EXHIBIT 14.1
HOMESTORE, INC.
CODE OF CONDUCT AND BUSINESS ETHICS
TABLE OF CONTENTS
INTRODUCTION ..................................................................1
THE CODE ......................................................................3
A. CONDUCT AND DISCIPLINE ...................................................3
B. CONFLICT OF INTEREST .....................................................4
C. CONFIDENTIALITY ..........................................................5
D. CORPORATE COMMUNICATIONS POLICY ..........................................6
E. DRUGS AND ALCOHOL ........................................................7
F. POLICY AGAINST DISCRIMINATION ............................................7
G. POLICY AGAINST HARASSMENT ................................................7
H. SECURITIES TRADING .......................................................8
I. ELECTRONIC COMMUNICATION .................................................9
J. DOCUMENT RETENTION POLICY ...............................................12
K. INTEGRITY OF RECORDS AND ACCOUNTING .....................................13
L. ENTERTAINMENT, GIFTS AND PAYMENTS .......................................17
M. POLITICAL CONTRIBUTIONS .................................................18
N. COMMERCIAL BRIBERY ......................................................18
O. ANTITRUST AND COMPETITION ...............................................19
P. HEALTH, SAFETY AND ENVIRONMENTAL PROTECTION .............................19
Q. ANTIBOYCOTT .............................................................19
R. TRADING RESTRICTIONS ....................................................20
S. COMPLIANCE WITH LAWS, RULES AND REGULATIONS..............................20
T. SUPPLEMENTAL STANDARDS FOR PRINCIPAL EXECUTIVE OFFICER
AND OTHER SENIOR FINANCIAL OFFICERS......................................20
COMPLIANCE CONTACT INFORMATION ...............................................22
ACKNOWLEDGEMENT & VERIFICATION ...............................................23
ADDENDUM......................................................................24
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INTRODUCTION
Homestore, Inc. and each subsidiary thereof (together,
"Homestore" or the "Company") has a strong commitment to business ethics and to
complying with the laws that govern the conduct of our businesses worldwide. We
believe that a commitment to honesty and integrity is a valuable asset that
builds trust with our customers, suppliers, employees, shareholders and the
communities in which we operate. To implement our commitment, we have developed
this Code of Conduct and Business Ethics (the "Code"). We have also established
a compliance program (the "Compliance Program") that is intended to ensure that
we have in place policies and systems designed to prevent and detect violations
of that Code or any applicable law, policy or regulation. By design, the Code
goes beyond the requirements of applicable law in certain respects.
SCOPE
The Code applies to all employees, directors, officers, agents
and consultants (together, "employees") of Homestore.
COMPLIANCE PROGRAM RESOURCES
As part of our Compliance Program, we have appointed a Compliance
Director who, in turn, from time to time, will designate one or more compliance
attorneys, whose names and telephone numbers are available and published on the
Company intranet. Additionally, the Chairman of the Audit Committee of the Board
of Directors serves as a compliance contact for any violation related to
Homestore's financial practices and dealings. We have also established a
compliance "hotline" that is administered by an independent, third-party. The
telephone number for this hotline is 877.888.0002; the number is also available
on the Company intranet.
These resources are available to report violations and may be
used to address questions concerning the Code and Compliance Program. We
encourage all employees to ask questions regarding the application of the Code.
Employees may direct such questions to their manager (in the absence of an
actual or potential conflict of interest), the compliance attorney, the
Compliance Director, the Chairman of the Audit Committee or to the compliance
hotline.
RESPONSIBILITIES
While each individual employee is ultimately responsible for his
or her compliance with the Code, every manager will also be responsible for
administering the Code as it applies to employees and operations within that
manager's area of supervision. Managers should coordinate these tasks with
appropriate compliance personnel. Managers may not delegate this responsibility.
REPORTING
If an employee observes or becomes aware of a situation that the
employee perceives to be a violation of the Code, the employee has an obligation
to promptly notify his or her manager, the compliance attorney, the Compliance
Director, the Chairman of the Audit
Committee or the compliance hotline operator (together, "Compliance Officers")
unless the Code directs otherwise. Violations involving a manager should be
reported directly to a Compliance Officer, not to or through the manager. In any
case, when a manager receives a report of a violation, it will be the manager's
responsibility to handle the matter in consultation with the Compliance
Director.
Callers to the compliance hotline will be treated fairly and
respectfully. If an employee reporting a violation wishes to maintain anonymity,
all reasonable steps will be taken to keep the caller's identity confidential.
The communications will be taken seriously and, if warranted, any reports of
violations will be investigated.
COMPLIANCE TRAINING
In order to make sure that all employees understand their
responsibilities under the Code, the Compliance Program includes training
requirements. New employees will receive an introductory briefing on the
elements of the Code as part of their orientation. Additionally, all persons
subject to the Code whose functions or responsibilities involve compliance with
the laws, regulations or standards of conduct applying to our operations will
receive additional specialized training, including participation in periodic
training sessions.
CONTINUING EDUCATION
Homestore requires that all employees be current with any and all
mandatory continuing education requirements, and encourages all employees to
participate in voluntary educational and training opportunities designed to help
them improve job performance and earn promotions to more responsible positions
within the Company. The Company will reimburse employees for the costs of such
programs that are pre-approved by the Senior Head of your department.
ACKNOWLEDGEMENT AND CERTIFICATION
The Code is available in printed form and also on the Company's
intranet. Every employee must read and understand the Code. All employees are
required, as a condition of employment, to provide the Company with an annual
certification that they have read and understand the Code. Employees will also
be required to sign an annual verification that they have no reasonable basis to
suspect that the Company or any person acting on behalf of the Company has
engaged in any conduct in violation of the Code.
DISCLOSURE AND DISCRETION
Homestore is committed to creating a work environment where
employees feel that, if they are doing something reasonable and in good faith,
they will not be unfairly subjected to disciplinary action. As such, the Company
encourages employees to disclose (either at the outset of their employment or as
soon the need arises), any current or potential conflicts with this Code that
exist or might reasonably be expected to arise during the course of their
employment. The Company is vested with discretion to determine whether
violations of the Code should be excused because they were either inadvertent
and/or resulting from a good faith effort
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by the employee to comply with the Code. Frank disclosure in advance of such
potential conflicts is a significant factor in the exercise of this discretion.
DISCLOSURE, AMENDMENTS AND WAIVERS OF THE CODE
To the extent required by applicable laws and listing standards,
the Company shall publicly disclose this Code and its application to all of the
Company's directors, executive officers, senior financial officers and other
employees. This Code may only be amended by Homestore's Board of Directors or a
duly authorized committee thereof. To the extent required by applicable laws and
listing standards, amendments to the Code shall be disclosed publicly. Any
waiver of the Code for any Homestore senior financial officer, executive officer
or director may be granted only by a majority of the independent members of the
Board of Directors or a duly authorized committee thereof. Any such waivers for
senior financial officers, executive officers or directors and the reasons
therefor shall be promptly disclosed publicly to the extent required by
applicable laws and listing standards.
THE CODE
A. CONDUCT AND DISCIPLINE
Homestore's objective is to maintain a creative, productive and
positive work environment. In order to provide such an environment (and also to
comply with laws applicable to our businesses and ensure our ability to provide
high quality products and services to customers), we have adopted this Code,
which establishes rules and standards regarding employee behavior and
performance and constitutes a part of the terms and conditions of employment of
each employee of the Company. Conduct that violates the rules and standards
embodied in the Code, that interferes with the Company's operations, that brings
discredit to the Company, or that is offensive to the Company's customers or an
employee's fellow employees, is not tolerated and will subject those responsible
to disciplinary action.
