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Occam Networks - Code of Business Conduct And Ethics (as Amended December 5, 2006)
Exhibit 10.25
OCCAM NETWORKS, INC.
CODE OF BUSINESS CONDUCT AND ETHICS (As amended December 5, 2006)
Overview of the Code
Occam' s reputation for honesty and integrity is among our most important assets. The Occam Code of Business Conduct and Ethics, which may be referred to as the " Code," is designed to provide you with a clear understanding of the conduct we expect from all our employees, directors, and consultants. The Code applies to all directors, officers, and employees of Occam and its subsidiaries, who, unless otherwise specified, are referred to together in the Code as " employees." In addition, consultants, contractors, and agents acting on behalf of Occam must review the Code and agree to be bound by its provisions as if they were employees. You are required to review the Code carefully. All new employees of Occam must execute an acknowledgement stating that they agree to be bound by the Code. Existing employees will be asked from time to time to provide the Human Resources Department with a similar acknowledgement. Failure to comply with the Code can and will result in disciplinary or enforcement action, which could include a termination of employment.
Purposes of the Code
We have adopted and implemented the Code to defer wrongdoing and promote the following:
ullet Honest and ethical conduct, including (i) the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (ii) the ethical conduct of our business; and (iii) the ethical management of our relationships and transactions with customers, vendors, and anyone with whom we conduct business; ullet Full, fair, accurate, timely, and understandable disclosure in reports and documents we file with, or submit to, the Securities and Exchange Commission and in other public communications we make;
ullet Compliance with applicable governmental laws, rules, and regulations;
ullet Prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and ullet Accountability for adherence to the Code.
Highlights of the Code
The most important principal embodied in the Code is that as an employee of Occam, you are our representative, and you must act on behalf of Occam in all circumstances with honesty and integrity and in conformity with all applicable laws and regulations . Key requirements of the Code include those listed below. ullet You must at all times conduct yourself and any business you are conducting on Occam' s behalf in compliance with all applicable laws or regulations.
ullet You must avoid conflicts of interest or the appearance of conflicts of interest.
ullet You must insure that every business or financial record that you prepare or are involved with, whether related to internal or external transactions, is prepared timely and accurately. You must never falsify any Occam document or business record, take any other action that distorts the true nature of any transaction, or fail to report to appropriate personnel any information that is necessary to insure that Occam properly records and accounts for every business transaction.
ullet If you are involved in preparation of our financial statements and reports or other public disclosures, you must use all reasonable efforts to ensure that all information and disclosures are full, fair, accurate, timely, and complete.
ullet You may not use assets of Occam, including confidential information, for your personal business or benefit.
ullet You must deal with our customers, suppliers, and other third parties with whom Occam has relationships, and with Occam' s competitors, fairly and at arm' s length and in compliance with all applicable laws, including those relating to competitive practices.
ullet You must protect Occam' s proprietary information as well as the proprietary information of third parties that Occam may obtain and must not use any such information for your personal benefit. ullet You must never bribe or attempt to bribe or improperly influence a government official. ullet You must report violations or suspected violations of the Code, including requests by any other employee or colleague to violate the Code, or any threats or retaliation against someone who has reported a potential violation or who is cooperating in any investigation.
ullet Violating the Code will result in disciplinary or enforcement action, which could include a termination of your employment.
Your Responsibilities
You are responsible for reading and understanding the Code . You must at all times comply with the Code, both in letter and in spirit. Ignorance of the Code will not excuse you from its requirements.
You are responsible for conforming your conduct to the Code . You must comply with the Code as well as other applicable policies of Occam. You will not be permitted to rely on technical arguments that an action was within the letter of the Code if it was clearly not within the spirit or intent of the Code.
You are responsible for seeking guidance if you have questions about the Code or if a circumstance or situation arises where you are uncertain as to whether an action is unethical or improper . Some situations may seem ambiguous. No Code of Conduct or other policy can address every circumstance. Occam encourages you to trust your instincts, as you will be responsible for your actions. In evaluating a situation, you should obtain all relevant facts, assess the responsibilities and roles of those
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involved, and use your own judgment and common sense to evaluate whether an action is unethical or improper. If you are uncertain, seek guidance. You may discuss with your manager any questions or concerns you have about the Code or other policies of Occam and whether or not any proposed course of conduct or dealing is appropriate. If for any reason you are uncomfortable discussing it with your manager, you should consult with appropriate personnel in the Human Resources Department or the Finance Department.
