LAST UPDATE: January 2017
The Code applies to all of the officers, employees, directors and consultants of
Calmare Therapeutics Incorporated ("CTI")
and its subsidiaries, and all such persons must read this Code and be familiar
with its contents and requirements. Unless the context requires otherwise, words
in the Code such as "you" or "your" or "individual(s)" or "personnel" refer to
all officers, employees, directors and consultants of
CTI and any subsidiaries.
This Code is intended to provide sufficient guidance to enable
personnel to conduct the Company's business with the utmost integrity. The Code
does not, however, confer on any party other than the Company any additional
rights or remedies, and it is not a contract, express or implied, guaranteeing
employment for any specific duration or guaranteeing any specific terms or
conditions of employment. The policies stated in the Code may be changed,
suspended or cancelled at any time in the sole discretion of the Company.
Always follow and fully comply with all applicable laws, rules and regulations,
and with this Code, wherever you are and in all circumstances that may arise
during your employment with the Company. Your obligation to comply with all
pertinent laws, rules and regulations applies whether or not the conduct or
situation at issue is specifically described in or covered by this Code.
It is your responsibility to read and understand this Code. You must comply with
this Code in both letter and spirit. Ignorance of the Code will not excuse you
from its requirements.
You have an obligation to raise any concerns about possible violations of the
Code. This includes situations where a manager or colleague, or anyone outside
the Company, asks you to do anything that violates the Code. You also have an
obligation to cooperate with any investigation by the Company concerning a
possible violation of the Code. It is every individual's responsibility to
actively ensure that his/her conduct, as well as the conduct of the other
personnel of the Company, complies with the Code.
If you violate any provision of this Code, you will be subject to disciplinary
action. Such disciplinary action is at the sole discretion of the Company and
may include, but may not be limited to, reprimand, suspension, demotion,
reduction or loss of pay or other compensation, or termination of employment.
If you are uncertain about whether any conduct is in violation of the Code, you
should ask for guidance from your supervisor or the Corporate Compliance
The Company must maintain accurate records and accounts in order to ensure that
the Company's activities are properly managed and are conducted both legally and
ethically. All Company personnel must therefore do everything that is reasonably
possible, consistent with their job duties, to ensure that the Company's
financial and other records, the Company's public disclosures, and all documents
and reports filed with the Securities Exchange Commission or any other
regulatory authority, are fair, accurate and timely, and are in compliance with
all applicable laws and truthfully reflect the actual results of the Company's
operations. All business or other transactions must be reported in such manner
as is necessary to permit the preparation of accurate financial and other
records, consistent with accepted principles of internal control, and prevent
any fraudulent conduct.
The Company realizes that you may take part in legitimate financial, business
and other activities outside of your job with the Company. However, you owe a
duty of undivided loyalty to the Company, and therefore your personal activities
and relationships must not conflict, or appear to conflict, with the interests
of the Company.
Keep in mind that the Code cannot address every potential conflict of interest,
so you must use your common sense. If you are unsure whether or not a situation
creates a conflict of interest or the appearance of a conflict of interest,
either avoid the situation or seek written approval of the situation from the
Company's Corporate Compliance Officer or Chief Executive Officer.
If a conflict of interest arises, the nature of the conflict should be fully
disclosed and discussed with the Company's Corporate Compliance Officer or
CEO. Where a conflict of interest prohibits you from engaging in a
specified activity or transaction, the same prohibition may extend to your
family, including your extended family.
The following are some examples of situations that may involve conflicts of
Financial Interests and Relationships. You should not knowingly have an
investment or financial interest in, or have any financial relationship or
management or advisory position with, a supplier, customer, or current or
potential competitor of the Company, except:
Outside Employment or Consulting. All employees are expected to devote
their entire working time to the performance of their duties for the
Company. Employees should therefore avoid outside business or consulting
activities that could divert their time, interest or talents from Company
business. Employees may only engage in non-Company employment or consulting
activities when such activities are approved in advance, in writing, by the
CEO of the Company.
Outside Directorships. The director of a corporation has access to
sensitive information and charts the course of the corporation. When
Company personnel are invited to play that role for an outside
organization, the Company must take steps to shield both the individual and
the Company from even the appearance of impropriety. For that reason,
except with respect to an individual serving at the Company's request as a
director of a company in which the Company has an investment interest,
Company personnel may not serve as directors of any other commercial
enterprise unless such service is approved in advance in writing by the
Company's CEO or the Board of Directors.
