EXHIBIT 14.1
TAG-IT PACIFIC, INC.
CODE OF ETHICAL CONDUCT
Tag-It Pacific, Inc. (the "COMPANY") is committed to conducting its
business on a high ethical plane based on honesty, integrity, and fair
commercial competition. This Code of Ethical Conduct (this "CODE") applies to
all directors, officers and employees (with all three groups being referred to
as "EMPLOYEES") of the Company and is intended to provide a clear understanding
of the ethical principles of business conduct expected of each employee.
Compliance with these standards is vital to the integrity and continued well
being of our business and our employees.
Our code is designed to embody rules regarding individual and peer
responsibilities, as well as responsibilities to our employees, customers,
suppliers, stockholders, the public and other stakeholders, and includes our
goals in furthering:
1. Honest and ethical conduct, including the ethical handling of
actual or apparent conflicts of interest between personal and
professional relationships;
2. The avoidance of conflicts of interest, including disclosure
to an appropriate person or persons identified in this Code of
any material transaction or relationship that reasonably could
be expected to give rise to such a conflict;
3. Full, fair, accurate, timely, and understandable disclosure in
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;
4. Compliance with applicable governmental laws, rules and
regulations;
5. The prompt internal reporting to an appropriate person or
persons of any violations of the Code; and
6. Accountability for adherence to the Code.
Today, all corporations are under high levels of scrutiny and are held
to increasingly higher levels of accountability. As a result, the Board of
Directors has reaffirmed its strong commitment that Company business practices
be conducted in accordance with the highest professional, ethical, legal and
moral standards. This Code outlines the broad principles of legal and ethical
business conduct embraced by the Company. It is not a complete list of legal or
ethical questions an employee might face in the course of business, and
therefore, this code must be applied using common sense and good judgment.
Additionally, under certain circumstances local country law may establish
requirements that differ from this code. Company employees worldwide are
expected to comply with all local country laws and Company business conduct
policies in the area in which they are conducting Company business.
Please read the Code of Ethical Conduct carefully. We are confident
that each of us will comply with the Code and thereby help maintain our
reputation for the highest standards of business integrity.
OVERALL ETHICAL CONDUCT
BUSINESS ETHICS
It is essential that we all keep an eye out for possible infringements
of the Company's business ethics - whether these infringements occur in dealings
with the government or the private sector, and whether they occur because of
oversight or intention. Company employees who have knowledge of possible
violations should notify Human Resources, or the Finance Department. To assist
employees in the day-to-day protection of our business ethics, we've compiled a
list of some areas where breaches may occur:
o Improper or excessive payments of any of the following:
o Employee bonuses or compensation agreements
o Consulting fees
o Director & officer payments
o Miscellaneous expenses
o Insurance premiums
o Nondeductible expenses
o Employee loans
o Public relations fees
o Legal fees
o Commissions
o Other professional fees
o Expense reports
o Questionable payments to agents, consultants, or professionals
whose backgrounds have not been adequately investigated, who
do not have signed contracts or letters of engagement, or
whose association with the Company would be embarrassing if
exposed;
o Payroll-related expenditures, bonuses, awards, and non-cash
gifts given to or by the Company employees without proper
approval and adequate documentation;
o Payments made in cash or checks drawn to Cash or Bearer or
bank accounts/property titles not in the Company's name;
o Transfers to or deposits in the bank account of an individual,
rather than in the account of the company with which we are
doing business;
o Billings made higher or lower than normal prices for fees, at
a customer's request;
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o Payments made for any purpose other than that described in
supporting documents;
o Payments made to employees of customers or agencies through
intermediary persons or organizations, or that seem to deviate
from normal business transactions;
o Any large, abnormal, unexplained, or individually approved
contracts, or expenditures made without review of supporting
documentation;
o Unusual transactions occurring with nonfunctional, inactive,
or shell subsidiaries or undisclosed or unrecorded assets or
liabilities;
o Use of unethical or questionable means to obtain information,
including information about competitors, information
concerning government acquisition plans, or any procurement
decision or action;
o An employment, consulting, or business relationship between a
Company employee and another company, especially in the same
or related business; and
o Frequent trading (buying and selling over short intervals) in
Company stock or the stock of a company with which we do
business.
These are examples of possible infringements that Company employees
need to avoid. Employees should feel free to discuss any concerns about this
policy with their manager, HR representative or the Finance Department.
CONFLICTS OF INTEREST
Employees are expected to make or participate in business decisions and
actions in the course of their employment with the Company based on the best
interests of the company as a whole, and not based on personal relationships or
benefits. Conflicts of interest can compromise employees' business ethics.