You are responsible to assist Occam in enforcing the Code and to report potential violations . You should be alert to possible violations and must report them. The process for reporting possible violations is described in Section III of the Code.
This Code is not an express or implied contract of continued employment and does not create any contractual rights for any employee of Occam or its subsidiaries. All employees should understand that this Code does not modify their employment relationship, whether at will or governed by contract, except that the employee' s compliance with the Code will be deemed a condition of continued employment with Occam.
Occam reserves the rights to amend, alter or terminate this Code, or to rescind any waiver or consent granted hereunder, at any time and for any reason. The policies in this Code do not constitute a complete list of Occam policies or a complete list of the types of conduct that can result in disciplinary action, including a termination of employment.
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TABLE OF CONTENTS
Page I. Introduction 1 II. Standards of Conduct 1 III. Accountability And Reporting; Identifying Violations 1 IV. Financial Records and Public Disclosure 3 V. Compliance with Laws, Rules and Regulations 6 VI. Insider Trading 6 VII. Conflicts of Interest 6 VIII. No Loans to Executive Officers or Directors 9 IX. Corporate Opportunities 9 X. Fair Dealing 9 XI. Customer Relationships 9 XII. Supplier Relationships 9 XIII. Export Controls 10 XIV. Gifts and Entertainment 10 XV. Government Business 10 XVI. Political Contribution 11 XVII. Protection and Proper Use of Company Assets 11 XVIII. Use of Computers and Other Equipment 11 XIX. Use of Software 12 XX. Use of Electronic Communications 12 XXI. Confidentiality 12 XXII. Recordkeeping 12 XXIII. Records on Legal Hold 13 XXIV. Disclosure 13 XXV. Outside Communications 13 XXVI. Discrimination and Harassment 14 XXVII. Health and Safety 14 XXVIII. Compliance Standards and Procedures 14 XXIX. Amendment, Modification and Waiver 16
I. INTRODUCTION This Code of Business Conduct and Ethics (the " Code" ) summarizes the ethical standards and key policies that guide the business conduct of Occam Networks, Inc. (the " Company" or " Occam" ).
The purpose of this Code is to promote ethical conduct and deter wrongdoing. The policies outlined in this Code are designed to ensure that the Company' s employees, including its officers (" employees" ), and members of its board of directors (" directors" ) act in accordance with not only the letter but also the spirit of the laws and regulations that apply to the Company' s business. The Company expects its employees and directors to exercise good judgment to uphold these standards in their day-to-day activities and to comply with all applicable policies and procedures in the course of their relationship with the Company.
Employees and directors are expected to read the policies set forth in this Code and ensure that they understand and comply with them. The Code should also be provided to and followed by the Company' s agents and representatives, including consultants. The Code does not cover every issue that may arise, but it provides general guidelines for exercising good judgment. Employees and directors should refer to the Company' s other policies and procedures for implementing the general principles set forth below. Any questions about the Code or the appropriate course of conduct in a particular situation should be directed to the Company' s Chief Financial Officer. Any violations of laws, rules, regulations or this Code should be reported immediately. The Company will not allow retaliation against an employee or director for such a report made in good faith. Employees and directors who violate this Code will be subject to disciplinary action, which may include a termination of employment.
Each employee and director must sign the acknowledgement form at the end of this Code and return the form to the Company' s Human Resources Department indicating that he or she has received, read, understood and agreed to comply with the Code. The signed acknowledgment form will be placed in the individual' s personnel files. II. STANDARDS OF CONDUCT The Company expects all employees and directors to act with the highest standards of honesty and ethical conduct. The Company considers honest conduct to be conduct that is free from fraud or deception and is characterized by integrity. The Company considers ethical conduct to be conduct conforming to accepted professional standards of conduct. Ethical conduct includes the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, as discussed below.