Listed below are examples of prohibited conduct which will subject
the individual involved to prompt disciplinary action up to, and including,
termination:
- breach of the Code;
- refusal to respect and follow management's instructions
concerning a job-related matter (i.e., insubordination);
- any type of harassment, whether it be relating to race,
religious creed, color, age, sex, sexual orientation, national
origin, ancestry, religion, marital status, medical condition as
defined under State law, disability (sensory, mental or
physical), HIV or AIDS, military service, arrest and conviction
records, marital status,
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pregnancy, maternity leave, childbirth and related medical
conditions or any category protected by federal, state or local
law;
- the unauthorized use of alcoholic beverages while on company
premises, on company time, or reporting for work while under the
influence of alcohol;
- the unlawful possession, manufacture, sale, distribution or use
of a controlled substance, or reporting for work while under the
influence of such a substance, other than medically prescribed
drugs;
- theft, misuse or willful destruction of company property or of
another individual's property, or the failure to report any
knowledge of theft; and
- falsifying any company record or report, books of account,
records, reports and financial statements, including Travel and
Expense Reports and time sheets.
In addition, inadequate or poor work performance may also be
grounds for disciplinary action. The Company has the right to terminate an
employee's employment with or without cause subject to the applicability of any
governing law or contract of employment. Depending upon the circumstances
surrounding a given situation, the Company maintains the right to carry out
whatever disciplinary action is deemed appropriate and to promptly report any
criminal activity to the proper authorities where the Company deems it advisable
or required.
The Company prohibits any form of retaliation against individuals
who report unwelcome conduct or who cooperate in the investigation of such
reports. In accordance with this policy, the Company will take appropriate
disciplinary action for any such retaliation, up to and including termination.
B. CONFLICT OF INTEREST
Every employee of Homestore must avoid any interest that
conflicts or appears to conflict with the interests of the Company or that could
reasonably be determined to harm the Company's reputation. A conflict of
interest exists if your actions as an employee are, or could reasonably appear
to be, influenced directly or indirectly by personal considerations or by actual
or potential personal benefit or gain outside of that benefit or gain directly
related to your employment. Actual or potential conflicts of interest must be
promptly disclosed to the appropriate Compliance Officer. By way of example, but
without limitation, conflicts of interest can include:
- ownership by an employee or family member of a significant
financial interest in an entity which does or seeks to do
business with, or is a competitor of, Homestore;
- serving as a director, officer, partner, consultant or other key
role with an entity which does or seeks to do business with, or
is an actual or potential competitor of, Homestore;
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- ownership of or employment with another business entity, where
such ownership or employment would interfere with an employee's
ability or desire to perform properly his or her duties to
Homestore;
- the payment of Homestore funds to any officer, employee or
representative of any customer or supplier in order to obtain
any benefit; and
- any outside activity that might reasonably affect adversely
Homestore's interests.
Full-time employees have a primary, professional obligation and
duty to the Company and to its shareholders. Therefore, all such employees
should keep any outside activity (such as self-employment) totally separate from
employment with the Company. Full-time employees are expected to devote the use
of the Company's time to working on behalf of the Company. Unless expressly
authorized by the Compliance Director, no outside activities should involve the
use of the Company's time, name, influence, assets, funds, materials, facilities
or employees. Any appointment of an employee to a governmental commission,
service organization or professional body that would involve designating the
employee as representative of the Company requires pre-approval by the
Compliance Director.
C. CONFIDENTIALITY
As an employee, you will have access to proprietary and
confidential information concerning the Company's business and the business of
the Company's clients and suppliers. You are required to keep such information
confidential during your employment as well as thereafter, and not to use,
disclose or communicate that confidential information other than in your role as
an employee.
As a general matter, any access you will have to proprietary and
confidential information is on a need-to-know basis. Unnecessary or unauthorized
efforts to secure confidential information could constitute grounds for
disciplinary action against you, including termination of employment. For
instance, unauthorized or unnecessary combing of the Company's computers or
files for information without appropriate consent is a violation of the
Company's policy regarding confidential and proprietary information. Such
violations are not limited to "hacking" or similar acts but also include
unauthorized review of another's computer that might be accessible to you in any
way. Similarly, going through another employee's office, desk or files without
permission from that employee violates the Company's policy and could subject
you to disciplinary action, including termination of employment.
Serious problems could be caused by the unauthorized disclosure of
information pertaining to internal matters or developments, or by the
unauthorized disclosure of any non-public, privileged or proprietary
information. In addition to possibly violating the law, such disclosure could,
among other things, competitively disadvantage the Company or breach the
confidence of a customer of the Company.
The use of the term "confidential information" includes
information in whatever form regarding the business, accounts, finances,
trading, planning, software or know-how of the Company and existing or
prospective customers or clients. It also includes such information designated
by the Company as confidential or information that an employee is aware is
subject to
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an obligation of confidentiality. Company records, reports, data, software and
documents are confidential and employees are not permitted to disclose or
release them to persons who are not directors, officers or employees of the
Company, remove them or make copies of them, in whole or in part, without prior
written approval of your manager.
Except as required in the performance of an employee's duties, or
if required by law after consulting with the Company's General Counsel,
employees should not discuss Company business with anyone who does not work for
Homestore and never discuss confidential business transactions with anyone,
including another Company employee, who does not have a direct association with
the transaction. Furthermore, employees should refrain from discussing or
disclosing confidential information while in any non-private setting.
If employees are questioned by someone outside their department
and they are concerned about the appropriateness of giving that person
information, they are not required to answer. Instead, as politely as possible,
they should refer the inquiry to their manager and reference the Code or the
Company's confidentiality policy. Any inappropriate inquiries from someone
outside the Company concerning the Company's business should be referred to the
Company's Compliance Director, Investor Relations Officer, Corporate
Communications Officer or the General Counsel as appropriate. Inappropriate
inquiries include ANY inquiry from investors, analysts or representatives of the
media.
In addition, employees owe a continuing obligation of
confidentiality after leaving the Company's employment, including compliance
with the Company's Confidentiality and Invention Assignment Agreement. Employees
may not disclose the Company's confidential information to any third party after
leaving employment except with the prior written consent of the Company or as
required by applicable law.
Upon termination of employment, employees will be required to sign
a declaration, in form and substance satisfactory to the Company, confirming
their continued obligation of confidentiality owed to the Company and confirming
they have returned all Company property.
In addition to protecting our own proprietary information, it is
the policy of the Company to respect the proprietary information of others.
Should any employee be furnished with such information or become aware of
information that he or she believes may have been misappropriated from another
party, that employee should immediately report the event to the Compliance
Director.
No current or former employee shall disclose any attorney-client
privileged information or any attorney work product material without the prior
written consent of the General Counsel of the Company (or another officer
designated by the General Counsel).
Any violation of this policy on confidentiality will be grounds
for disciplinary action, up to and including immediate termination of
employment, in addition to any other remedies available at law.
D. CORPORATE COMMUNICATIONS POLICY
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Homestore strives to be accurate and consistent in its
communications with others. To achieve this goal, all contact with investors,
analysts and members of the media should be handled by the appropriate corporate
communications officer. Employees of Homestore should direct any and all
inquiries from investors, analysts or members of the media, including requests
for information, press releases and interviews, to the appropriate corporate
communications officer. Corporate communications will handle all interviews and
media submissions (including press releases, articles and letters to the
editor). Employees who may be exposed to media contact, for example when
attending conferences or making presentations, should be aware that Homestore's
standard corporate policy is not to comment on rumors or speculation regarding
its activities. All inquiries from regulatory authorities or government
representatives should be referred to the Compliance Director or the General
Counsel.
In addition, senior management, investor relations professionals
and others at Homestore who regularly communicate with securities market
professionals ("FD Persons") and holders of Homestore securities must comply
with Regulation FD ("Reg FD") promulgated by the Securities and Exchange
Commission. Reg FD provides that whenever any FD Person discloses material,
non-public information to certain persons (generally, securities market
professionals and holders of Homestore securities who may well trade on the
basis of the information), Homestore must also disclose that information to the
general public either simultaneously (for intentional disclosures) or promptly
(for inadvertent disclosures).
E. DRUGS AND ALCOHOL
The Company prohibits the unauthorized use of alcoholic beverages
while on company premises, on company time, or reporting for work while under
the influence of alcohol. Likewise, the Company prohibits the unlawful
possession, manufacture, sale, distribution or use of a controlled substance, or
reporting for work while under the influence of such a substance, other than
medically prescribed drugs. This policy also requires that the Company abide by
applicable laws and regulations relative to the use of alcohol or other
controlled substances.
