EXHIBIT 1.1
AMERICAN VANTAGE COMPANIES
CODE OF BUSINESS CONDUCT AND ETHICS
The highest standards of ethical business conduct and full compliance with all applicable laws are required of the Company’s directors, officers and employees in the performance of their corporate responsibilities. This Code of Business Conduct and Ethics (this “Code”) governs the work behavior and business relationships of the directors, officers and employees of American Vantage Companies (the “Company” or “AVCS”) to ensure compliance with legal requirements and the Company’s standards of business conduct. Directors, officers and employees are expected to read and understand this Code, uphold these standards in the day-to-day activities of the Company and comply with all applicable policies, procedures and law.
In order to preserve and perpetuate the reputation and successful business operation of the Company, there should be careful observance of all applicable laws and regulations, as well as scrupulous regard for high standards of conduct and personal integrity. While it is not possible to describe every illegal or improper act or practice, the Company deems the following standards of conduct in this Code to be particularly important.
The Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions must sign the acknowledgement form attached to this Code indicating he or she has received, read, understands and agrees to comply with this Code and return such form to the AVCS Chief Accounting Officer.
II. GENERAL STANDARDS OF CONDUCT
The Company expects all directors, officers and employees to exercise good judgment to ensure the safety and welfare of all at the Company, and to maintain a cooperative, efficient, positive, harmonious and productive work environment. These standards apply while working at the Company’s premises, offsite locations where the Company’s business is being conducted, at company-sponsored business and social events, or any other place where such individual is a representative of the Company. Directors, officers and employees who engage in misconduct or whose performance is unsatisfactory may be subject to corrective action, including termination.
III. RESPONSIBILITIES
| A. | Responsibilities of Employees and Others. It is the responsibility of each employee to ask questions, seek guidance and express concerns regarding compliance with this Code and the related procedures. Every employee should be aware and abide by the laws, regulations and the Company’s policies governing its business activities, regardless of their job or geographic location. No employee will be subject to retaliation by the Company for reporting in good faith a violation of this Code. |
Individuals or companies engaged to consult for or otherwise represent the Company or provide services to the Company must act on the Company’s behalf in a manner consistent with this Code and shall be required to comply with these practices in their contract with the Company in the same manner as applies to employees of the Company.
| B. | Board and Management Responsibilities. Management at all levels of the Company are responsible for ensuring adherence to this Code. The Board of Directors of the Company (the “Board”) has a general oversight function. Any significant deviation from the standards of conduct in this Code, whether actual or apparent, will be reported by management to the Board along with actual or proposed remedial actions. |
Management is responsible for providing guidance and issuing procedures to assist employees in complying with the Company’s ethical business conduct, including informing employees about the Company’s policies and ensuring they are followed, assisting employees to resolve questions/issues and maintaining a work environment where constructive, frank and open discussion is encouraged, without fear of retaliation.
