THE J M SMITH CORPORATION CODE OF CONDUCT & ETHICS › JM Smith Code of Ethics.pdf · Within the J M Smith Corporation, directors, officers and employees may not give or receive any

SOLUTION GROUP

THE J M SMITH CORPORATIONCODE OF CONDUCT & ETHICS

From the t ime of our founding and throughout the years of our growth that spans several generat ions, we have always been al l about doing the r ight thing at the J M Smith Corporat ion – for our customers, our stakeholders, by one another, and within the communit ies where we work and l ive. The common core of al l ethical codes is simply to do the r ight thing. I t is also readi ly observable that there has more than occasional ly been a struggle by some to do the r ight thing. We are al l famil iar with what happens when individuals and businesses don’t do the r ight thing. People get in trouble when they seem to think that doing the r ight thing doesn’t apply to them. One of the clearest sets of precepts comes from the U.S. Mil i tary Academy, West Point, where the credo is that a cadet wi l l not l ie, cheat or steal – or tolerate anyone who does. A very precise and a great rule. Businesses can get into trouble in any number of ways, sometimes by an employee confusing what is clearly wrong with the just i f icat ion of “competi t ive advantage.” I t is for this reason that formal codes of conduct have a place in the business world.

We have undertaken the task to review and update our Code of Conduct. I t wi l l be included in the revised Employee Handbook for 2010, and in this stand alone pamphlet, too. Our Code of Conduct appl ies throughout the J M Smith Corporat ion, from the board room to the mail room. I t appl ies to al l divisions and associated business enti t ies such as wholly owned subsidiaries and LLC’s. While i t cannot possibly detai l every potential ethical di lemma or si tuat ion, I hope that you wil l f ind i t to be a useful and thought provoking guide.

There is one thing that is new. While an employee can always feel free to speak with their supervisor, manager, VP, HR Director, or Division President about something that just doesn’t square with what an individual bel ieves to be r ight, we have added an anonymous third party hotl ine. We want an employee to feel free to alert us to possible wrongdoing so we can do what we need to do. We wil l not permit any retal iat ion against any employee who brings forward, in good faith, what is bel ieved to be truthful information about any situat ion that would compromise our principles, our values, violate the law, or put us at r isk. That number is 888-226-6810.

Thank you for al l that you do in support of our Company. I ask that you read this guide and keep i t as a reference. We are a great place to work and we wil l keep i t that way. Our integri ty has been and wil l remain non-negotiable. That is our legacy, and that is our way.

Bi l l Cobb Chairman

l e t t e r

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c o n t e n t

TABLE OF CONTENTS

Anti-trust p. 4

Business Gifts & Entertainment p. 5

Competitive Information p. 7

Compliance with Law and Government Regulations p. 8

Conflicts of Interest p. 9

EMail, the Internet & Use of Company Property p. 11

Environment p. 12

Equal Opportunity Employment p. 13

Fraud p. 14

Harassment-Free Workplace p. 15

Investments & Insider Information p. 16

Media Relations p. 17

Non-Competition p. 18

Outside Employment p. 19

Political Contributions p. 20

Proprietary and Confidential Information p. 21

Record Keeping, Financial and Accounting Controls p. 23

Safety and Health p. 24

Substance Abuse-Free Workplace p. 25

Reporting and Non-Retaliation p. 26

A N T I - T R U S T

4

Anti-trust law is complex, and determining what is proper and improper can often times

require sound legal advice.

Anti-trust laws exist to ensure that competi t ion in the marketplace remains vigorous, free, and unencumbered by col lusion or “restraint of trade.” Anti- trust law is complex, and determining what is proper and improper can often t imes require sound legal advice. This is part icularly true when a Company may acquire a new product, a new service or seeks to cooperate with others for some mutual benefi t , as in a trade associat ion.

There can also be situat ions that arise with individual employees engaged in marketing, sales, or purchasing goods and services. In general, i t is good pract ice for employees to avoid discussing with a competi tor:

• Prices• Costs• Product attr ibutes• Sales terr i tor ies• Channels• Customers

I t is general ly NOT a problem to gather information about a competi tor from the web, publ ic sources, former customers, defect ing customers or lost prospects. Other problematic si tuat ions can arise when entering into an exclusive agreement with a customer or suppl ier. Formal or informal “understandings” between companies with competing products or services to assign or designate terr i tor ies to prevent “turf wars” may be problematic.

Violat ions of anti- trust law can result in termination of employment, cr iminal prosecution, imprisonment, and f ines. And lots of bad press!

Examples of a Possible Ethical Issue

• The economy is not good, so a group of three companies meets and decides amongthemselves what they wil l charge for their products. They agree to a price schedule andsign i t .

• Two large telecommunications companies merge but st i l l operate l ike two companies. Oneconcentrate exclusively in the mobile/cel l phone market and the other in internet services. Fol lowing the merger, pr ices increase signif icantly.

• Two groups of salesmen get together. They al l agree that there’s lots of business to goaround and they’re t i red of travel ing al l over the terr i tory competing with one another. So they divide the territory up.

