Exhibit 14
FIRST FINANCIAL BANCORP
BANK OF LODI, N.A.
LODI, CALIFORNIA
POLICIES AND CODE OF CONDUCT
APPLICABLE TO
MEMBERS OF THE BOARD OF DIRECTORS
TABLE OF CONTENTS
(continued)
Page
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I. Standards Applicable to Selection, Qualifications and Conduct of Board Members..........................1
A. Purpose Statement..............................................................................1
B. Responsibility With Respect to Policies........................................................1
C. Selection of Directors.........................................................................1
D. Prohibitions on Service for Other Persons or Entities..........................................2
E. Specific Standards Applicable to Directors.....................................................2
F. Duty of Loyalty................................................................................3
G. Confidential Information and Trade Secrets.....................................................4
H. Charges Commonly Brought Against Directors of Banks............................................4
II. Conflicts of Interest...................................................................................5
A. Purpose Statement..............................................................................5
B. Responsibilities...............................................................................6
C. General Standard...............................................................................6
D. Contacts and Relationships With Other Financial Institutions...................................6
E. Insider Vendor/Business Dealings...............................................................7
F. Insider Trading................................................................................9
G. Consequences for Failure to Adhere to Insider Trading Policies................................12
H. Additional Prohibited Transactions............................................................12
I. Questions or Assistance.......................................................................13
J. Pre-Clearance of All Trades by Directors......................................................13
K. Certification.................................................................................13
III. Restrictions on Resale of Securities by Affiliates.....................................................13
A. Purpose Statement.............................................................................13
B. Resales Under Rule 144........................................................................14
C. Resale by Means of a Registration Statement...................................................16
D. Resale Pursuant to Regulation A...............................................................17
E. Status of Shares Acquired from an Affiliate...................................................17
IV. Required Disclosures Under the Securities Exchange Act of 1934.........................................
A. Initial Statement of Beneficial Ownership of Securities.......................................
B. Statement of Changes of Beneficial Ownership of Securities....................................
C. Annual Statement of Beneficial Ownership of Securities........................................
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D. Filing by the Company on Behalf of the Director...............................................
V. Bank Bribery Act.......................................................................................18
A. Purpose.......................................................................................18
B. Policy Elements...............................................................................18
C. Exceptions....................................................................................18
D. Recordkeeping.................................................................................19
VI. Violations of Board Policies...........................................................................19
A. Actions Deemed in Violation of Policies.......................................................19
B. Penalties for Violations of Policies..........................................................20
VII. Required Disclosures Under the Sarbanes-Oxley Act......................................................
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I. Standards Applicable to Selection, Qualifications and Conduct of Board
Members
A. Purpose Statement.
First Financial Bancorp and Bank of Lodi, N.A. (together the "Company")
seek to maintain the best reputation and the highest ethical standing of any
banking company in its communities. In the conduct of its business the Company
depends upon the attention, goodwill, competence and personal integrity of its
Directors. In addition, banking and corporate laws and regulations require that
bank Directors maintain high standards of personal and business integrity, and
prohibit certain activities by insiders. The purpose of these Board of Directors
policies (the "Policies") is to ensure high standards of performance and conduct
by Directors, as well as to insure compliance with the laws and regulations
which affect the Company and the members of the Board of Directors.
B. Responsibility With Respect to Policies.
Following adoption by the Board of Directors, it will be the
responsibility of the Board's Audit Committee to review and enforce these
Policies. These Policies shall be reviewed by the Audit Committee as necessary
to maintain current, effective policies and in no event less frequently than
every six months.
The Company's Directors shall have the individual and collective
responsibility to bring to the attention of the Audit Committee all information
of which they are aware regarding the existence of material concerns raised by
these Policies, including any violations of these Policies.
C. Selection of Directors.
In accordance with the requirements of the Company's By-Laws, from time
to time the Board may at its discretion nominate or appoint new Board members.
Individuals who are selected to be Directors should have sufficient time
available to fulfill their responsibilities, and should be free of financial
difficulties or other commitments which might hinder their efforts, make demands
which conflict with the individual's commitment to the Company or in any way
tend to embarrass the Company.
A position as a Director of the Company is a position of trust.
Directors should be selected on the basis of their qualities of integrity,
business experience, experience with financial matters, knowledge of and
commitment to the community, as well as their genuine interest in assisting the
Company. Company Directors will be screened to insure they possess the maturity
and sophistication to appreciate their obligations to all of the Company's
constituents, including the Company's shareholders, employees, depositors and
other customers, the community in which the Company operates, and the regulatory
agencies which supervise the Company's activities. These qualities should be
clearly demonstrated by the candidate's experience and reputation. In addition,
the Board should favor candidates who have the skill and inclination to attract
business to the Company or who can be helpful in evaluating business
opportunities that are presented to the Company.
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Candidates for membership on the Company's Board of Directors (whether
nominated by the Board or another shareholder) must submit a consent for the
Company to obtain a background check (including fingerprint cards) and a credit
report and a resume of the candidate's business and professional experience for
review by the Audit Committee and the Company's Chief Executive Officer. The
Audit Committee shall pay particular attention to any elements of the documents
submitted by a Board candidate which bring into question the candidate's ability
to fully comply with all elements of these Policies.
D. Prohibitions on Service for Other Persons or Entities and Ownership of
Company Stock.
1. Except as specifically authorized by a majority vote of the
Company's Board of Directors, no person while a member of the Company's Board of
Directors shall serve, whether or not paid for such services, as a Director,
officer, employee, agent, nominee, material consulting accountant, analyst,
attorney, advisor, consultant, or policy decision maker for any other bank,
savings association, bank or savings association holding company, or affiliate
or subsidiary thereof, or act in the capacity of the assignee, agent,
consultant, advisor or nominee of anyone who has any contract, arrangement or
understanding with any other bank, savings association, bank or savings
association holding company, or affiliate or subsidiary thereof, or with any
officer, Director, employee, agent, nominee, material consulting accountant,
analyst, attorney or policy decision maker thereof, pursuant to which that
person could be called upon to reveal or in any way utilize information obtained
as a Director or will, directly or indirectly, attempt to effect or encourage
any action of the Company.
2. Except as specifically authorized by a majority vote of the
Company's Board of Directors, no person while a member of the Company's Board of
Directors shall, directly or indirectly, own more than 5% of, organize, manage,
operate, finance or participate in the ownership, management, operation or
financing of any financial institution whose deposits are insured by the FDIC
that has its head offices or a branch office within 100 miles of any Bank of
Lodi branch office.
3. Annually, prior to the preparation of the proxy for the time of the
Company's annual shareholders meeting (or at such other time as may be fixed by
the Board of Directors) each Director shall submit an annual certification under
penalty of perjury dated as of February 28th of each year, stating the
Director's sources of income (other than interest income on regularly maintained
deposit accounts or publicly traded bonds and dividend income from publicly
traded equities) as shown on his or her tax return (including all W-2 or 1099
forms) and a list of the number of voting shares of any bank, thrift, or bank,
financial or thrift holding company so that the Board of Directors may verify
compliance with this provision.
4. In addition to the Company's policy with respect to the
qualifications of Directors, federal law requires that, unless an exception is
granted by the Office of the Comptroller of the Currency, members of the
Company's Board of Directors be citizens of the United States and that all
Directors own, without encumbrances, at least 1,000 shares of the Company's
stock. At all times while serving on the Board of Directors, each Director shall
maintain beneficial ownership of at least 1,000 shares of the Company's common
stock. Federal
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law also provides that members of the Company's Board of Directors may not be
investment bankers.
