Corporate Governance - Insider Transaction Policy
FUEL SYSTEMS SOLUTIONS, INC
SECURITIES TRADING POLICY
The Board of Directors of Fuel Systems Solutions, Inc has adopted this Securities Trading Policy for our directors, officers, employees and consultants with respect to the trading of the Company's securities, as well as the securities of publicly traded companies with whom we have a business relationship.
United States securities laws prohibit the purchase or sale of a company's securities by persons who are aware of material information about that company that is not generally known or available to the public. These laws also prohibit persons who are aware of such material nonpublic information from disclosing this information to others who may trade. Companies and their controlling persons may also be subject to liability if they fail to take reasonable steps to prevent securities trading by company personnel in violation of applicable securities laws. Company personnel who violate the insider trading laws or the Policy are also subject to sanctions by the Company.
Insider trading at the wrong time, whether in violation of this policy, inadvertent, or innocent, can, and has, resulted in exposure of the Company and you to investigations by U.S. authorities. The market surveillance division at NASDAQ regularly examines trades in the period immediately preceding disclosure of material information and they have easy access to records in the United States and elsewhere that reveal who made the trades.
This Policy is designed to prevent insider trading or allegations of insider trading, and to protect the Company's and your reputation. It is your obligation to understand and comply with this Policy. Although the Company will assist you in understanding your obligations, the ultimate responsibility for adhering to this Policy and avoiding improper trading rests with you.
An Addendum to this Policy contains additional provisions applicable to directors, officers and employees in groups such as finance and investor relations who are more likely to be exposed to nonpublic information on a recurring basis.
Scope of Policy
Persons Covered. As a director, officer, employee or consultant of the Company or its subsidiaries, this Policy applies to you. The same restrictions that apply to you apply to your family members who reside with you, anyone else who lives in your household and any family members who do not live in your household but whose transactions in securities covered by this Policy are directed by you or are subject to your influence or control (such as parents or children who consult with you before they trade in such securities). In addition, the same restrictions that apply to you also apply to trusts or other entities controlled by you or by any member of your household. You are responsible for making sure that the purchase or sale of any security covered by this Policy by any such person complies with this Policy.
Securities Covered.The prohibition on securities trading in this Policy applies to all Company securities, including stock options and phantom stock options. Furthermore, the prohibition on securities trading in this Policy is not limited to trading in the Company's securities. It also includes trading in securities of other firms about which Company personnel obtain non-public information in the course of their employment or other relationship with the Company, such as customers or suppliers of the Company and those with which the Company may be negotiating major transactions, such as an acquisition, investment or sale. Information that is not material to the Company may nevertheless be material to one of those firms.
Transactions Covered. Trading includes purchases and sales of common stock, options, and any other securities the Company may issue from time to time, as well as derivative securities relating to the Company's stock, whether or not issued by the Company, such as put and call options.
Stock Option Exercises. This Policy's trading restrictions generally do not apply to the exercise of a stock option for cash. The trading restrictions do apply, however, to any sale of the underlying stock or to a cashless exercise of the option through a broker, as this entails selling a portion of the underlying stock to cover the costs of exercise. The restrictions also apply to situations where an option holder pays the purchase price and/or applicable withholding taxes in Company stock, if this is permitted under the terms of the option.
Phantom Stock Option Exercises. This Policy's trading restrictions apply to the exercise of phantom stock options. You may not exercise a phantom stock option without first pre-clearing the transaction in accordance with the pre-clearance procedures set forth in the Addendum to this Policy, as applicable.
Vesting of Restricted Stock. This Policy's trading restrictions generally do not apply to the issuance of shares upon vesting of an award of restricted stock or the concurrent withholding by the Company of a portion of those shares to satisfy applicable withholding taxes pursuant to a previously made election to withhold for taxes. However, the trading restrictions do apply to the election (or change of an election) you may make regarding your tax withholding method (e.g., "netting" shares vs. payment in cash) in connection with a vesting of an award of restricted stock. In addition, the trading restrictions do apply to any sales of Company stock issued upon vesting of restricted stock.
Statement of Policy
Trading on Inside Information. You may not trade in the securities of the Company, directly or through family members or other persons or entities, if you are aware of material nonpublic information relating to the Company. Similarly, you may not trade in the securities of any other company if you are aware of material nonpublic information about that company which you obtained in the course of your employment with the Company.
You are prohibited from trading while in possession of material non-public information, even where you are not motivated to trade based on this information. For example, you may wish to sell securities to raise money for an emergency expenditure. Regardless of your reasons for trading, you may not do so if at the time you are aware of material non-public information.
