The conduct of each employee represents a part of the most important asset of FalconStor Software, Inc. – a reputation for integrity. FalconStor’s reputation is nothing more or less than a reflection of the conduct of its employees. It is the responsibility of each employee to preserve that reputation.
This Code of Conduct (the “Code”) states FalconStor’s fundamental principles. Adherence to the Code’s principles is important to maintain FalconStor’s stature and to promote its success in a competitive business community. The principles are important to all employees as individuals because the Code addresses conduct that could lead to criminal and/or civil liability for the employees involved in the conduct.
OBEY THE LAW AND FALCONSTOR POLICY
FalconStor conducts its business in accordance with all applicable laws. You are expected to conduct yourself in the same manner. Compliance with the law is a minimum expectation. Personal integrity may, and often will, involve a standard higher than what exists under the law. You should direct any questions you have about these Guidelines or a legal compliance matter to your manager and/or the General Counsel.
You are also expected to act in accordance with FalconStor’s policies, which are available to all employees either electronically on MyFalc or through your manager or the General Counsel. Certain FalconStor policies are summarized below.
In some instances, FalconStor policies may go beyond the requirements of U.S. or foreign law. Nevertheless, as a FalconStor employee you are expected to comply with FalconStor policies and this Code of Conduct.
FalconStor views seriously any violation of the Code. The misstep of a single employee can undermine FalconStor’s reputation and success and reflect negatively on all other employees. Thus, code violations may lead to significant sanctions by the Company, including, among others, dismissal.
MAINTAIN AND PROVIDE ACCURATE AND HONEST BUSINESS RECORDS AND FINANCIAL REPORTS
FalconStor follows generally accepted accounting principles and standards, and applicable laws, regulations and practices for accounting and financial reporting. To meet its obligations, the Company must rely on employee truthfulness to ensure the accuracy of its financial statements. Complete and accurate data must be maintained and provided to appropriate Company personnel so that the Company’s financial statements present fairly its financial position and the results of its operations. Any employee who is aware of material misstatements or omissions affecting the fair presentation or accuracy of the Company’s financial statements is under an obligation to use reasonable efforts to have them corrected or, failing that, to report this information promptly to an appropriate officer of the Company. Reports may also be made to the Company’s hotlines, identified above.
All communications with the Company’s outside auditors must be true and complete. FalconStor employees must cooperate fully with representatives of the Company’s auditors by responding promptly, accurately and completely to all inquiries made by those representatives.
DO NOT MISUSE FALCONSTOR PROPERTY OR EQUIPMENT
The misuse of any of FalconStor’s property or the property of others in the care, custody or control of FalconStor is prohibited. The removal from FalconStor facilities of any of its property for a purpose other than use in FalconStor’s business is prohibited unless specifically authorized by the appropriate department head. The foregoing policies apply to property such as furnishings, equipment and supplies, as well as to property created, obtained or copied by FalconStor for its exclusive use, such as files, reference materials and reports, computer software, data processing systems and databases.
RESPECT THE INTELLECTUAL PROPERTY OF OTHERS
All employees must comply with the laws and regulations that govern the rights to and protection of our own and others’ copyrights, trademarks, patents, trade secrets, and other forms of intellectual property.
PROTECT FALCONSTOR’S CONFIDENTIAL AND PROPRIETARY INFORMATION
“Confidential” information is information that the Company considers private and which is not common knowledge among other persons or organizations that might find it useful for competitive or other reasons. “Proprietary” information is information that the Company owns, develops, pays to develop, possesses, or to which it has an exclusive right.
During the course of business, Confidential or Proprietary Information or Company trade secrets may become available to the employee. It is very important for all employees to safeguard such information. Employees must also follow confidentiality restrictions from previous employers and not use or share that information at the Company.
Both during and after the employee’s association with the Company, it is a violation of this policy to disclose, use, release or discuss any such Confidential, Proprietary or trade secret information, except as required by the Company. It is also a violation of this policy for an employee to appropriate any Confidential, Proprietary or trade secret information for the employee’s own use or to use such information in any way inconsistent with the interests of the Company.
This section applies to employee conduct toward other companies, as well as to employee activities within the Company. While an employee should always obtain as much information as possible about the marketplace, an employee must do that only in accordance with this policy. Employees must never be a party to a situation in which proprietary or confidential information has been obtained improperly from another company. If an employee is approached with an offer of confidential information which may have been obtained improperly, the employee must immediate discuss this matter with her/his supervisor and/or the Company’s legal department.
