Exhibit 14
FALCONSTOR SOFTWARE, INC.
CODE OF CONDUCT
I. Introduction
1. A Statement of Principles. 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.
FalconStor expects all of its employees to comply with applicable
laws, rules and regulations. FalconStor also expects all of its employees to
abide by both the letter and the spirit of the Code's provisions. It is the
Company's intent to exceed the minimum requirements of the law and industry
practice. The Code identifies behavior that is never acceptable and will always
be considered to be outside the scope of employment.
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.
2. 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.
3. 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.
4. 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.
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:
All United States Employees: Call toll free, 1-800- 418-6423 x 571
All Employees Worldwide: e-mail to CONFIDE2SV@SECURITYVOICE.COM
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.
5. 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: disclosing information to a
government or law enforcement agency, where the employee has reasonable cause to
believe that the information discloses a violation or possible violation of
federal or state law or regulation; or providing information, causing
information to be provided, filing, causing to be filed, testifying,
participating in a proceeding filed or about to be filed, or otherwise assisting
in an investigation or proceeding regarding any conduct that the employee
reasonably believes involves a violation of: federal criminal law relating to
securities fraud, mail fraud, bank fraud, or wire, radio and television fraud,
or any rule or regulation of the Securities and Exchange Commission, or any
provision of federal law relating to fraud against shareholders, or 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.
6. 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.
7. 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:
Committing, authorizing, or directing an illegal act.
Failing to exercise proper compliance oversight or tolerating
illegal conduct, if acting as a supervisor of another employee of the Company.
Failing to report illegal business conduct of which he or she
directly knows or observes.
Discouraging another employee from reporting a violation of law or
of this Code.
Improperly disclosing the identity of a person who reports a
violation of this Code.
Retaliating or condoning retaliation against any Employee who
reports such a violation.
The code is not intended to and does not create an employment
contract, and does not create any contractual rights between FalconStor and its
employees or create any express or implied promise for specific treatment in
specific situations.
II. Use, Protection and Management of Corporate Assets
1. Financial Integrity. 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.
2. Code of Ethics. The Company has adopted a Code of Ethics for
Chief Executive Officer and Senior Financial Officers. A copy is attached to
this Code of Conduct.
3. Use of Corporate Assets. 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.
4. Intellectual Property. 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.
5. Third-Party Software. All employees must use software and content
information only in accordance with the associated licenses and/or terms of use.
The Company prohibits the making or using of copies of non-licensed copyrighted
material, including software, documentation, graphics, photographs, clip art,
animation, movie/video clips, sound, and music.
6. Trade Secrets and Confidential or 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.
7. Ownership of Work. All intellectual property which any employee
makes, conceives, reduces to practice or develops (in whole or in part, either
alone or jointly with others) during the employee's employment is the sole
property of the Company. The Company shall be the sole owner of all patents,
copyrights and other intellectual property or other rights in connection
therewith.
III. Legal and Regulatory Compliance
1. Communications with Government. 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.
2. Bribery, Gratuities and Improper Payments. FalconStor complies
with the anti-corruption laws of the countries in which it does business,
including the United States Foreign Corrupt Practices Act ("FCPA"). In full
compliance with the FCPA, neither FalconStor nor anyone acting on its behalf
will make any direct or indirect payment or promise of payment to foreign
government officials for the purpose of inducing the individual to use his/her
position to obtain or to retain FalconStor business.
3. Anti-Boycott Requirements. FalconStor complies with United States
law that prohibits participation in international boycotts that are not
sanctioned by the United States government.
4. Export Control. 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.
5. International Business Activities. 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.
6. Political Activity. Political activity should be an exercise of
individual choice and conviction. FalconStor encourages all employees to
participate actively in the political process; our public institutions depend on
such participation. However, employees should be careful not to associate
FalconStor with their political activity. All political activity must be
undertaken with the employee's own resources and on their own time. No
contribution or support may be provided on behalf of the Company to a political
candidate or committee without the approval of the Company's General Counsel.
Neither the Company nor any FalconStor employee may require any employee to make
a personal contribution to a political action committee or to a political
candidate or committee, and no FalconStor employee will face retribution from
the Company or any other employee for declining a request to make such a
contribution.
IV. Conflicts of Interest
1. Avoidance of Conflicts. Employees should avoid any situation
which involves or may involve a conflict between their personal interest and the
interests of the Company. As in all other facets of their duties, employees
dealing with customers, suppliers, contractors, competitors, or any person doing
or seeking to do business with the Company, are to act in the best interests of
the Company. Each employee must make prompt and full disclosure in writing to
their manager of any potential situation which may involve a conflict of
interest. Such conflicts include, but are not limited to:
Ownership by the employee or by a member of the employee's family of an interest
in any outside enterprise which does or seeks to do business with, is a
competitor of, or is a vendor, supplier, competitor or contractor to the
Company.
Serving as a director, officer, partner, consultant, or in a
managerial or technical capacity with an outside enterprise which
does or is seeking to do business with or is a competitor of the
Company. Exceptions to this can be approved by the Company's Board
of Directors.
Being promised or receiving a fee from a third party doing or
seeking to do business with the Company for acting as a broker,
finder or go-between.
Borrowing from or being financially indebted to a competitor or
supplier of goods and services of the Company, other than banks or
other financial institutions for typical consumer debt generally
available to non-Company employees.
Any other arrangement or circumstance, including family or other
personal relationships, which might dissuade the employee from
acting in the best interests of the Company.
2. Gifts and Entertainment. FalconStor policy and practice encourage
the use of good judgment, discretion and moderation when giving or accepting
gifts or entertainment related to business activities. Gift giving and practices
may vary in different cultures; however, any gifts and entertainment given or
received must be in compliance with law, must not violate the giver's and/or the
receiver's policies on the matter, and must be consistent with local custom and
practice. 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.
3. 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.
4. Diversion of Corporate Opportunity
Employees are prohibited from: (a) taking for themselves personally
opportunities related to Company business; (b) using Company property,
information, or position for personal gain; or (c) competing with the Company
for business opportunities, provided, however, if the Company's disinterested
directors determine that the Company will not pursue an opportunity that relates
to Company's business, an employee may do so.
V. Work Environment
1. Equal Opportunity Employment. 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.
2. Harassment. 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.
VI. Communications With the Public and Insider Trading
1. Communications with the Public. FalconStor's advertising, sales
and promotional material seeks to be truthful, accurate, and free from false
claims. FalconStor provides its shareholders with timely and appropriate
information subject only to competitive and legal constraints. FalconStor
provides a link on its website for shareholders to communicate with the Company
and its directors.
2. 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 of 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.
VII. Antitrust
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:
Agreements with any competitor on the types of business the Company
will conduct, the terms pursuant to which the Company will do
business, the prices the Company will charge, the customers the
Company will serve or the products the Company will offer.
Agreements with anyone outside the Company to avoid dealing with or
boycotting any individual or group of potential customers or
suppliers.
Attendance at trade association or group meetings without an
approved agenda.
Refusing to sell one product or service unless the customer also
agrees to buy another product or service or refusing to purchase a
product or service unless the seller agrees to buy some other
product or service from the Company.
FALCONSTOR SOFTWARE, INC.
Code of Ethics for Chief Executive Officer
and Senior Financial Officers
The Board of Directors of FalconStor Software, Inc. (the "Company"),
has developed and adopted this Code of Ethics applicable to its Chief Executive
Officer ("CEO") and Senior Financial Officers to promote honest and ethical
conduct, full, fair, accurate, timely and understandable disclosure, and
compliance with applicable laws, rules and regulations
Senior Financial Officers ("SFOs") include the Company's Chief
Financial Officer and such other Company officials as the Board designates from
time to time.
The CEO and SFOs must:
o Act with honesty, integrity and independence, avoiding actual or
apparent conflicts of interest in personal and professional
relationships.
o Comply with Company policies and procedures.
o Provide full, fair, accurate, complete, objective, timely and
understandable financial disclosure in internal reports as well as
documents filed with or submitted to the Securities and Exchange
Commission, any other governmental agency or self-regulatory
organization, or used in public communications.
o Promptly bring to the attention of the Company's Audit and
Disclosure Committees any information concerning (a) significant
deficiencies in the design or operation of internal controls which
could adversely affect the Company's ability to record, process,
summarize and report financial data, or (b) any fraud, whether or
not material, or any actual or apparent conflicts of interest
involving any management or other employees who have a significant
role in the Company's financial reporting, disclosures or internal
controls.
o Comply with laws, rules and regulations of federal, state and local
governments, the Securities and Exchange Commission, and other
appropriate private and public regulatory agencies.
o Act in good faith, responsibly with due care, competence, diligence,
and without knowingly misrepresenting material facts or allowing
one's independent judgment to be subordinated.
o Protect and respect the confidentiality of information acquired in
the course of one's work except when authorized or otherwise legally
obligated to disclose. Confidential information must not be used for
personal advantage.
o Promote and be an example of ethical behavior as a responsible
partner among peers, in the work environment and the community.
o Responsibly use and control assets and other resources employed or
trusted to their supervision.
o Inform the Company's Board of Directors in the event that a material
conflict or a significant issues arises that would impact the
ability of the CEO or the SFO to perform his or her duties or to
comply with this Code of Ethics.