Gifts and Entertainment. To avoid both the reality and the appearance of
any improper business relations, you should neither give to nor accept from
suppliers, customers or competitors, any gifts, hospitality or
entertainment that could be considered lavish or excessive. Gifts,
hospitality and entertainment of reasonable value are permissible so long
as they are within the customary reciprocal courtesies between the
Company's personnel and their business associates, they are made to promote
general business goodwill, and they are fully reported to and approved by
Related Party Transactions. Without prior approval by both a majority of
the Company's Board of Directors and a majority of the Company's
disinterested directors who are not employees of the Company, no sale or
purchase of property, supplies or services shall be made by the Company to
or from any director or officer of the Company, members of a director's or
officer's family, or entities in which any of these persons is a director,
officer or owner of 5% or more of that entity's equity interests.
Corporate Opportunities. Part of your duty of loyalty to the Company
requires that you offer to the Company all opportunities of which you
become aware that are related to the Company's business. Therefore, if you
become aware of a business opportunity related to the Company's business,
you must report it to the Company. You may not personally take advantage of
any opportunity that is related to the Company's business unless you have
reported it to the Company and the Company's CEO has given you
written permission to pursue the opportunity in lieu of the Company.
Company assets are meant for Company and not personal use. Company assets
include your time at work and work product, as well as the Company's equipment,
computers and software, company information, and trademarks and name.
Personnel may not utilize the services of Company personnel or
utilize Company assets for their own personal benefit or the personal benefit of
anyone outside the Company absent prior written approval by the Corporate
Compliance Officer or the Company's CEO.
Common sense should be exercised. For example, an occasional personal phone call
from the workplace is inevitable and is not prohibited, while substantial
personal phone calls represent a misuse of Company assets and are prohibited. In
sum, you must recognize that that misuse or misappropriation of Company assets
may be considered theft, is a violation of the Code, and can result in
termination of employment or even criminal prosecution.
Bribes, kickbacks or other improper payments, whether made to governmental
officials or to anyone in the private sector, have no place in the Company's
business and are strictly prohibited. This prohibition covers both direct
payments and indirect payments, such as those made through a consultant or other
third party or by reimbursement of Company personnel for payments made
personally by them. Furthermore, the Company's personnel
shall not directly or indirectly accept any bribes, kickbacks or other improper
No Company contributions may be made to support the campaign of any candidate
seeking political office or the activities of any political party except as
permitted under U.S. law. Contributions include things such as direct payments,
purchase of tickets to fund-raising events, and provision of Company-paid
employees, facilities, equipment, transportation or other services to a
candidate seeking political office or to political committees. Corporate
political contributions may be made only upon receipt of written authorization
by the Company's Corporate Compliance Officer or CEO that such
contributions are permitted under applicable U.S. law.
All of CTI's information technology and wireless network equipment (including
CTI-issued cell telephones, laptop computers,
facsimile machines and software issued to employees and consultants or provided to or made available for employees' and consultants' use)
is the property of CTI and is to be used in a manner consistent with CTI business
purposes. All information transmitted, received or stored on the Company's computer
system, is the property of CTI.
The Company reserves the right to monitor the use of its computer system and other
equipment to ensure appropriate use. Such monitoring may include the periodic review
of documents that are created, transmitted, or received on the computer system; the
tracking and identification of Internet websites contacted; and the monitoring of
voice or facsimile communications. Personnel do not have any personal privacy right
with respect to the use, transmittal, receipt or storage of information in the
Company's computer system or any other Company equipment.
Access controls such as passwords or other means of authentication shall be
employed to ensure proper access and to protect CTI's information technology.
All passwords must be given to the Corporate Compliance Officer, which will be kept
confidential. Access accounts and passwords shall be issued to named individuals
only, shall not be shared, and individual server passwords shall be complex and changed
every sixty (60) days. Personnel may not read or access another individual's email,
voice mail, or computer or other files without the prior approval of an authorized
The Company has installed a variety of security mechanisms, including firewalls, to
optimize the safety and security of the Company's computer systems. Anyone who
attempts to disable, defeat, circumvent, or subvert any Company security device will
be subject to disciplinary action, which may include immediate dismissal.
Only software authorized and properly licensed by the Company may be stored or used
on a Company computer. With the increasing risk posed by computer viruses, it is
mandatory that unauthorized software not be stored or run on a Company computer.