The files, manuals, reports, notes, lists and other records or data of the Company, in any form, including electronic, are the exclusive property of the Company and must be returned at the end of employment with the Company. Any Confidential, Proprietary or trade secret information to which an employee has access remains so after employment and may not be disclosed or use for any purpose after employment.
BE HONEST IN ALL GOVERNMENT COMMUNICATIONS
All communications made by FalconStor employees to government officials must be truthful. The Company will not tolerate false statements (verbal or written) by any of its employees to a government agency – local, state or federal. This extends to communications made to the Company’s legal department in conjunction with the preparation and filing of applications on behalf of the individual employee with a government agency. Deliberate misstatements to government officials or false statements made with a reckless disregard for their accuracy can expose both the Company and the individual employee involved to civil and criminal penalties.
Contact with government agencies should be brought to the attention of the Company’s General Counsel. Any governmental investigation involving the Company, however informal, must be brought to the immediate attention of the Company’s General Counsel. Such investigation can take the form of a subpoena, a letter, a visit, or a telephone conversation.
DO NOT GIVE OR ACCEPT QUESTIONABLE PAYMENTS OR GIFTS
You must consider carefully whether to offer or accept any payment or gift in a business relationship. Rules applicable to the giving or receiving of favors and gifts vary depending upon the circumstances, and you must comply both with this Code and with local law, custom and practice. In all cases, business decisions must be based on the merits of products, services or people.
With respect to non-government personnel , gift-giving is proper only to create good will. It is improper to offer, promise, or give a gift for the purpose of influencing or obligating the recipient to do business with the giver. For example, it is improper to seek special favors in a business relationship by offering to provide use of accommodations (including lodges, resorts, homes or condominiums), use of transportation (including vehicles, boats or aircraft), lavish gifts or entertainment, charitable donations, event sponsorships, assistance in securing loans or cash payments (all of which may be referred to as “gifts”).
Unless prohibited by the customer's own policies, and in compliance with the Company’s Travel and Entertainment Policy, it is appropriate to pay for a customer's meals and entertainment or to invite a customer to a sporting event or outing, provided the expenses of doing so are reasonable. It is also permissible to give a customer a gift of reasonable value on special occasions, as long as the gift does not seek, and does not create the appearance of seeking, special favors. The frequency and timing of any such gifts should always be considered so as not to create the appearance of impropriety.
It is also appropriate to invite customers to education or training seminars sponsored by FalconStor, subject to management approval. On such occasions, FalconStor may pay the customer’s reasonable travel expenses and give the customer a business-related gift of reasonable value as a memento of the occasion.
With respect to government personnel , it is against FalconStor policy to provide or pay for, either directly or indirectly, any meal, travel, entertainment, lodging or gift. Except in very limited circumstances, the giving of any gratuity to a government employee could subject both you and FalconStor to civil and criminal penalties.
Any payment or gift, or any offer, promise, or authorization to make a payment or gift to a person acting in an official capacity for a foreign government designed to influence that individual's acts or decisions is improper. You must fully comply with the Foreign Corrupt Practices Act of 1977, as amended. Any violation may result in severe discipline and substantial civil and criminal penalties for you and FalconStor.
FalconStor strictly prohibits bribes, kickbacks and extortion of any kind. Do not solicit or accept any money. Do not solicit or accept any gift which would create the appearance that you will be influenced or obligated to do business with the giver. If a customer or supplier offers or gives you any money or a gift which would create such an appearance, reject the offer, return the money or gift and promptly inform your manager and the General Counsel.
You may not use FalconStor funds to give gifts to fellow employees.
Giving or receiving a gift should never damage FalconStor’s reputation. Any gift-giving should be fully visible to your manager. It is critical that all expense report records accurately reflect gifts provided to customers, suppliers, partners or other third parties in order to comply with tax and other legal reporting requirements.
FalconStor employees may not solicit gifts, entertainment or favors of any value from persons or firms with which FalconStor does, or potentially does, business. Nor may any employee act in a manner that would place any vendor or customer in a position where s/he may feel obligated to make a gift, provide entertainment, or provide personal favors in order to do business or to continue to do business with FalconStor. All employees are required to report gifts with a value of greater than one hundred dollars ($100.00) to the Company’s Chief Financial Officer.