Employees are expected to apply sound judgment to avoid conflicts of interest
that could negatively affect the Company or its business. At the Company, a
conflict of interest is any activity that is inconsistent with or opposed to the
Company's interests, or gives the appearance of impropriety.
Employees should avoid any relationship that would cause a conflict of
interest with their duties and responsibilities at the Company. Employees are
expected to disclose to us any situations that may involve inappropriate or
improper conflicts of interests affecting them personally or affecting other
employees or those with whom we do business. Waivers of conflicts of interest
involving executive officers require the approval of the Board of Directors or
an appropriate committee.
Members of the Company's Board of Directors have a special
responsibility because our Directors are prominent individuals with substantial
other responsibilities. To avoid conflicts of interest, Directors are expected
to disclose to their fellow Directors
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any personal interest they may have in a transaction upon which the Board passes
and to recuse themselves from participation in any decision in which there is a
conflict between their personal interests and the interest of the Company.
Set forth below is specific guidance for some areas of potential
conflicts of interest that require special attention. It is not possible to list
all conflicts of interest. These are examples of the types of conflicts of
interest that the Company employees are expected to avoid. Ultimately, it's the
responsibility of each individual to avoid any situation that could appear to be
a conflict of interest. Employees are urged to discuss any potential conflicts
of interest with their manager, HR Representative, or the Finance Department.
INTEREST IN OTHER BUSINESSES. Company employees and members of their immediate
families must avoid any direct or indirect financial relationship with other
business that could cause divided loyalty.
OUTSIDE DIRECTORSHIPS. The Company encourages its employees to be active in
industry and civic associations, including membership in other companies' Boards
of Directors. Employees who serve on outside boards of a profit making
organization are required, prior to acceptance, to obtain written approval from
the Audit Committee. As a rule, employees may not accept a position as an
outside director of any current or likely competitor of the Company.
Furthermore, in the absence of an overriding benefit to the Company and a
procedure to avoid any financial conflict (such as refusal of compensation and
recusal from involvement in the other company's relationship with the Company),
approval is likely to be denied where the Company employee either directly or
through people in his or her chain of command has responsibility to affect or
implement the Company's business relationship with the other company. Approval
of a position as a director of a company that supports or promotes a
competitor's products or services is also likely to be denied.
If the committee approves an outside directorship, employees may keep
compensation earned from that directorship unless the terms of the committee's
approval state otherwise. Generally, however, employees may not receive any form
of compensation (including stock options, IPO stock or cash) for service on a
board of directors of a company if the service is at the request of the Company
or in connection with the Company's investment in, or a significant relationship
exists with, that company and the directorship is as a consequence or in
connection with that relationship. Any company that is a vendor, supplier,
partner or customer of the Company has a "relationship" with the Company.
"Significant" is broadly defined to include a sole-source vendor/supplier, or
one in which the Company is responsible for generating five percent or more of
the outside company's revenues. When membership on a Board of Directors is other
than at the Company's request, and even if no compensation is received, a
potential for conflict of interest exists, and therefore the Company employee is
expected to recuse him- or herself from any involvement in the Company's
relationship with that outside company. It is therefore important that Company
employees recognize that their membership should be an opportunity to provide
expertise and to broaden their own experience, but they should not be put in a
position where the other company
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expects to use the person's board membership as a way to get access or to
influence Company decisions.
The Company may at any time rescind prior approvals in order to avoid a
conflict or appearance of a conflict of interest for any reason deemed to be in
the best interests of the Company. In addition, the Company will periodically
conduct an inquiry of employees to determine the status of their membership on
outside boards.
INVESTMENTS IN PUBLIC COMPANIES. Passive investments of not more than one
percent of total outstanding shares of companies listed on a national or
international securities exchange, or quoted daily by NASDAQ or any other board,
are permitted without the Company's approval - provided the investment is not so
large financially either in absolute dollars or percentage of the individual's
total investment portfolio that it creates the appearance of a conflict of
interest. Any such investment must not involve the use of confidential "inside"
or proprietary information, such as confidential information that might have
been learned about the other company on account of the Company's relationship
with the other company. Investments in diversified publicly traded mutual funds
are not deemed subject to these conflict of interest guidelines, provided
confidentiality requirements are observed.
INVESTMENTS IN PRIVATE COMPANIES. Company employees will occasionally find
themselves in a position to invest in the Company's partners or customers. It is
imperative that employees presented with such opportunities understand the
potential conflict of interest that may occur in these circumstances. Company
employees must always serve our stockholders first. Investing in other companies
that the Company has an actual or potential business relationship with may not
be in our stockholders' best interests. The following guidelines are intended to
cover such circumstances:
Company employees may not invest in privately held companies that are
the Company's customers, partners or suppliers without disclosure to the
Company. Where the employee either directly or through people in his/her chain
of command has responsibility to affect or implement the Company's relationship
with the other company, approval of the Company is required; however, in such
cases approval is likely to be denied.
