I. PURPOSE: This
Policy provides guidelines to employees, officers and
directors of and consultants to Encision Inc. (the “Company”)
with respect to transactions in the Company’s securities.
II. DEFINITIONS:
(a). Insider: All
officers of the Company, all members of the Company’s
Board of Directors, and all employees of, and consultants
and contractors to, the Company and its subsidiaries
who receive or have access to Material Nonpublic Information
(as defined below) regarding the Company. Insiders
also include the members of immediate families, and members
of the households of the individuals in the prior sentence.
This Policy also applies to any person who receives Material
Nonpublic Information from any Insider.
(b). Material Nonpublic Information:
Nonpublic information is information that has not been
disclosed to the general public and is otherwise not
available to the general public. It is not possible
to define all categories of material information. However, information
should be regarded as material if there is a reasonable
likelihood that it would be considered important to an
investor in making an investment decision regarding the
purchase or sale of the Company’s securities.
While
it may be difficult under this standard to determine
whether particular information is material, there are
various categories of information that are particularly
sensitive and, as a general rule, should always be considered material. Both
positive and negative information may be material. Examples
of such information include, but are not limited
to:
- Financial results, including revenues and costs
- News of a pending or proposed merger or joint
venture
- Impending bankruptcy or financial liquidity
problems
- New product announcements of a significant
nature
- Significant acquisitions
- Significant litigation exposure due to actual
or threatened litigation
- Major changes in senior management.
(c). Trading
Window: The period of time commencing on the second
Trading Day following the date of public disclosure
of the financial results for a particular fiscal
quarter or year and continuing until the beginning
of the first of the last five Trading Days of the
end of the next fiscal quarter.
(d). Trading
Day: Trading Day shall mean a day on which national
stock exchanges and the National Association of Securities
Dealers, Inc. Automated Quotation System (NASDAQ) are
open for trading.
III.
REFERENCES: None
IV. POLICY:
(a). It
is the Policy of the Company to oppose the unauthorized
disclosure of any nonpublic information acquired in
the workplace and the misuse of Material Nonpublic
Information in securities trading.
(b). This Policy applies to all
transactions in the Company’s securities, including
common stock, options for common stock and any other securities
the Company may issue from time to time, such as preferred
stock, warrants and convertible debentures, as well as to
derivative securities relating to the Company’s
stock, whether or not issued by the Company, such as
exchange-traded options.
(c). Any person who possesses
Material Nonpublic Information regarding the Company is an
Insider for so long as the information is not publicly known. Any
employee can be an Insider from time to time, and would at
those times be subject to this Policy. Because
the Company cannot know what every employee or consultant
knows at any specific time, any individual possessing
what could be construed to be Material Nonpublic Information
should consult the Chief Financial Officer before engaging
in any securities transactions, or in any way discussing
the information with non-Encision personnel.
(d). Trading on Material Nonpublic
Information: No director, officer
or employee of, or consultant to, the Company, and
no member of the immediate family or household of any
such person, shall engage in any transaction involving
a purchase or sale of the Company’s securities,
including any offer to purchase or offer to sell, during
any period commencing with the date that he or she
possesses Material Nonpublic Information concerning
the Company, and ending at the close of business on
the second Trading Day following the date of public
disclosure of that information, or at such time as
such nonpublic information is no longer material.
(e). Tipping: No
Insider shall disclose (“tip”) Material Nonpublic
Information to any other person (including family members)
where such information may be used by such person to his
or her profit by trading in the securities of companies to
which such information relates, nor shall such Insider or
related person make recommendations or express opinions on
the basis of Material Nonpublic Information as to trading
in the Company’s securities.
(f). Confidentiality of
Nonpublic Information: Nonpublic information
relating to the Company is the property of the Company
and the unauthorized disclosure of such information is
forbidden.
(g). Directors and officers
of the Company must also comply with the reporting
obligations and limitations on short-swing transactions
set forth in Section 16 of the Securities Exchange
Act of 1934, as amended. The
practical effect of these provisions is that officers
and directors who purchase and sell the Company’s
securities within a six-month period must disgorge
all profits to the Company whether or not they had
knowledge of any Material Nonpublic Information. Under
these provisions, and so long as certain other criteria
are met, neither the receipt of an option under the
Company’s option plans,
nor the exercise of that option, is deemed a purchase
under Section 16; however, the sale of any such
shares is a sale under
Section 16.