F. POLICY AGAINST DISCRIMINATION
The Company prohibits discrimination against any employee or
prospective employee on the basis of sex, race, color, age, religion, sexual
preference, marital status, national origin, disability, ancestry, political
opinion or any other basis prohibited by the laws that govern our operations.
G. POLICY AGAINST HARASSMENT
The Company prohibits all forms of unlawful harassment. The
Company expects all personnel to adhere to a simple standard, namely, that all
employees must be treated with respect. The Company will vigorously enforce its
policy regarding harassment. All employees are expected to understand what
constitutes harassment and accordingly avoid behavior or situations which could
have even the appearance of or be interpreted as harassment of another person.
What is Harassment?
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Harassment is not occasional compliments or other generally
acceptable social behavior. It refers to any conduct, comment, gesture or
contact (e.g. relating to race, religious creed, color, age, sex, sexual
orientation, national origin, ancestry, religion, marital status, medical
condition as defined under State law, disability (sensory, mental or physical),
HIV or AIDS, military service, arrest and conviction records, marital status,
pregnancy, maternity leave, childbirth and related medical conditions or any
category protected by federal, state or local law) that is likely to cause
offense or humiliation to a reasonable person or that might, on reasonable
grounds, be perceived by a reasonable person as placing a condition on their
employment or on any opportunity for training or promotion.
Reporting and Complaint Procedures
If an employee feels that he or she has been the victim of any
form of harassment, he or she should immediately contact either the appropriate
Compliance Officer or the Human Resources department. If the employee fails to
report the occurrence of an alleged harassment within a reasonable time, the
Company's ability to conduct a thorough investigation and respond effectively to
the situation may be limited. For this reason, employees are encouraged, if they
feel that they have been the target of harassment, to report the incident
immediately. If the circumstances are such that an employee does not feel
comfortable reporting the incident to his or her department manager, he or she
may report it to another Compliance Officer or via the compliance hotline. Any
harassment reported to a manager must be reported by that manager to the
appropriate Compliance Officer.
This initial report can be oral or written, but an employee will
be asked to submit a written and signed statement of the complaint within three
days of the initial report. Upon receipt of the written statement, the Company
will conduct a fact-finding investigation.
Reports will be investigated with due regard for the privacy of
those involved. Any employee found to have harassed a fellow employee or
subordinate will be subject to disciplinary action, including possible
discharge. The Company will also take any additional action necessary to
appropriately remedy the situation. No adverse employment action will be taken
against any employee making a good faith report of alleged harassment.
The Company accepts no responsibility for harassment of one
employee by another employee. Harassment is outside the course and scope of
every employee's job-related duties, and the individual who makes unwelcome
advances, threatens or in any way harasses another employee is personally liable
for such actions and their consequences. In the absence of special
circumstances, the Company generally will not provide legal, financial or other
assistance to an individual accused of harassment if a legal complaint is filed.
H. SECURITIES TRADING
All employees are responsible for reviewing, understanding and
complying with Homestore's Procedures and Guidelines Governing Securities Trades
by Company Personnel, as adopted by the Board of Directors on August 3, 1999
(the Company's "Trading Guidelines"). Homestore's Trading Guidelines are
available in print form, as well as on the Company's intranet.
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I. ELECTRONIC COMMUNICATION
The Company provides electronic communication tools to help
improve productivity and enable you to provide efficient, high-quality work.
Electronic communications include all aspects of voice, video, and data
communications, such as voice mail, e-mail, fax, and Internet access. The
Company views electronic communications as a business tool provided to employees
at significant cost. We encourage you to use these electronic communications
subject to the explicit requirements set forth below.
You are required to use your access for business-related purposes,
e.g., to communicate with customers and suppliers, to research relevant topics
and obtain useful business information. However, personal use of the Company
e-mail is permitted, so long as such use is reasonable and does not otherwise
interfere with legitimate business uses. While using electronic communication,
you must conduct yourself honestly and appropriately, and respect the
intellectual property rights, privacy and prerogatives of others, just as you
would in any other business dealings. To be absolutely clear on this point, all
Company policies apply to your conduct on electronic communications, especially
(but not exclusively) those that deal with intellectual property protection,
discrimination, misuse of company resources, sexual harassment, data security
and confidentiality.
The Company has software and systems in place that can monitor and
record all electronic communications usage. The Company wants employees to be
aware that our security systems are capable of recording (for each and every
user) each World Wide Web site visit, each chat, newsgroup or e-mail message and
each file transfer into and out of our internal networks. The Company reserves
the right to monitor these communications at any time, without notice to the
employees. No employee should have any expectation of privacy as to his or her
usage of electronic communication tools. The Company reserves the right to
inspect any and all files stored in private areas (of any form of electronic
communication) of our network in order to assure compliance with policy.
The Company prohibits the display of any kind of sexually explicit
image or document on any Company system other than as required for business
purposes. In addition, sexually explicit material may not be accessed, archived,
stored, distributed, edited or recorded using our network or computing
resources. If an employee finds that he or she is connected to a site that
contains sexually explicit or offensive material, he or she should disconnect
from that site immediately.
No employee may use the Company's electronic communication or
overload any computer system or network or to circumvent any system intended to
protect the privacy or security of another user. Abuse of access privileges or
passwords by unauthorized entry into another employee's system or files, or into
the Company's internal or external networks, or the distribution of messages or
materials that are not consistent with the policies for appropriate workplace
conduct, are subject to appropriate disciplinary action up to and including
dismissal. In some cases, the abuse of access privileges may be illegal, and the
violator may be subject to legal penalties.
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Use of Company electronic communication facilities to commit
infractions such as misuse of Company assets or resources, discrimination,
sexual harassment, unauthorized public statements and misappropriation or theft
of intellectual property are also prohibited. Such misuse of the Company's
electronic communication facilities is subject to appropriate disciplinary
action, up to and including dismissal.
User IDs and passwords help maintain individual accountability for
electronic communication usage. Any employee who obtains a password or ID must
keep that password confidential. Company policy prohibits the unauthorized
sharing of user IDs or passwords.
Employees learning of any technical misuse of the electronic
communications systems should notify their Department Manager. Employees
experiencing technical or functional problems should notify the IT Department.
Employees aware of other misuses (i.e., messages dealing with sexual harassment,
racial slurs, etc.) are encouraged to notify the appropriate Compliance Officer
or Human Resources personnel.
To the extent required by Company policies or prudent business
practices, voice, data, files and images (hereinafter referred to as "electronic
records") should be saved to the appropriate drives if they relate to the
Company's business. All e-mail kept in the e-mail section may be deleted if at
the end of every calendar quarter or sooner if file storage limitations are
encountered. The Company's general policy is that employees should delete all
e-mail which is greater than 30 days old, unless such policy is tolled by
litigation or other reason. Employees will be notified by the General Counsel if
the 30-day policy has been suspended.
Employees should exercise discretion in the dissemination of
electronic records. These records should be sent only to persons who need the
information for business purposes. Employees should refrain from mass cc's of
electronic records to ensure that we do not inundate other employees with
information they do not need.
Confidentiality
The Company policies concerning confidentiality of information
also apply to information transmitted by e-mail. Use of e-mail raises additional
concerns related to confidentiality. The Company has implemented various
security measures designed to protect the confidentiality of corporate
information transmitted through the internal e-mail system. E-mail systems
operated by third parties should not be considered secure and therefore should
not be used to transmit confidential information until you obtain reasonable
assurances as to confidentiality.
Company personnel should not participate in any electronic forum
discussing the Company, its customers, suppliers or other persons with which the
Company does business or about which the Company possesses confidential
information. In no case is any employee of the Company authorized to make any
defamatory statement using the Company's electronic communication system.