IV. BUSINESS PRACTICIES
| A. | Gifts and Entertainment. Business gifts and entertainment are customary courtesies designed to build goodwill among business partners. These courtesies include such things as meals and beverages, tickets to sporting or cultural events, discounts not available to the general public, travel, accommodation and other merchandise and services. However, offering or receiving any gift, gratuity or entertainment that might be perceived to unfairly influence a business relationship should be avoided. In addition, the value of gifts given or received should be nominal, both with respect to frequency and amount. Nominal gifts or entertainment may be given at the Company’s expense or accepted on behalf of the Company if: (i) they are consistent with accepted business practice; (ii) they cannot, in the surrounding circumstances, be reasonably construed as a bribe, payoff or kickback; and (iii) the offer or receipt of such gifts does not violate any law, government regulation or generally accepted ethical standards. Written approval by the AVCS President or the AVCS Chief Accounting Officer must be obtained prior to making any gifts or entertainment. Under no circumstances may gifts of cash or cash equivalents be made or received, with the exception of a gift certificate if such certificate meets the above criteria. |
| B. | Bribes and Kickbacks. No effort may be made, directly or indirectly, to influence improperly any customer, vendor or supplier of the Company. The payment of bribes, payoffs, kickbacks or other benefits that may improperly influence business relationships between the Company and its customers, vendors or suppliers is prohibited. Such conduct is illegal and may violate state and federal criminal laws. |
| C. | Political Contributions. No corporate funds, merchandise or service may be paid or furnished, directly or indirectly, to a political party, committee, organization or to a political candidate or incumbent, except if legally permissible and if approved in advance in writing by the President of the Company. This policy does not apply to or restrict the ability of any director, officer or employee of the Company to participate voluntarily in political activities on their own personal time or to make personal contributions. However, the Company is prohibited from reimbursing any director, officer or employee for political contributions made from such individual’s personal funds. |
| D. | Payments to Government Officials or Employees. Corporate funds or gifts may not be furnished, directly or indirectly, to a government official, government employee or politician for the purpose of obtaining or maintaining business on behalf of the Company. Such conduct is illegal and may violate state and federal criminal laws. Assistance or entertainment provided to any government office should never, in form or substance, compromise the Company’s arm length business relationship with the government agency or official involved. |
| E. | Accounting Procedures and Documentation. All transactions must be accurately recorded in a timely manner on the Company’s books and records. The recording and reporting of transactions and financial balances must comply with generally accepted accounting principles. No undisclosed unrecorded accounts, corporate funds or assets will be established or maintained. No entry may intentionally distort, mislead or disguise the true nature of any transaction. Corporate funds may not be paid with the intent or understanding that any part of such payment is to be used for a purpose other than that described by the documents supporting such payment. All payments made on the Company’s behalf must have supporting documentation. All expense reporting must be documented in an accurate manner and include all required signature approvals. |
| F. | Marketing. Proper marketing practices should emphasize quality products at competitive prices. The use of misleading information, omission of important fact or false claims about the Company’s products are not acceptable. |
| G. | Competition and Fair Dealing. The Company seeks to outperform its competition fairly and honestly. The Company seeks competitive advantages through superior performance, never through unethical or illegal business practices. Stealing proprietary information, possessing trade secret information that was obtained without the owner’s consent, or inducing such disclosures by past or present employees of other companies is prohibited. Each director, officer and employee of the Company should endeavor to respect the rights of and deal fairly with the Company’s customers, vendors, suppliers, competitors and with each other. No director, officer or employee of the Company should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other intentional unfair-dealing practice. The Company’s directors, officers and employees should not falsely disparage or make unfair negative comments about its competitors or their products and services. Negative public statements concerning the conduct or performance of any former director, officer or employee of the Company should also be avoided. |
| H. | Privacy of Personal Information. The Company will acquire and retain only personal information that is required for the effective operation of the business of the Company or that is required by law in the jurisdictions in which the Company operates. Access to such information will be restricted internally to those with a legitimate need to know. Employee communications transmitted by the Company’s systems are not considered private. |
| I. | Compliance with Laws and Regulations. All directors, officers and employees of the Company must comply with all applicable laws, regulations and rules worldwide. Each director, officer and employee must acquire appropriate knowledge of the requirements relating to his or her duties sufficient to enable him or her to recognize potential dangers and to know when to seek advice on specific polices and procedures of the Company. No director, officer or employee may take any action on behalf of the Company that violates the letter or spirit of any law or regulation. Violations of laws, regulations and rules may subject the director, officer or employee to individual criminal or civil liability as well as to discipline by the Company. Such individual violations may also subject the Company to civil or criminal liability or the loss of business. |
| J. | Public Reporting. The policy of the Company requires full, fair and accurate, timely and understandable disclosure in the periodic reports required to be filed by the Company with the Securities and Exchange Commission. All employees are encouraged to bring to the attention of the appropriate senior executive officers or the Board or audit committee members, complaints, questions or concerns regarding accounting, internal accounting controls and auditing matters in accordance with the procedures established by the audit committee of the Board of Directors of the Company. |
V. PREVENTING CONFLICT OF INTEREST
A. Reporting Potential Conflict of Interest. Directors, officers and employees of the Company have a responsibility to the Company and its stockholders to act in the best interest of the Company and to avoid situations that present a potential or actual conflict of interest between their interest and the interests of the Company. A ‘conflict of interest’ exists where the private interest or benefits of one person or entity conflict with the interest or benefits of the Company. Actions that might involve a conflict of interest or the appearance of one should be disclosed in writing to management of the Company for review by the Board.