III. ACCOUNTABILITY AND REPORTING; IDENTIFYING VIOLATIONS
Reporting Procedures
The Company expects employees to assist Occam in enforcing the Code and to report possible violations to appropriate personnel. Violations may occur as a result of someone' s intentional act or, in some cases, because of an unintentional act, oversight, or error. Employees should report suspected violations regardless of whether they believe the violation is or was intentional. Suspected violations should be reported to either of the following at Occam' s principal executive offices located at 77 Robin Hill Road, Santa Barbara, California 93117 (telephone: (805) 692-2900): ullet Occam' s Chief Financial Officer, Chris Farrell; or
ullet Occam' s Chief Executive Officer, Robert L. Howard-Anderson.
If an employee has concerns relating to Occam' s accounting, internal controls, auditing matters, financial record keeping, or public disclosures, he or she should also notify the Audit Committee of Occam' s Board of Directors by sending a letter to its Chairman, Robert Bylin, c/o Occam Networks, Inc., 77 Robin Hill Road, Santa Barbara, California 93117. You may also notify the Audit Committee by sending an email to an internal Audit Committee email address that is available to all Occam employees at Occam' s internal website. Email notifications to the internal Audit Committee link will be delivered directly to members of the Audit Committee.
To the extent reasonably possible, Occam will preserve a reporting person' s anonymity in connection with any investigation of a suspected violation. If an employee has concerns about anonymity, we encourage him or her to send an anonymous letter via mail to the personnel identified above, outlining the concerns and suspected violation and providing as much detail as possible to permit, if appropriate, an investigation into the issues raised. In addition, an employee should review Occam' s Complaint Procedures for Accounting and Auditing Matters, which is available on Occam' s internal and external websites. It is against Occam policy and this Code to retaliate in any manner, including harassment or threats, against any person who has in good faith reported a suspected violation of this Code or any other Occam policy.
Identifying Violations To assist employees in the day-to-day monitoring of our business conduct, the following is a partial list of facts or circumstances that could suggest a violation of the Code. This list is not exhaustive but provides examples of situations that employees should avoid and that should be reported.
ullet Oral or written agreements or understandings with customers modifying payment terms, rights of cancellation or product return, or any other term or condition, where such modification is not part of the terms and conditions of sale communicated to the Finance Department for purposes of recording the transaction.
ullet Improper or excessive payments relating to inaccurate or misleading time sheets, expense reports, billing records, or similar documents; ullet Improper or excessive payments to agents, consultants, or professional service providers, particularly where the service providers are new or unknown to Occam and have not been adequately investigated or have not signed contracts or letters of engagement as required by Occam' s policies, or where an association between Occam and the third party would be embarrassing if exposed; ullet Improper or excessive payments for " miscellaneous expenses" not properly categorized; ullet Payroll-related expenditures, bonuses, awards, and gifts given to or by Occam employees without proper approval and adequate documentation;
-2- ullet Payments made in cash or checks drawn to cash, or bearer or bank accounts or other property not titled in the name of Occam or a subsidiary of Occam; ullet Any payment or transfer to, or deposit with the bank account of, an individual or intermediary rather than the individual or company with which Occam is doing business;
ullet Payments or billings made, or fees collected or paid, that are greater or less than normal payments, billings, or fees for the services provided or received and made at the request of a supplier or customer; or any payment made or received in an amount greater or less than, or for purposes other than, as described in supporting documentation; ullet Unusual transactions occurring with non-functional, inactive, or shell subsidiaries or involving undisclosed or unrecorded assets or liabilities; and ullet Any employment, consulting, or business relationship between an Occam employee and another company, especially in a business that is the same as or related to Occam or any subsidiary of Occam.
IV. FINANCIAL RECORDS AND PUBLIC DISCLOSURE
Every Occam financial record including sales records, time sheets, expense reports, books and ledgers, and other financial data and records must be accurately and timely prepared and must be prepared in accordance with all applicable laws, principles, and standards. The integrity of our financial transactions and records is critical to the operation of our business and to maintaining the confidence and trust of our stockholders, customers, suppliers, and employees.
General Principles Applicable to Employees
Each employee having any responsibility for, or involvement in, financial reporting or accounting must have an appropriate understanding of relevant accounting and financial reporting principles, standards, laws, rules, and regulations as well as Occam' s financial and accounting policies, controls, and procedures.