No Tipping. You may not pass material nonpublic information on to others or recommend or express opinions to anyone as to the purchase or sale of any securities when you are aware of such information. This practice, known as "tipping," also violates the securities laws and can result in the same civil and criminal penalties that apply to insider trading, even though you did not trade and did not gain any benefit from another's trading. Because even a casual remark recommending or expressing an opinion as to a purchase or sale of the Company's securities could be misconstrued as being based upon material, nonpublic information, you should exercise caution in making any such recommendation or expressing any such opinions.
Blackout and Pre-Clearance Procedures. To help prevent inadvertent violations of the federal securities laws and to avoid even the appearance of trading on the basis of inside information, the Company's Board of Directors has adopted an Addendum to this Securities Trading Policy that applies to directors, executive officers subject to Section 16 of the Securities Exchange Act of 1934, and certain designated employees of the Company and its subsidiaries who have regular access to material nonpublic information about the Company. The Company will notify you if you are subject to the Addendum.
The Addendum generally prohibits persons covered by it from trading in Company securities or exercising options or phantom stock options during quarterly blackout periods and during certain event-specific blackouts. Some of the persons subject to blackout periods must also pre-clear all transactions in the Company's securities, as provided in the Addendum.
Definition of Material Nonpublic Information
Inside information has two important elements—materiality and public availability.
Material Information. Information is material if a reasonable investor would consider it important in deciding whether to buy, hold or sell a security. Any information that could reasonably be expected to affect the price of the security is material. While it is not possible to define all categories of material information, there are various categories of information that are particularly sensitive and, as a general rule, should always be considered material. Common examples of material information include:
- Projections of future earnings or losses or other earnings guidance.
- Earnings known, or known to a reasonably close approximation, prior to their announcement.
- A pending or proposed merger, acquisition, material joint venture or an acquisition or disposition of significant assets.
- New major contracts, orders, customers or finance sources, or the loss of customers, contracts or finance sources.
- The pending introduction of major new products or the yet-to-be-publicized development of important new processes or inventions.
- Major events regarding the Company's securities, such as repurchase plans, changes in dividend policy or the public or private offering of additional equity or debt securities.
- A change in senior management.
- An auditor notification that the Company may no longer rely on an auditor's audit report.
- Actual or threatened major litigation, or positive or negative developments regarding such litigation.
- Liquidity problems or other materially adverse financial developments.
Both positive and negative information can be material. Because trading that receives scrutiny will be evaluated after the fact with the benefit of hindsight, questions concerning the materiality of particular information should be resolved in favor of materiality, and trading should be avoided.
Nonpublic Information. Nonpublic information is information that is not generally known or available to the public. One common misconception is that material information loses its "nonpublic" status as soon as a press release is issued disclosing the information. In fact, information is considered to be available to the public only when it has been released broadly to the marketplace (such as by a press release or an SEC filing) and the investing public has had time to absorb the information fully. As a general rule, information should be considered public only two full trading days following the release of the information. For example, if the Company announces financial earnings after the market closes on a Thursday, the first time you can buy or sell Company securities is the opening of the market on the following Monday (assuming you are not aware of other material nonpublic information at that time).
The Company considers it inappropriate for those employed by or associated with the Company to engage in short-term, speculative or derivative transactions in the Company's securities, or in other transactions in the Company's securities that may lead to inadvertent violations of the securities trading laws. Accordingly, your trading in Company securities is subject to the following:
Short Sales. You may not engage in short sales of the Company's securities (sales of securities that are not then owned), including a "sale against the box" (a sale with delayed delivery).
Publicly Traded Options. You may not engage in transactions in publicly traded options in the Company's securities, such as puts, calls and other derivative securities, on an exchange or in any other organized market. You also may not engage in such transactions privately (excluding Company granted stock options or phantom stock options).
Hedging Transactions. You are prohibited from entering into hedging transactions or similar arrangements involving Company securities, such as equity swaps, collars, exchange funds and forward sale contracts. These hedging transactions allow an owner of securities to lock in much of the value of his or her stock holdings, often in exchange for all or part of the potential for upside appreciation in the stock. These transactions allow the owner to continue to own the covered securities, but without the full risks and rewards of ownership. When that occurs, the interests of the owners and the interests of the Company and its shareholders may be misaligned and may signal a message to the trading market that may not be in the best interests of the Company and its shareholders at the time it is conveyed.
Prohibition on Pledges. You are prohibited from purchasing Company securities on margin, borrowing against Company securities held in a margin account, or pledging Company securities as collateral for a loan. If you have Company stock pledged as of January 1, 2013, you are required to report this to the Company's Chief Financial Officer and you will be required to unwind the pledging as promptly as possible but in any event within three years. The Company's Chief Financial Officer shall report any pledging to the Nominating and Corporate Governance Committee of the Board of Directors and shall consult with such committee concerning any pledges and any exceptions to this policy.