Even in the case of the internal e-mail system, each employee is
responsible for using e-mail in a manner that preserves the confidentiality of
information transmitted through the system. For example, each employee is
responsible for maintaining the confidentiality of his or
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her passwords and identification numbers. In addition, each employee has the
responsibility not to send or forward e-mail to any person who does not need to
know the information in the e-mail for business purposes. Likewise, e-mails
should not be reviewed by employees who are not an addressed recipient of the
e-mail, unless authorized by the sender of the e-mail, an addressed recipient of
the e-mail or a member of senior management exercising the Company's rights to
monitor electronic communications.
Back-up tapes are made (and retained for a period of 30 days) of
the entire network and that record information transmitted by e-mail (including
e-mail that an employee may have intended to delete from the system). As a
result, material transmitted through e-mail may be subject to disclosure to
unintended third parties (for example, in a litigation context), even if a "hard
copy" of the e-mail is not made. Accordingly, each e-mail should contain only
the specific facts and other information that need to be communicated for
business reasons. Before saving or sending an e-mail users should consider
whether any information contained in the communication might be misconstrued if
reviewed by a third party.
The Company has installed firewalls to assure the safety and
security of the Company's networks. Any employee who attempts to disable, defeat
or circumvent any Company security facility may be subject to summary dismissal.
Any e-mail seeking or discussing advice from the Legal Department
is covered by privilege and the e-mail should also be marked "PRIVILEGED AND
CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION" at the beginning of the document.
Any such e-mail should not be shared with, or forwarded to, any person other
than the relevant attorney in the Legal Department; otherwise, the privilege of
the e-mail may be compromised. Additionally, any e-mail that contains other
confidential information should be marked "CONFIDENTIAL."
Software Copyrights
All software that is the property of the Company can only be
installed for use in hardware owned by the Company or hardware approved by the
Company. This ensures that the Company does not violate copyright laws for
software purchased.
Internet Copyrights
Images and contents of the web site on the Internet may be subject
to copyright laws. While you may make printouts of the contents of a third-party
web site, the particular web site may prohibit re-use of the images or the
contents. As a matter of precaution, these images and contents should not be
incorporated in presentations or material prepared for company use without the
permission of the third-party web site owner.
Security
Employees are provided passwords to access the Company's systems
and electronic communication tools. These passwords should not be shared with
other parties and should be changed frequently. Employees should set passwords
that are not easy to decode and in particular should avoid use of familiar terms
such as their family member names, birthdates and other data sets that can be
easily associated with them. Employees should also not post
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passwords in visible and accessible places. In particular, employees with
laptops provided for travel access should make sure that the passwords are not
in the laptop files as well. Laptops can be stolen or accessed by unauthorized
parties and remote access can be obtained if passwords are easily located.
Employees should immediately call the IT Help Desk to lock out system access and
change passwords if laptops are stolen or lost.
J. DOCUMENT RETENTION POLICY
All business records should be retained for not more than one (1)
year after the calendar year in which they are prepared or acquired, unless
disposition is governed by other practices as specified below:
- All records that the Company is required to retain by law or
contract, or which are the subject of special written
arrangements, should be retained for the specified periods;
- Documents that the Office of the General Counsel determines to
be relevant to current or pending judicial or agency proceedings
or investigations must not be destroyed until after the final
resolution of those proceedings;
- Electronic mail messages that remain in a user's inbox, deleted
items, or sent mail folders are presumed to have no business
value and will be automatically deleted after thirty days;
- Drafts of documents should be discarded immediately upon
completion of the final documents or final termination of
discussions, except for such drafts the Office of the General
Counsel determines should be retained;
- All technical data such as engineering records, source code
listings, test and reports should be retained for such period of
time as determined by the project's manager, who shall consult
with intellectual property counsel in connection with patent or
other intellectual property-related records;
- Accounting and financial documents are governed by policies
created by the accounting department and our auditors;
- Records containing personal information of employees should be
retained for four years from the time the record is created
unless otherwise directed by the Human Resources office;
- Sales contracts, purchase orders, leases, releases, agreements,
and other contracts are retained for a period of six years after
the calendar year in which the performance of the contract or
other obligation was completed;
- Planning and related records such as strategic plans, business
plans, budgets, studies and reports, market research data, and
competitive intelligence files should be retained for three (3)
years; and
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- Pricing and competitive information used to support pricing
decisions should be retained for a period of four (4) years
after the calendar year in which the transaction was completed.
Where possible, file purging will be done automatically at regular
intervals. Otherwise, all personnel should review their records at least
semi-annually. In the event any legal action or government investigation is or
is likely to be initiated, the General Counsel will order all destruction
activities to be suspended immediately.
K. INTEGRITY OF RECORDS AND ACCOUNTING
Accuracy and reliability in the preparation of all business
records is mandated by law and is of critical importance to the Company's
decision-making process and to the proper discharge of Homestore's financial,
legal and reporting obligations. The books and records provisions of the U.S.
Foreign Corrupt Practices Act (the "FCPA") and other applicable laws require the
Company to maintain accurate books and records and to devise an adequate system
of internal controls. Such laws may provide for criminal and civil penalties for
violations of these requirements.
All business records, expense accounts, vouchers, bills, payrolls,
service records, reports to government agencies and other reports must
accurately reflect the facts. All corporate funds and assets must be recorded in
accordance with Company procedures. The books and records of Homestore must be
prepared with care and honesty and must accurately reflect each transaction
recorded therein. False or misleading entries in such records are unlawful and
are not permitted. No undisclosed or unrecorded funds or assets shall be
established for any purpose.
The Company maintains a system of internal controls and
procedures that it believes provides reasonable assurance that transactions are
executed in accordance with management's authorization and properly recorded and
that financial records and reports are accurate and reliable. All directors,
officers and employees are expected to adhere to these procedures. Compliance
with accounting and internal controls and procedures and auditing procedures is
required at all times. The Company expects for both the letter and the spirit of
internal controls and procedures to be strictly adhered to at all times.
In any Company location where petty cash funds are permitted to
exist, such funds must be administered pursuant to the Company's system of
internal controls. Except for petty cash approved by the relevant business unit
controller, no cash funds may be maintained. Electronic transfers of funds are
not considered cash transactions but must be conducted in accordance with
Company policy. The use of Company assets for any unlawful or improper purpose
is strictly prohibited.
Employees are prohibited from offering anything of value to
government officials, whether foreign or domestic, to obtain a particular result
for the Company. The term government officials includes political parties, party
officials, candidates for political office and officials of public international
organizations. Employees are permitted to make political campaign contributions
to the extent permitted by applicable law in accordance with policies and
procedures established by the appropriate legal or compliance personnel.
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As an issuer of securities registered with the SEC, Homestore and
its officers, directors, shareholders acting on behalf of the corporation, and
agents and employees, including non-U.S. citizens and residents, are subject to
the prohibitions of the FCPA and other applicable laws. The activities of
Homestore's subsidiaries and affiliates could cause the Company to have
vicarious liability for their conduct. In addition, any entity incorporated in
the U.S., and individual citizens or residents of the U.S., are also subject to
the prohibitions of the FCPA. Further, non-U.S. citizens and non-U.S. entities
can be liable under the FCPA for acts committed in the U.S. in furtherance of a
bribe to a non-U.S. official.
Violation of the bribery provisions of the FCPA is a felony and
the penalties are severe - the Company can be fined up to $2 million and an
officer, director, employee or agent of the Company who willfully violates the
bribery provisions can be fined $100,000 or imprisoned not more than 5 years, or
both. The fine cannot be indemnified by the Company. Civil penalties may also be
imposed.
The FCPA also (i) requires the Company to maintain an adequate
system of internal control; (ii) requires the Company to make and keep accurate
books and records; (iii) prohibits falsification of accounting records; and (iv)
prohibits lying to auditors. Knowing violations of the books and records
provisions of the FCPA are punishable by fines of up to $2.5 million for the
Company and up to $1 million for individuals and/or imprisonment of not more
than 10 years. Civil penalties may also be imposed.