B U S I N E S S G I F T S & E N T E R TA I N M E N T

Gifts, meals and entertainment are common courtesies in the business world that tend to bui ld goodwil l and bui ld sound working relat ionships. This is very common, but not exclusive to, an organization’s sales or marketing act ivi t ies. In al l things, good judgment and moderation are the rule, and one must never, ever sol ici t a gif t or entertainment as a quid pro quo, or condit ion, of doing business. As a general rule, one should never give or accept a gif t of cash. A gif t card of nominal value is general ly OK.

Within the J M Smith Corporat ion, directors, off icers and employees may not give or receive any gif t or favor to anyone unless i t is of nominal value, that is, $500 or less. I t is impermissible, and may be unlawful, to give or to promise anything of value for the purpose of inf luencing a business transaction.

There may exist some l imited circumstances where a gif t of greater than $500 fair market value could be accepted, but in such cases there must be prior consent from the President of the division, or CEO of the corporat ion. In the case of directors and off icers or the corporat ion, the Governance Committee must consent. There are some instances, such as in deal ing with government off ic ials, where the acceptable threshold of nominal value is much less than in the commercial world. There are some governmental agencies that discourage, i f not outr ight forbid, their employees from receiving anything of value from a suppl ier or vendor because of the mere appearance of such a gesture. The customer or prospect is therefore not being rude, but is l ikely fol lowing their own code of conduct.

There may be part icular t imes of the year, during the Christmas season, for example, when gif t-giving with such i tems as gif t baskets, confect ions, frui t and so forth accompanied by greeting cards are given. I t ’s fair ly common during the hol iday season. This is not general ly a problem.

Entertainment or meals for the purposes of doing business are commonplace. Moderation and good taste are the watchwords. This doesn’t mean that you have to take a cl ient to a fast food restaurant, but i t does suggest that i t is probably inappropriate to book a table at a f ive star restaurant.

Likewise with entertainment. In general i t is better to have prior approval before offer ing a customer t ickets or accommodations to any major sport ing or entertainment event.

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In all things, good judgment

and moderation are the

rule, and one must never,

ever solicit a gift or

entertainment as a quid pro

quo, or condition, of doing

business.

B U S I N E S S G I F T S & E N T E R TA I N M E N T

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I t ’s possible to formulate some general pr inciples as to what’s acceptable and what’s not in the area of business gif ts and entertainment. • Small gi f ts, meals, refreshments, travel arrangements, t ickets should be

consistent with acceptable business customs and general pract ice.

• There is a $500 general threshold within the J M Smith Corporat ion and i tsenti t ies.

• There must be a legit imate business purpose.

• Such gif ts and entertainment must not be otherwise i l legal.

• We never, ever sol ici t them.

• The receiving of such i tem or business gratuit ies cannot color or cloud ourbusiness judgment, causing us to make a decision or carry out a transaction that we would otherwise be disincl ined to do.

• The provision of gi f ts or gratuit ies, or receiving same, must not result inembarrassment to the J M Smith Corporat ion i f the matter were to be publ icly disclosed in the press or in an onl ine blog.


• A purchasing manager happens to be a rabid footbal l fan. In considerat ion for renewing acontract, the purchasing manager asks for a season t icket to the forthcoming season of hisfavori te footbal l team.

• A customer offers to provide a $1,000 check, payable to an employee, with theunderstanding that the check wil l go to a chari ty. The employee accepts the offer, cashesthe check, and pockets the money.

C O M P E T I T I V E I N F O R M AT I O N

We operate in a competi t ive environment. We welcome that because our products and services stand on their merits in the marketplace. We do take reasonable and prudent act ion to protect our proprietary and confidential information, and we’l l address that point later in this pamphlet.

Gathering competi t ive information, sometimes known as “competi t ive intel l igence,” is perfect ly acceptable and is legal i f gained from publ ic sources. Publ ic sources include press reports, information obtained on the Internet, a company’s patents, a company’s governmental f i l ings – part icularly for publ icly-held companies. Wrongful appropriat ion of another company’s “trade secrets” is act ivi ty we wil l not engage in. Besides being unethical, such conduct can also become a criminal act, punishable by f ines or imprisonment. There are a number of commonly acceptable ethical guidel ines that we subscribe to.

• We do not enter private property i l legal ly.

• We do not employ concealed l istening or viewing devices or unlawful technicalmethods.

• We respect confidential i ty when requested.

• We do not pay bribes or inducements to obtain competi tor ’s information.

• We do not pose as “researchers” or “ job appl icants” for the purposes of gaining acompeti tor ’s proprietary information.

• We wil l not employ an individual or retain the services of a third party consultantto engage in gathering otherwise company proprietary or trade secret information.

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Gathering competitive information, sometimes known as “competitive intelligence,” is perfectly acceptable and is legal if gained from public sources.


• An employee develops a relat ionship with a private company which happens to be a competi tor. Employeeestabl ishes rapport with “Chatty Cathy,” and gains some very interest ing insights to share with her manager.

• A prospect visi ts our headquarters and leaves his briefcase. Prospect is obtaining competi t ive bids. Anemployee opens the briefcase, copies the bid she f inds, returns the original, and then contacts the prospect to return the property that was left behind. Enterprising employee gives the bid she copied to asales manager.

C O M P L I A N C E W I T H L AW S A N D R E G U L AT I O N S

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To knowingly violate the law or to deviate from our ethical standards is not only wrong, it may also be il legal.