Each employee having any responsibility for, or involvement in, the customer sales and support process or managing relationships with Occam' s vendors must understand the accounting and financial reporting implications of Occam' s transactions with these parties. All such employees should consult with the Finance Department to discuss any requests for non-standard terms or conditions. All such employees are responsible for insuring the accuracy and completeness of all documentation relating to customer sales and support or vendor transactions. The terms and conditions of any transaction between Occam and any customer or vendor must be fully and completely reflected in the documentation governing the transaction. The existence of oral or written agreements or understandings of any kind that are not part of the documentation relating to the transaction and that are not reported to the Finance Department as part of such transaction is an absolute violation of this Code and constitutes grounds for immediate termination. Examples of such agreements or understandings include (but are not limited to) requests for payment terms that differ from those reflected in purchase orders or other documentation or rights to return or cancel orders or products that are not reflected in the documentation. Employees involved in customer and vendor transactions are responsible to consult with the Finance Department if any customer or vendor requests that Occam consent to any term or condition that would not be fully reflected in the documentation relating to the transaction.
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Even employees not directly involved in financial reporting, accounting, sales or purchasing will likely come into contact with financial records or reports or with other documents on which employees preparing financial statements will depend. These may include vouchers, time sheets, invoices, or expense reports. We expect every employee, regardless of his or her familiarity or involvement with finance or accounting matters or principal job responsibilities or functions, to use all reasonable efforts to ensure that every business record or report with which he or she deals is accurate, complete, reliable, and timely submitted.
Each employee is specifically required to use all reasonable efforts to ensure the following provisions of the Code are satisfied:
ullet All transactions must be recorded and classified in the proper accounting period and in the appropriate account and department. Delaying or prepaying invoices to meet budget goals is a violation of the Code.
ullet No employee may falsify any document or distort the true nature of any transaction.
ullet All transactions must be supported by complete and accurate documentation.
ullet Any information or statement in any report, filing, certification, application, or similar document that Occam may submit to any governmental authority or entity must be full, fair, accurate, timely, and complete.
ullet Employees must cooperate fully with any investigation into the accuracy, completeness, and timeliness of Occam' s financial records. ullet To the extent estimates and accruals are required to be made in Occam' s reports and records, employees involved with such estimates and accruals will base them on good faith judgments supported by appropriate documentation.
ullet No payment may be made to any supplier, vendor, or other person, other than the person or firm that actually provided goods or services to Occam, unless the payment is approved in advance by the Chief Executive Officer and the Chief Financial Officer.
Employees Controlling Occam Funds
Every employee of Occam is personally responsible for all Occam funds over which he or she exercises control. No employee may allow any agent or contractor of Occam to exercise control over any funds of Occam without the prior approval of the Chief Executive Officer and Chief Financial Officer.
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Dealing With Auditors Our auditors have a duty to review our records in a fair and accurate manner. All employees must cooperate fully with independent and internal auditors in good faith and in accordance with law. No employee may fraudulently induce, or influence, coerce, manipulate, or mislead, our independent or internal auditors regarding any financial record, process, control, procedure or other matter.
Public Communications and Reports
Occam files reports and other documents with the Securities and Exchange Commission, the Nasdaq Global Market, and other governmental and regulatory agencies. In addition, from time to time, Occam makes other public announcements, such as issuing press releases.
Employees involved in the preparation of these reports, documents, or announcements are expected to use all reasonable efforts to ensure that Occam' s disclosures are complete, accurate, objective, relevant, timely and understandable. In addition, employees are expected to comply with Occam' s disclosure controls and procedures, which are designed to ensure full, fair, accurate, timely and understandable disclosure in our public reports and communications.