Below you will find some of the more common questions that are
asked regarding the FCPA, together with answers that we believe you will find
useful. This material is not intended to cover each and every situation that
might trigger questions regarding the FCPA. We emphasize that it is incumbent
upon every employee to comply with the FCPA and with all governing local laws
regarding bribery of government officials. Whenever any employee has any doubts
about whether proposed conduct could violate the FCPA, or local laws, it is
mandatory that the employee contact the appropriate Compliance Officer to ensure
that the proposed conduct would not violate any such laws.
Common Questions Regarding The FCPA
What conduct does the "bribery "provision of the FCPA prohibit?
The FCPA makes it unlawful for any issuer of securities registered
with the SEC and any officer, director, employee, agent or stockholder acting on
behalf of such company and entities incorporated in the U.S., and their
officers, directors, employees, agents or stockholders acting on its behalf, to
corruptly offer, pay, promise to pay, or authorize the payment, directly or
indirectly through any other person or firm, of anything of value to a non-U.S.
government official, political party or official thereof or any candidate for
political office or official of a public international organization, in order to
obtain or retain business or to secure any improper advantage.
Does the FCPA cover only bribery?
No, the FCPA also includes requirements that issuers of securities
registered with the SEC maintain adequate books and records of the Company and
its subsidiaries. Where an
14
issuer holds 50% or less of the voting power of another entity the issuer must
proceed in good faith to cause that other entity to devise and maintain a system
of accounting controls that provide reasonable assurances that:
- transactions are executed in accordance with management's
general or specific authorization;
- transactions are recorded as necessary (i) to permit preparation
of financial statements in conformity with generally accepted
accounting principles or any other criteria applicable to such
statements; and (ii) to maintain accountability for assets;
- access to assets is permitted only in accordance with
management's general or specific authorization; and
- the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action
is taken with respect to any differences."
Are non-U. S. citizens subject to the bribery provisions of the
FCPA?
Yes. All officers, directors, shareholders, employees and agents
of SEC-registered issuers (U.S. and non-U.S. issuers) are directly covered by
the FCPA. In addition, the U.S. has recently amended the FCPA to conform to the
OECD Convention on Controlling Bribery of Foreign Public Officials in
International Business Transactions. As a result of these amendments the FCPA
now applies to any foreign citizen or foreign entity, including a foreign
subsidiary (and there need not be a connection to an issuer of securities or to
an entity organized in the U.S.) which commits acts in the U.S. in furtherance
of a bribe to a non-U.S. government official.
Is the OECD Convention significant?
Yes. The OECD Convention is a major breakthrough to "level the
playing field" in international business. For many years U.S. businesses have
complained that the international business arena was not a level playing field
and that U.S. businesses were being severely prejudiced because non-U.S.
competitors could and did bribe government officials to get business and, in
some cases, could even take tax deductions for the bribe. The OECD Convention,
adopted by 34 countries, changes that. It is now effective and signatories are
in various stages of enacting local implementing legislation. Not only does the
Convention criminalize bribery but the Convention provides that bribery of
public officials is a legal basis for extradition of violators. The Convention
has a monitoring mechanism that provides for regular reviews of steps taken by
participating countries to implement the Convention. Already OECD has begun
studying whether countries are complying with their obligations under the
Convention.
Do the FCPA bribery provisions cover officials or employees of the
United States government?
No. However, it is the Company's policy that its relationship with
U.S. government officials or employees of the United States (and its
relationship with non-U.S. government officials or employees) shall be conducted
in such a manner that full public
15
disclosure of the details will not embarrass or jeopardize the Company's
integrity or reputation. There are also laws in most jurisdictions around the
world which prohibit bribery of officials. This policy applies whether Company
funds or personal funds or assets are involved and also applies to indirect
contributions or payments made through third parties. Additionally, all
employees must be aware of the fact that U.S. laws and the laws of some non-U.S.
jurisdictions strictly control the giving of gifts to and entertainment of
government employees.
Are there internal reporting requirements regarding gifts and
entertainment provided by the Company to government officials and employees?
Gifts to U.S. government officials and employees are rarely, if
ever, permissible. In the case of non-U.S. officials or employees, such gifts
may be permissible depending on the circumstances. Any such gifts require prior
written approval of the Compliance Director.
Could the bribery provisions of the FCPA apply in a situation
where the Company has only a minority interest in another company?
Yes, it could. Of course, the degree of ownership and control
(including the amount of participation by nominees in operation of the venture)
is relevant to "knowledge" and "authorization." Relevant questions include
whether the Company managed day-to-day operations or only read annual reports.
It should be remembered that individual U.S. citizens or residents working for
such foreign ventures could have personal exposure.
Does the FCPA bribery provision apply only to getting new
contracts? Is there a de minimus exception under the FCPA?
The coverage of the FCPA goes beyond getting new contracts and
covers payments to secure "any improper advantage" and there is no de minimus
exception. The FCPA could cover an improper payment to get a tax ruling that
would make conditions of doing business more favorable. It also applies to
retaining current business.
Is there a company policy regarding procedures for retention of
consultants, agents and representatives?
Yes. The General Counsel has developed certain procedures, which
must be followed, before consultants, agents or representatives are retained.
The General Counsel has also developed certain standard provisions for use in
all consulting, agency and representation agreements. These agreements include
provisions designed to insure compliance with the FCPA. In addition, all
agreements with consultants, agents or representatives shall contain the
following:
- a requirement that the consultant will comply with all
applicable laws and regulations, including the FCPA, in the
course of his activities on the Company's behalf,
- a requirement that the consultant will file periodic reports of
his activities on the Company's behalf;
- a provision that any assignment requires the Company's
pre-approval;
16
- a requirement for an identification of all principals and
subagents;
- a provision prohibiting the consultant from refunding any
Company funds to any director, officer, employee, or other agent
of the Company or a customer or from making any illegal payment
from the funds under applicable laws; and
- a provision that terminates the agreement without further
liability or obligation on the part of the Company should the
consultant breach any of these covenants.
All payments made to consultants, agents and representatives must
be reported on an annual basis.
Persons or entities rendering the following kinds of services are
not subject to the due diligence procedures or the requirement of approval by
the General Counsel:
- law firms or lawyers that are retained by the General Counsel or
his designee for legal services or advice rendered in the normal
course of the Company's business;
- certified public accountants and tax advisors that are retained
by the Board of Directors or Homestore officers for services or
advice rendered in the normal course of the Company's business;
and
- customary service agreements such as maintenance, repair,
construction, pension benefits, advertising, employment
agencies, medical consultation, or technical service agreements
relating to operational activities and the like.
Are persons with primary responsibility for disbursement of
Company funds subject to specific controls?
Yes. Each Company officer and all Company employees with primary
responsibility for disbursement of Company funds is required annually to submit
a representation letter stating that, for the preceding year to the best of his
or her knowledge, there were no violations of the Company's standards.
L. ENTERTAINMENT, GIFTS AND PAYMENTS
Homestore will procure, and also provide, goods and services to be
used in its business based on service, quality and other relevant business
considerations. Accordingly, decisions relating to the procurement and provision
of goods and services should always be free from even a perception that
favorable treatment was sought, received or given as the result of furnishing or
receiving gifts, favors, hospitality, entertainment or other similar gratuity.
The giving or receiving of anything of value to induce such decisions is
prohibited.
The payment of Homestore funds to any officer, employee or
representative of any customer or supplier in order to obtain any benefit is
strictly prohibited. The competitive appeal of the Company's services and
products must be based on their quality, price and other legitimate attributes
recognized in the marketplace.
17
Homestore employees shall not seek or accept any personal gifts,
payments, fees, services, valuable privileges, vacations, or pleasure trips
without a business purpose, or loans from any person or business organization
that does or seeks to do business with, or is a competitor of, the Company. No
employee shall accept anything of value in exchange for referring business
opportunities to another business.
Gifts or entertainment of nominal value motivated by commonly
accepted business courtesies may be offered or accepted, but not if such gifts
or entertainment would reasonably be expected to cause favoritism or a sense of
obligation to the donor. Spousal travel which is intended to be reimbursed by
the Company or by a customer or supplier must be pre-approved by a Compliance
Officer, as must gifts to government officials. Meals or entertainment provided
by or to a potential customer or supplier must be reasonable, must be for a
business purpose, and must not occur on an unreasonably repetitive basis. Meals
or entertainment may not be supplied to a customer if it would violate a known
customer policy. If an unsolicited gift of more than nominal value is received,
the employee should return the gift with a polite note explaining Homestore
policy.