E. Specific Standards Applicable to Directors.
Members of the Company's Board of Directors shall be responsible for
the following in connection with matters involving the Company:
o Exercising sound and prudent judgment in the oversight of the Company's
activities and operations.
o Discharging the Director's obligations with the interests of the Company,
its shareholders, employees, customers and communities uppermost in the
Director's mind.
o Supporting the decisions of the Board of Directors following full and
reasonable discussion or debate of matters establishing the policies and
strategies of the Company.
o Administering the affairs of the Company with candor, personal honesty and
integrity.
o Obtaining no actual or apparent personal gain from information gained
pursuant to the Director's conduct of confidential duties on behalf of the
Company.
o Maintaining independence while remaining receptive to the views of others
and viewing problems with as little personal bias as possible.
o Complying with all federal and state statutes, rules and regulations
applicable to the Company or its Directors.
o Reviewing examination, financial and other reports with respect to the
business, activities and performance of the Company and ensuring that any
problems are appropriately and timely addressed.
o Insuring prudent tradeoffs between the imperatives of growth, safety and
profitability, taking into appropriate account the multiple constituencies
to which the Company is responsible.
o Acting as an active advocate for the Company in the community.
o Attending all regular and special meetings of the Board of Directors and of
all Board committees on which the Director serves.
o Protecting the interests of the Company through the avoidance of
self-dealing in transactions with the Company.
o Owning at least 1,000 shares of the Company's capital stock to insure that
the Director has a healthy personal interest in the Company's progress and
prosperity.
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o Taking advantage of continuing education opportunities, especially those
activities which provide a forum for interaction with Directors of peer
group banks.
o Maintaining as confidential all information obtained as a Director.
F. Duty of Loyalty.
Consistent with the high standards established by these Policies,
members of the Board of Directors must be loyal to the Company and to the
Company's management, and must help the Company identify and capitalize on
opportunities that may translate into prudent, profitable business for the
Company. Members of the Board of Directors shall represent and promote the
goodwill of the Company in the community. No Director shall reveal or in any way
utilize information obtained as a Director or will, directly or indirectly,
provide such information to any person who is not a member of Company management
or the Board of Directors to attempt to effect or encourage any action of the
Company. Federal law provides specific standards for insider transactions that
are designed to curb abuses by Directors and other insiders who seek to use
their positions with the Company to advance their own interests. In addition,
the common law duty of loyalty and good faith requires something more than the
mere observance of the letter of these statutory requirements, with members of
the Company's Board of Directors being expected to observe high standards of
personal and business ethics. Directors should avoid any activity that would not
bear public scrutiny.
It is anticipated that Directors may do business with the Company.
However, Directors must understand that the Company is required to avoid
providing Directors services or financial accommodations of any kind which are
more favorable than those offered to the general public. Extensions of credit to
Directors must meet or exceed the standards set forth in Regulation O of the
Board of Governors of the Federal Reserve System.
As is discussed more fully below, Directors must disclose to the
Company any potential or existing conflicts of interest. Directors must respect
the prerogative of the Company to seek profitable new business venues and new
clients, and Directors should take care not to interfere with that prerogative.
Directors must not compete with the Company or, without the advance consent of
the Company's Board of Directors, be a principle or director of any competitor
bank or bank holding company. Directors should avoid any personal or
professional affiliations which might demand or appear to demand conflicting
loyalties.
G. Confidential Information and Trade Secrets.
All information, materials, reports, analyses, attorney client
communications, reports or correspondence from accountants, auditors or other
advisors related to or concerning the Company, all records of the accounts of
customers, and any other records and books relating in any manner whatsoever to
the customers of the Company, and all other files, books and records and other
materials owned by the Company or used by it in connection with the conduct of
its business, whether prepared by a Director or otherwise coming into his or her
possession, shall be the exclusive property of the Company regardless of who
actually prepared the original material, book or record. All such books and
records and other materials shall be immediately returned to the Company by the
Director on any termination of his or her service as a Director.
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No Director shall reveal or in any way utilize information obtained as a
Director or will, directly or indirectly, provide such information to any person
who is not a member of Company management or the Board of Directors to attempt
to effect or encourage any action of the Company.
Directors will have access to and become acquainted with the Company's
trade secrets, including the names of customers and clients of the Company,
their financial condition and financial needs, financial information regarding
the Company and other information relating to the Company's products, services
and methods of doing business. Directors shall not disclose any of the Company's
trade secrets, directly or indirectly, or use them in any way, either during the
term of the Director's service as a Director (except as required as a Director
of the Company) or for a period of twelve months after the termination of
service as a Director of the Company. Directors will not, for one year following
the termination of their service as a Director, solicit for employment elsewhere
individuals who are active, full-time employees of the Company.
H. Charges Commonly Brought Against Directors of Banks.
The most likely plaintiffs in lawsuits against bank directors are the
Federal Deposit Insurance Corporation (FDIC) (in its role as the receiver of a
failed institution), the Office of the Comptroller of the Currency (OCC) (in its
role as the bank's primary federal regulator), the bank's shareholders and it
creditors. The most likely plaintiffs in lawsuits against the directors of a
bank holding company are the Board of Governors of the Federal Reserve System
(FRB), the company's shareholders and its creditors. While suits brought by
shareholders and creditors are the most numerous, those involving the most
serious potential consequences and the greatest expenditures of money are likely
to be those brought by the FDIC, the OCC and the FRB. Regardless of the identity
of the plaintiff, many of the same acts and omissions of bank and bank holding
company directors serve as the bases for claims that are made against them,
including the following:
o Engaging in self-dealing.
o Approving imprudent or excessive loans.
o Failing to address in a satisfactory manner conditions and practices that
have been criticized, formally or informally, by bank regulatory agencies.
o Failing to provide proper guidance to management.
o Failing to have the bank audited on a regular basis.
o Failing to ensure the implementation and maintenance of adequate internal
procedures and controls.
o Permitting the institution to become illiquid, or to otherwise operate
without adequate net worth and reserves.
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o Failing to attend a sufficient number of Board and Board committee
meetings.
o Failing to require adequate diversity in the institution's investments.
o Failing to exercise sound business judgment.
II. Conflicts of Interest
A. Purpose Statement.
The purpose of this conflict of interest policy is to describe the
guidelines established by the Company and bank regulatory agencies with respect
to the minimization of the risks associated with potential conflicts of
interest, and to ensure that the Company applies uniform standards to all Board
members. The Company recognizes that there are numerous potential conflicts of
interest involved in the day-to-day conduct of the Company's business, and
therefore the Company tries to adhere to practices which protect the Company's
interests, its image and its reputation, while at the same time remaining fair
and reasonable to all concerned.
As is noted above, the Company depends upon the personal integrity of
its Directors in conducting the Company's business. In addition, banking and
corporate laws and regulations prohibit certain activities by Company insiders.
As such, the purpose of this conflict of interest policy is to ensure compliance
with all applicable laws and regulations concerning conflicts of interest, to
describe the guidelines established by the Company and by the bank regulatory
agencies to minimize the risks associated with potential conflicts of interest,
and to ensure that fair and equal treatment is provided to all Company
customers, employees, officers and Directors.