If an employee believes that any public disclosure by Occam is materially false or misleading, or if any employee becomes aware of material information that he or she believes should be disclosed to the public, he or she should bring the information to the attention of the Chief Executive Officer, the Chief Financial Officer, or the Audit Committee. An employee should take similar action if he or she believes that questionable accounting or auditing conduct or practices have occurred or are occurring. Intentional Misconduct
Intentional misrepresentations of the Company' s financial performance or any other action by an employee that intentionally compromises the integrity of Occam' s reports (financial or otherwise), records, or public disclosures is a specific and extremely severe violation of this Code. Any violation of this Code arising from an intentional misrepresentation, including failure to report potential misrepresentations by others, will be viewed as severe misconduct and will be subject to severe penalties, including termination of employment. Examples of such intentional misconduct would include, but are not limited to, the following:
ullet Reporting any information or entering any information in Occam' s books, records, or reports that fraudulently or intentionally hides, misrepresents, or disguises the true nature of any financial or non-financial transaction;
ullet Agreeing orally or in writing to any term or condition of any transaction with a customer or vendor that is not reflected in the documentation provided to the Finance Department or failing to disclose to the Finance Department that any customer or vendor either intends to breach or otherwise fail to honor any term or condition as reflected in such documentation or has an understanding of any term or condition that is inconsistent with the understanding of the Company and the Finance Department;
ullet Establishing any undisclosed or unrecorded fund, account, asset, or liability for any improper purpose;
-5- ullet Entering into any transaction or agreement that accelerates, postpones, or otherwise manipulates the accurate and timely reporting of revenues and expenses;
ullet Intentionally misclassifying transactions as to accounts, business units, or accounting periods; ullet Intentionally destroying or altering any document or record that employee has been notified is subject to a legal hold; or ullet Knowingly assisting others in any of the above.
V. COMPLIANCE WITH LAWS, RULES AND REGULATIONS
Employees and directors must comply with all laws, rules and regulations applicable to the Company and its business, as well as applicable Company policies and procedures. Each employee and director must acquire appropriate knowledge of the legal requirements relating to his or her duties sufficient to enable him or her to recognize potential problems and to know when to seek advice from the Company' s Chief Financial Officer. Violations of laws, rules and regulations may subject the violator to individual criminal or civil liability, as well as to discipline by the Company. These violations may also subject the Company to civil or criminal liability or the loss of business. Any questions as to the applicability of any law, rule or regulation should be directed to the Company' s Chief Financial Officer.
VI. INSIDER TRADING
The purpose of the Company' s insider trading policy is to establish guidelines to ensure that all employees and directors comply with laws prohibiting insider trading. No employee or director in possession of material, non-public information may trade the Company' s securities (or advise others to trade) from the time they obtain such information until after adequate public disclosure of the information has been made. Employees and directors who knowingly trade Company securities while in possession of material, non-public information or who tip information to others will be subject to appropriate disciplinary action up to and including termination. Insider trading is also a crime.
Employees and directors also may not trade in stocks of other companies about which they learn material, non-public information through the course of their employment or service.
Any questions as to whether information is material or has been adequately disclosed should be directed to the Company' s Chief Financial Officer. Additional information regarding insider trading can be found in the Company' s Insider Trading Policy.
VII. CONFLICTS OF INTEREST
An employee' s personal activities and relationships must not conflict, or appear to conflict, with those of Occam. An employee' s decisions and actions in the course of employment should be based on the best interests of Occam, not based on his or her own personal relationships or business and financial interests. We expect each employee to evaluate his or her personal relationships and activities to determine whether a conflict exists or could appear to exist and to avoid such relationships and activities. Common conflicts arise through the employment or business activities of a spouse, significant other, or other relative or
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through personal or business relationships through which an employee or a spouse, significant other, or relative may have a personal or economic relationship. Any situation where it may be difficult for an employee to perform his or her work impartially, objectively, or effectively and in the best interests of Occam could suggest that a conflict exists. Each employee is required to disclose immediately to a supervisor, the Finance Department, or the Human Resources Department if he or she becomes aware that any personal relationship or business or financial interest conflicts, or may appear to conflict, with those of Occam. Supervisors with concerns that any actual or suspected conflict, whether their own or related to a reporting employee, would violate the Code should contact the Finance Department or Human Resources Department.
Employee Conflicts Conflicts arise in numerous situations, and it is not possible to categorize every potential conflict. Again, the employee is responsible to evaluate these situations and confer with his or her supervisor or finance or human resources personnel. Conflicts such as those relating to an employee' s work schedule, duties, and responsibilities are specifically described in the employee handbook. In connection with the Code, we have also adopted the following conflicts policies relating to business or financial interests of employees (for the following purposes, " employee" does not include non-employee directors of Occam):
ullet Employees may own up to 1% of the stock of a competitor, customer, or supplier without obtaining p...
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