaint using the Company intranet.
If your concerns relate to accounting, internal controls or auditing matters, or if the Legal Department or another executive officer is implicated in any violation or suspected violation, you may also contact the Audit Committee of the Board of Directors . If you wish to remain anonymous, send an anonymous letter addressed to Audit Committee Chair at 7535 Irvine Center Drive, Suite 100, Irvine, CA 92618 or contact the Audit Committee via the whistleblower hotline by phone at 800-683-6217 or by filing an online complaint using the Company intranet.
If you make an anonymous report, please provide as much detail as possible, including copies of any documents that you believe may be relevant to the issue.
When reports are not made anonymously, reasonable efforts will be made to keep your identity confidential. In certain circumstances, however, your identity may become apparent during an investigation or may need to be disclosed (e.g., in regulatory proceedings). Accordingly, it is not possible for the company to give a blanket guarantee of confidentiality.
Reprisals, threats, retribution or retaliation against any person who has in good faith reported a violation or a suspected violation of law, this Code or other company policies, or against any person who is assisting in any investigation or process with respect to such a violation, is prohibited.
The Board of Directors or its designated committee will be responsible for investigating violations and determining appropriate disciplinary action for matters involving members of the Board of Directors or executive officers. The Board of Directors or its designated committee may designate others to conduct or manage investigations on its behalf and recommend disciplinary action.
Subject to the general authority of the Board of Directors to administer this Code, the Chief Financial Officer and the Legal Department will be jointly responsible for investigating violations and determining appropriate disciplinary action for other employees, agents and contractors. The Chief Financial Officer and the Legal Department may designate others to conduct or manage investigations on their behalf and recommend disciplinary action. The Chief Financial Officer and the Legal Department will periodically report Code violations and the corrective actions taken to the Board of Directors or its designated committee. The Board of Directors reserves the right to investigate violations and determine appropriate disciplinary action on its own and to designate others to do so in place of, or in addition to, the Chief Financial Officer and the Legal Department.
The company will promptly investigate any suspected violations. If it is determined that evidence of a violation exists, the individual subject to investigation will be notified. The subject of an investigation will have an opportunity to respond to any allegations made against that person. A person suspected of violating the Code may be suspended with or without pay while an investigation is conducted. The company will follow local grievance procedures in jurisdictions where such procedures apply.
The company will take appropriate action against any employee, agent or contractor whose actions are found to violate the Code. Disciplinary actions may include, at the company’s sole discretion, oral or written reprimand, suspension or immediate termination of employment or business relationship, or any other disciplinary action or combination of disciplinary actions as deemed appropriate to the circumstances. A record of the disciplinary action will be retained in the employee’s personnel file. Notwithstanding the foregoing, all decisions regarding disciplinary action (including, but not limited to, review of the situation and the action to be taken, shall be in the company’s sole and absolute discretion).
In determining what disciplinary action is appropriate in a particular case, the company will take into account all relevant information, including (without limitation) the nature and severity of the violation, any history of warnings and violations, whether the violation appears to have been intentional or inadvertent and whether the violator reported his or her own misconduct. The company will strive to enforce the Code in a consistent manner while accounting for all relevant information and unique circumstances. An alleged violator may make a written request for reconsideration within 14 days of notification of the final disciplinary decision. The company’s ultimate determination (following reconsideration, if reconsideration is timely requested) of any disciplinary action or decision shall be final, binding and conclusive on all parties.
Where the company has suffered a loss, it may pursue its remedies against the individuals or entities responsible. Certain violations of this Code may also be subject to civil or criminal prosecution by governmental authorities and others. Where laws have been violated, the company may report violators to the appropriate authorities. All rights and remedies of the company under this Code are cumulative and no such right or remedy shall be waived unless express set forth by the company in a writing by an officer of the company.
Nothing in this Code of Business Conduct and Ethics creates or implies an employment contract or term of employment. Employment at the company is employment at-will. Employment at-will may be terminated with or without cause and with or without notice at any time by the employee or the company. Nothing in this Code shall limit the right to terminate employment at-will. No employee of the company has any authority to enter into any agreement for employment for a specified period of time or to make any agreement or representation contrary to the company’s policy of employment at-will. Only the Chief Executive Officer of the company has the authority to make any such agreement, which must be in writing.
The policies in this Code do not constitute a complete list of company policies or a complete list of the types of conduct that can result in discipline, up to and including discharge. Except as expressly provided, any and all other company policies shall remain in full force and effect and shall not be superseded or modified by this Code.
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