(h). No officer or director
may ever make a short sale of the Company’s stock.
V. POTENTIAL CRIMINAL
AND CIVIL LIABILITY AND/OR DISCIPLINARY ACTION:
(a). Liability for
Insider Trading. Insiders may
be subject to penalties of up to $1,000,000 and up to ten
years in jail for engaging in transactions in the Company’s
securities at a time when they have knowledge of Material
Nonpublic Information regarding the Company.
(b). Liability for Tipping. Insiders
may also be liable for improper transactions by any person
(commonly referred to as a “tippee”) to whom
they have disclosed Material Nonpublic Information regarding
the Company or to whom they have made recommendations or
expressed opinions on the basis of such information as to
trading in the Company’s securities. The Securities
and Exchange Commission (the “SEC”) has imposed
large penalties even when the disclosing person did not profit
from the trading. The SEC, the stock exchanges
and the National Association of Securities Dealers, Inc.
use sophisticated electronic surveillance techniques
to uncover insider trading.
(c). Possible Disciplinary
Action. Employees of the Company who violate
this Policy shall also be subject to disciplinary action
by the Company, which may include ineligibility for future
participation in the Company’s equity incentive
plans or termination of employment.
VI. GUIDELINES:
(a). Suggested Closure
of Trading Window For Officers, Directors and All Employees.
The period beginning five trading days before the end
of each quarter and ending one Trading Day following
the date of public disclosure of the financial results
for that quarter, is a particularly sensitive period
of time for transactions in the Company’s stock from the perspective
of compliance with applicable securities laws. This
sensitivity is due to the fact that officers, directors
and certain other employees and consultants will, during
that period, often possess Material Nonpublic Information
about the expected financial results for the quarter.
Accordingly, to ensure compliance
with this Policy and applicable federal and state securities
laws, it is suggested that all directors, officers,
employees and consultants having access to the Company’s internal financial statements or other
Material Nonpublic Information not conduct transactions involving
the purchase or sale of the Company’s securities
during this period.
From time to time, the Company
may also recommend that directors, officers, selected
employees and others suspend trading because of developments
known to the Company and not yet disclosed to the public. In such event, such persons are advised
not to engage in any transaction involving the purchase or
sale of the company’s securities during such
period and should not disclose to others the fact of
such suspension of trading.
The purpose behind the suggested self-imposed non-Trading
Window period is to help establish a diligent effort to avoid
any improper transaction.
It should be noted, however,
that even during the Trading Window, any person possessing
Material Nonpublic Information concerning the Company
should not engage in any transaction in the Company’s securities until such information
has been known publicly for at least one Trading Day, whether
or not the Company has recommended a suspension of trading
to that person. Trading in the Company’s
securities during the Trading Window should not be
considered a “safe harbor,” and all directors,
officers and other persons should use good judgment
at all times.
(b). Preclearance of Trades. The
Company has determined that all officers and directors of
the Company must refrain from trading in the Company’s
securities, even during the Trading Window, without first
complying with the Company’s preclearance process. Each
officer and director should contact the Company’s Chief
Financial Officer prior to commencing any trade in the Company’s
securities. The Company may find it necessary,
from time to time, to require compliance with the preclearance
process from certain employees and consultants other
than and in addition to officers and directors.
(c). Individual Responsibility. Every
officer, director, employee and consultant has the individual
responsibility to comply with this Policy regarding insider
trading, regardless of whether the Company has a suggested
Trading Window for that Insider or any other Insiders of
the Company. The guidelines set forth in this Policy
are guidelines only, and appropriate judgment should be exercised
in connection with any trade in the Company’s
securities.
(d). An Insider may, from
time to time, have to forego a proposed transaction in the
Company’s securities even if he or she planned
to make the transaction before learning of the Material
Nonpublic Information and even though the Insider believes
he or she may suffer an economic loss or forego anticipated
profit by waiting.
(e). For purposes of
this Policy, the Company considers that the exercise of stock
options under the Company’s stock option plans
(but not the
sale of any such shares) is exempt from this Policy, since
the other party to the transaction is the Company itself
and the price does not vary with the market but is fixed
by the terms of the option agreement or the stock option
plan.