Standing Orders. Standing orders regarding the Company's securities should be used only for a very brief period of time. A standing order placed with a broker to sell or purchase stock at a specified price leaves you with no control over the timing of the transaction. A standing order transaction executed by the broker when you are aware of material nonpublic information may result in unlawful securities trading. This restriction does not apply to purchase and sales under a Rule 10b5-1 trading plan that is approved by the Compensation Committee of the Board of Directors. Rule 10b5-1 trading plans are discussed below.
Rule 10b5-1 Trading Plans
A Rule 10b5-1 trading plan is a written program for trading securities designed to gain the protections of the defenses against insider trading under Rule 10b5-1 of the Securities Exchange Act of 1934. A plan of this type establishes parameters for purchases and/or sales of the Company's securities by a broker or other independent fiduciary, or places discretion in another person who has no material, nonpublic information. Once the plan agreement is executed, the person who creates the trading plan retains no discretion over purchases or sales of the Company's securities under the plan. This includes the amount of the securities being traded, the trading prices and the timing of the trades. For example, a trading plan may simply instruct a broker to sell 1,000 shares on the first of every month, or it may involve a complex trading formula. A trading plan permits trading at any time, so long as the trading was established at a time when the person establishing the plan was not aware of any material, nonpublic information.
Because the rules governing trading plans can be complex, anyone considering entering into a Rule 10b5-1 trading plan should first consult our Finance Department in New York City. Only trading plans approved in advance by our Finance Department in New York City are permitted under the Policy. By approving the plan, however, the Company does not incur any obligation to assure that the plan complies with Rule 10b5-1 or assume any liability if it does not. Each director, officer, employee or consultant who adopts a Rule 10b5-1 trading plan should consult with his or her own legal counsel.
This Policy continues to apply to your transactions in Company securities even after you have ended employment or other services to the Company or a subsidiary. If you are aware of material nonpublic information when your employment or service relationship ends, you may not trade in Company securities until that information has become public or is no longer material.
Maintaining the confidentiality of Company information is essential for competitive, security and other business reasons, as well as to comply with securities laws. You should treat all information you learn about the Company or its business plans in connection with your employment as confidential and proprietary to the Company. Inadvertent disclosure of confidential or inside information may expose the Company and you to significant risk of investigation and litigation.
Disclosures to Outsiders. The timing and nature of the Company's disclosure of material information to outsiders is subject to legal rules, the breach of which could result in substantial liability to you, the Company and its management. Also, individuals who talk directly to reporters without going through the proper channels risk providing incorrect information, revealing proprietary strategies or creating an affirmative disclosure obligation. Accordingly, it is important that responses to inquiries about the Company by the press, investment analysts or others in the financial community be made on the Company's behalf only through authorized individuals. Unless responding to such inquiries is among your specifically authorized responsibilities, you should politely refer all media representatives to the Company's Investor Relations Department.
In addition, you should not discuss the Company or its business (or another company that is doing business with the Company) in an "internet" message board or chat room or similar internet-based forum.
Disclosure to Company Personnel. You should consider the consequences of disclosure of material, nonpublic information even in discussions with Company personnel. For example, these individuals could be prohibited from trading in the Company's securities until the information is publicly disclosed or, as a result of your communication, they could inadvertently engage in a violation of the securities laws or this Policy. Accordingly, even within the Company, you should restrict dissemination of material, nonpublic information on a need to know basis.
Your compliance with this Policy is of the utmost importance both for you and for the Company. If you have any questions about this Policy or its application to any proposed transaction, you may obtain additional guidance from the New York City Finance Department. Do not try to resolve uncertainties on your own, as the rules relating to securities trading are often complex, not always intuitive and carry severe consequences.
Company personnel are expected to report actual or suspected violations of Company policies, laws and regulations. If you know or have reason to believe that any person has engaged in trading in securities in violation of this Policy, you should bring the relevant facts and circumstances to the attention of the Company's Chief Financial Officer or a SOX Compliance Officer. Please refer to the Company's Code of Conduct.
Consequences of Violation
Insider trading cases have been brought involving employees trading through off-shore accounts, trading by family and friends based on information obtained from company employees and trading involving a relatively small number of shares or dollar amounts. The SEC, the stock exchanges and FINRA use sophisticated electronic surveillance techniques to uncover insider trading. Violation of the Policy may result in both civil and criminal penalties under applicable securities laws, including substantial fines and imprisonment. You may also be subject to Company sanctions that could include termination of your relationship with the Company.
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I, __________________, certify that I have read the Fuel Systems Solutions, Inc. Securities Trading Policy and Addendum. I further certify that I have been in full compliance with the policy since its inception (or since the time the policy first applied to me), or that I have reported all instances of noncompliance to the Company's Chief Financial Officer or such other person designated for this purpose by the Chief Executive Officer.
