Policy Governing Related Person Transactions
"Related Person" – A related person is a director, executive officer, nominee for the Board, beneficial owner of more than 5% of any class of the Company's voting securities, and any of the forgoing person's immediate family members (including children, stepchildren, parents, stepparents, spouses, siblings, parents in-law, children in-law, siblings in-law, and any person sharing the household of such director, executive officer, nominee, or shareholder, other than tenants and employees).
"Related Person Transaction" – A related person transaction involves a Transaction in which the Company or any of its subsidiaries and either (i) a Related Person, (ii) a person that was a Related Person less than 12 months previous to the Transaction, or (iii) an entity in which a Related Person has a direct or indirect material interest, are participants, and in which the amount involved exceeds $120,000.
"Transaction" – A transaction includes any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements, or relationships.
It is the general policy of the Company to prohibit all Related Person Transactions unless the Company's Audit Committee shall determine in advance of the Company or any of its subsidiaries entering into any such Related Person Transaction that the Transaction is conducted on terms that are fair to the Company and its subsidiaries. All Related Person Transactions must be reviewed and approved by the Audit Committee in advance of the Company or any of its subsidiaries entering into any such Transaction.
In order for the Audit Committee to approve a Related Person Transaction:
- The Transaction should be presented to the Audit Committee before it is entered into by the Company;
- The Audit Committee must be satisfied that it has been fully informed as to the direct and indirect interests, relationships and conflicts or potential conflicts present in the proposed Transaction, specifically including:
- the Related Person's name and relationship to the Company;
- a complete description of the proposed Transaction, including both economic and non-economic features, and a copy of any proposed written agreement governing the Transaction;
- the nature of the Related Person's direct or indirect interest in the Transaction;
- the benefits of the Transaction to the Company or its subsidiaries;
- a summary of the availability of other sources of comparable products or services; and
- the Related Person's relationship to or ownership interest in any other party to, or which has an interest in, the Transaction.
- The Audit Committee must determine that, being fully apprised of the above, it believes, nonetheless, the Transaction is fair to the Company and, if necessary, the Company has developed an appropriate plan to manage any conflicts or potential conflicts of interest.
- In the event an Audit Committee member or his or her immediate family member is a Related Person with respect to a proposed Transaction presented to the Audit Committee, such Audit Committee member shall not participate in the determination whether to approve the proposed Transaction.
In the event that the Company enters into a Related Person Transaction that has not received approval by the Audit Committee, or a Transaction that was not originally a Related Person Transaction becomes a Related Person Transaction, the Audit Committee or Audit Committee Chair must review such Transaction promptly, and may ratify such Transaction, provided that, in such case, unless there is otherwise a compelling business or legal reason for the Company to continue with the Transaction, the Audit Committee or Audit Committee Chair may only ratify the Transaction if it determines that (i) the Transaction is fair to the Company, and (ii) any failure to comply with this Policy was not due to fraud or deceit.
The General Counsel of the Company shall be responsible for ensuring that this Policy is distributed to all executive officers, directors, nominees to the Board, and beneficial owners of more than 5% of any class of the Company's voting securities. Such Related Persons shall also be notified that they are responsible for informing their immediate family members and entities in which they have a direct or indirect material interest of the Policy.
Any director, executive officer or nominee to the Board of the Company who proposes to enter into a Related Person Transaction or becomes aware of an unapproved Transaction, shall notify the General Counsel of such proposal or Transaction, and to the extent known, provide the General Counsel all of the information required under Section (C)(2) of this Policy, as well as any other information requested by the General Counsel. The General Counsel, upon receiving such notification, shall be responsible for requiring that any proposed Transaction be presented to the Audit Committee for consideration in accordance with this Policy.
Adopted by the Board on September 2, 2010 to be effective upon completion of the Company's initial public offering.