Homestore's business entertainment must not be conducted at any
location which could reasonably adversely affect Homestore's reputation (e.g.,
clubs associated with nudity, facilities associated with criminal activities,
etc.).
It is difficult to promulgate definitions for "nominal,"
"reasonable" and " commonly accepted business courtesy" to cover all
circumstances. Employees are urged to make good faith judgments. In making these
judgments, the employee should ask whether it would be embarrassing to him or
her or the Company if a story appeared in the local news about the giving or
receiving of the gift or entertainment in question. In cases of doubt, seek
guidance from the appropriate Compliance Officer.
M. POLITICAL CONTRIBUTIONS
Certain jurisdictions have enacted laws prohibiting contributions
(directly or through others) by corporations to political parties or candidates.
For example, U.S. federal law and the laws of numerous states prohibit such
contributions in connection with elections. U.S. federal law also prohibits
political contributions by persons who are not U.S. citizens or permanent
residents. Laws of various jurisdictions, including the U.S., impose various
other limitations and restrictions on political contributions. Where corporate
political contributions are legal, contributions by the Company shall be made
only from funds allocated for such a purpose and must be authorized by the Board
of Directors.
N. COMMERCIAL BRIBERY
No commercial bribes or other similar payments and benefits,
directly or indirectly, shall be paid to employees of suppliers or customers.
"Commercial bribery" includes any payment, direct or indirect, to
any director, officer, employee or representative of a customer or supplier of
the Company made for the purpose of influencing or affecting such person's
business judgment or action.
18
O. ANTITRUST AND COMPETITION
The activities of the Company are subject to antitrust and
competition laws. Employees are required to consult with compliance personnel
and internal counsel on all antitrust-sensitive matters.
In general, antitrust and anti-competition laws prohibit
agreements or actions that may restrain trade or reduce competition. Violations
include agreements among competitors to fix or control prices or to allocate
territories or markets. Exceptions may exist for lawful joint ventures or
regulated activities. Until the existence of such an exception is ascertained by
the General Counsel or his designee, Homestore prohibits any employee of the
Homestore group of companies from participating in any discussions,
understandings or agreement with a competitor regarding:
- raising, lowering, stabilizing or otherwise affecting rates,
commissions or prices;
- matters that would affect the availability or terms of services
or products;
- allocation of markets, territories or other customers;
- encouragement of a boycott of a product or service;
- what constitutes a "fair" profit level; and
- credit terms.
It may not be sufficient to evaluate only conduct carried out in
one country under the laws of that country. For example, the United States and
the European Union consider whether an act has harmful effects within their
territory regardless of whether the act was lawful in the jurisdiction in which
the act was performed. Where such effects are to be anticipated, the General
Counsel should be consulted.
P. HEALTH, SAFETY AND ENVIRONMENTAL PROTECTION
The Company will conduct its business in a manner designed to
protect the health and safety of its employees, its customers, the public and
the environment. The Company's policy is to comply with all applicable
governmental health, safety and environmental requirements. Any departure or
suspected departure from this policy must be reported promptly.
Q. ANTIBOYCOTT
The United States has enacted laws that prohibit or penalize
participation in international boycotts not sanctioned by the United States,
specifically the Arab boycott of Israel. U.S. law imposes reporting requirements
regarding any requests to participate in any such unsanctioned boycott. The U.S.
laws apply to entities organized under U.S. law and to U.S. nationals or
residents employed by such entities, but do not apply to U.S. nationals working
for a non-U.S. company and residing outside the U.S. All employees, whether
subject to these U.S.
19
laws or otherwise, shall refer any request to participate in any such boycott to
the Compliance Director in advance of taking any action regarding a request to
participate in any such boycott.
R. TRADING RESTRICTIONS
There are a variety of laws restricting trade enacted by countries
in which the Company does business. These restrictions may apply whether the
trading takes place from the United States or otherwise. In all cases, U.S.
trade restrictions apply to U.S. citizens and residents. Those countries that
are presently subject to restrictions which are relevant to the Company include
the following:
Afghanistan
Burma
Cuba
Angola (UNITA)
Federal Republic of Yugoslavia & Republic of Serbia
Iran
Iraq
Libya
Sudan
Any employee contemplating doing business with nationals or public
or private sector entities from such countries must obtain the prior approval of
both his or her manager and the appropriate Compliance Officer.
S. COMPLIANCE WITH LAWS, RULES AND REGULATIONS
Homestore strives to ensure that all activity by or on behalf of
the Company is in compliance with all applicable laws, rules and regulations.
The standards and rules discussed above are intended to provide guidance to
employees, officers and directors to assist them in their obligation to comply
with applicable laws, rules and regulations. These standards and rules are
neither exclusive nor complete. Additional company policies and rules may be
published to employees from time to time. Employees are required to comply with
all applicable laws, rules and regulations, whether or not specifically
addressed in these policies. For additional guidance, or if questions regarding
the existence, interpretation or application of any law, rule or regulation
arise, please contact your manager or the Compliance Director.
T. SUPPLEMENTAL STANDARDS FOR PRINCIPAL EXECUTIVE OFFICER AND OTHER
SENIOR FINANCIAL OFFICERS
The Board of Directors of the Company has established the
following supplemental ethical standards for the Company's principal executive
officer, principal financial officer and controller or principal accounting
officer, or persons performing similar functions (the "Financial Officers"). The
Financial Officers must comply with these standards in addition to all of the
other standards contained in this Code.
20
The Financial Officers shall take all reasonable steps to provide
full, fair, accurate, timely and understandable disclosures in the reports and
documents that the company files with or submits to the Securities and Exchange
Commission and in other public communications made by the Company. In the event
that a Financial Officer learns that any such report, document or communication
does not meet this standard and the deviation is material, then such officer
shall review and investigate such deviation, advise the Board of Directors or
the appropriate committee of the Board of Directors regarding the deviation and,
where necessary, revise the relevant report, document or communication.
21
COMPLIANCE CONTACT INFORMATION
COMPLIANCE DIRECTOR
NAME AND CONTACT INFORMATION:
Michael Douglas; michael.Douglas@homestore.com; 805.557.3155
COMPLIANCE ATTORNEYS
NAME AND CONTACT INFORMATION:
John R. Miller; john.miller@homestore.com; 805.557.3454
AUDIT COMMITTEE CHAIRMAN
NAME AND CONTACT INFORMATION:
Kenneth K. Klein; kklein@KleincoBuilds.com; 918.493.3406
COMPLIANCE HOTLINE NUMBER
877.888.0002
22
ACKNOWLEDGEMENT & VERIFICATION
ACKNOWLEDGEMENT:
I understand that the Homestore Code of Business Ethics and
Conduct (the "Code") forms a part of my terms of employment or directorship.
I understand that it is my responsibility to read, understand and
keep up to date with the contents of the Code, and to seek clarification or
further information if needed.
I understand that breach or violation of the Code may result in
disciplinary action including but not limited to termination of my employment.
I acknowledge that I have been afforded the opportunity to ask any
questions I have concerning the content of the Code and related Compliance
Program.
VERIFICATION:
Do you know or have a reasonable basis to suspect that the Company
or any person acting on behalf of the Company has engaged in any conduct in
violation of Homestore's Code of Conduct and Business Ethics?
Yes: _____ No:_____
If you have answered "yes" to the preceding question, please set
forth a brief statement of the facts and circumstances that prompted your
answer.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
If you have any question as to the applicability of the Code to
any situation, you should discuss the matter with your management, the General
Counsel or any Compliance Officer before completing this form.
If you wish to disclose any current or potential conflicts with
this Code that either exist or might reasonably be expected to arise during the
course of your employment, please set forth an explanation of these conflicts.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature:
-----------------------------------------
Print Name: Date:
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23
HOMESTORE, INC.