Any unauthorized software that is found on a Company computer will be removed, and
is a serious transgression. In addition, software on the Company's computers may
not be altered without advance written approval by the Company.
Software and applications developed by personnel, as well as reports and documents
prepared by them in the course of their work for the Company or using the Company's
software and equipment, are the property of the Company. Any Individual whose employment, contract, or relationship
with the Company terminates for any reason must return to the Company all software,
forms, and other documents or property of the Company.
Any files received from others outside the Company, whether attached to e-mail or on
a transportable disk, must be checked for viruses. Anti-virus software is part of
the standard package on all Company computers. CTI has anti-virus software which
updates virus definitions on a weekly basis and scans all files on CTI computers
daily. Personnel must pay attention to all CTI notices regarding viruses.
All communications that are made using the Company's computer system or other
equipment, such as telephones and facsimile machines, should be carried out
in a professional manner. Any e-mail or other communication disseminated in
a public forum should be treated with the same care and consideration as a
letter sent on Company letterhead that may be discoverable by an opponent in
litigation. Any communication should be consistent with the Company's business
practices and confidentiality policies, must not disclose any trade secrets or
intellectual property, may not violate anyone's rights in any way (such as, for
example, defamation or harassment), and should be treated as if it is a
communication with the media.
Company personnel may not use Company equipment or time to access web
sites containing "inappropriate" content (such as adult or pornographic web
sites, gambling sites, or web sites with pirated software). The Company's
computer and other equipment may not be knowingly used to transmit viruses and
similar harmful code, conduct denial of service attacks, violate any other
system's acceptable use policy, or violate the law.
If you have any question as to whether any anticipated use of the Company's
computer system or other equipment is permissible, check with your manager
before engaging in any such use.
In the course of your employment or association with the Company, you may become
aware of non-public material information relating to the Company. Securities laws
prohibit persons from trading securities on the basis of non-public material
information. This is commonly referred to as insider trading, and all personnel
of the Company are prohibited from engaging in insider
trading. The Company has a long-standing commitment to comply with all applicable
federal and state securities laws and regulations, and insists that all of its
personnel - no matter what their positions - fully comply
with such laws and regulations.
Material non-public information includes any information that an investor might
consider important in deciding whether to buy, sell, or hold securities that
has not been disclosed to the public. Examples of material non-public
information may include things such as financial results and forecasts; new
product developments; obtaining or losing important contracts; changes in the
rates or estimated rates of sales, earnings or dividends; changes in auditors;
stock splits or reverse splits; possible mergers, acquisitions, joint ventures,
tender offers or major purchases or sales of securities or assets; major management
changes or change in control of the Company; major changes in business direction;
sales or purchases by the Company of its own securities; and major litigation
developments. Such information can be favorable or unfavorable. Getting a
major new contract or customer, and losing a major contract or customer can
both be material non-public information.
Information is considered non-public unless is has been disclosed to the public.
Examples of effective disclosure include public filings with securities regulatory
authorities and issuance of Company press releases. The information must not
only be publicly disclosed; there must also be adequate time for the market as
a whole to digest the information.
If you become aware of material non-public information relating to the Company,
you may not buy or sell shares or other securities of the Company until that
information has been disclosed to the public and there has been an adequate
opportunity for the information to be absorbed by the market. Similarly, if
you obtain material non-public information about another company, such as a
supplier or a customer, or if you learn that the Company is planning a major
transaction with another company (such as a take-over), you must not trade in
the securities of the other company until that information has been disclosed
to the public and there has been an adequate opportunity for the information
to be absorbed by the market. Equally important, you must not disclose or give
"tips" about material non-public information to relatives or friends - or to
anyone else - which would enable the receiver of the tip to profit from that
information through securities trading. Furthermore, do not discuss such
information in elevators, restaurants or other public places.
It is particularly dangerous to trade immediately before the Company announces
quarterly sales and earnings results. Therefore, it is Company policy that
personnel of the Company may not trade in the Company's stock during
the period from the end of any calendar quarter (March 31, June 30, September 30
and December 31) until at least one business day has elapsed following the release
for publication of quarterly or annual statements of sales and earnings. Even
after that publication, however, you must not trade if you are aware of material
information that has not yet been disclosed. However, you can trade if the purchase
or sale is made pursuant to a contract, instruction, or plan in full compliance with
SEC Rule 10b 5-1. Any individual of the Company who establishes
an arrangement under Rule 10b 5-1 should promptly deliver a written copy of the
arrangement to the Corporate Compliance Officer. The Company will be free, in
its discretion, to make those arrangements public.