| B. | Personal, Financial or Business Interest. Directors, officers or employees may not use their position with the Company to derive or secure any personal, financial or other benefit for themselves, their relative or associates. Also, directors, officers or employees may not use their position with the Company to do business with a friend or relative or with a company in which such director, officer or employee of the Company, friend or relative has an interest. In such event, the director, officer or employee must disclose any potential conflict of interest and withdraw from participation in the selection of that business relationship. |
| C. | Acting Against the Company’s Interests. Directors, officers and employees owe a duty to the Company to advance the Company’s legitimate business interests when the opportunity to do so arises. No director, officer or employee may divert a business or financial opportunity to his or her own benefit. This situation can occur when a director, officer or employee becomes aware of an opportunity to acquire or profit from a business opportunity or investment that the Company may have an interest in pursuing. In such situation, the director, officer or employee should disclose the relevant facts to the Board and the President. If the Company is not interested in pursuing the opportunity and no objection is expressed, the person may then take advantage of the opportunity. In no event may a director, officer or employee deal for his or her own account in products sold or services performed by the Company. In addition, directors, officers and employees are prohibited from using corporate property, information or position for personal gain or competing with the Company. |
| D. | Outside Employment. No officer or employee may engage in employment outside the Company if such employment: (i) could constitute an actual or potential conflict of interest, or (ii) interfere with the officer’s or employee’s assigned duties with the Company. Examples of such interference include outside employment that requires the use of the Company’s time or facilities or impairs the officer’s or employee’s ability to give full attention to his or her position with the Company during scheduled working hours. |
| E. | Outside Directorship and Investments. A director, officer or employee serving as a director of, or having a business or financial interest in, a company having current or prospective dealings with the Company (such as a competitor, customer, vendor, landlord or tenant) must immediately disclose that fact in writing to the Company’s President that it may be determined whether the situation presents a conflict of interest. The business or financial interests of family members living with a director, officer or employee of the Company also shall be considered to be the financial interests of that director, officer or employee. Any subsequent approval to continue or engage in such outside directorship or investment must be made in writing. The Company will presume that ownership of not more than one percent (1%) of a publicly traded company’s securities (other than the Company) does not involve a conflict of interest and need not be disclosed. |
| F. | Government Service. Although individual participation in political activities or service in government positions outside of normal business hours is encouraged, such activities or service may present a conflict of interest. Any officer or employee wishing to be a candidate for public office, whether elective or appointive, must request the prior written approval of the Company’s President. A director, officer or employee holding a government office should abstain from any vote or decision that involves the Company’s interest. |
| G. | Loans. Loans to or guarantees of obligations of loans by the Company are not permitted to any director or executive officer of the Company. |
VI. WORK ENVIRONMENT
| A. | Equal Opportunity. The Company’s focus in personnel decisions is on merit and contribution to the Company’s success. The Company affords equal employment opportunity to all qualified persons without regard to any impermissible criterion or circumstance. The Company does not tolerate or condone any type of discrimination. |
Employees are treated without regard to race, color, religion, sex, marital or veteran status, age, national origin, ancestry, physical disability, mental disability, medical condition, sexual orientation or any other characteristics protected by law. Any employee who feels that he or she has been subject to discrimination on the basis of any legally protected status or who has been subject to any behavior should discuss the matter with their supervisors or an officer of the Company. All such matters will be promptly investigated and handled as confidentially as possible. Employees are encouraged to bring to the attention of the Company any conduct by superiors, co-workers, clients, suppliers or any person or persons associated with the Company that is discriminatory or disrespectful of their dignity.