We str ive to comply with al l laws and regulat ions that are appl icable to our corporat ion and to business operat ions. We are not permitted to achieve results by violat ing laws or regulat ions or by unethical deal ings. To knowingly violate the law or to deviate from our ethical standards is not only wrong, i t may also be i l legal.

There is a large body of law and regulat ion that consti tutes a framework for how we operate. And i t is constantly evolving. This includes law and regulat ion that govern our accounting pract ices, taxation, the employment relat ionship, human resources, data and information securi ty, physical securi ty of inventory, health and safety, the environment, and more. There are a variety of governmental agencies that have jur isdict ion over some aspects of how we operate such as the DEA, OSHA, the EEOC, the IRS, the Department of Labor, the Department of Health and Human Services, the Department of Homeland Securi ty, and the l ist continues on though state agencies.

In some areas, new rules and regulat ions are rapidly evolving. Electronical ly Protected Health Information (e PHI), the privacy and securi ty requirements of HIPAA, and “Red Flag” rules pertaining to how we protect customer ’s f inancial transactions are among some of the newest requirements that affect us in some of our operat ions.

In some cases the body of law and regulat ion may seem to be ambiguous or diff icult to interpret. We do provide training that is decentral ized to division level. And you are expected to seek guidance i f you are unsure of where the Company stands – or where you stand. We have a number of wel l- trained professionals in f inance and accounting, human resources that you may consult . Where legal advice is required, we wil l obtain i t , and from special ized law f irms.

C O N F L I C T S O F I N T E R E S T

A confl ict of interest arises when an employee, off icer, or director of a corporat ion has a si tuat ion where their pr ivate interests interfere with, or appears to interfere with, the interests of the Company. General ly, this involves a transaction or a contemplated transaction alone or in concert with others where the employee, off icer, or director of a corporat ion benefi ts direct ly or indirect ly, now or in the future, from the transaction.

Confl ict of interest si tuat ions appear to be complex, but they do lend themselves to another formulat ion: does the transaction create a present or future enti t lement for the individual or member of the individual ’s family that confl icts with the primary loyalty one should have to their Company? Reduced to this formulat ion, i t ’s pretty easy to see that employees have a primary duty to their Company. The Company is enti t led to their best efforts in return for the remuneration, benefi ts, and other privi leges of employment. I f an individual would be out to “make a deal” for themselves at the expense of their duty of loyalty to the Company, we have a problem.

Confl icts of interest affect not only the employee, off icer or director of a corporat ion, but also extend to the individual ’s family. Within the J M Smith Corporat ion, and for the purposes of this pol icy, “ family” means only the individual ’s spouse; his or her sibl ings and their spouses; his or her ancestors; and his or her descendants and spouses.

Investments and loans to a customer, suppl ier, or competi tor must be disclosed. However, purchase of shares in a publ icly traded Company that do not exceed 5% of outstanding shares is permissible. Opportunit ies may present themselves when an individual may be asked to join the board of another for-prof i t corporat ion or business enti ty. Before accepting such a posit ion, this event must be reported and inquiry wi l l be made into the l ine of business. One of the hal lmarks that dist inguish the J M Smith Corporat ion is our act ive support of chari table, non-prof i t organizat ions. A Director, VP, or President could be asked to si t on the board of such a non-prof i t ent i ty. Before accepting such a posit ion, there must be a noti f icat ion and then the level of contr ibut ions by the corporat ion to such an act ivi ty wi l l be monitored. Nothing in this pol icy is intended to interfere with employees’ lawful exercise of protected r ights.

9

Conflicts of interest affect not only the employee, officer or director of a corporation, but also extend to the individual’s family.

10

So the high points are:

• A confl ict of interest must be reported to a vice president, the president of thebusiness unit , the division HR Director, or to the Chairman of the Board.

• The appearance of a confl ict of interest must be reported.

• The Corporat ion’s confl ict of interest provisions extend to members of anindividual ’s family.

• A Director of the Corporat ion signs and f i les an annual disclosure statementwith the Board.

• Employees do not f i le an annual disclosure statement, but wi l l review theCompany’s confl ict of interest pol icy and aff i rm that they have read and understand i t when they receive and review the J M Smith Employee Handbook.

• I f the J M Smith Corporat ion or one of i ts divisions needs a legal opinion orassistance, we wil l obtain i t .

C O N F L I C T S O F I N T E R E S T

Example of a Possible Ethical Issue

• A senior f inancial manager ’s wife returns to the work force after an absence of severalyears. She is an accountant. She is offered a posit ion in the same accounting f irm with whom the Corporat ion has a business relat ionship.

E M A I L , T H E I N T E R N E T A N D T H E U S E O F C O M PA N Y P R O P E R T Y

The Company owns or leases bui ldings, off ice space, automobiles, off ice furnishing and equipment, computers, and telecommunications systems. We uti l ize a variety of software products; provide voice mail , e-mail , and use of the Internet. We purchase and issue off ice suppl ies. Al l of this property belongs to the Company. I t is provided to faci l i tate the transaction of business. The computer you ut i l ize for company business, company-provided voice mail , e-mail and software programs, are al l company property. The Company may impose controls, restr ict ions, and monitor the use of i ts property and reserves the r ight to do so. For example, only l icensed software that has been approved by the Company may be loaded onto a computer. So-cal led “free ware” or “shareware” may not be downloaded from the Internet without permission from IT. This is done to protect the integri ty of Company systems from viruses and other “mal ware.”