If you have a question regarding the trading of securities or whether certain
information is material or has been adequately disclosed to the public, you should
contact the Corporate Compliance Officer and abstain from trading in the Company's
securities or disclosing information to people outside the Company until you have
been informed that such trading is permissible, or that the information is not material
or has been publicly disclosed.
This policy is not designed to restrict the freedom of personnel
to make appropriate personal investments. Nevertheless, insider trading
is a serious matter, it is illegal and can result in criminal as well as civil
penalties, and it is prohibited by the Company.
All applicable antitrust laws must be observed. For example, personnel
must refrain from discussions, agreements or understandings with
any party with respect to any matter which could be construed as price fixing or
stabilization, bid-rigging, limits on service or allocation of services,
customers or territories.
The Company's relationships and contacts with government entities and officials
must be completely proper. Company personnel must
scrupulously avoid any dealings with government entities or officials that are
improper or that might be construed to be improper in any way.
One of the Company's most important assets is its confidential information and
the confidential information licensed or otherwise entrusted to it by others.
The Company's legal obligations and its competitive position often mandate that
this information remains confidential.
It is your obligation to safeguard both the Company's confidential information
and the confidential information licensed or otherwise entrusted to the Company
by others. You may not disclose or share such confidential information with
anyone outside the Company unless it is necessary and authorized as part of your
The first category encompasses confidential information that is intended for internal
use at the Company only. This information typically relates to things such as the
Company's operations, customer lists, pricing policies, and trade secrets
(confidential information used in the course of business to give the Company a
competitive advantage). It also often relates to technology owned by third parties
and licensed, marketed or otherwise used by the Company in providing technology
evaluation and management services to corporations, government agencies, universities,
or others. This category of confidential information belongs to the Company or is
entrusted to the Company on a confidential basis, and the Company endeavors to keep
such information confidential indefinitely. You are likewise obligated to do so.
The second category, by contrast, involves confidential corporate information that
the Company routinely discloses at some point to the investing public. This information
often gauges the Company's financial performance (for example, quarterly financial
results of the Company's operations), or identifies events that have or may have a
significant or material impact on the value of the Company's securities. As outlined
in the section of this Code entitled "Insider Trading," premature use or disclosure of
such information may expose the individual involved to onerous civil and criminal penalties.
Confidential information in either category must not be disclosed by
personnel to anyone outside the Company, except as authorized for a legitimate
Company business purpose (such as contacts with the Company's accountants or lawyers,
or in connection with a business transaction in which such disclosure is appropriate
and authorized). Even within the Company, confidential information should be discussed
only with those who have a need to know the information. An individual's
obligation to safeguard confidential information continues even after his
or her association with the Company has ended.
Any unauthorized disclosure of confidential information to others outside the Company,
including to family and friends, is a violation of this Code and may violate the law.
The Company's communications with the public must be accurate. Only the
CEO, and persons specifically designated by the CEO, is authorized
to issue press releases, speak with shareholders and securities analysts, or
otherwise similarly communicate with the public or others on behalf of the
Frequently, dissemination of information about the Company is made through press
releases, reports to shareholders, reports filed with government agencies, and
other Company communications. Any unauthorized dissemination of certain
information may cause injury to individuals or to the business interests of the
Company. Further, personnel expressing personal opinions
on subjects related to Company business should avoid giving the impression that
they are speaking on behalf of the Company. Employees and consultants may have
written agreements with the Company concerning the confidentiality of certain
proprietary information. However, every individual -
whether or not he or she has a written agreement with the Company - has the
obligation to insure that any information they have concerning the Company's
business, finances and personnel is handled professionally, with discretion, and
disseminated only as authorized through the appropriate channels.
All advertising and promotional activities must also be conducted in a manner
consistent with scrupulous business ethics and applicable legal requirements.
Only the Company's CEO or an officer specifically designated by the
CEO or the Board of Directors can sign contracts or otherwise incur
obligations on behalf of the Company. Any
such designation by the CEO must be as to a specific transaction or
matter, and not a blanket grant of authority.