| B. | Harassment. The Company prohibits discrimination or harassment on the basis of sex, race, religion, color, national origin or ancestry, disability, medical condition, marital or veteran status, age, sexual orientation or any other basis protected by law. Harassment includes unwelcome conduct of a verbal or physical nature when such conduct (i) has the purpose or effect of creating an intimidating, hostile or offensive working environment as defined by law; (ii) has the purpose or effect of unreasonably interfering with an individual’s work performance; or (iii) adversely affects an individual’s employment opportunities. |
The Company will not tolerate sexual harassment of its employees or applicants for employment in any form. Sexual harassment includes, but is not limited to, (i) unwelcome sexual flirtations, advances or propositions; (ii) visual conduct such as leering, making sexual gestures or displaying sexually suggestive objects, pictures, cartoons or posters; (iii) verbal abuse of a sexual nature; (iv) subtle pressure or requests for sexual activities; (v) unnecessary touching of an individual; (vi) graphic verbal commentaries about an individual’s body; (vii) sexually degrading words used to describe an individual; (viii) a workplace display of sexually suggestive objects or pictures; (ix) sexually explicit or offensive jokes; or (x) physical assault. No director, officer or employee shall threaten or insinuate, either explicitly or implicitly, that an employee’s or applicant’s refusal to submit to sexual advances will adversely affect that person’s employment, work-status evaluation, wages, advancement, assigned duties, shifts, or any other condition of employment or career development. Similarly, no director, officer or employee shall promise, imply, or grant any preferential treatment in connection with any employee or applicant engaging in sexual conduct.
Any employee who feels that he or she is a victim of harassment by any supervisor, management official, other employee, customer, vendor, or any other person in connection with his or her employment should bring the matter to the immediate attention of an executive officer of the Company. The Company will promptly investigate all allegations of harassment in as confidential a manner as possible and will take appropriate corrective action as warranted. Following an investigation, any employee who is determined to have engaged in harassment in violation of this policy will be subject to appropriate sanctions, up to and including termination.
| C. | Health and Safety and the Environment. The Company strives to provide each employee with a safe and healthy work environment. Each employee has responsibility for maintaining a safe and healthy workplace for all employees by following safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions. |
All forms of unlawful conduct, including threatening or intimidating behavior, threats assaults or violence of any kind in the workplace are prohibited. Any director, officer or employee found using, selling or in possession of illegal drugs on the Company’s premises will be subject to disciplinary action. Employees should report to work in a condition to perform their duties, free from the influence of illegal drugs or alcohol.
The Company is committed to doing business in an environmentally responsible manner. This includes complying with laws involving environmental quality and related health and safety issues. Accordingly, every director, officer and employees is expected to conduct the Company’s business in an environmentally responsible and safe manner and not to engage in any activity that violates environmental laws or regulations.