Incidental personal use of the Company’s property, to include the Internet and e-mail , is OK provided that:

• Such use is l imited in durat ion and at such t imes that i t does not interfere with work.

• Does not result in any signif icant costs to the Company nor does i t overly burden theCompany’s “telecommunications pipel ine.”

• Does not contain pornographic or offensive material , discriminatory or derogatorylanguage or references to anyone on the basis of age, color, disabi l i ty, gender,ethnici ty, rel igion, marital or family status, or sexual orientat ion.

• Does not expose the Company to l iabi l i ty.

11

We util ize a variety of software products; provide voice mail, email, and use of the Internet.


• An employee obtains miscel laneous suppl ies on a dai ly basis. When asked what she wasdoing with these suppl ies, the employee confided to a supply clerk that she was running her own business and this is saving her money.

• A new employee instal led a copy of a software program he brought with him from his previous company, thinking that i t would help productivi ty in his new capacity since he was so famil iar with i t .

• An employee claims to get easi ly bored, so instead of working, he routinely spends 1 – 2hours a day “surf ing” and using his Facebook account for keeping in touch with fr iends.

E N V I R O N M E N T

12

Many of our buildings are of a modern design and are operated in such a way as to qualify for a LEEDS certification.

The J M Smith Corporat ion seeks to comply with al l environmental regulat ions, and to operate in such a way that we protect the environment. We do this in any number of ways. Many of our bui ldings are of a modern design and are operated in such a way as to qual i fy for a LEEDS cert i f icat ion. While no commercial bui lding can real ly be completely “green,” we can and do responsibly minimize our environmental impact.

A lot has been writ ten about “paperless” off ices, beginning in the 70’s. Yet we typical ly generate waste paper. And so we re-cycle i t at col lect ion points. Many of our bui ldings have vending machines that dispense canned and bott led soft dr inks and water. And we routinely col lect and re-cycle those materials.

While we are not a manufacturing Company, we do generate waste in our dai ly operat ions to include toner cartr idges from printers, old and uneconomical ly repairable computers. We either recycle or properly dispose of these i tems so we don’t contr ibute to waste disposal problems.

We maintain attract ive grounds at our bui ldings. We do not over-water which would contr ibute to run-off , and we comply with any local i rr igat ion or watering restr ict ions that may be put into place by local authori t ies or water distr icts because of drought condit ions.


• A paint ing contractor has been working at one of our faci l i t ies. He disposes of excess paint and other chemicals by pouring them into a storm drain. Two employees observe this, but walk on by and say or do nothing.

• A regional off ice replaces half a dozen old computer monitors with f lat screens.Supervisor gathers up the old monitors in his pick-up truck, drives to a nearby business, and dumps the old monitors into a commercial trash bin.

E Q U A L O P P O R T U N I T Y E M P L O Y M E N T

We have long required that employees be treated fair ly, with dignity, and with respect. Before there was the U.S. Equal Employment Opportunity Commission (EEOC) that now has jur isdict ion over such matters -- as do the variously named fair employment pract ices agencies at state level.

The J M Smith Corporat ion specif ical ly prohibits discriminatory treatment on the basis of:

• Race• Color• Rel igion• Sex• National or igin• Age• Disabi l i ty• Genetic information• Veteran status• Or any other characterist ic protected by law Equal opportunity extends to the Company’s pract ices in recruit ing, promotion, terminations, training, and the benefi ts of employment.

We expect that al l employees wil l continue to respect and abide by our pol icy. We expect that when there may be suspected EEO issues that the employee wil l feel free to bring those issues to the attention of their manager or to their Division’s Human Resources Off ice. Should an employee take their gr ievance outside of the Company to the EEOC, then the employee needs to understand that retal iat ion against the employee for having brought forward a complaint wi l l not be tolerated.

There is strength in diversity, in understanding and respecting one another ’s differences as we go forward in our duties with the Company every day. Equal opportunity employment is not only the law, ethical ly i t ’s the r ight thing to do.

13

The J M Smith Corporation specifically prohibits discriminatory treatment.


• An employee is known to be very hard of hearing. He requests a new headsetwith a volume control he can adjust and that’s compatible with his hearing aid. His supervisor denies the request and tel ls him to use the standard equipment l ike everyone else.

• An employee who is an ethnic minori ty is told by her manager that she must accompanyher to al l project meetings from now on as others might not “understand her.”

• A female employee requests to attend an off-si te training session with her counterparts.Her request is denied with the comment that they already have enough women in their group with this training.

F R A U D

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Fraud is always dishonest, it is sometimes criminal, and can have serious consequences to include termination of employment and/or prosecution.

Fraud is intentional ly deceiving another in order to damage them or to unjust ly obtain something of value, such as property or a service. Fraud may be by omission when one has a duty to do something, or by intentional ly withholding material information, but more frequently there is an act of commission such as a theft. Fraud is always dishonest, i t is sometimes criminal, and can have serious consequences to include termination of employment and/or prosecution.