BE HONEST AND OPEN IN ALL RELATIONSHIPS WITH VENDORS AND SUPPLIERS
Transactions with vendors and suppliers must be carried out on an arms-length basis. This means conditions should exist for competitive, willing buyer and willing seller transactions. Competitive bidding should be used whenever possible. Decisions should be made on the basis of quality, price, availability and service. All vendors and suppliers should be dealt with fairly, honestly and openly. This policy extends to all services provided to the Company as well as goods used by the Company. In addition, if the representative for the vendor or supplier is a former employee, family member or close personal friend, you should disclose this information to your manager.
DO NOT PARTICIPATE IN BOYCOTTS
FalconStor complies with United States law that prohibits participation in international boycotts that are not sanctioned by the United States government.
DO NOT VIOLATE EXPORT CONTROLS
In order to protect U.S. national security, to implement U.S. foreign policy, and to preserve scarce resources, the United States government restricts the export of certain technology and products, including certain computer software and technical goods and data. We strictly observe all restrictions placed on the export and re-export of a United States product or component of a product, good, service, or technical data.
AVOID CONFLICTS OF INTEREST
An employee's activities can, intentionally or unintentionally, create a conflict of interest or an appearance of impropriety. You are to devote your full time and efforts to FalconStor. In general, you must avoid any activity or personal interest that creates or appears to create a conflict between your interests and the interests of FalconStor or that might impair, or appears to impair, your ability as an FalconStor employee to perform your work objectively and effectively. Some guidelines for avoiding such actual or apparent conflicts follow:
Because the facts of any such situation may differ, you must seek clarification from your manager and the General Counsel before proceeding with any activity that might be construed as creating a conflict of interest. For example, a conflict might arise if you join an advisory board, board of directors of another company or standards board. The activities of your immediate family members may also be construed as creating a conflict of interest. You should seek guidance from your manager and the General Counsel with respect to these activities also.
If you are aware of any transaction or relationship that reasonably could be expected to give rise to a conflict of interest, you must disclose such transaction or relationship to the General Counsel.
TREAT FELLOW EMPLOYEES WITH DIGNITY AND RESPECT
FalconStor promotes a cooperative and productive work environment by supporting the cultural and ethnic diversity of its workforce and is committed to providing equal employment opportunity to all qualified employees and applicants. Employment decisions will be made without regard to any individual’s race, color, religion, gender, sexual orientation, national origin, age, marital status, physical or mental handicap or disability, or such characteristics of any individual’s relatives, friends or associates.
Harassment, intentional or unintentional, has no place in the work environment. FalconStor will not tolerate any form of harassment of employees based on their real or perceived race, color, religion, gender, sexual orientation, national origin, age, marital status, physical or mental handicap or disability, or based on such characteristics of any employee’s relatives, friends or associates. All employees must comply with the FalconStor Policy on the Prevention of Harassment and Discrimination.
DO NOT ENGAGE IN INSIDER TRADING
All employees are prohibited from buying or selling public securities of FalconStor or any other company if they are in possession of material non-public information about the company. All employees are subject to the Company’s Policy on the Trading of Securities of FalconStor Software, Inc. Any questions regarding the purchase or sale of any security should be directed to the Company’s General Counsel.
COMPLY WITH THE ANTITRUST LAWS
FalconStor expects its employees to conduct the Company’s business in full compliance with applicable federal, state and international antitrust and trade regulation laws.
All business decisions should be made by FalconStor independently and not as part of any collective decision-making involving competitors. Because antitrust laws are constantly evolving, no guidelines can adequately anticipate every situation to which these laws apply. The guidelines are intended, therefore, only to alert employees to potential problem areas. Employees should consult the Company’s General Counsel whenever a situation presents itself which might appear to raise potential antitrust questions.
The following activities present a serious risk of antitrust exposure and should be reviewed in advance with FalconStor’s General Counsel:
COMPLY WITH LOCAL LAWS
FalconStor acknowledges and respects the diverse cultures, customs and business practices it encounters in the global marketplace. FalconStor will apply with both the applicable United States laws and regulations that govern its operations and the local laws wherever it does business. If an employee feels at any time that United States laws and regulations and local laws applicable to FalconStor’s business are in conflict, s/he should immediately contact the Company’s General Counsel.
Scope of the Code. The Code applies to FalconStor Software, Inc., to all subsidiaries or affiliates in which FalconStor directly or indirectly owns more than 50 percent of the voting control and to all directors, officers and employees of each. All references to “FalconStor” or the “Company” include FalconStor Software, Inc., and its subsidiaries and affiliates. All references to “employees” include directors, officers, and employees of FalconStor and its subsidiaries or affiliates.