VII. | PROTECTION AND PROPER USE OF COMPANY ASSETS AND CONFIDENTIAL INFORMATION |
| A. | Use of Company Assets. All directors, officers and employees should endeavor to protect the Company’s assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company’s profitability. Any suspected incident of fraud or theft should be immediately reported for investigation. Company equipment should not be used for non-Company business, although incidental personal use of telephones, fax machines, copy machines, personal computers and similar equipment is generally allowed if there is no significant added cost to the Company, it does not interfere with such person’s work duties and is not related to an illegal activity or to any outside business. |
| B. | Use of E-mail and Internet. E-mails systems and internet services are provided to help us do our work. Incidental and occasional personal use is permitted, but never for personal gain or improper purpose. Employees are prohibited from accessing, sending or downloading any information that could be insulting or offensive to another person, such as sexually explicit messages, cartoons, jokes, unwelcome propositions, ethnic or racial slurs, or any other message that could be viewed as harassment. Employees’ messages, including voice mail, are considered the Company’s property and employees should not have any expectation of privacy. Unless prohibited by law, the Company reserves the right to access and disclose this information as necessary for business purposes. Employees should use good judgment and not access, send a message or store any information that they would not want to be seen or heard by other individuals. |
| C. | Protection of Proprietary and Confidential Information. Information generated in the Company is a valuable company asset. Protecting this information plays a vital role in the Company’s continued growth and ability to compete. Typical of such information are technical information such as computer programs and databases, business information such as the Company’s objectives and strategies, trade secrets, processes and formulae, analysis, charts, drawings, reports, sales, earnings, forecasts, relationships with suppliers, marketing strategies, training materials, plans for acquisitions or divestitures, employee compensation and records and other information of a similar nature. Directors, officers and employees must maintain the confidentiality of the Company’s proprietary and confidential information and must not use or disclose such information without the express consent of an officer of the Company or when legally mandated. Adhering to this principle is a condition of continued service or employment. |
VII. INSIDER TRADING
United States and foreign securities laws, as well as the Company’s policy, prohibit the buying and selling of securities using material corporate information that is not yet available to the public (‘insider trading’). Severe penalties can be imposed on directors, officers and employees, their families and recipients of this insider information. All directors, officers and employees of the Company must not disclose non-public information to any other person. No director, officer, employee, ex-employee, including their immediate family members, may buy or sell securities of the Company when in possession of non-public inside information concerning the Company. This restriction also applies to trading in securities of any other company based on inside information acquired as a result of employment with the Company or from some other business association with the Company. Providing ‘tips’ to people outside the Company based on inside information about the Company or other companies acquired as a result of the director’s, officer’s or employee’s position with the Company is also prohibited by law and this policy. Persons who involve themselves in insider trading, either by personally engaging in trading or by disclosing material non-public information to others, are subject to immediate dismissal and prosecution.
VIII. U.S. ANTITRUST LAWS AND OTHER COMPETITION LAWS
United States antitrust laws, as well as competition laws outside the United States, are designed to ensure a fair and competitive free market systems. These laws are based on the premise that open competition in a free marketplace will lead to appropriate prices and promote an efficient, productive economy. While the Company will compete vigorously in the marketplace, it will comply with the applicable antitrust and competition laws in every jurisdiction in which the Company conducts its business. The Company will compete on the merits of its products, the prices it charges and the customer loyalty it earns.
No director, officer, employee, agent or contractor should at any time, or under any circumstance, enter into an agreement or understanding, written or oral, express or implied, with any competitor concerning prices, discounts, other terms or conditions of sale, profits or profit margins, costs, allocation or product or geographic markets, allocation of customer, limitations of production, boycotts of customers or suppliers, or bids or the intent to bid or even discuss or exchange information on these subjects. Collusion among competitors is illegal and the consequences of violation are severe.
Violation of antitrust laws and other competition laws can result in severe penalties being imposed upon both the Company and the individuals involved.
X. FOREIGN CORRUPT PRACTICES ACT
The Foreign Corrupt Practices Act (the “FCPA”) includes anti-bribery and corrupt payment provisions which make it illegal to make an offer, payment, promise to pay or authorization to pay any money, gift or anything of value to any foreign official or any foreign political party, candidate or official with the purpose of unlawfully influencing such person(s) to make a decision that would favor the Company’s business.
In addition to the anti-bribery provisions of the FCPA, the FCPA has separate accounting standards that require that proper controls be in place to ensure the lawful use of the Company’s assets. Pursuant to the FCPA accounting standards, no payment shall be made, or other transaction entered into, on behalf of the Company without proper management approval. Accordingly, the Company’s funds, assets or services cannot be used for any purpose that is unlawful under the laws of the United States, any state thereof, or any jurisdiction, foreign or domestic. Complete and accurate records should be maintained of all transactions, including transactions that relate in any way, directly or indirectly, to a foreign government official.
As a matter of strict policy of the Company, any action by any director, officer or employee that is contrary to the provisions of the FCPA is strictly prohibited.