Some forms of fraud have been cal led “waste” or “abuse.” Within the Federal government and in government contract ing, fraud, waste and abuse are frequently lumped together as conduct that wi l l not be tolerated. Sometimes fraud is masked by phrases such as “ inventory shrinkage.” Inventories don’t just “shrink” of their own accord.

Within the J M Smith Corporat ion, we expect waste and abuse to be avoided as such act ivi ty can have a negative impact on prof i tabi l i ty. Besides doing the r ight thing, al l J M Smith employees have a vested interest in keeping operat ing expenses as low as reasonably possible as we al l part icipate in prof i t sharing.

A fraud may be perpetrated not just by a theft, but by destroying or alter ing any Company record. A Company record is some form of recordation that is customari ly used to document the Company’s business. There is the expectat ion that a Company record may be rel ied upon as truthful ly and accurately recording Company business. This is part icularly true of any document that has to do with f inances or inventory and that are subject to external audit or inspection from t ime to t ime.

Any suspected incident of fraud or theft must be reported to management, to a division HR Director, a division president, or to the CEO. An investigat ion wil l occur and appropriate act ion wi l l be taken.


• A clerk makes a big mistake in a staff report. She discovers the mistake threedays later, but does not tel l anyone.

• Two employees of a shif t of eight habitual ly come to work late, and take extra long lunchbreaks. The supervisor routinely approves the weekly t ime cards submitted by these employees.

• Two employees travel out of town on business with a manager from another department.The manager picks up the tab for dinner, but employee “A” st i l l c laims the dinner expense on his expense report.

H A R A S S M E N T-F R E E W O R K P L A C E

Achieving our mission means that we must demand excel lence, promote teamwork, and maintain a workplace that is free from unlawful discrimination, int imidation or harassment. I t ’s about respect.

Sexual harassment is i l legal. Sexual harassment is unwelcome sexual advances, requests for sexual favors, as wel l as other physical, verbal, or visual conduct based upon sex when:

• Submission to the conduct is an expl ici t or implici t term or condit ion of employment; or • The conduct has the purpose of effect of unreasonably interfering with the individual ’s

work performance by creating a hosti le, offensive or int imidating work environment. Sexual harassment may be directed towards a person of the opposite sex or of the same sex.

Harassment based on an individual ’s race, color, rel igion, sex, national or igin, age, disabi l i ty, genetic information, veteran status or any other characterist ic protected by law is not permissible. Harassing conduct includes but is not l imited to:

• Epithets, slurs, and negative stereotyping;• Defamatory wri t ten or graphic material that is placed on walls, bul let in boards, or that

is circulated in the workplace.

There may be occasions where offensive comments or materials may be introduced into the workplace “unencumbered by the thought process.” I f one is able, one should object to the conduct and very clearly explain to the person causing the harassment that you are uncomfortable and that he or she must cease the conduct immediately. There may also be occasions, perhaps a senior-subordinate relat ionship, where the target of the harassment does not feel comfortable in direct ly deal ing with the situat ion. The conduct must then be reported to a vice president or to human resources. Witnesses and corroborat ion are always useful. An investigat ion wil l take place and appropriate act ion, to include discipl inary act ion up to and including termination of employment, wi l l result . Our pol icy on not tolerat ing harassment appl ies to vendors, customers, contractors, and other providers of goods and services on J M Smith Corporat ion premises.

15

Achieving our mission means that we must demand excellence, promote teamwork, and maintain a workplace that is free from unlawful discrimination, intimidation or harassment.


• An employee in a cube area routinely tel ls sexual ly expl ici t jokes that he thinks areoutrageously funny. Not everyone else thinks so. He has recently begun referr ing to certainfemale employees in sexual ly expl ici t terms. No one has complained yet, but his supervisoris aware of this act ivi ty.

• The Company is having an IT cr isis. A contractor is hired to f ix this problem. The contractor

is an Indian, a member of the Sikh rel igion. He wears a beard and a turban. Within hearingrange of this contractor, two employees loudly proclaim their anger about managementhaving brought in this (disparaging words deleted) who’s “Not one of us.” The contractorsays nothing, but “word” of this incident gets back to the department manager.

• A clerk is responsible for conducting an inventory at the end of a f iscal year. A report isturned in, but is very incorrect and incomplete. The employee’s manager loudly berates theemployee for his “stupidity”, and l ights into him with a barrage of profanity.

I N V E S T M E N T S & I N S I D E I N F O R M AT I O N

16

An employee, officer, or director must disclose if they have made any investment, including loans, to a customer, supplier, or competitor.

An employee, off icer, or director must disclose i f they have made any investment, including loans, to a customer, suppl ier, or competi tor. These disclosures also pertain to family members as described in our code of conduct:

• Spouses• His or her sibl ings and their spouses;• His or her ancestors, and his or her descendants and their spouses

The above restr ict ions on investments do not apply to shares of stock in any publ icly traded corporat ion which happens to be a customer, suppl ier or competi tor provided that the shares do not exceed 5% of the publ icly traded corporat ion’s outstanding shares.

The J M Smith Corporat ion, to include i ts various divisions and subsidiaries, is not a publ icly traded company. However, certain employee, off icers or directors, by vir tue of their posit ion, may be in a posit ion to have to learn of “ inside information.” This inside information may apply to publ icly traded customers, suppl iers, or to acquisi t ion targets.

• “Material information” is essential ly an accounting term meaning that theinformation is so important that i t can affect the judgment of investors to buy, sel l , or hold a securi ty.

• “Non publ ic” means information that is not known to the general publ ic in pressreleases, SEC f i l ings or similar forums. “Non publ ic” information is shared only on a str ict “need to know” basis.

• “Tipping” means the disclosure of material or non-publ ic information to someonewho does not have a need to know that can be used by the person receiving thetip to buy or sel l a securi ty.

Great care should be taken in sharing inside information with others, and there must be a legit imate business purpose to the disclosure – not the potential of individual f inancial gain or the prevention of individual f inancial loss. And i f we need to obtain legal advice, we wil l do so.


• Two employees are overheard at lunch t ime in a conversation where “A” tel ls “B” that hismanager told him that the corporat ion was going to acquire Acme Inc., a medium-sized publ icly traded technology Company.

• An employee learns that we are interested in acquir ing Acme Inc. and that we’re workingon a deal. The employee understands that acquired companies usual ly get a goodpremium on the price of their stock. Acme stock is trading at $5.00 a share. The employeecashes out some CD’s, cal ls his broker, and tel ls his broker to buy 10,000 shares of Acmebefore the trading day ends.

M E D I A R E L AT I O N S

The J M Smith Corporat ion is a privately held company. As such, we do not have the duty to disclose the same type of information that a publ icly-held company does. At the same t ime, we’re members of the community and i ts good business to keep the media, and the publ ic, appropriately informed.

The J M Smith Corporat ion does not have a publ ic affairs off ice or a media relat ions off ice. General ly, only the CEO or the President of a Division may issue a press release. No one else may grant an interview or provide information about the corporat ion without the prior approval of the CEO or the President of a division.

There are six general areas that any employee must not comment on i f they receive a media query:

• Any information about the Company’s f inancial condit ion.

• Commentary on a pending acquisi t ion.

• Commentary on layoff rumors.

• Commentary on a lawsuit , or any complaint that a regulatory agency may be looking into.

• Information about contemplated management changes.

• Disclosures about new products, services, pol icies or strategies.

Sometimes, a cr isis si tuat ion may occur, for example, some type of a natural disaster or accident in which the publ ic has an interest. Under those circumstances, an individual other than the CEO or a Division President may be appointed by the appropriate executive to act as a spokesperson.

Sometimes the media can be very aggressive. Employees on the receiving end of such inquir ies should pol i tely but f i rmly state “no comment”, wri te down the contact information, and refer the matter to the executive in charge of the business unit .

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We’re members of the community and its good business to keep the media, and the public, appropriately informed.

N O N -C O M P E T I T I O N

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Healthy competition is good for us and is good for our economy.

We al l l ive and work in a competi t ive business environment. And healthy competi t ion is good for us and is good for our economy. There are, however, opportunit ies where others might take advantage of us. For that reason, we take measures to legal ly protect that which is ours.

Some employment posit ions require going beyond the basel ine measures of protect ing propriety and confidential information and have in place what are cal led “protect ive covenants.” These al l inclusive protect ive covenants include:

• Agreements that are l imited in t ime and geography not to compete with thebusiness of the Company after leaving Company;

• Agreements not to sol ici t or entice our employees to leave the Company to go towork for a competi tor.

Protect ive covenants are lawful in most state, and are a condit ion of employment only in the posit ions that require them.

Questions on protect ive covenants should be referred to the appropriate division human resources off ice.

O U T S I D E E M P L O Y M E N T

J M Smith employees spend a good part of their t ime working for the Company. The Company should be gett ing our employees’ “best efforts” -- unconfl icted by working for or consult ing with any other company that is in substantial ly the same business we’re in. An employee’s primary, but not necessari ly exclusive, duty is to the Company.

• No off icer, director, or employee may serve in any capacity as an off icer, director, oremployee for any competi tor, suppl ier, or customer within prior wri t ten approval fromthe Chairman of the Board, CEO, or division president.

• I f offers of directorships in outside organizations other than competi tors, suppl iers, orcustomers are received by an employee, the employee should noti fy the business unitVP, the human resources off ice, or the division president.

General ly, part t ime employment or services to a chari table organization or non-prof i t that do not confl ict with the employee’s primary duty to the Company are not problematic. The employee’s HR director or division president is avai lable to discuss any situat ion and to provide advice.

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The Company should be getting our employees’ “best efforts”

P O L I T I C A L C O N T R I B U T I O N S

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The J M Smith Corporation does not make political contributions or otherwise provide financial support to candidates for office or to political parties.

Part isan pol i t ics has i ts place in our system of government, but not in the workplace. The J M Smith Corporat ion does not make pol i t ical contr ibut ions or otherwise provide f inancial support to candidates for off ice or to pol i t ical part ies. Any requests for exception would have to be disclosed in wri t ing to the Chairman of the Board or to the CEO.

J M Smith employees are not authorized to use Company funds or assets for pol i t ical purposes. I t is prohibited for any J M Smith employee to sol ici t pol i t ical contr ibut ions in support of a part icular pol i t ical party or candidate. Active advocacy for a part icular party, candidate, or cause supported by a pol i t ical party or candidate should be avoided.