ADDENDUM
TO THE
CODE OF CONDUCT AND BUSINESS ETHICS
(FOR ATTORNEYS IDENTIFIED IN SECTION II BELOW)
(a) EFFECTIVE: AUGUST 5, 2003
POLICIES AND PROCEDURES FOR REPORTING BY ATTORNEYS PURSUANT TO
THE SARBANES-OXLEY ACT STANDARDS OF PROFESSIONAL CONDUCT
I. INTRODUCTION
The U.S. Securities and Exchange Commission (the "SEC") recently promulgated
rules creating standards of professional conduct for attorneys (the "Attorney
Conduct Rules"). The Attorney Conduct Rules generally require Homestore's
attorneys working on SEC-related matters to report "up the ladder" within
Homestore actual or potential violations of law of which they are aware. All
attorneys employed or retained by Homestore must read this Policy and the
attached copy of the Attorney Conduct Rules. The Attorney Conduct Rules present
several interpretive questions and methods for establishing a framework for
compliance. This Policy sets forth Homestore's approach to those matters.
This Policy will address the following principle matters:
a. which attorneys must make reports;
b. what events must be reported;
c. where to make a report;
d. responses to reports; and
e. procedures for outside counsel.
Each attorney is personally responsible for complying with the Attorney Conduct
Rules. This Policy sets forth Homestore's policies and procedures relating to
the Attorney Conduct Rules, but it does not amend or alter any of your
individual obligations under the Attorney Conduct Rules. This Policy should not
be relied upon without reference to, or in lieu of, the Attorney Conduct Rules.
In the event of a conflict between this Policy and the Attorney Conduct Rules,
the Attorney Conduct Rules shall govern.
This Policy serves as an addendum to and forms a part of the Homestore Code of
Conduct and Business Ethics (the "Code") and is subject to all the terms and
conditions set forth therein. As such, you will be required to comply with the
annual certification and verification obligations set forth in the Code with
respect to this Policy and matters subject hereto. Please note that this Policy
covers only the reporting requirements under the Attorney Conduct Rules and is
in addition to any other reporting requirements under the Code, any of our other
policies or procedures and the general rules of ethical conduct. All such other
policies or rules shall continue in effect and shall apply to reportable events
that are not covered by the Attorney Conduct Rules and this Policy.
24
All capitalized terms used but not defined herein have the meaning given them in
the Code.
II. ATTORNEYS SUBJECT TO THIS POLICY
This Policy covers all in-house and outside attorneys employed or retained by
Homestore that:
(a) provide legal services to Homestore,
(b) have an attorney-client relationship with Homestore, and
(c) (i) transact business or communicate with the SEC on behalf
of Homestore,
(ii) represent Homestore before the SEC,
(iii) provide advice regarding U.S. securities laws or SEC rules
and regulations with respect to any document that is known
by such attorney to be filed with the SEC or incorporated
into filings with the SEC, or
(iv) provide advice to Homestore regarding whether any
information is required to be filed with the SEC under
U.S. securities laws or SEC rules and regulations.
This Policy also applies to any attorney supervising or directing another
attorney who is covered by this Policy (a "Supervisory Attorney"). An attorney
who is covered by this Policy on a matter under the supervision or direction of
a Supervisory Attorney is referred to herein as a "Subordinate Attorney."
This Policy does not apply, however, to foreign attorneys who are licensed
outside the U.S. and do not independently practice before the SEC or give legal
advice on U.S. securities laws.
All attorneys subject to this Policy are referred to as "Covered Attorneys."
Nothing herein shall preclude non-Covered Attorneys from making reports under
this Policy.
Certain Covered Attorneys retained or directed to investigate evidence of
Material Violations (as defined below) may not be subject to the reporting
obligations under this Policy as set forth in the Attorney Conduct Rules.
III. REPORTABLE EVENTS
Each Covered Attorney shall make a report under this Policy promptly upon
becoming aware of credible evidence of:
(a) a material violation of an applicable United States federal or
state securities law,
(b) a material breach of fiduciary duty arising under United States
federal or state law, or
(c) any other material violation of any United States federal or
state law;
by Homestore or by an officer, director, employee or agent of Homestore (each, a
"Material Violation") has occurred, is ongoing, or is about to occur (a
"Reportable Event").
Credible evidence consists of evidence "upon which it would be unreasonable,
under the circumstances, for a prudent and competent attorney not to conclude
that it is reasonably likely that a Material Violation has occurred, is ongoing,
or is about to occur." (Section 205.2(e) of the Attorney Conduct Rules.)
25
A breach of fiduciary duty includes any breach of fiduciary or similar duty owed
to Homestore recognized under applicable federal or state statute or common law,
including without limitation, misfeasance, nonfeasance, abdication of duty,
abuse of trust and approval of unlawful transactions
The determination of whether a Reportable Event exists is inherently subjective.
The Covered Attorney need not have actual knowledge of a Reportable Event, but
only become aware that such Reportable Event is reasonably likely under the
circumstances. The SEC defines "reasonably likely" as "more than a mere
possibility, but it need not be `more likely than not.' Reference to "under the
circumstances" means the circumstances existing at the time the Covered Attorney
decides whether he or she is obligated to report and may include, among others,
the competence, background and experience of the Covered Attorney.
The Attorney Conduct Rules do not define the level of "materiality" required for
violation to be reportable. Instead, the SEC relies on the "well-established
meaning [of materiality] under existing federal securities laws," citing Basic,
Inc. v. Levinson, 485 U.S. 224, 231-236 (1988) and TSC Indus. v. Northway, Inc.,
426 U.S. 438 (1976). These cases are generally cited for the proposition that a
fact is material if there is a substantial likelihood that its disclosure would
have been considered significant by a reasonable investor.
Any Covered Attorney who has questions or concerns regarding any suspected
Material Violation, the nature of the law of fiduciary duties or otherwise with
respect to whether a Reportable Event exists should consult with Homestore's
Compliance Director (as designated under the Code) in accordance with Section IX
below.
IV. UP-THE-LADDER REPORTING RESPONSIBILITIES
A. Reporting to Supervisory Attorney and General Counsel
If a Covered Attorney becomes aware of a Reportable Event (whether through a
report received from his or her Subordinate Attorney or otherwise), that Covered
Attorney shall promptly report such Reportable Event directly to his or her
Supervisory Attorney.
If the Covered Attorney's immediate supervisor is the General Counsel of
Homestore (a position the SEC refers to as the "Chief Legal Officer"), the
Covered Attorney shall make such report directly to the General Counsel;
provided, that if such Covered Attorney reasonably believes it would be futile
to report the Reportable Event to the General Counsel, he or she may report the
Reportable Event directly to the Audit Committee as described in Section IV.D.
below.
B. Obligations of Supervisory Attorney upon Receipt of a Report
A Supervisory Attorney receiving a report from a Subordinate Attorney shall
assess such report in good faith to determine whether it provides credible
evidence of a Reportable Event. If the Supervisory Attorney becomes aware of
credible evidence of a Reportable Event by virtue of such report or otherwise,
the Supervisory Attorney shall comply with his or her reporting obligations
under Section IV.A. above. If such Supervisory Attorney determines no credible
evidence of a Reportable Event exists, that Supervisory Attorney shall so notify
the Subordinate Attorney and advise the Subordinate Attorney of the basis for
that determination.
26
A Supervisory Attorney is not required to treat every report from a Subordinate
Attorney as credible evidence of a Reportable Event. Rather, a Supervisory
Attorney must independently determine, based on his or her own competence,
background and experience that credible evidence of a Reportable Event exists.
If a Subordinate Attorney reasonably believes that the Supervisory Attorney to
whom he or she made the report has failed to comply with the reporting
provisions applicable to Supervisory Attorneys, he or she may, but is not
required to, report directly to the General Counsel and take the actions
described below in Sections IV.D. and IV.E. of this Policy.