B. Responsibilities.
The Company's Directors have the responsibility to comply with these
Policies and all applicable laws and regulations. Any suspected violations of
these Policies should be reported immediately to the Company's Audit Committee
Chairman or Vice Chairman for investigation. Proven violations to these Policies
may subject the involved party to certain penalties and possibly to criminal
prosecution.
The Company recognizes that there are numerous potential conflicts of
interest involved in the day-to-day conduct of the Company's business, and
therefore the Company tries to adhere to practices that are "fair and
reasonable" in all areas of management of that business. However, three specific
areas are carefully regulated and as such are specifically addressed in these
Policies: insider vendor/business dealings, securities trading, and bribery of
Company insiders.
C. General Standard.
A conflict of interest is defined for purposes of these Policies as a
Director's or a Director's family or business associates involvement in any
interest which might either conflict
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with the Director's duty to the Company or adversely affect the Director's
judgment in the performance of his or her responsibilities to the Company, or
which might tend to create the appearance of conflict or impropriety so as to
undermine the confidence of third parties in the high standards of the Company.
The Company asks of its Directors that they ensure that their personal
and business interests and those of others are not advanced at the expense of
the Company. The Company's Directors may not engage in personal or business
conduct which conflicts with the interests of the Company. It is important that
the Company's Directors avoid even the appearance of a conflict of interest, in
the recognition that the appearance of a conflict can be as damaging to the
Company's standing and reputation as an actual conflict.
D. Contacts and Relationships With Other Financial Institutions.
1. Communication With Other Financial Institutions.
Directors of the Company shall immediately report to the Company's
Chairman of the Board and Chief Executive Officer any communication by or with
any person who is a director, officer, employee, agent, nominee, attorney or
policy decision maker for any other bank, savings association, bank or savings
association holding company, or affiliate or subsidiary thereof, which
communication is initiated with respect to any proposed merger or reorganization
or other non-public or strategic initiatives related to the Company. Thereafter,
unless specifically authorized by the Board of Directors or a Committee of the
Board with jurisdiction over such matters, the reporting Director shall have no
further communications with agents or representatives of such bank, savings
association, bank or savings association holding company or affiliate or
subsidiary thereof and shall refer, immediately and without delay, all such
further attempted communication to the Chairman, the President and Chief
Executive Officer or the full Board of Directors.
2. Compensation From Other Financial Institutions.
No Director of the Company shall, while serving as a Director, accept
any compensation of any kind or in any form whatsoever during the Director's
term as a Director from any bank, savings association, bank or savings
association holding company or affiliate or subsidiary thereof, or from any
individual, entity or group of individuals and/or entities acting in concert
which has a controlling interest in any other bank, savings association, bank or
savings association holding company or affiliate or subsidiary thereof, unless
the receipt of such compensation is approved in advance by a majority of the
non-interested members of the Company's Board of Directors.
E. Insider Vendor/Business Dealings.
1. Definition.
Vendor/business dealings between the Company and its Directors pose
potential conflict of interest problems for the Company's Directors and as such
are expressly addressed by special banking and corporate laws and regulations.
The Company has determined that the
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Company's vendor/business dealings policy and procedures will apply to all
Company Directors and their immediate families.
A "business dealing" is any transaction by a Company Director in which
the Director receives any direct or indirect economic benefit, excluding
extensions of credit, deposit relationships and any other ordinary customer
service provided by the Company. By way of example, "business dealing" includes
the following activities:
a. The sale, purchase or other conveyance of assets, goods or services to or
from the Company. (This includes the sale or purchase of all types of
non-deposit liabilities and the payment of interest on such liabilities.)
b. The use of the Company's facilities, real or personal property, or
personnel.
c. The lease of property, equipment or other assets to or from the Company.
d. The payment by the Company of commissions and/or fees, including but not
limited to brokerage commissions and management, consultant, insurance,
architectural and legal fees.
e. Service agreements.
f. The payment of interest on deposits to the extent that the rate of interest
exceeds the amount paid to other depositors on similar deposits.
NOTE: Company policy and federal law prohibit the payment of interest
on deposits to a Director, officer, employee or attorney of the Company in
excess of the rate paid to other depositors.
2. Policy Elements.
The Company may enter into business relationships, contracts and
similar arrangements with Directors. However, all business dealings between the
Company and its Directors must be intended for the benefit of the Company and
must not be entered into by the Company merely as an accommodation to the
Director. For the purposes of this conflict of interest policy, a "business
dealing" does not include (i) compensation of a Director for his or her services
as a Director of the Company, (ii) any transactions that are subject to
Regulation O of the Board of Governors of the Federal Reserve System, or (iii)
any business dealings which have a total transaction value of less than $5,000.
All other business relationships between the Company and a Director of the
Company must satisfy each of the following requirements:
a. A business dealing will not be entered into by the Company unless it is
determined by Company management to be fair and reasonable. "Fair and
reasonable" means on terms and under circumstances that are substantially
the same, or at least as favorable, as those prevailing at the time for
comparable business dealings with persons who are not Directors.
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b. The following procedures will be utilized to ensure that business dealings
that involve Company insiders are arms-length transactions and to assist
the Company in determining the fairness and reasonableness of a business
dealing:
(i) To the extent practical, at least two competitive quotes and/or bids, dated
within 60 days of the date the Board considers the transaction, should be
obtained for transactions in excess of $5,000, with the exception of those
transactions that are subject to Regulation O of the Board of Governors of
the Federal Reserve System.
(ii) Outside independent advice from at least one competent expert will be
obtained to render an opinion regarding the fairness of the business
dealing to the Company. A sale or lease of property, for example, will
require that comparable rates or an appraisal from an outside source be
obtained.
(iii)A business dealing should generally be for a term that does not exceed one
year. However, there may be exceptions, such as with a lease agreement. In
such a case, the landlord and the Company will negotiate in good faith a
mutually fair business arrangement.
(iv) Each year the Company will reevaluate the fairness of every business
dealing which has been in existence for one year or more or which has been
continuously recurring during the past year. In the case of a long-term
lease, the transaction will be reevaluated for fairness at the time of
renewal or renegotiation.
c. All transactions in excess of $1,000 that involve Company Directors and
their immediate families will require prior approval by the Company's Chief
Executive Officer. If it is determined that the transaction presents a
potential conflict of interest, the Company will not permit the use of the
Director or a member of their immediate family in connection with the
business dealing.
3. Review of Business Dealings.
The Company's Chief Executive Officer will review each proposed
business dealing which involves an amount in excess of the limits described
above for compliance with applicable laws and regulations. No business dealing
may be approved unless it has previously been reviewed by the Company's Chief
Executive Officer, except with respect to the determination of reasonable
compensation for Directors. The determination of the Company's Chief Executive
Officer will not be binding on the Board, but the Company's Board of Directors
will justify in writing any Board decision that is contrary to a determination
of the Company's Chief Executive Officer as to non-compliance with applicable
laws or regulations.
4. Recordkeeping.
The Company will maintain satisfactory written records with respect to
all business dealings that involve Directors. The Company's records will
document and substantiate the reasonableness and fairness to the Company of each
such business dealing.
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F. Insider Trading.
1. Introduction.
The Securities and Exchange Commission ("SEC") and the U.S. Justice
Department vigorously pursue violations of insider trading laws. An "insider" is
a person who possesses, or has access to, material information concerning the
Company that has not been fully disclosed to the public. Insiders may be subject
to criminal prosecution and/or civil liability for trading (which can include
both a purchase and sale) the Company's stock when they know material
information concerning the Company that has not been fully disclosed to the
public.
The Insider Trading and Securities Fraud Enforcement Act puts the onus
on companies and, possibly, other "control persons" for violations by Company
personnel.
In addition to responding to the requirements of the Act, these
Policies attempt to establish standards that will avoid even the appearance of
improper conduct on the part of insiders. The Company has worked to establish
its reputation for integrity and ethical conduct and it does not want that
reputation to be damaged.
2. Policy Elements.
It is the Company's policy that an insider or any related person
(including family members) may not buy or sell any securities (including common
or preferred stock, options or warrants) or engage in any other action that
takes advantage of inside information and may not pass that information on to
others.
Except as provided in the next paragraph, insiders must limit their
purchases and sales of the Company's securities to certain periods in each
calendar quarter following the release of the Company's quarterly financial
information. The time when trading is permitted is referred to as a "window
period." In general, each window period begins on the third calendar day
following the public announcement of the Company's quarterly earnings and ends
on the day preceding the Company's Board of Directors meeting regularly
scheduled for the last month of each calendar quarter. The Board of Directors
may from time to time impose additional "black-out" periods when all trading by
insiders will be prohibited. In all events, an insider must not trade even
during a window period while in the possession of material nonpublic
information.
Insiders may buy the Company's securities outside the window period in
the case of an acquisition (but not a subsequent sale) of the Company's common
stock on the exercise of employee stock options. In addition, an insider may
engage in any transaction that is specifically approved in writing in advance by
the Company's Chief Executive Officer.
As a result of the sensitivity and scrutiny of stock trading by
insiders, all Directors must notify the Company's Chief Executive Officer or
Corporate Secretary at least two days prior to making any purchase or sale of
the Company's securities.
In connection with the obligation not to pass material non-public
information on to others, Directors may not, without a legitimate reason,
discuss material non-public information with other persons. Directors must take
all steps reasonably necessary to reduce the chances of inadvertent tipping of
material non-public information. These steps should include the following:
discussion of material, non-public information on a need-to-know basis only; use
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of secure methods of transferring confidential data electronically; maintenance
of documents in secure, preferably locked, environments; and destruction of
documents prior to disposal.
These Policies apply to all material, non-public information, whether
or not obtained in the course of serving as a Director of the Company, relating
to any public company, including the Company's customers and suppliers. Stock
transactions that may be necessary for independent reasons, such as the need to
raise money for an emergency expenditure, are not excepted from these Policies.
To preserve the Company's goal of adhering to high ethical standards of conduct,
even the appearance of an illegal or improper transaction must be avoided.
3. Material Insider Information Defined.
Material information is any information that a reasonable investor
would consider important in making a decision to buy, hold or sell any security.
In short, material information is any information which could affect the price
of a security. Either positive or negative information may be deemed to be
material. The following are examples of information that may be regarded as
material:
o Projections of future earnings or losses
o News of a pending or proposed merger
o Acquisition or tender offer developments
o Changes in liquidity position, including changes caused by the
loss of a line of credit or other financing
o News of a significant sale of assets or the disposition of a
subsidiary, division or line of business
o Changes in dividend policies
o Declaration of a stock split or the offering of additional
securities
o Changes in senior management
o Significant new products or discoveries
o Impending bankruptcy or financial liquidity problems
o The gain or loss of substantial customer or supplier support
o A pending tender offer or exchange offer
o Calls, redemptions or purchases of the Company's securities
o Business combinations of any type
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o Earnings announcements
o The filing of a lawsuit or significant developments in a
litigation matter
o Labor disputes, strikes and lockouts
o Important license, patent or franchise developments
o The commencement or potential commencement of a governmental
investigation
o Significant compensation plans or programs
o The adoption of a poison pill or other anti-takeover defense
o Significant borrowings, defaults or write-offs
o Significant diminishment of the value of assets
The foregoing list is illustrative only. There may be many other
examples of material information which may arise in the course of a company's
business.
4. When Information Is Public.
Generally, information should be considered non-public if it has not
been disseminated in the Company's annual or periodic reports, has not been the
subject of a press release intended for and made available to the public or has
not been widely reported to the media, statistical services, market letters or
the like. Further, the investing public must be afforded time to receive the
information and act upon it following the release of the information. Therefore,
Directors must refrain from trading, and must refrain from advising others to
trade, in the Company's stock until at least two full calendar days (trading can
commence on the 3rd calendar day) after disclosure of information to the public.
5. 20/20 Hindsight.
It is important to remember that when any securities transaction
becomes the subject of legal scrutiny, it will undoubtedly be viewed after the
fact with the benefit of "20/20 hindsight." As a result, before engaging in any
securities transaction, Directors should carefully consider how regulators and
others might view the transaction.
6. Transactions By Family Members.
The restrictions described in this Section F also apply to Directors'
family members and others living in the Directors' households. Directors are to
be responsible for the compliance with these Policies by members of their
immediate family and personal household.
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7. Tipping Information To Others.
Insider trading violations are not limited to trading by the insider
alone. It is also illegal to share non-public material information with others
who then use such information to purchase or sell the Company's stock. Liability
in such cases will extend to both the "tipper"--the insider who told someone
non-public information, and the "tippee"--the person who purchased or sold
shares based on this non-public information. The securities law penalties for
violations of this standard will apply regardless of whether a Director derives
any personal profit from the actions of the person to whom the information was
passed.
Directors who are in possession of material, non-public information
concerning a company or municipality should take particular care to avoid
discussions of confidential information in public places such as gatherings,
hallways, office areas that are generally open to employees, elevators,
restaurants and airplanes.
G. Consequences for Failure to Adhere to Insider Trading Policies.
The penalties for insider trading violations are substantial.
Individuals who trade on inside information (or tip such information to others)
are subject to a civil penalty of up to three times the profit gained or loss
avoided, plus a criminal fine (no matter how small the profit) of up to
$1,000,000, and a jail term of up to ten years. In addition, an individual
insider's violation can subject the company and its controlling persons to civil
penalties of the greater of $1,000,000 or three times the profit gained or loss
avoided, and a criminal penalty of up to $2,500,000.
Moreover, any Director who violates the Company's insider trading
policy will be subject to company-imposed sanctions, including immediate removal
for cause. Needless to say, even if an investigation by the Securities and
Exchange Commission or other regulatory authority does not result in the
imposition of penalties or prosecution, the mere fact of an investigation can
tarnish one's reputation, irreparably damage one's career and involve
substantial legal expense.
H. Additional Prohibited Transactions.
Because it is improper and inappropriate for Company personnel to
engage in short-term or speculative transactions involving Company stock, it is
the Company's policy that Directors should not engage in any of the following
activities with respect to securities of the Company:
1. Trading In Securities On A Short-Term Basis.
Any Company stock purchased by a Director or executive officer in the
open market must be held for a minimum of six months. (Note: this requirement
parallels the SEC's short-swing profit rule, which prevents executive officers,
Directors and 10 percent shareholders from selling or purchasing any Company
stock within six months of a purchase or sale.)
13
2. Purchases Of Company Stock On Margin.
Purchases of Company stock on margin, other than in conjunction with
the exercise of stock options in accordance with any Stock Option Plan adopted
by the Company, are prohibited.
3. Short Sales.
4. Buying Or Selling Puts Or Calls.
I. Questions or Assistance.
If a Director has questions about these Policies, or specific
transactions which may be affected by these Policies, the Director should obtain
additional guidance from the Company's legal counsel. However, responsibility
for adhering to these Policies and avoiding illegal and improper transactions
rests with each First Financial Bancorp employee, officer, Director and agent.
J. Pre-Clearance of All Trades by Directors.
To provide assistance in preventing inadvertent violations and avoiding
even the appearance of an improper transaction, the Company has implemented the
following procedure: All transactions in Company stock (including acquisitions,
dispositions and transfers) by Directors of the Company must be pre-cleared by
the Company's Corporate Secretary. If a Director is contemplating a transaction
in the Company's stock, the Director should contact the Corporate Secretary
before completing the transaction. This requirement does not apply to stock
option exercises, but does cover market sales of option stock. This requirement
also excludes the use of Company stock as an investment alternative in the
Company's 401(k) program.
K. Certification.
Directors will be required to certify their understanding of and intent
to comply with these Policies Statement, and may be required to re-certify
compliance on an annual basis.
III. Restrictions on Resale of Securities by Affiliates
A. Purpose Statement.
Each person who is a Director of the Company may possess the power to
direct or cause the direction of the management and policies of the Company and,
therefore, will be considered to be an "affiliate" of the Company (i.e., a
person who directly or indirectly, through one or more intermediaries, controls
the Company) for purposes of the Securities Act of 1933, as amended (the "Act").
Every affiliate of the Company is subject to certain restrictions on the resale
of his or her shares of Company stock regardless of how the shares are acquired.
Shares of the Company obtained by an affiliate through a registration statement
or from the "market" are generally called "control shares." Shares held or
acquired by any person who later becomes an affiliate of the Company will also
become "control shares" (also referred to as "affiliate
14
shares") subject to resale restrictions. These Policies discuss those
restrictions. Rule 144 is also applicable to transactions involving the sale of
"restricted securities," i.e., securities acquired from an issuer in a
transaction not involving a public offering. See "Status of Shares Acquired from
an Affiliate" below.
As the issuer of the securities, the Company is obligated under the Act
to take reasonable steps to ensure that its securities are not transferred in
violation of the Act. In order to satisfy its obligations and to provide the
appropriate notice of resale restrictions, the Company must instruct its
transfer agent to prohibit transfer of all affiliate shares without appropriate
advice from the Company and must order its transfer agent to place a restrictive
legend on each certificate representing affiliate shares. The purpose of the
legend is to properly inform any person who may obtain the certificate, whether
the person is an owner, transferee, pledgee, etc. that the certificate
represents affiliate shares which are subject to restrictions on the transfer of
said shares. The legend will read substantially as follows:
"The shares represented by this certificate are owned
by a person, or persons, who may be considered an
affiliate for purposes of Rule 144 under the
Securities Act of 1933. No transfer of these shares
or any interest therein may be made except pursuant
to Rule 144, or an effective registration statement
under the Act, unless the issuer has received an
opinion of counsel satisfactory to it that such
transfer does not require registration under the
Act."
The Company's transfer agent (the "Transfer Agent"), has been given
stop-transfer instructions similar to the restrictive legend with regard to all
certificates representing Company shares issued or to be issued to Directors and
executive officers of the Company. Counsel to the Company may be required to
provide an opinion of counsel to the Transfer Agent prior to effecting the
transfer of shares for a proposed resale of shares by an affiliate of the
Company.
There are various methods available to affiliates of the Company to
sell their "control shares." These methods include resale in compliance with
Rule 144, resale by means of a Registration Statement or resale pursuant to
Regulation A promulgated under the Act.
B. Resales Under Rule 144.
Rule 144 was promulgated by the Securities and Exchange commission (the
"SEC"), to provide a mechanism by which sales of the Company's stock may be made
for the account of an affiliate without registration under the Act. The ability
to resell Securities pursuant to Rule 144 is, however, subject to a number of
requirements including the availability of current public information concerning
the Company; limitations on the amount of securities sold; sales being made only
through "brokers' transactions"; filing of a notice of sale with the SEC; and
the seller having a bona fide intention to sell. These requirements are more
fully discussed below:
15
1. Current Public Information.
Rule 144(c) requires that adequate current information with respect to
the issuer be available to the public. This requirement can be met if the issuer
has securities registered pursuant to the Act; has been subject to the reporting
requirements of Section 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") for at least 90 days immediately preceding the sale of the
securities; and timely files all the reports required to be filed thereunder
during the twelve months preceding such sale (or for such shorter period that
the issuer was required to file such reports). The Company has securities
registered pursuant to the Act and is subject to the reporting requirements of
the Exchange Act. Thus, the current public information requirement of Rule
144(c) will be met if the Company timely files all of the requisite reports as
of the date of any sale under Rule 144.
2. Limitation on Amount of Securities Sold.
Rule 144(e) places a limitation on the amount of securities that may be
sold. With respect to sales by an affiliate, the amount of securities sold,
together with all sales for the account of the affiliate within the preceding
three months cannot exceed the greater of (a) one percent of the total
outstanding shares of the issuer as shown by the most recent report or statement
published by the issuer or (b) the average weekly reported volume of trading in
such securities reported on all national securities exchanges and/or reported
through the automated quotation system of a registered securities association
during the four calendar weeks preceding the filing of the notice required by
Rule 144(h), discussed below.
3. Manner of Sale.
a. Rule 144(f) requires that the securities be sold in "brokers' transactions"
or in transactions directly with a "market maker" and that the persons
selling the securities shall not:
(1) Solicit or arrange for the solicitation of orders to buy the securities in
anticipation of or in connection with such transaction; or
(2) Make any payment in connection with the offer or sale of the securities to
any person other than the broker who executes the order to sell the
securities.
b. Rule 144(g) defines the term "brokers' transactions" and includes
transactions executed by a broker in which the broker:
(1) Does no more than execute the order or orders to sell the securities as
agent for the person for whose account the securities are sold, and
receives no more than the usual and customary broker's commission; and
(2) Neither solicits nor arranges for the solicitation of customers' orders to
buy the securities in anticipation of or in connection with the
transaction; and
(3) After reasonable inquiry is not aware of circumstances indicating that the
person for whose account the securities are sold is an underwriter with
respect to the securities, or that the transaction is a part of a
distribution of securities of the issuer. (In other words, the broker
16
must determine that the shares are sold in accordance with the other
provisions of Rule 144 discussed above).
4. Notice of Proposed Sale.
Rule 144(h) provides that if the amount of securities to be sold in
reliance upon Rule 144 during any three month period exceeds 500 shares or has
an aggregate sales price in excess of $10,000, three copies of a notice on Form
144 must be filed with the SEC. A copy of the Form 144 notice is attached for
your information. The Form 144 must be signed by the person for whose account
the securities are to be sold and must be transmitted for filing concurrently
with either the placing with a broker of an order to execute a sale of
securities in reliance upon Rule 144, or the execution directly with a market
maker of such a sale.
5. Bona Fide Intention to Sell.
Rule 144(i) provides that the person filing the Form 144 notice must
have a bona fide intention to sell the securities referred to in the notice
within a reasonable time after filing the notice.
C. Resale by Means of a Registration Statement.
If an affiliate of the Company desires to sell shares in excess of the
amount allowable under Rule 144 and free of any restrictions on resale, such
sale must be by means of an effective registration statement under the Act, or
pursuant to an applicable exemption. Various forms of registration statements
are available, each with its own requirements.
An S-1 registration statement, for example, requires a prospectus which
includes the greatest scope of disclosure of information under the rules and
regulations of the SEC. In addition to disclosure covering the business and
management of the issuer, detailed financial information must be included.
Form S-3 may also be used to register the resale of shares by
affiliates. Form S-3 is a fairly short document which, for the most part, would
incorporate filings by the Company under the Exchange Act. In order for Form S-3
to be available to affiliates, the issuer must have been subject to the
reporting requirements of the Exchange Act for at least 36 months (which the
Company has been). There are certain other conditions that apply to the
availability of Form S-3 to affiliates which are not discussed herein. In
addition to Form S-1 and Form S-3, other forms of registration statements, also
not discussed herein, may be available.
D. Resale Pursuant to Regulation A.
Regulation A, promulgated pursuant to Section 3(b) of the Act, exempts
from registration under the Act resales within any twelve month period by or on
behalf of any one affiliate of securities of an issuer having an aggregate
offering price which does not exceed $100,000, if the resales are made in
accordance with the Regulation. When two or more persons agree to act in concert
for the purpose of selling an issuer's securities, all securities of the same
class sold for the account of all such persons during any twelve month period
will be aggregated
17
for the purpose of determining the limitation on the amount of securities sold
under the Regulation.
Persons proposing to sell shares under Regulation A are required to
file an "offering statement" with the SEC at least ten days prior to the date on
which the initial offering or sale of any securities under the Regulation is to
be made.
In addition to filing an offering statement with the SEC, the person
for whose account the securities are offered pursuant to Regulation A must file
a report of sale with the SEC within thirty days after the end of each six month
period following the date of the original offering circular or statement. A
final report must also be made upon the completion or termination of the
offering and may be made prior to the end of the six month period in which the
last sale is made.
While the cost of an offering pursuant to a registration statement, a
Regulation A offering does involve preparation of a disclosure document which
should be prepared upon advice of securities counsel. Because of the limited
amount of shares which can be sold within the $100,000 limitation, the
Regulation A offering is typically used in connection with a directed placement
by the affiliate to a purchaser or purchasers without a broker.
E. Status of Shares Acquired from an Affiliate.
Shares purchased from an affiliate by a non-affiliate person, if such
shares are sold pursuant to the provisions of Rule 144 or pursuant to a
registration statement, will not be restricted in the hands of the purchaser.
Thus, the purchaser is free to resell the shares as he or she sees fit. Shares
received from an affiliate as a gift or pursuant to an exemption may, however,
under some circumstances be restricted to the same extent as the affiliate's
shares.
These Policies do not discuss "restricted securities," i.e., securities
which are acquired from an issuer in a transaction not involving a public
offering, and the special requirements imposed by Rule 144 with respect to
restricted securities. We are not aware of any restricted securities which the
Company currently has outstanding.
Because of the complexity of the limitations on resales of affiliate
shares, we advise that any proposed resales or transfers of shares of the
Company be reviewed by counsel to the Company in order to ensure that such
resales are made in compliance with the Act. Counsel to the Company will be
called upon to provide an opinion of counsel to the Company's Transfer Agent
with respect to all resales or transfers of affiliate shares. In order to
expedite the process, counsel should be notified sufficiently in advance so as
to allow the performance of the due diligence required to render counsel's
opinion.
IV. Required Disclosures Under the Securities Exchange Act of 1934
Each person who becomes a Director of the Company will be considered a
"reporting person" for purposes of Section 16(a) of the Securities Exchange Act
of 1934, as amended. As a reporting person, each Director is subject to certain
SEC filing requirements. The following are the general filing requirements
imposed by the SEC:
18
A. Initial Statement of Beneficial Ownership of Securities
Within 10 days after becoming a reporting person, each Director must
electronically file with the SEC via EDGAR a Form 3 "Initial Statement of
Beneficial Ownership of Securities." Each Director must disclose in the Form 3
his or her beneficial ownership of any securities of the Company, whether such
beneficial ownership is direct or indirect. In general, a Director is deemed to
beneficially own any securities (i) for which that Director has voting or
investment control, (ii) which are held in the Director's name or on the behalf
of the Director by a third party (i.e. direct interests), or (iii) in which the
Director has a pecuniary interest, by reason of contract, understanding or
relationship (including a family relationship or arrangement) in securities held
in the name of another person (i.e. indirect interests). If the Director does
not beneficially own any securities of the Company, the Director is required to
file the Form 3 and state that no securities are beneficially owned.
Form 3 has several specific requirements. The Director should clearly
identify the class of securities beneficially owned, even if the Company only
has one outstanding class. The Director should disclose the face value of the
debt securities or the number of equity securities beneficially owned, whichever
is appropriate. Non-derivative securities beneficially owned should be reported
in Table I and derivative securities (e.g. options, warrants, puts, convertible
securities, calls, etc.) should be reported in Table II. Derivative securities
beneficially owned that are both equity securities and convertible or
exchangeable for other equity securities (e.g. convertible preferred securities)
should only be reported in Table II.
To obtain a copy of the Form 3, more information on the form and detailed
instructions on filing, visit the SEC website at
http://www.sec.gov/divisions/corpfin/forms/form3.htm.
B. Statement of Changes of Beneficial Ownership of Securities
Each Director who enters a transaction resulting in a change in
beneficial ownership of the Company's securities must electronically file with
the SEC, via EDGAR, a Form 4 "Statement of Changes of Beneficial Ownership of
Securities." In general, a Form 4 must be filed before the end of the second
business day following the execution of a change of ownership. However, the
filing deadline may be extended up to a maximum of five business days in certain
instances if the transaction is executed by a third party (e.g., a broker,
dealer or plan administrator) on behalf of the Director and the Director did not
select the date of execution. In such instances, the two day period within which
the Director must file does not begin until the Director receives notice of the
transaction execution or three business days after the execution, whichever
occurs first.
Form 4 has several specific requirements. The Director must clearly
identify the class of securities, even if the Company only has one class of
securities. The Director must disclose the face value of the debt securities or
the number of equity securities beneficially owned, whichever is appropriate. In
general, all acquisitions or dispositions of debt, equity or derivative
securities of the Company must be reported. The amount of securities
beneficially owned following the transaction(s) must be reported as well.
Acquisitions or dispositions and
19
holdings of non-derivative securities should be reported in Table I.
Acquisitions or dispositions and holdings of derivative securities should be
reported in Table II. The exercise or conversion of a derivative security should
be reported in Table I and the holdings of the underlying security should be
reported in Table II. The prices of securities should be reported on a per share
basis, not an aggregate basis, except that the aggregate price of debt must be
stated. Brokerage commissions and other costs of execution should be excluded
from such amounts.
Form 4 also requires the Director to disclose the character of the
transaction reported. The transaction codes listed below should be used to
describe each transaction. If the transaction is not specifically listed, the
Director should use transaction code "J" and describe the nature of the
transaction in the appropriate space provided. If a transaction involves an
equity swap or instrument with similar characteristics, the Director should use
transaction code "K" in addition to the code(s) that most appropriately
describes the transaction (e.g. "S/K" or "P/K").