Of course, our employees, as individuals, are welcome to make pol i t ical contr ibut ions or to support the cause or candidates or party of their choice on their own t ime and with their own resources. The J M Smith Corporat ion also encourages our employees to register, to vote, and to part icipate in the pol i t ical processes as i t is their r ight to do so.

Example of a Possible Ethical Issue

• During the run-up to the recent general elect ion, an employee posted a very largecampaign sign in their cube, encouraging individuals to vote for a part icular candidate for President.

P R O P R I E TA R Y & C O N F I D E N T I A L I N F O R M AT I O N

Our business information is proprietary – meaning that i t belongs to the Company. We take the necessary steps to preserve the confidential i ty of our business information. Certain types of business information may also qual i fy as a trade secret under the Uniform Trade Secret Act or similar statutes. Intel lectual property developed incident to one’s employment is the property of the Company, not the individual. Directors, off icers, and employees have an ethical duty not to disclose confidential information gleaned from business transactions and to protect confidential relat ionships. Business information that has not been made publ ic wi l l not be released to private individuals or organizations or governmental bodies unless demanded by legal process such as a subpoena or court order. Confidential information may never be used for the purpose of advancing a private interest or for other personal gain.

One of the means used through the Corporat ion to safeguard that which is ours is to restr ict access to confidential information to those who have a need to know. Another means we use is to require an individual to sign a confidential i ty & nondisclosure agreement as a condit ion of employment. In some instances, divisions exceed the requirement with a more comprehensive set of protect ive covenants, including a non-competi t ion agreement.

I t is a common and good pract ice that when deal ing with a third party consultant providing advice or services to the Company that these individuals sign a confidential i ty and non-disclosure agreement before undertaking any work or being al lowed access to this information or data.

Obl igat ions not to disclose proprietary and confidential information extend beyond the employee’s tenure with the Company. I t is for this reason that i t is unethical, and probably unlawful, to request that an employee reveal confidential or trade secret information he or she may have from a previous employer.

Examples of proprietary and confidential information include, but are not necessari ly l imited to:

• Writ ten and oral agreements between the Company and suppl iers, vendors,customers, partners;

• Company f inancial information – and please note that as a privately held Companywe do not have to disclose the f inancial information that a publ icly held company isobl iged to disclose;

• Proprietary software, code, and programs;

• Company f inancial records;

• Protected Health Information (PHI);

• Blueprints and drawings;

• Diagrams and f low charts that describe business methods or processes;

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We take the necessary steps to preserve the confidentiality of our business information.

P R O P R I E TA R Y & C O N F I D E N T I A L I N F O R M AT I O N

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• Customer l ists;

• Trademarks, patents and copyrights assigned to the J M Smith Corporat ion orany of i ts divisions;

• Bid information;

• Acquisi t ion information.

Recognizing and helping the Company protect that which is ours is ethical. In the event that the Company’s business or reputat ion is compromised by the improper or unlawful use of release of proprietary and confidential information, the Company often has legal recourse.

Should you have question about this important topic, seek guidance from senior management, your division HR department, or the president of your division. Should we need to obtain special ized legal advice on any specif ic problem or issue concerning intel lectual property, trade secrets, proprietary or confidential information, we wil l do so.


• An employee quits the Company, taking detai led l ists of “her” customers and theCompany’s customers for several product l ines so she can get off to a quick start with her new employer, a competi tor with one of the J M Smith Corporat ion’s divisions.

• A f inancial analyst, a Company employee, has a brother- in- law who works for a suppl ier in theregion. The suppl ier could offer certain goods to the Company. The analyst provides his brother- in- law company f inancial information and a “heads up” on what goods we may be inthe market for as a business lead.

R E C O R D K E E P I N G ,F I N A N C I A L & A C C O U N T I N G C O N T R O L S

The preparat ion and maintenance of accurate and rel iable business records is of cr i t ical importance to the J M Smith Corporat ion’s decision making processes and to our proper discharge of f inancial, legal, and report ing obl igat ions.

Al l f inancial and business records including expense accounts, purchase orders, requisi t ions, bi l ls, payrol l records, t ime sheets, personnel records, tax records, and reports to governmental agencies must be prepared with care and honesty. In general, we rely upon the accuracy and val idi ty of records and reports in managing the business and in carrying out our obl igat ions.

Records and reports may be prepared and archived electronical ly, on paper, or in some combination of both. Documents or records which are not to be retained or are waste wi l l be disposed of properly, general ly by shredding or by placing in a shred bin. Al l corporate funds, assets, and transactions are documented and accounted for in accordance with General ly Accepted Accounting Principles (GAAP). The corporat ion retains external auditors to independently review and to cert i fy our f iscal operat ions as a business pract ice. J M Smith employees are expected to cooperate with any routine, recurr ing, or special audits.

Misappl icat ion, misappropriat ion or wrongful use of corporate funds or property, the suspected diversion of such funds or property to personal use, or suspected improper records keeping must be reported to senior manager or to the division HR off ice for further act ion.

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All financial and business records including expense accounts, purchase orders, requisitions, bil ls, payroll records, time sheets, personnel records, tax records, and reports to governmental agencies must be prepared with careand honesty.


• An employee reported to HR that an employee in their department routinely uses a corporatecredit card for personal purchases of off ice equipment and furniture, and submits false receipts using a common software appl icat ion to “cover” this on his expense reports.

• A maintenance worker f inds three banker ’s boxes marked “2008 invoices” thrown in a

dumpster on the Company’s premises and does not report this to management.

S A F E T Y & H E A LT H

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Maintaining a safe workplace and implementing programs that directly contribute to helping our employees remain healthy and productive have long been valued at the J M Smith Corporation.

Maintaining a safe workplace and implementing programs that direct ly contr ibute to helping our employees remain healthy and productive have long been valued at the J M Smith Corporat ion. We do this in a number of ways:

• By maintaining attract ive and well-maintained bui ldings.

• By providing for the physical securi ty of our employees by means of IDbadges, entry control systems, survei l lance cameras, use of securi tyoff icers, and other enhancements to securi ty.

• By planning for employee safety in the event of emergencies, such astornado warnings, and through trained f irst aid AED teams.

• By not tolerat ing behaviors that amount to harassment.

• By periodical ly checking the driving records and by providing training toemployees who are assigned to or who otherwise operate Company vehicles.

• By safe work pract ices, to include relevant training.

• By posting Material Safety Data Sheets (MSDS’s) in the work place, to include electronic postings.

• By providing mult iple means for employee involvement in safety, ei therthrough a designated Safety and Securi ty Administrator, or safetycommittee, and by empowering employees to provide suggestions,anonymously or otherwise, in an electronic suggestion box.

• By prohibit ing the possession of f i rearms on Company property.

• By maintaining a substance abuse-free workplace (see the fol lowing section).

• By providing on-site nurse pract i t ioners where there is a large enoughemployee base to support the pract ice.

• By providing a comprehensive wellness program for employees.

I t is unethical, and may be i l legal under some circumstances, to interfere with or take retal iatory act ion against an employee who has a bona f ide safety issue.

S U B S TA N C E A B U S E - F R E E W O R K P L A C E

The J M Smith Corporat ion maintains a substance abuse-free workplace. That’s because the abuse of legal or i l legal substances -- or the abuse of alcohol ic beverages -- is contrary to maintaining a safe, healthy and productive working environment.

• We prohibit an individual from being under the inf luence of alcohol, i l legal, orcontrol led substances on the job.

• I f an individual is taking prescript ion medication as part of a treatment plan for amedical condit ion, that ’s OK as long as the individual ’s performance of job functions is not impaired.

• From t ime to t ime the Company may sponsor or may part icipate in social or businessevents where alcohol ic beverages are served. Moderation is the key word. The Company wil l not condone excessive alcohol ic consumption, or intoxicat ion, under any circumstances.

• The Company does conduct post-offer, pre-employment drug test ing, post-accidenttest ing, and for cause test ing. The Company reserves the r ight to establ ish a random test ing program.

• There is no “amnesty” program if an individual tests posit ive incident to a companyrequired drug test. I f an individual has a substance abuse problem and is not thesubject of discipl inary act ion and has not tested posit ive, he or she should contact their human resources off ice to investigate treatment options. The EmployeeAssistance Program (EAP) is another resource.

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The J M Smith Corporation maintains a substance abuse-free workplace.


• An employee goes to a party before a Company event. They come to the Company event very intoxicated. They act boorishly throughout the Company event.

• An employee can’t manage to use hand tools without dropping them. His speech is slurredand he mumbles to himself. The employee has seen a doctor on at least three occasionduring the past two weeks. The department manager ignores the behavior.

• A new employee fai ls a pre-employment drug test. He needs the job badly. He convinces the HR clerk who received the results not to say anything to anyone and that this wi l l never happen again. The clerk feels sorry for the employee and does as the employee asks.

R E P O R T I N G & N O N -R E TA L I AT I O N

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“We are committed to honest, truthful, ethical dealings with our customers, our vendors and among ourselves. Integrity is non-negotiable.”

All J M Smith employees have a duty to not only comply with our ethical guidel ines, but to report violat ions.

Violat ions may be reported to a manager, vice president, HR Director, President of a division or CEO. I f something just doesn’t look r ight and you need to seek guidance, please do so. I t is the r ight thing to do.

If there are violat ions, such reports wi l l be taken seriously, confidential i ty wi l l be maintained by ensuring only those with a direct need to know are involved, and complaints wi l l be investigated promptly and properly. I f act ion needs to be taken, i t wi l l be taken.

Violat ions may also be reported confidential ly to a third party provider where we have an ethics hotl ine. That number is 888-226-6810. Think of this number as a resource to you, kind of an “Ethics EAP.” Sometimes an ethical si tuat ion needs the same sort of mechanism. Regardless of how an ethical lapse or si tuat ion amounting to outr ight wrongdoing is reported, we wil l not permit any retal iat ion whatsoever against any employee who brings forward, in good faith, what is bel ieved to be truthful information. Keep this pamphlet handy as a reference. Employees wil l be expected to aff i rm their understanding of our code of ethics when they receive and sign for the J M Smith Employee Handbook which wil l also contain a copy of our code.

“Integri ty. We are committed to honest, truthful, ethical deal ings with our customers, our vendors and among ourselves. Integri ty is non-negotiable.”

© September 2009, The J M Smith Corporation