Such situations may put the Company employee in a conflict of interest
between furthering their personal interests versus the interests of the Company,
hence the likelihood of denial. Employees in those circumstances should not
invest in the company in question.
If an investment is made and/or approval is granted, and the employee
subsequently finds him or herself in a potentially conflicted position due to
his or her job responsibilities or those of others in his or her chain of
command, the Company employee is expected to recuse him- or herself from any
involvement in the Company's relationship with that other company. (If the
conflict is so fundamental as to undermine the employee's ability to undertake
an important job activity, a discussion of possible divestiture may be
required). Furthermore, with respect to any investment or financial interest in
a third party, employees should be extremely cautious to avoid activities such
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as recommending or introducing the other company to other parts of our Company's
organization unless there is a clear disclosure of the financial interest.
If an employee happens to have an investment in a company and
transitions into a role that would place him/her in a conflict of interest
position (such as those described above), the employee should disclose the
situation in writing to his/her manager and HR Representative. Efforts will be
made to resolve the situation equitably on a case-by-case basis.
Where the Company has made an investment in another company, permission
must be obtained before an employee invests in that company. When a Company
employee is placed on a board of directors or advisory board to represent the
Company, such employee cannot make an investment in that other company without
approval from our Board of Directors; and they may not receive compensation for
such participation at the Company's request.
INVENTIONS, BOOKS, AND PUBLICATIONS. Company employees must receive written
permission from the Company before developing, outside of the Company, any
products or intellectual property that is or may be related to the Company's
current or potential business.
PROPER PAYMENT. All Company employees should pay for and receive only that which
is proper. Company employees should not make payments or promises to influence
another's acts or decisions, and Company employees must not give gifts beyond
those extended in normal business. Company employees must observe all government
restrictions on gifts and entertainment. Employees will not receive payments of
any kind from Company customers.
FAVORS, GIFTS, AND ENTERTAINMENT. Company employees and members of their
families must not give or receive valuable gifts (including gifts of equipment
or money, discounts, or favored personal treatment) to or from any person
associated with the Company's vendors or customers. This includes accepting the
opportunity to buy "directed shares" (also called "friends and family shares")
from another company where the Company employee is now or is likely to become
involved in the evaluation, recommendation, negotiation or approval of current
or prospective business with that company.
This is not intended to preclude the Company from receiving or
evaluating appropriate complimentary products or services. Nor is it intended to
preclude the Company from making a gift of equipment to a company or
organization, provided that the gift is openly given, with full knowledge by the
company or organization, and is consistent with applicable law. In all cases,
the exchange of gifts must be conducted so there is no appearance of
impropriety. Gifts may only be given in accordance with applicable laws,
including the U.S. Foreign Corrupt Practices Act.
Advertising novelties, favors, and entertainment are allowed when the
following conditions are met:
o They are consistent with the Company's business practices;
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o They do not violate any applicable law, such as state and
federal procurement laws and regulations;
o They are of limited value ($50 or less); or
o Public disclosure would not embarrass the Company.
INDUSTRY ASSOCIATIONS. Membership on boards of industry associations generally
do not present financial conflicts of interest. However, employees should be
sensitive to possible conflicts with the Company's business interests, if, for
instance, the association takes a position adverse to the Company's interests or
those of key customers.
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FINANCIAL OFFICER CODE OF ETHICS
As a public company, it is of critical importance that the Company's
filings with the Securities and Exchange Commission be accurate and timely.
Depending on their position with the Company, employees may be called upon to
provide information to assure that the Company's public reports are complete,
fair and understandable. The Company expects all of its personnel to take this
responsibility very seriously and to provide prompt and accurate answers to
inquiries related to the Company's public disclosure requirements.
The Finance Department bears a special responsibility for promoting
integrity throughout the organization, with responsibilities to stakeholders
both inside and outside of the Company. The Chief Executive Officer, Chief
Financial Officer and Finance Department personnel have a special role both to
adhere to these principles themselves and also to ensure that a culture exists
throughout the company as a whole that ensures the fair and timely reporting of
the Company's financial results and condition.