General Transaction Codes
P -- Open market or private purchase of non-derivative or derivative security
S -- Open market or private sale of non-derivative or derivative security
V -- Transaction voluntarily reported earlier than required
Rule 16b-3 Transaction Codes
A -- Grant, award or other acquisition pursuant to Rule 16b-3(d)
D -- Disposition to the issuer of issuer equity securities pursuant to Rule
16b-3(e)
F -- Payment of exercise price or tax liability by delivering or withholding
securities incident to the receipt, exercise or vesting of a security
issued in accordance with Rule 16b-3
I -- Discretionary transaction in accordance with Rule 16b-3(f) resulting in
acquisition or disposition of issuer securities
M -- Exercise or conversion of derivative security exempted pursuant to Rule
16b-3
Derivative Securities Codes (Except for transactions exempted pursuant to Rule
16b-3)
C -- Conversion of derivative security
E -- Expiration of short derivative position
H -- Expiration (or cancellation) of long derivative position with value
received
O -- Exercise of out-of-the-money derivative security
X -- Exercise of in-the-money or at-the-money derivative security
20
Other Section 16(b) Exempt Transaction and Small Acquisition Codes (except for
Rule 16b-3 codes above)
G -- Bona fide gift
L -- Small acquisition under Rule 16a-6
W -- Acquisition or disposition by will or the laws of descent and distribution
Z -- Deposit into or withdrawal from voting trust
Other Transaction Codes
J -- Other acquisition or disposition (describe transaction)
K -- Transaction in equity swap or instrument with similar characteristics
U -- Disposition pursuant to a tender of shares in a change of control
transaction
For a copy of the Form 4, more information on the form and detailed instructions
on filing, visit the SEC website at
http://www.sec.gov/divisions/corpfin/forms/form4.htm.
C. Annual Statement of Beneficial Ownership of Securities
Under certain circumstances, a Director is required to electronically
file with the SEC, via EDGAR, a Form 5 "Annual Statement of Beneficial Ownership
of Securities." In general, a Form 5 must be filed if (i) there were any
transactions in the previous fiscal year that were exempt from Section 16(b) of
the Securities Exchange Act of 1934 (e.g. bona fide gifts and inheritance), (ii)
there were any transactions in the previous year that were exempt for the
disclosure requirements of Forms 3 or 4, (iii) there was any small
acquisition(s) in a six month period during the previous fiscal year not
exceeding $10,000 in market value or iv) there were any transactions that should
have been reported in Forms 3 and 4 that were not reported. If applicable, a
Form 5 must be filed on or before the 45th day after the end of the Company's
fiscal year. The Director should report the transactions listed above for the
previous fiscal year and the beneficial ownership at the end of the previous
fiscal year.
Form 5 has several specific requirements. The Director must clearly
identify the class of securities, even if the Company only has one class of
securities. The Director must disclose the face value of the debt securities or
the number of equity securities beneficially owned, whichever is appropriate.
Every transaction must be reported even if the acquisitions and dispositions
with respect to a class of securities are equal. Both direct and indirect
beneficial ownership of securities must be reported. Acquisitions or
dispositions and holdings of non-derivative securities should be reported in
Table I. Acquisitions or dispositions and holding of derivative securities
should be reported in Table II. The exercise or conversion of a derivative
security should be reported in Table II and the holdings of the underlying
security should be reported in Table I. Acquisitions or dispositions and
holdings or derivative securities that are both equity securities and
convertible or exchangeable for securities other equity securities
21
should only be reported in Table II. The prices of securities should be reported
on a per share basis, not an aggregate basis, except that the aggregate price of
debt must be stated. Brokerage commissions and other costs of execution should
be excluded from such amounts. If consideration other than cash was paid for the
security, the Director should describe the consideration, including the value of
the consideration. The Director should also report any holdings that should have
been previously reported in a Form 3, any transactions that should have been
previously reported in a Form 4, and any transactions that should have been
previously reported in a Form 5.
Form 5 also requires the Director to disclose the character of the
transaction reported. The transaction codes listed below should be used to
describe each transaction. If the transaction is not specifically listed, the
Director should use transaction code "J" and describe the nature of the
transaction in the appropriate space provided. If a transaction involves an
equity swap or instrument with similar characteristics, the Director should use
transaction code "K" in addition to the code(s) that most appropriately
describes the transaction (e.g. "S/K" or "P/K").
General Transaction Codes
P -- Open market or private purchase of non-derivative or derivative security
S -- Open market or private sale of non-derivative or derivative security
Rule 16b-3 Transaction Codes
A -- Grant, award or other acquisition pursuant to Rule 16b-3(d)
D -- Disposition to the issuer of issuer equity securities pursuant to Rule
16b-3(e)
F -- Payment of exercise price or tax liability by delivering or withholding
securities incident to the receipt, exercise or vesting of a security
issued in accordance with Rule 16b-3
I -- Discretionary transaction in accordance with Rule 16b-3(f) resulting in
acquisition or disposition of issuer securities
M -- Exercise or conversion of derivative security exempted pursuant to Rule
16b-3
Derivative Securities Codes (Except for transactions exempted pursuant to Rule
16b-3)
C -- Conversion of derivative security
E -- Expiration of short derivative position
H -- Expiration (or cancellation) of long derivative position with value
received
O -- Exercise of out-of-the-money derivative security
X -- Exercise of in-the-money or at-the-money derivative security
22
Other Section 16(b) Exempt Transaction and Small Acquisition Codes (except for
Rule 16b-3 codes above)
G -- Bona fide gift
L -- Small acquisition under Rule 16a-6
W -- Acquisition or disposition by will or the laws of descent and distribution
Z -- Deposit into or withdrawal from voting trust
Other Transaction Codes
J -- Other acquisition or disposition (describe transaction)
K -- Transaction in equity swap or instrument with similar characteristics
U -- Disposition pursuant to a tender of shares in a change of control
transaction
For a copy of Form 5, more information on the form and detailed instructions on
filing, visit the SEC website at
http://www.sec.gov/divisions/corpfin/forms/form5.htm.
D. Filing by the Company on Behalf of the Director
If a Director so chooses, he or she may grant the Company a limited
power of attorney to file Forms 3, 4 and 5 on his or her behalf. However,
compliance with the disclosure requirements of this Section IV ultimately
remains the responsibility of the individual Director and the Company assumes no
legal or other responsibility whatsoever for such compliance. The limited power
of attorney is attached as Exhibit A.
V. Bank Bribery Act
A. Purpose.
The Bank Bribery Act provisions of the Comprehensive Crime Control Act
of 1984 prohibit any improper benefit to any individual who seeks loan funds or
services from, or who are in a position to provide services to, a financial
institution by establishing criminal penalties for the offer or acceptance of
such benefits. It is the intention of the Company to adopt a policy that
embodies the highest ethical standards and that complies with the requirements
of the Bank Bribery Act.
B. Policy Elements.
All Directors, and the immediate families of such persons, are
generally prohibited from:
23
1. Soliciting for themselves or for a third party (other than the Company)
anything of value from anyone in return for any business, service or
confidential information of the Company.
2. Accepting anything of value (other than bona fide salary, wages and fees)
from anyone in connection with the business of the Company, either before
or after a transaction is discussed or consummated.