Compliance with Code. Failure to read and/or to acknowledge the Code does not exempt an employee from his/her responsibility to comply with the Code, applicable laws, regulations, and all FalconStor policies and guidelines that are related to his/her job.
The Code is not intended to cover every issue or situation an employee may face as an employee. Nor does the Code replace other more detailed policies and guidelines. Employees should use the Code as a reference guide in addition to FalconStor’s policies and guidelines, including the Employee Handbook, required for each particular job.
Code Administration. If you need details on a specific policy, you may contact the Company’s General Counsel, Director of Human Resources, or Chief Financial Officer.
Enforcement and Reporting Violations. The responsibility for the Code’s enforcement extends throughout the Company. All managers are accountable for the Code’s enforcement in their departments. Employees should immediately report possible violations of the Code to the Company’s Director of Human Resources. Reports may also be made through the Company’s compliance hotlines:
Web: http://falconstor.alertline.com . This website is available in both English and Chinese.
Phone: 1-888-690-3865. (Non-U.S. employees will need to dial the local AT&T access code first.) The voice hotline is available in 140 languages.
Both hotlines are available 24 hours a day, 7 days a week, 365 days a year. These hotlines are operated by a third party and are completely anonymous.
Complaints submitted will be referred to other personnel as determined to be appropriate or as required under the directives of the Audit Committee. A copy of any complaint that relates to accounting issues, internal accounting controls or auditing matters will be forwarded to the Audit Committee for review.
Non-Retaliation. The Company is committed to providing a workplace conducive to open discussion of its business practices. It is Company policy to comply with all applicable laws that protect employees against unlawful discrimination or retaliation by their employer as a result of their lawfully reporting information regarding, or their participating in, investigations involving alleged corporate fraud or other alleged violations by the Company or its agents of federal or state law. Specifically, Company policy prevents any employee from being subject to disciplinary or retaliatory action by the Company or any of its employees or agents as a result of the employee:
- federal criminal law relating to securities fraud, mail fraud, bank fraud, or wire, radio and television fraud,
- any rule or regulation of the Securities and Exchange Commission,
- any provision of federal law relating to fraud against shareholders,
- this Code,
where, with respect to investigations, such information or assistance is provided to or the investigation is being conducted by a federal regulatory agency, a member of Congress, or a person at the Company with supervisory or similar authority over the employee.
However, please be advised that employees who file reports or provide evidence that they know to be false or without a reasonable belief in the truth and accuracy of such information will not be protected by this Code and may be subject to disciplinary action, including termination of their employment. In addition, except to the extent required by law, the Company does not intend this Code to protect employees who violate the confidentiality of any applicable lawyer-client privilege to which the Company or its agents may be entitled under statute or common law principles, or to protect employees who violate their confidentiality obligations with regard to the Company’s trade secret information. Employees considering providing information that may violate these privileges or reveal Company trade secrets are advised to consult an attorney before doing so.
If any Employee believes he or she has been subjected to any action that violates this Policy, he or she may file a complaint directly with our legal department or the Audit Committee of the Company. To contact our Audit Committee or to submit a report to them, please use the hotline described in the previous section. If it is determined that an Employee has experienced any improper employment action in violation of this Code, the Company will take appropriate corrective action.
Investigation of Suspected Violations. Suspected violations will be investigated under the supervision of the Company’s legal department or the Company’s outside counsel, as the legal department deems appropriate. Employees are expected to cooperate in the investigation of reported violations. When practical and appropriate under the circumstances, and in order to protect the privacy of the persons involved, those people investigating the suspected violation will attempt to keep confidential the identity of someone who reports a suspected violation or who participates in the investigation. There may be situations, however, when this information must be disclosed as part of our investigation.
Employees should be aware that the Company’s legal department is legally obligated to act in the best interests of the Company as a company. They do not act as lawyers or personal representatives for any individual employees, including our CEO. Our Board of Directors has ultimate responsibility for final interpretation of this Code and for determining whether any violations of this Code have occurred.
Violations. Violations of the Code will be met with discipline up to and including termination of employment.
Appropriate disciplinary action will be taken promptly against any Employee, determined to have violated any applicable federal, state or local law or regulation, or this Code or any future version of this Code.
Among other things, employees of the Company may be disciplined for: