EXHIBIT 99.1
CODE OF ETHICS AND CONFLICTS OF INTEREST POLICY
[LOGO]
SALISBURY BANCORP, INC.,
SALISBURY BANK AND TRUST COMPANY, and
SBT MORTGAGE SERVICE CORPORATION
Individual Responsible: John F. Perotti
Chairman and CEO
Board Approved: August 26, 2005
Last Revision: February 29, 2008
SALISBURY BANCORP, INC.,
SALISBURY BANK AND TRUST COMPANY,
AND
SBT MORTGAGE SERVICE CORPORATION
CODE OF ETHICS AND CONFLICTS OF INTEREST POLICY
for Directors, Officers, and Employees
Salisbury Bank and Trust Company (the "Bank"), Salisbury Bancorp, Inc. (the
"Holding Company") and SBT Mortgage Service Corporation, a subsidiary of the
Bank (herein referred to collectively as the "Corporation") are institutions of
public trust that are dependent upon public confidence. Inherent in that trust
is the Corporation's responsibility not only to preserve and safeguard public
confidence but also to strengthen and renew such confidence. The reputation and
soundness of the Corporation is dependent on its commitment to avoid conflicts
of interest. It is imperative that each member of the Board of Directors,
Officer and Employee of the Corporation act with integrity at all times, conduct
themselves in a professional manner, and comply with all rules, regulations and
policies of the Corporation. In addition, all Directors, Officers and Employees
have an obligation to the Corporation to ensure that their outside activities,
interests and personal affairs are not in conflict with the Corporation's
interests or reflect negatively upon the Corporation's reputation in the
community. It is to this end that this Code of Ethics and Conflicts of Interest
Policy ("Policy") was adopted. This Policy also serves as the Holding Company's
"Code of Ethics" for purposes of Section 406 of the Sarbanes-Oxley Act of 2002
and the regulations of the Securities and Exchange Commission promulgated
pursuant thereto.
STATEMENT OF BOARD POLICY
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No one associated with the Corporation, whether as a director, officer or
employee, should use their position, directly or indirectly, for private gain,
to advance personal interests or to obtain favors or benefits for themselves,
their families or related interests, or any other entity. Each such person must
manage their personal and business affairs so as to avoid situations that might
lead to conflict of interest or the appearance of a conflict of interest
involving the Corporation. Compliance with this Policy is required of all such
persons.
The purpose of this Policy is to ensure that business dealings and transactions
between the Corporation and its officers, directors, principal shareholders and
employees are conducted in an arm's-length fashion.
The nature of the banking industry requires that each employee and officer of
the Corporation meet high standards of integrity and ethical conduct. These
rules are based upon laws and fiduciary duties which are derived from common
sense principles. However, they are extremely important and should be reviewed
regularly. Please remember that the following should be considered to be
guidelines and as such, cannot address every potential issue. If you should have
a question concerning a specific
proposed transaction, discuss it first with the Chief Executive Officer or a
member of Senior Management.
The Policy is applicable to officers, directors and employees of the
Corporation.
CONFLICTS OF INTEREST
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All officers, directors and employees ("insiders") are responsible for dealing
fairly with the Corporation in business transactions and ensuring that their
personal interests do not bias the Corporation's decisions. Insiders must ensure
that their own business and personal relationships with the Corporation, as well
as their relationships with fellow insiders, are always at arm's-length.
Insiders must also ensure that they do not take any business opportunity that
properly belongs to the Corporation. Even the appearance of abuse in insider
dealings can adversely affect both the Corporation and the individual. The law
does not prohibit an insider from doing business with the Corporation; in fact,
many insiders are very important customers. Insiders must ensure, however, that
neither they nor others abuse their position to benefit personally at the
Corporation's expense, and they should take appropriate precautions in
structuring their business and personal ties to the Corporation to avoid even
the appearance of a conflict of interest.
Insiders must not put their personal or business interests or those of others
above the interests of the Corporation. Thus, insiders must be fair in their
dealings with the Corporation, and personal interests must not be allowed to
bias decisions. Insiders must not take advantage of potential "corporate
opportunities," such as business enterprises, properties, or new products that
they learn of as a result of their position or that are in the Corporation 's
"line of business."
Insiders must disclose fully to the Board any personal interest they may have in
matters affecting the Corporation and ensure that any transactions involving
these interests are determined by disinterested Directors to be fair to the
Corporation.
PERSONAL CONDUCT
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Each officer, director and employee is expected to maintain the highest ethical
standards in their personal and professional dealings. The Corporation will not
tolerate any illegal discrimination or harassment of any kind.
Employees, officers and directors of the Corporation are expected to accept
certain responsibilities, adhere to acceptable business principles in matters of
personal conduct, and exhibit a high degree of personal integrity at all times.
This not only involves respect for the rights of others, but also demands that
with respect to business and personal matters, such persons refrain from any
behavior that might be harmful to the Corporation, or that might be viewed
unfavorably by current or potential customers or with respect to the public.
PERSONAL FINANCES
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Each officer, director, and employee should maintain his or her personal
finances in a prudent, businesslike manner. Checking accounts for officers,
directors, principal
shareholders and employees are to be handled in a professional manner. Deposits
may not bear a greater rate of interest than that paid to the general public. In
accordance with 12 CFR 215.4(e) of Regulation O, the Bank may not pay an
overdraft of an executive officer or director of the Bank or of an affiliate of
the Bank, on an account at the Bank, unless either:
o The payment of funds is made in accordance with a written,
preauthorized, interest-bearing extension of credit plan that
specifies a method of repayment, or a written, preauthorized
transfer of funds from another account of the account holder at the
Bank.
o The payment is of an inadvertent overdraft on an account in an
aggregate amount of $1,000 or less, provided the account is not
overdrawn for more than five business days, and the Bank charges the
executive officer or director the same fee charged to any other
customer of the Bank in similar circumstances.
The following activities are prohibited:
1. Borrowing from other staff members;
2. Borrowing from the Corporation's customers other than those
that are lending institutions;
3. Borrowing from the Holding Company or borrowing at
preferential rates from the Bank because of your position.
Remember that any Bank loans to executive officers, directors
and principal shareholders must be on the same terms and
conditions as those offered to the general public; and
4. Borrowing from the Corporation or any other institution, on
terms or conditions (or through a process) which would violate
any applicable law, rule or regulation, or which would be
contrary to the policies of the Corporation.
The Policy of the Corporation and banking laws impose various restrictions on
certain "insider" loan transactions. Please refer to the Bank's Insider Lending
Policy & Procedures and Regulation O Compliance Policy.
BUSINESS DEALINGS
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In addition to lending transactions, any dealings between the Corporation and
directors, executive officers, principal shareholders and related interests of
such persons, including transactions between the Corporation and the immediate
family of (spouses, children, parents, grandparents, siblings and step-relatives
or any person sharing your household), the Corporation's insiders ("related
interests"), must constitute arm's-length transactions.
The following insider transactions are prohibited:
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1. A transaction or business dealing which is not intended for
the benefit of the Corporation but is merely an accommodation
for the insider's benefit;
2. A transaction that is not made on terms and under
circumstances which are substantially the same or as favorable
as those prevailing at the time for comparable business
dealings with persons not covered by the Policy; or
3. A transaction that is an investment in real estate, either
directly or indirectly, whether in the form of an equity
interest, partnership, joint venture, or any other form, if
the Corporation, in substance, has virtually the same risks
and potential rewards as an investor in the borrower's
investment in real estate.
With regard to use of the Corporation's property and personnel, the Boards have
taken the position that all supplies, copy services, postage meter and support
personnel are for the Corporation's business and should not be used for personal
needs. Any questions or areas of confusion regarding this Policy should be
addressed to the Chief Executive Officer.
Conflicts of interest between officers, employees, principal shareholders or
directors of the Corporation and customers of the Corporation (or their related
interests) shall be avoided at all times. Conflicts of interest include, but are
not limited to, compensation from or investments in customers of the Corporation
or their related interests. Similarly, the unauthorized use of privileged
information constitutes a conflict of interest. Any officer, employee, principal
shareholder or director contemplating a transaction that may involve a conflict
of interest must obtain the proper approval of the Board of Directors of the
Holding Company or the Bank, respectively. Any such approval shall not be deemed
a waiver of this provision of this Policy.
The following activities are prohibited:
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1. A direct or indirect financial interest including joint
ventures or directorship in or with a supplier, customer or
appropriate prospective customer without prior disclosure to
and prior approval from the appropriate Board of Directors.
2. Receiving preferential treatment from customers of the
Corporation because of your position with the Corporation.
3. Selling or leasing goods or services to the Corporation
without prior disclosure and approval by a majority of
disinterested directors. In addition,
the terms and conditions of transactions must be not less
favorable than those offered to others.
4. Receiving discounts on personal purchases from suppliers or
customers because of business relationships with the
Corporation.
5. Giving preferential treatment to a customer, supplier or
prospective customer because of any favor, gratuity or outside
business relationship with such customer, supplier or
prospective customer.
Actual conflicts of interest and any known potential conflicts of interest must
be disclosed to the appropriate Board of Directors, including those arising due
to business or personal relationships with customers, suppliers, business
associates, or competitors of the Corporation.
CONFIDENTIALITY AND SAFEGUARDING CONFIDENTIAL INFORMATION
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All non-public information about the Corporation should be considered
confidential information. Additionally, information obtained in the course of
evaluating a loan application, servicing a loan and other information including
financial, personal and other information on customers, suppliers, prospective
customers, employees or applicants is strictly confidential and must not be used
or disclosed for any reason other than the intended purpose for such
information. Use of such information to further your own business interests
should be scrupulously avoided. In addition, such information may not be shared
or made available to individuals outside the Corporation unless required by law.
All customer information is considered private and privileged, and is to be used
solely for the purpose of providing customers with legitimate business services.
Employees are prohibited from inquiring on customer accounts (this includes
employee accounts) for any reason other than an approved and legitimate business
inquiry. Failure to meet privacy responsibilities may be cause for disciplinary
action, up to and including termination of employment.
Use of material inside information in your own investments can constitute a
violation of federal securities laws. As long as this material inside
information is not fully disclosed to the investing public, you must abstain
from trading in, recommending, or discussing the securities concerned.
The obligation to preserve confidential information continues even after
employment with the Corporation ends.
The stock of the Holding Company is registered pursuant to the Securities
Exchange Act of 1934. Therefore, each employee, officer, and director should be
familiar with the basic requirements of both state and federal securities laws
with regard to reporting requirements and trading in the Holding Company's
stock. The requirements are summarized in the following policies adopted by the
Boards of Directors of the Holding Company and the Bank: Policies and Procedures
on Confidential Information and the Avoidance of Insider Trading and the Policy
Regarding Pre-clearance of Insider Transactions and Procedures for Officers and
Directors Pursuant to Section 16 of the
Securities Exchange Act of 1934, as Amended. In general, the securities laws
prohibit abuse of special insider knowledge with regard to trading in the
Holding Company's stock. Accordingly, you may not take advantage of material
non-public information, such as current earnings, proposed major reorganizations
or other transactions which could significantly affect the value of the stock by
buying, selling or recommending the stock of the Holding Company. It is
advisable to review the Corporation's Policies and Procedures on Confidential
Information and the Avoidance of Insider Trading before entering into a stock
transaction.
OUTSIDE EMPLOYMENT
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With respect to an employee of the Corporation, employment is a full-time career
unless otherwise provided by the appropriate Board of Directors (or in the case
of a non-officer employee, as provided by executive management). The undivided
interest and loyalty of employees is important to the continued success of the
Corporation. Thus, employment with, or acting as consultant to, outside firms is
permitted only if it is approved in advance by the appropriate Board of
Directors (or in the case of a non-officer employee, executive management). In
determining whether to approve such outside employment, the appropriate Board of
Directors (or in the case of a non-officer employee, executive management) shall
consider all relevant factors, including but not limited to the following:
1. Will it interfere with work assignments or performance;
2. Will it involve the possibility of adverse publicity to the
Corporation;
3. Is it with a competitor, supplier or customer;
4. Does it imply sponsorship by the Corporation; and
5. Does it involve serving as a director, officer, manager or
consultant.
Any such approval shall not be deemed a waiver of this provision of this Policy.
In addition, certain affiliations by directors, officers and employees are
specifically prohibited by law. Examples of such prohibitions include serving as
a director, officer, or employee of:
1. A public utility holding company or its affiliates (15 U.S.C.
ss.79q(c)); and
2. An interstate power company (16 U.S.C. ss.825d(b) or having
certain specified affiliations with a registered investment
company (15 U.S.C. ss.80a-10(c)).
3. Most unaffiliated depository institutions within the
Corporation's market area, subject to certain exemptions
pursuant to state and federal law.
CONTRIBUTIONS - POLITICAL ACTIVITIES
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The Corporation, as a responsible citizen, encourages contributions to worthy
charitable, social and educational causes. However, due to the requirements of
the working environment, employee contributions to political or charitable
organizations may not be solicited on the Corporation's premises or during
working hours without prior management approval. Officers and employees shall
not contribute directly or indirectly on behalf of the Corporation, time, money,
service or favors to political parties, candidates or workers. The Corporation
is prohibited from engaging in politics or making political contributions
including the use of its facilities and/or supplies.
Any officer or employee who wishes to take an active role as a political
candidate for any elective public office or is considered being appointed to any
governmental or civic position, must discuss the details and receive prior
approval from the Chief Executive Officer and appropriate Board of Directors.
CREDIT PRACTICES
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It is important that all loans be made in a prudent manner. In addition, all
loans should be made in an arm's-length transaction or in such a manner as will
not reflect adversely on the integrity of our institution. Thus, you may not
extend credit or participate in any credit extension to a customer in the
following circumstances:
1. The proceeds of a loan are to be given to you or benefit you,
your family, or an entity in which you have a financial or
other interest;
2. The borrower, in turn, loans the proceeds of his loan to you,
your family, or an entity in which you have an interest;
3. The borrower uses the proceeds of the loan to pay your debts
or those of your family or an entity in which you have an
interest;
4. The borrower uses the proceeds to purchase assets from you,
your family or an entity in which you have an interest;
5. The loan is made on a preferential rate which has not been
authorized by the Loan Committee or other appropriate
authority within the Bank;
6. The loan is made to an employee of a bank regulatory agency,
which has supervision over the Bank; or
7. The borrower obtains a loan from another bank on a
preferential basis as part of a reciprocal arrangement
pursuant to which the Bank extends credit to such other bank
on a preferential basis.
Additional rules apply to loans to executive officers, directors, and principal
shareholder. Please review the Bank's Insider Lending Policy & Procedures and
Regulation O Compliance Policy.
RECEIPT OF GRATUITIES
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There are certain circumstances in which an officer, director or employee of the
Corporation may be offered or wish to give a gratuity or some other thing of
value to a person who happens to be a customer or supplier of the Corporation or
is in some other way related to the Corporation. Typical examples include
situations in which the other individual is a family member or the proposed gift
or service properly furthers the interest of the Corporation by facilitating
business discussions in a normal and usual fashion, such as a business luncheon.
However, as a general rule, neither you nor your family may solicit or accept
gifts, fees, services or entertainment from customers, suppliers, or prospective
customers. In order to guide your conduct, make sure that you are familiar with
the Bank Bribery Act, 18 U.S.C. ss.215, of the Comprehensive Crime Control Act
of 1984. This statute is intended to prevent payment or receipt of anything of
value in support of a transaction with the Corporation or another financial
institution. As a general rule, the Corporation's employees, officers,
directors, agents or attorneys are prohibited from soliciting for themselves or
for a third party (other than the Corporation) anything of value from anyone in
return for any business, service or confidential information of the Corporation,
and from accepting anything of value (other than bona fide salary, wages and
fees referred to in 12 U.S.C. 215(c)) from anyone in connection with the
business of the Corporation either before or after a transaction is discussed or
consummated. Accordingly, you should be mindful that in instances in which a
benefit is given or received relating to a banking transaction, there is a
possibility of violating the law and the Corporation's Policy.
The following are intended to guide your conduct:
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1. Benefits of a nominal value ($50.00 or less), which are
clearly unconnected with any transaction with the Corporation
may be accepted from customers, suppliers, or prospective
customers by the Corporation's officers, employees or
directors.
2. Tangible gifts or services or anything of value from
customers, suppliers, or prospective customers shall not be
solicited or accepted by any of the Corporation's officers,
employees or directors, for themselves or a third party, as a
gift or condition in connection with any transaction of the
Corporation.
3. You may receive the normal amenities which facilitate the
discussion of the Corporation's business, such as a business
luncheon, from a customer, supplier or prospective customer,
provided the expense would be paid for by the Corporation as a
reasonable business expense if not paid for by another party.
However, even those should be of a nominal value.
4. You may receive a gift, service, or other thing of value from
a customer, supplier, or prospective customer of the
Corporation when that individual is a close family relative
such as parent, child, spouse, grandparent, or grandchild, and
the gift is based on that relationship.
5. You may not be named as the recipient of a bequest or legacy
under a customer's will or as a personal representative of a
customer's estate unless the customer is a family member or
the transaction has been disclosed to and
approved by appropriate senior management or the appropriate
Board of Directors.
6. You may accept advertising or promotional material of nominal
value, such as pens, pencils, notepads, key chains, calendar
and similar items.
7. You may accept normal and reasonable discounts, rebates,
merchandise or services, which do not exceed those available
to other customers.
8. You may accept normal and reasonable civic, charitable,
educational, or religious organization awards in recognition
of service and accomplishments.
LITIGATION
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No suits of any kind or for any reason are to be instituted in the name of the
Corporation by any officer without first fully discussing the matter with the
Chief Executive Officer. This rule would not apply to attachments where quick
action is necessary to protect the Corporation's position.
EMBEZZLEMENT
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Employees have a positive duty to report to management or the Audit Committee
any facts relative to a suspected embezzlement or any other suspected illegal
act committed by a fellow employee.
IMPROPER INFLUENCE OVER AUDITORS
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The Corporation recognizes the importance of preventing improper influence on
the conduct of auditors. Accordingly, the Corporation prohibits any director,
officer or employee from taking any action, or failing to take any action, to
fraudulently influence, coerce, manipulate or mislead any of the Corporation's
auditors during their review or audit of the Corporation's financial statements,
and related books and records for the purpose of rendering the financial
statements false or materially misleading. Improper influence would include, but
is not limited to, directly or indirectly: (a) offering or paying bribes or
other financial incentives, including offering future employment or contracts
for non-audit services; (b) providing an auditor with inaccurate or misleading
accounting, financial or legal analysis, records or information; (c) threatening
to cancel or canceling existing non-audit or audit engagements if the auditor
objects to the proposed account; (d) seeking to have a partner removed from the
audit engagements because the partner objects to the proposed accounting; (e)
blackmailing; and (f) making physical threats.
E-MAIL AND OTHER ELECTRONIC OR TELEPHONIC COMMUNICATIONS
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All electronic and telephonic communication systems and all communications and
information transmitted by, received from, or stored in these systems are the
property of the Corporation and as such are to be used for job-related purposes.
The unauthorized use of any software and business equipment, including, but not
limited to, facsimiles, telecopiers, computers and copy machines for private
purposes is strictly prohibited.
Employees using this equipment for personal purposes do so at their own risk.
Further, employees are not permitted to use a code, access a file, or retrieve
any stored communication unless authorized to do so or unless they have received
prior clearance from an authorized supervisor. All pass codes are the property
of the Corporation. No employee may use a pass code or voice-mail access code
that has not been issued to that employee or that is unknown to the Corporation.
Moreover, improper use of the e-mail system or the Internet, i.e., spreading
offensive jokes or remarks, will not be tolerated. Employees who violate this
policy are subject to disciplinary action, up to and including discharge.
To ensure that the use of electronic and telephonic communications systems and
business equipment is consistent with the Corporation's legitimate business
interests, authorized representatives of the Corporation may monitor the use of
such equipment from time to time. This may include a review of electronic
messages including e-mail and voice-mail messages.
WAIVER OF ANY PROVISION OF THIS POLICY
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From time to time, the Corporation may waive some provisions of this Policy. Any
waiver of this Policy for executive officers or directors of the Corporation may
be made only by the Board of Directors and must be promptly disclosed as
required by SEC rules. Any waiver of this Policy for other employees may be made
only by the Chief Executive Officer of the Corporation.
OTHER REQUIREMENTS
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This Policy is not intended to be an exhaustive statement of all potential
conflicts of interest and all of the ethical requirements of Directors, Officers
and Employees of the Corporation under applicable state and federal law and
regulations. If any questions arise regarding the application of the
requirements of law and of this Policy to specific situations, such questions
should be promptly addressed to your supervisor, the Chief Executive Officer,
Chief Financial Officer or the Audit Committee.
The Chief Executive Officer and Chief Financial Officer shall be accountable to
the Audit Committee and Board of Directors for assuring adherence to this
Policy.
Compliance with the Policy is a condition of employment and failure to comply
may be a basis for disciplinary action, termination or may result in other legal
consequences.
ADDITIONAL RULES APPLICABLE TO CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL
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OFFICER OF THE CORPORATION
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In addition to complying with all other parts of this Policy, if you are the
Corporation's principal executive officer, principal financial officer,
principal accounting officer or controller, or any person performing similar
functions, you must take the following steps to ensure full, fair, accurate,
timely and understandable disclosure in reports and documents that the
Corporation files with or submits to the SEC and in other public communications
made by the Corporation:
1. Carefully review drafts of reports and documents the
Corporation is required to file with the SEC before they are
filed and the Corporation's press releases or other public
communications before they are released to the public, with
particular focus on disclosures that each principal officer
does not understand or agree with and on information known to
the principal officer that is not reflected in the report,
documents, press release or public communication;
2. Meet with members of senior management, division heads,
accounting staff and others involved in the disclosure process
to discuss their comments on the draft report, document, press
release or public communication;
3. Establish and maintain disclosure controls and procedures,
which ensure that material information is included in each
report, document, press release or public communication, in a
timely fashion;
4. Consult with the Audit Committee on a regular basis to
determine whether it has identified any weaknesses or concerns
with respect to internal controls;
5. When relevant, confirm that neither the Corporation's internal
auditors nor its independent accountants are aware of any
material misstatements or omissions in the draft report or
document, or have any concerns about the "Management's
Discussion and Analysis of Financial Condition" section of a
report or document; and
6. Bring to the attention of the Audit Committee matters that you
feel could compromise the integrity of the Corporation's
financial reports, disagreements on accounting matters, or
violations of any part of this Policy.
INTERNAL CONTROL OVER FINANCIAL REPORTING AND DISCLOSURE CONTROLS AND PROCEDURES
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The Corporation shall maintain disclosure controls and procedures and internal
control over financial reporting that collectively ensure that the information
required to be disclosed by the Corporation in its periodic reports, current
reports and proxy statements filed by the Corporation under the Exchange Act and
the rules thereunder is:
o Recorded, processed, summarized and reported, within the time
periods specified in the SEC's rules and forms; and
o Accumulated and communicated to management, including the
Chief Executive Officer and Chief Financial Officer to allow
timely decisions regarding required disclosure.
The Corporation shall maintain a system of internal control over financial
reporting to ensure reliability and adequacy of its books and records and proper
recording of all transactions including dispositions of assets. The Corporation
has established guidelines and procedures related to the keeping of books and
records that in reasonable detail accurately and fairly reflect the
Corporation's transactions and dispositions of assets. The Corporation's
guidelines and procedures are intended to prevent the Corporation's records from
being misleading or from concealing anything that is improper.
Directors, officers and employees must strictly comply with the disclosure
controls and procedures and internal control over financial reporting and must
be vigilant in ensuring that the Corporation's funds or assets are not used for
any unlawful or improper purpose. Directors, officers, and employees may only
enter into transactions that are executed in accordance with the Corporation's
specific authorization or established formalized policies and procedures.
All transactions that have been accounted for in accordance with policy will be
accumulated and processed in a manner that will permit preparation of financial
statements, reports and data for purposes of internal, public and regulatory
reporting. Such statements, reports and data must be in a form sufficient to
reflect accurately and fairly the results of transactions entered into by the
Corporation and to permit proper accountability for assets.
The implementation and maintenance of disclosure controls and procedures and
internal controls for financial reporting that are adequate in all respects to
satisfy the requirements of the Corporation, applicable law and GAAP, will be
the primary responsibility of the Chief Executive Officer and Chief Financial
Officer. Compliance with the provisions and requirements of these controls and
procedures will be tested and evaluated by the Corporation's internal auditing
department. Any failures regarding these controls or procedures should be
reported to the Chief Financial Officer or the person assigned the
responsibility for the internal auditing function, if any, so that deficiencies
can be corrected and assurance of compliance can be maintained.
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John F. Perotti
Chairman and Chief Executive Officer
ADOPTED BY THE BOARD OF DIRECTORS ON AUGUST 26, 2005.
LAST REVISED ON FEBRUARY 29, 2008.