XI. OUTSIDE REQUESTS FOR INFORMATION
Outside requests for information concerning the Company should only be handled by authorized persons. All inquiries from securities analysts or investors must be directed to the Company’s President or Chief Accounting Officer. If an employee receives an inquiry from a governmental or regulatory agency on matters outside his or her area of responsibility or on legislative issues, such inquiries should be directed to an executive officer. General inquiries from the media should be directed to the Company’s President.
XII. IMPLEMENTATION AND MONITORING
Management of the Company shall be responsible for explanation of this Code so as to assure employee knowledge and compliance, as well as for enforcement of this Code. Written certification concerning Code compliance may be periodically required from those directors, officers or employees so designated by the President of the Company. As no policy can cover all potential topics, this Code may be supplemented from time to time.
In order to ensure that violations of this Code do not result in harm to the Company or its directors, officers and employees, it is essential that management of the Company be aware of any such violations. Therefore, directors, officers and employees are encouraged to discuss with their supervisor or any officer of the Company any concerns they may have related to the interpretation and application of this Code. Any director, officer or employee of the Company who has knowledge of a potential or suspected violation of this Code has an obligation to report promptly relevant information to a supervisor, any officer of the Company or the Company’s Audit Committee. Reports will be treated confidentiality to the extent possible and consistent with the Company’s responsibility to address the issue. No person will be subject to retaliation by the Company for reporting in good faith a violation of this Code. Directors, officers and employees are expected to cooperate in internal investigations of misconduct.
The Company will take such disciplinary or preventive action as it deems appropriate to address any exiting or potential violation of this Code brought to its attention.
XIII. ENFORCEMENT
Violation of this Code may result in disciplinary action, up to and including removal from office or the Board or termination of employment. Legal proceedings may also be commenced, if necessary, to recover the amount of any improper expenditures, any profits realized by the offending director, officer or employee, and any financial detriment sustained by the Company. In appropriate circumstances, violations of this Code will be reported to the applicable authority.
XIV. PERSONS COVERED
This Code applies to all directors, officers and employees of the Company. With regard to personal securities trading and certain other matters described in this Code, the Code also applies to spouses, family members and others who live in their households. In particular, the Company’s directors, officers and employees may not, indirectly through a family member, do what they cannot do directly. Therefore, all references in the Code to the Company’s directors, officers and employees include such individuals as well as, where appropriate, their immediate families.
Individuals or companies engaged to consult for or otherwise represent the Company or provide services to the Company must act on the Company’s behalf in a manner consistent with this Code and shall be required to comply with these practices in their contract with the Company in the same manner as applies to employees of the Company.
XV. WAIVERS
Any waiver of this Code for employees other than officers or directors shall be communicated immediately to the Company’s executive officers and the Board. Any waiver of this Code for officers or directors may be made only by the independent members of the Board or a Board committee comprised of independent directors and will be promptly disclosed as required by law or stock exchange regulation. Any waiver from this Code will be publicly disclosed to the extent required by applicable laws and regulations.
XVI. HELP AND INFORMATION
All directors, officers and employees are encouraged to bring any questions or concerns regarding the provisions in this Code or its application to their supervisor or any officer of the Company. This Code is not intended to be a comprehensive rulebook. Certain situations may require specific advice.
XVII. GENERAL
This Code is a corporate statement of policy, the contents of which may be modified substituted or altered at any time by the Company. All amendments to this Code must be approved by the Board. This Code is not intended to create a contract of employment or to alter the employment relationship that exists between employees and the Company.
ACKNOWLEDGMENT OF RECEIPT AND COMPLIANCE WITH THE CODE
I hereby certify that I have received, read and understand American Vantage Companies’ (the “Company”) Code of Business Conduct and Ethics. I understand that a violation of any provision of the Code of Business Conduct and Ethics is grounds for discipline up to and including termination of my position with the Company. I also understand that if I discover a violation of any provision of the Code of Business Conduct and Ethics, it is my duty to notify my the appropriate authorized persons of the Company.
I hereby agree to comply with the policies and guidelines set forth in the Company’s Code of Business Conduct and Ethics.
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