C. Response by General Counsel upon Receipt of a Report
The General Counsel shall undertake such inquiry into the evidence presented by
the Covered Attorney submitting a report directly to the General Counsel (the
"Submitting Attorney") as the General Counsel reasonably believes is appropriate
to determine whether a Reportable Event exists. If the General Counsel
determines that no Reportable Event exists, he or she will notify the Submitting
Attorney and advise him or her of the basis for that determination. Otherwise,
the General Counsel will be required to take all reasonable steps to cause
Homestore to adopt an Appropriate Response (as defined below) and will advise
the Submitting Attorney of that response within a reasonable time.
An "Appropriate Response" is one that causes the Submitting Attorney to
reasonably believe, taking into account all attendant circumstances, including
the weight of evidence, severity of potential violation and scope of
investigation, that:
(1) no Material Violation has occurred, is ongoing, or is about to occur;
(2) Homestore has, as necessary, adopted appropriate remedial measures,
including appropriate steps or sanctions to stop any Material Violations that
are ongoing, to prevent any Material Violation that has yet to occur, and to
remedy or otherwise appropriately address any Material Violation that has
already occurred and to minimize the likelihood of its recurrence; or
(3) Homestore, with the consent of its Board of Directors or its Audit
Committee, has retained or directed an attorney to review the reported evidence
of a Material Violation and either:
(a) has substantially implemented any remedial recommendations
made by such attorney after a reasonable investigation and evaluation of the
reported evidence; or
(b) has been advised that such attorney may, consistent with his
or her professional obligations, assert a colorable defense on behalf of
Homestore (or Homestore's officer, director, employee or agent, as the case may
be) in any investigation or judicial or administrative proceeding relating to
the reported evidence of a Material Violation.
D. Evaluation of Response from General Counsel
Following receipt of the response of the General Counsel to the report, the
Submitting Attorney must assess whether he or she has received an Appropriate
Response to his or her report within
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a reasonable time. If the Submitting Attorney determines that the General
Counsel has provided an Appropriate Response within a reasonable time, the
Submitting Attorney has no further obligations under this Policy with respect to
the Reportable Event set forth in his or her report. If the Submitting Attorney
determines that the General Counsel has not provided an Appropriate Response
within a reasonable time, the Submitting Attorney must report the Reportable
Event to the Audit Committee of the Board.
E. Evaluation of Response by Audit Committee
If the Submitting Attorney determines that Homestore has not provided an
Appropriate Response within a reasonable time, the Submitting Attorney must
explain his or her reasons to the General Counsel, the Chief Executive Officer
of Homestore and to Audit Committee to whom he or she reported the Reportable
Event.
F. Qualified Legal Compliance Committee ("QLCC")
The Attorney Conduct Rules permit Homestore to form a QLCC or to designate
Homestore's Audit Committee or another committee of the Board to serve as a
QLCC. Homestore has not formed or designated a QLCC to date, but reserves the
right to do so in the future. In the event Homestore forms or designates a QLCC
we will inform all Covered Attorneys thereof and make the necessary revisions to
this Policy to reflect the alternative policies and procedures applicable to the
QLCC.
V. SPECIAL REQUIREMENTS OF OUTSIDE COUNSEL
Homestore encourages all of its outside law firms to comply with this Policy in
making reports to Homestore, except as otherwise required by law. In this
regard, every Homestore attorney who retains outside counsel on behalf of
Homestore should provide outside counsel with a copy of this Policy and any form
of written report that may be designated from time to time by Homestore for
making reports under this Policy.
Each outside law firm comprised of more than one Covered Attorney should
designate an engagement partner to make reports to Homestore under this Policy.
Except as otherwise required by law, the engagement partner shall be responsible
for delivering any report required under this Policy to his or her in-house
Supervisory Attorney or the General Counsel, as designated to that outside
counsel by Homestore.
VI. REPORTS AND RECORDKEEPING
A. Format and Timing of Reports
Reports made under this Policy may be made in person, by telephone, by e-mail,
electronically or in writing as promptly as possible following the time the
Covered Attorney becomes aware of a Reportable Event and in a manner consistent
with the privileged nature of the communication. All reports shall be made
directly by the Covered Attorney, and the Covered Attorney shall clearly
indicate either on the face of any written report or at the time the report is
made orally that such report is being made pursuant to this Policy or the
Attorney Conduct Rules. All oral reports shall be followed up by a written
report within two (2) business days thereafter.
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Homestore may from time to time publish a form of report that must be used by
Covered Attorneys in making reports under this Policy.
B. Recordkeeping
The General Counsel and any Covered Attorney who reports a Reportable Event
shall make a written record stating that the report was made, describing the
nature of the report and noting whether a response was received.
VII. COMPLIANCE WITH THE ATTORNEY CONDUCT RULES AND NON-RETALIATION
Each Covered Attorney is required to comply with the Attorney Conduct Rules.
While no private right of action lies against a Covered Attorney for failing to
comply with the Attorney Conduct Rules, failure to comply may subject an
attorney to SEC enforcement action, including disciplinary action and civil
penalties.
No attorney covered by this Policy or the Attorney Conduct Rules shall be
disciplined, reprimanded, dismissed or otherwise penalized for complying in good
faith with this Policy or the Attorney Conduct Rules. An attorney formerly
employed or retained by Homestore who made a report under this Policy or the
Attorney Conduct Rules and reasonably believes he or she has been discharged for
doing so may notify Homestore's Board of Directors or any committee of the Board
of his or her belief.
VIII. AMENDMENTS, INTERPRETATION AND PRIVILEGE
A. Amendments
This policy may be amended and reissued by Homestore from time to time. Without
limiting Homestore's right to amend this Policy in any way, Homestore
anticipates that it will likely amend this Policy to reflect (1) experience with
the implementation and operation of the Policy, (2) additional commentary from
the SEC, developing case law and other guidance on the requirements of the
Attorney Conduct Rules and (3) developments after the date of this Policy,
including direction from the Board of Directors of Homestore.
B. Interpretation
This Policy is intended to provide a reporting process on events that may be
subject to reporting obligations under the Attorney Conduct Rules. No element of
this Policy, however, is intended to bind Homestore, its General Counsel or any
Covered Attorney to any particular interpretation of, or commitment under, the
Attorney Conduct Rules. Furthermore, this Policy is not intended to amend,
modify or alter any of the provisions of the Attorney Conduct Rules.
C. Privilege
The communications under this Policy are intended to assist Homestore's General
Counsel in delivering legal services to Homestore and to assist Homestore in
receiving legal services from Homestore's other in-house and outside attorneys.
Neither Homestore, nor any of its officers,
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management, employees or attorneys intends to waive any legal privilege that may
be applicable to any of the communications required under the terms of this
Policy or the Attorney Conduct Rules. Homestore considers all such
communications to be privileged and specifically asserts the application of
privilege for such communications.
Covered Attorneys should use their reasonable efforts, subject to their general
ethical obligations and obligations under the Attorney Conduct Rules, not to
make public any reports under this Policy or take other action that breaches
Homestore confidences or that might otherwise be viewed as a waiver of the
attorney-client privilege.
IX. CONSULTATION REGARDING THE ATTORNEY CONDUCT RULES AND THIS POLICY
Homestore is dedicated to helping its Covered Attorneys fully understand and
comply with the Attorney Conduct Rules and this Policy. Homestore strongly
encourages its Covered Attorneys to raise concerns and ask questions he or she
may have regarding the Attorney Conduct Rules and this Policy. Questions
regarding the Attorney Conduct Rules or this Policy may be discussed with or
submitted to the Compliance Director designated in the Code. In the course of
such consultation, the Compliance Director may conclude independently that an
event discussed or submitted is a Reportable Event, in which case the Compliance
Director shall be obligated to comply with this Policy and the Attorney Conduct
Rules with respect thereto. In the event a Covered Attorney reasonably feels
that his or her question or concern was not appropriately addressed by the
Compliance Director, he or she may discuss such question or concern with the
Chief Executive Officer or the Audit Committee. No opinion or assessment by the
Compliance Director that a matter is or is not a Reportable Event shall be
binding on any Covered Attorney.
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