C. Exceptions.
The Company recognizes that the following are appropriate exceptions to
the general prohibition of acceptance of things of value in connection with
service as a Director of the Company:
1. Gifts, gratuities, amenities or favors if they are based entirely on
obvious family or personal relationships (such as the relationship between
an official and his or her parents, children or spouse) when the
circumstances make it clear that it is this relationship rather than the
business of or employment by the Company which is the motivating factor.
2. Meals, refreshments, travel arrangements, accommodations, or entertainment,
all of reasonable value, if furnished in the course of a meeting or other
occasion the purpose of which is to hold bona fide business discussions,
provided that the expenses would be paid for by the Company as a reasonable
business expense, if not paid for by another party.
3. Loans from other banks or financial institutions on customary terms to
finance the proper and usual activities of a Director, such as home
mortgage loans, except where prohibited by law.
4. Advertising or promotional materials of a reasonable value, such as pens,
pencils, note pads, key chains, calendars and similar items.
5. Discounts, premiums, or rebates on merchandise or services or other
benefits that do not exceed those available to other customers.
6. Gifts of reasonable value that are related to commonly recognized events or
occasions, such as promotion, new job, wedding, retirement, Christmas or
bar mitzvah, so long as such gifts do not exceed the value of $100 per
gift.
7. Civic, charitable, educational or religious organizational awards for
recognition of service and/or accomplishment, so long as such awards do not
exceed the value of $100 per award.
8. The Company may, on a case by case basis, approve of other circumstances,
not identified above, in which an involved party requests to be permitted
to accept something of value in connection with the Company's business. Any
exception to these Policies should be documented as a policy exception and
reported to the Board of Directors.
24
D. Recordkeeping.
If a Director is offered or receives anything of value beyond what is
authorized in these Policies, that person must disclose the following
information in writing to the Chief Executive Officer:
1. The gift offered or accepted.
2. The name of the donor and his/her company affiliation.
3. The value of the gift.
4. The circumstances surrounding receipt of the gift.
VI. Violations of Board Policies
A. Actions Deemed in Violation of Policies.
Members of the Company's Board of Directors shall be deemed to have
violated these Policies upon the determination by the Audit Committee that any
of the following events has occurred:
1. A material breach by a Director of any of the provisions of these Policies;
2. The repeated neglect by a Director of his or her duties under these
Policies or any material act of dishonesty, intentional misrepresentation
or moral turpitude, including the misappropriation or embezzlement of
property of the Company or a customer of the Company, the unauthorized
intentional disclosure of confidential or material non-public information,
or a fraud by the Director in the performance of his or her duties as a
Director of the Company;
3. A Director is convicted of a misdemeanor involving moral turpitude or a
felony; or
4. A written finding, order or directive from any state or federal banking
regulator with jurisdiction over the Company ordering the removal of a
Director of the Company.
B. Penalties for Violations of Policies.
In the event the Board of Directors determines that a Director has
violated his or her duties or responsibilities pursuant to these Policies, all
of the following will apply to such Director:
1. The Director immediately will be removed as a member of any Board
committees on which the Director serves.
25
2. The Director will thereafter be ineligible for participation in any
compensation plans which are available to the Company's Directors,
including the receipt of fees for attendance at Board or Board committee
meetings and participation in any stock option plans or deferred
compensation plans which are applicable to the Company's Directors.
3. The Director will immediately forfeit and surrender any unexercised stock
options previously awarded to the Director by the Board.
4. In the discretion of the Board of Directors, the Director will not be
entitled to indemnity from the Company for any claim, demand, damages,
causes of action or other costs (including but not limited to attorneys
fees) arising out of or related to any violation of this Policy statement.
To the extent that any claim, demand, damages, causes of action or other
costs (including but not limited to attorneys fees) arising out of or
related to any violation of this Policy statement are asserted against or
incurred by the Company, the Company will have a right of indemnity against
the Director. In the event that the Board exercises its discretion as set
forth herein, it will notify the Company's directors and officers liability
carrier of such determination and shall exclude the Director from coverage
under the Company's policy.
5. The Board of Directors will request the resignation of the Director, will
recommend the removal of such Director to the shareholders of the Company
at a special meeting called for the purpose of removing such Director, or
will not renominate such Director and, if such Director seeks nomination at
a meeting of the shareholders, will recommend to the Company's shareholders
that the Director not be re-elected at the any meeting of the Company's
shareholders.
VII. Required Disclosures Under the Sarbanes-Oxley Act
The Securities Exchange Commission issued Item 406 of Regulation S-K
pursuant to requirements set forth in Section 406 of the Sarbanes-Oxley Act.
Pursuant to Item 406, the Company is required to make several disclosures
regarding its "Code of Ethics." The Company will provide the SEC copies of these
Policies and will notify the SEC of any amendments to these Policies. In
addition, the Company will furnish copies of these Policies, amendments and
revisions thereto, and other information as required in its Form 8-K reports and
in its annual Form 10-K report.
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VERIFICATION OF COMPLIANCE
I, _______________, hereby verify that I have reviewed the
terms of this policy statement and agree to be bound by its terms.
-------------------------------
(signed)
-------------------------------
(print name)
-------------------------------
(dated)
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Exhibit A
LIMITED POWER OF ATTORNEY
Know all by these presents, that the undersigned hereby constitutes and
appoints Allen R. Christenson, Corporate Secretary, the undersigned's true and
lawful attorney-in-fact to:
(1) execute for and on behalf of the undersigned, in the
undersigned's capacity as an officer and/or Director of First
Financial Bancorp (the "Company"), Forms 3, 4, and 5 in
accordance with Section 16(a) of the Securities Exchange Act
of 1934, as amended, and the rules thereunder;
(2) do and perform any and all acts for and on behalf of the
undersigned which may be necessary or desirable to complete
and execute any such Form 3, 4, or 5, complete and execute any
amendment or amendments thereto, and file such form with the
United States Securities and Exchange Commission and any stock
exchange or similar authority; and
(3) take any other action of any type whatsoever in connection
with the foregoing which, in the opinion of such
attorney-in-fact, may be of benefit to, in the best interest
of, or legally required by, the undersigned, it being
understood that the documents executed by such
attorney-in-fact on behalf of the undersigned pursuant to this
Power of Attorney shall be in such form and shall contain such
terms and conditions as such attorney-in-fact may approve in
his or her discretion.
The undersigned hereby grants to each such attorney-in-fact full power
and authority to do and perform each and every act and thing whatsoever
requisite, necessary, or proper to be done in the exercise of any of the rights
and powers herein granted, as fully to all intents and purposes as the
undersigned might or could do if personally present, with full power of
substitution or revocation, hereby ratifying and confirming all that such
attorney-in-fact, or such attorney-in-fact's substitute or substitutes, shall
lawfully do or cause to be done by virtue of this power of attorney and the
rights and powers herein granted. The undersigned acknowledges that the
foregoing attorneys-in-fact, in serving in such capacity at the request of the
undersigned, are not assuming, nor is the Company assuming, any of the
undersigned's legal or other responsibilities, including compliance with Section
16 of the Securities Exchange Act of 1934, as amended.
This Power of Attorney shall remain in full force and effect until the
undersigned is no longer required to file Forms 3, 4, and 5 with respect to the
undersigned's holdings of and transactions in securities issued by the Company,
unless earlier revoked by the undersigned in a signed writing delivered to the
foregoing attorneys-in-fact.
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IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney
to be executed as of this ______ day of _______________________, 2003.
Signature
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Print Name
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