Because of this special role, the Chief Executive Officer, the Chief
Financial Officer and all members of the Company's Finance Department are bound
by the following Financial Officer Code of Ethics, and by accepting the Code of
Ethical Conduct, each agrees that he or she will:
o Act with honesty and integrity, avoiding actual or apparent
conflicts of interest in personal and professional
relationships;
o Provide information that is accurate, complete, objective,
relevant, timely and understandable to ensure full, fair,
accurate, timely, and understandable disclosure in reports and
documents that the Company files with, or submits to,
government agencies and in other public communications;
o Comply with rules and regulations of federal, state,
provincial and local governments, and other appropriate
private and public regulatory agencies;
o Act in good faith, responsibly, with due care, competence and
diligence, without misrepresenting material facts or allowing
one's independent judgment to be subordinated;
o Respect the confidentiality of information acquired in the
course of one's work except when authorized or otherwise
legally obligated to disclose. Confidential information
acquired in the course of one's work will not be used for
personal advantage;
o Share knowledge and maintain skills important and relevant to
stakeholder's needs;
o Proactively promote and be an example of ethical behavior as a
responsible partner among peers, in the work environment and
the community;
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o Achieve responsible use of and control over all assets and
resources employed or entrusted;
o Promptly report to the Chief Financial Officer and/or the
Chairman of the Audit Committee any conduct that the
individual believes to be a violation of law or business
ethics or of any provision of the Code of Ethical Conduct,
including any transaction or relationship that reasonably
could be expected to give rise to such a conflict.
Violations of this Financial Officer Code of Ethics, including failures
to report potential violations by others, will be viewed as a severe
disciplinary matter that may result in personnel action, including termination
of employment. If you believe that a violation of the Financial Officer Code of
Ethics has occurred, please contact the Company's Chief Financial Officer,
Ronda Ferguson, at ronda.ferguson@tagitpacific.com. You may also contact the
Audit Committee of the Board of Directors at Tag-it Pacific, Inc. Audit
Committee, c/o Stubbs, Alderton & Markiles, LLP, 15821 Ventura Blvd., Suite
525, Encino, California 91436.
It is against the Company policy to retaliate against any employee for
good faith reporting of violations of this Code.
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LAWS, REGULATIONS AND GOVERNMENT RELATED ACTIVITIES
Violation of governing laws and regulations, whether in the United
States or abroad, is both unethical and subjects the Company to significant
risk in the form of fines, penalties and damaged reputation. It is expected
that each employee will comply with applicable laws, regulations and corporate
policies. Specific areas with which employees are expected to comply include:
o Anti-Trust
o Insider Trading
o Foreign Corrupt Practices Act
o Government Business
o Political Contributions
o Using Third-Party Copyrighted Material
o Export, Re-export and Transfer Policy
o Customs Compliance for International Shipping
ANTI-TRUST
The economy of the United States, and of most nations in which the
Company does business, is based on the principle that competition and profit
will produce high-quality goods at fair prices. To ensure that this principle
is played out in the marketplace, most countries have laws prohibiting certain
business practices that could inhibit effective competition. The antitrust laws
are broad and far-reaching. They touch upon and affect virtually all aspects of
the Company's operations. The Company supports these laws not only because they
are the law, but also because we believe in the free market and the idea that
healthy competition is essential to our long-term success. The Company fully
embraces all antitrust laws and avoids conduct that may even give the
appearance of being questionable under those laws. Whether termed antitrust,
competition, or free trade laws, the rules are designed to keep the marketplace
thriving and competitive. In all cases where there is question or doubt about a
particular activity or practice, employees should contact the HR representative
or the Finance Department before proceeding.
INSIDER TRADING
If an employee has material, non-public information relating to the
Company, it is the Company's policy that neither the employee, nor any person
related to the employee, may buy or sell securities of the Company or engage in
any other action to take advantage of, or pass on to others, that information.
This policy also applies to trading in the securities of any other company,
including our customers or suppliers, if employees have material, non-public
information about that company which the employee obtained in the course of
their employment by the Company.
Transactions that may be necessary or justifiable for independent
reasons, including emergency expenditures and transactions planned before the
employee learned the material information, are not exceptions. Even the
appearance of an improper transaction must be avoided to prevent any potential
risk to the Company or the
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individual trader. Violations of insider trading laws may be punishable by fines
and/or imprisonment.
Besides the obligation to refrain from trading while in possession of
material, non-public information, employees are also prohibited from "tipping"
others. The concept of unlawful tipping includes passing on information to
friends or family members under circumstances that suggest that employees were
trying to help them make a profit or avoid a loss. Besides being considered a
form of insider trading, of course, tipping is also a serious breach of
corporate confidentiality. For this reason, employees should be careful to
avoid discussing sensitive information in any place (for instance, at lunch, on
public transportation, in elevators) where others may hear such information.