Situations could arise that may warrant an exception to strict application of
the Code. Examples of such situations might include, but are not limited to,
cases of particular personal hardship, or other circumstances where the nature
of the transaction or conduct at issue may properly require or permit different
treatment. Requests for exemptions from strict application of the Code must be
submitted in writing to the Corporate Compliance Officer using a copy of the
"Exemption Request Form" that is appended to the Code. Any exemption request
must describe in detail all pertinent information regarding the proposed transaction
or conduct for which the exemption is requested so that an informed decision may
be made regarding the exemption request. In emergency situations, a request may
be made orally and subsequently confirmed in writing.
In the case of a member of the Board of Directors or an officer, only the
CEO of the Company may authorize an exception or special handling.
The necessary approvals for an exemption are required to be obtained in advance
of an action requiring an exemption.
If you violate any provision of this Code, if you violate any applicable law,
rule or regulation, you will be subject to disciplinary action. Such
disciplinary action is in the sole discretion of the Company and may include,
but may not be limited to, reprimand, suspension, demotion, reduction or loss of
pay or other compensation, or termination of your employment or association with
You are required to report violations or suspected violations of the Code. This
reporting obligation includes situations where a manager or colleague, or
someone outside the Company, asks you to violate the Code. You must promptly
report possible violations or suspected violations of the Code, and you can do
so in the following two ways:
Audit Committee Chair c/o Corporate Compliance Officer
Calmare Therapeutics Incorporated
1375 Kings Hwy. STE 400
Fairfield, CT 06824-5380
With respect to financial or other SEC mandated disclosures only, you may make
an anonymous report of concerns regarding possible violations of the Code by
calling the CTI Compliance Line Hotline at
(800) 560-6987. If you file a report anonymously, your report must contain as
much specific information as possible in order for the persons investigating
to adequately assess the situation and remedy any possible violations.
Managers have important responsibilities under the Code. Managers must
understand the Code, seek guidance when necessary, and report suspected Code
violations. If a manager knows that an individual is contemplating a prohibited
action and does nothing, the manager will be responsible along with the
All reports of violations or suspected violations of the Code will be
investigated. In the course of the Company's investigation of reports of
violations or suspected violations of the Code, the Company will, to the extent
permitted by law, make reasonable and appropriate efforts to maintain the
confidentiality of the investigation and the confidentiality of the identity of
the reporting employee, but such confidentiality cannot be guaranteed.
It is the Company's objective that its business at all times be conducted in
compliance with the Code and all applicable laws and regulatory requirements.
Accordingly, the Company prohibits any form of retaliation against an individual
for filing a bona fide and truthful report of a violation
or suspected violation of the Company's Code or any law, rule or regulation, or
for assisting or participating in the investigation of any report of a violation
or suspected violation of the Company's Code or any law, rule or regulation.
For example, the Company prohibits any retaliation against an individual, such
as disciplinary action or termination of employment or contract, for:
If any individual believes he or she has been subjected to any retaliation
by the Company or any of its agents for reporting suspected misconduct in
accordance with this policy, he or she may file a complaint in accordance
with the procedures set forth above in this Code in the section entitled
Retaliation by any director, officer, employee or agent of the Company against
any individual who seeks advice, raises a concern, or reports any violation or
suspected violation of any law, rule or regulation, or of the Code, is strictly
prohibited and will not be tolerated. The Company will take action against any
individual who engages in any retaliatory conduct in violation of this policy,
and such action may include, if appropriate, termination of employment. However,
this policy of non-retaliation is not intended to protect a person who is
involved in wrongdoing about which he or she is making a report, or to protect
any person who intentionally makes a false report.
The Audit Committee of the Company's Board of Directors has determined that it
will meet privately at least annually with the Company's internal accountants.
Any individual may communicate privately with any member of the Audit Committee or
its Chairperson on any matter the individual believes should be discussed
privately. Any such communications may be by telephone or by private letter. As
January 18, 2017,
the members of the Audit Committee are:
Rustin Howard, Chairman
When an individual commences employment or contractual arrangement with the
Company, and when a director is elected, a copy of this Code will be furnished
to such individual. Within ten (10) days of his or her receipt of a copy of this
Code, the individual must review the Code and return to the Corporate Compliance
Officer a properly completed and signed Acknowledgment of Receipt in the form
appended to this Code.
Each director, officer, employee and consultant of the Company must report, as
provided in the section of this Code entitled "Reporting Violations" and within
ten (10) days of becoming aware of such conduct, any conduct which the
individual reasonably believes constitutes a violation or suspected violation of
the Company's Code or any applicable law, rule or regulation.