In all cases, Company employees should refer to the Company's Insider
Trading Policy for further information.
FOREIGN CORRUPT PRACTICES ACT
The Company requires full compliance with the Foreign Corrupt Practices
Act ("FCPA") by all of its employees, consultants and agents. The anti-bribery
and corrupt payment provisions of the FCPA make illegal any corrupt offer,
payment, promise to pay, or authorization to pay any money, gift, or anything
of value to any foreign official, or any foreign political party, candidate or
official, for the purpose of:
o Influencing any act, or failure to act, in the official
capacity of that foreign official or party; or
o Inducing the foreign official or party to use influence to
affect a decision of a foreign government or agency, in order
to obtain or retain business for anyone, or direct business to
anyone.
Payments, offers, promises or authorizations to pay any other person,
U.S. or foreign, are likewise prohibited if any portion of that money or gift
will be offered, given or promised to a foreign official or foreign political
party or candidate for any of the illegal purposes outlined above.
All the Company employees, whether located in the United States or
abroad, are responsible for FCPA compliance and the procedures to ensure FCPA
compliance. All managers and supervisory personnel are expected to monitor
continued compliance with the FCPA to ensure compliance with the highest moral,
ethical and professional standards of the company.
Any action in violation of the FCPA is prohibited. All the Company
employees who become aware of apparent FCPA violations should notify the HR
representative or the Finance Department immediately. Any question or
uncertainty regarding compliance with this policy should be brought to the
attention of the HR representative or the Finance Department.
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POLITICAL CONTRIBUTIONS
No Company assets - including employees' work time, use of the Company
premises, use of Company equipment, or direct monetary payments - may be
contributed to any political candidate, political actions committees (also
known as, "PACS"), party, or ballot measure without the permission of the Board
of Directors. Of course, the Company employees may participate in any political
activities of their choice on an individual basis, with their own money and on
their own time.
USING THIRD-PARTY COPYRIGHTED MATERIAL
Company employees may sometimes need to use third-party copyrighted
material to perform their jobs. Before such third-party material may be used,
appropriate authorization from the copyright holder must be obtained. The need
for such permission may exist whether or not the end product containing
third-party material is for personal use or for the Company's internal or other
use. It is against Company policy and it may be unlawful for any employee to
copy, reproduce, scan, digitize, broadcast, or modify third-party copyrighted
material when preparing Company products or promotional materials, unless
written permission from the copyright holder has been obtained prior to the
proposed use. Improper use could subject both the Company and the individuals
involved to possible civil and criminal actions for copyright infringement. It
is against Company policy for employees to use the Company's facilities for the
purpose of making or distributing unauthorized copies of third-party copyrighted
materials for personal use or for use by others.
CUSTOMS COMPLIANCE FOR INTERNATIONAL SHIPPING
The Company's policy is to comply fully with customs laws, regulations
and policies in all countries where the Company does business. Accurate customs
information on shipping documents is required for all international shipments.
Employees should not initiate shipping documents outside approved automated
shipping systems or non-production shipping group.
PROPRIETARY INFORMATION
Proprietary information is defined as information that was developed,
created, or discovered by the company, or that became known by or was conveyed
to the company, that has commercial value in the company's business. It includes
but is not limited to software programs and subroutines, source and object code,
trade secrets, copyrights, ideas, techniques, know-how, inventions (whether
patentable or not), and any other information of any type relating to designs,
configurations, toolings, schematics, master works, algorithms, flowcharts,
circuits, works of authorship, formulae, mechanisms, research, manufacture,
assembly, installation, marketing, pricing, customers, salaries and terms of
compensation of Company employees, and costs or other financial data concerning
any of the foregoing or the Company and its operations generally.
The Company's business and business relationships center on the
confidential and proprietary information of the Company and of those with whom
we do business -
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customers, vendors, and others. Each employee has the duty to respect and
protect the confidentiality of all such information. The use of confidential and
proprietary information - whether the Company's or a third party's - is usually
covered by a written agreement. In addition to the obligations imposed by that
agreement, all employees should comply with the following requirements:
o Confidential information should be received and disclosed only
under the auspices of a written agreement
o Confidential information should be disclosed only to those
Company employees who need to access it to perform their jobs
for the Company
o Confidential information of a third party should not be used
or copied by any Company employee except as permitted by the
third-party owner (this permission is usually specified in a
written agreement)
o Unsolicited third-party confidential information should be
refused or, if inadvertently received by a Company employee,
returned unopened to the third party or transferred to the HR
representative or the Finance Department for appropriate
disposition
Employees must refrain from using any confidential information
belonging to any former employers, and such information must never be brought to
the Company or provided to other Company employees.
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