ADDENDUM TO SECURITIES TRADING POLICY
BLACKOUT AND PRE-CLEARANCE PROCEDURES
(Dated as of January 01, 2013)
To help prevent inadvertent violations of the federal securities laws and to avoid even the appearance of trading on inside information, the Company's Board of Directors has adopted this Addendum to the Company's Securities Trading Policy. This Addendum applies to directors and executive officers of the Company who are subject to Section 16 of the Securities Exchange Act of 1934 and certain designated employees of the Company and its subsidiaries who are likely to have access to material nonpublic information about the Company. These individuals are referred to in this Addendum as Covered Persons. The names, departments and/or positions of the Covered Persons subject to this Addendum are listed on the attached Schedule I. The Chief Financial Officer of the Company may from time to time designate other individuals or positions that are subject to this Addendum and will amend Schedule I from time to time as necessary to reflect changes. The Company will notify you if you are a Covered Person.
This Addendum supplements the Company's Securities Trading Policy. Covered Persons subject to the Addendum must also comply with the Policy.
Covered Persons are subject to the following blackout procedures.
Quarterly Blackout Periods. The Company's announcement of its quarterly financial results almost always has the potential to have a material effect on the market for the Company's securities. Therefore, to avoid even the appearance of trading on the basis of material nonpublic information, you may not trade in the Company's securities during the period beginning 15 days before the end of the quarter and ending after the second full trading day following the filing of the SEC required periodic reports.
Event-Specific Blackouts. The Company may on occasion issue potentially material information by means of a press release, SEC filing on Form 8-K or other means designed to achieve widespread dissemination of the information. You should anticipate that trading will be blacked out while the Company is in the process of assembling the information to be released and until the information has been released and fully absorbed by the market.
From time to time, an event may occur that is material to the Company and is known by only a few directors or executives. So long as the event remains material and nonpublic, the persons who are aware of the event, as well as other persons covered by the quarterly earnings blackout procedures, may not trade in the Company's securities, as follows. The existence of an event-specific blackout will not be announced, other than to those who are aware of the event giving rise to the blackout. If, however, a person whose trades are subject to pre-clearance requests permission to trade in the Company's securities during an event-specific blackout, the Chief Financial Officer (or his designee) will inform the requesting person of the existence of a blackout period, without disclosing the reason for the blackout. Any person made aware of the existence of an event-specific blackout should not disclose the existence of the blackout to any other person. The failure of the Chief Financial Officer to designate a person as being subject to an event-specific blackout will not relieve that person of the obligation not to trade while aware of material nonpublic information.
Exceptions. A Covered Person who is subject to a quarterly earnings blackout period may be permitted to purchase or sell securities during a quarterly blackout period in exceptional circumstances with the prior written consent of the Chief Financial Officer (or his designee). Exceptional circumstances may include the sale of securities in the case of financial hardship or where the timing of the sale is critical to complete a planned tax-minimizing strategy initiated prior to the beginning of the blackout period. Exceptions may be granted only by the Chief Financial Officer (or his designee) and should generally be requested at least two business days in advance of the proposed trade. An exception will not be granted if the Chief Financial Officer (or his designee) concludes that the Company's earnings information for the applicable quarter constitutes material nonpublic information or if there is an event-specific blackout. Any such exception will be reported to the Board of Directors.
Some of the Covered Persons, namely directors and executive officers of the Company and certain other persons holding positions in which they are expected to regularly have access to material nonpublic information relating to business development, corporate transactions or legal or regulatory developments, are subject to pre-clearance procedures (see the "Subject to Pre-Clearance" column of Schedule I). You will be notified if you are subject to pre-clearance procedures.
If you are one of the persons subject to pre-clearance, you, together with your immediate family members and other members of your household, may not engage in any transaction involving the Company's securities without first obtaining pre-clearance of the transaction from the Chief Financial Officer (or his designee).1 This includes stock plan transactions such as option exercises, phantom stock option exercises, gifts, loans, contributions to a trust or any other transfers. A request for pre-clearance should generally be submitted to the Chief Financial Officer at least two business days in advance of the proposed transaction. The Chief Financial Officer (or his designee) will evaluate a pre-clearance request in light of this Policy and the relevant facts and circumstances, and will determine whether to approve or disapprove the request for clearance.
Unless the Chief Financial Officer (or his designee) specifies otherwise, a pre-clearance for a trade or other activity involving Company' securities will be valid for a period of five business days from the date on which the pre-clearance is given.
1 The Chief Financial Officer may not trade in Company securities unless the Chief Accounting Officer or the Chief Executive Officer has approved the trade(s) in accordance with the procedures set forth in this Addendum.
Exception for Approved 10b5-1 Trading Plans
Trades by Covered Persons in the Company's securities that are executed pursuant to an approved Rule 10b5-1 trading plan are not subject to the prohibition on trading on the basis of material nonpublic information contained in the Securities Trading Policy or to the restrictions set forth above relating to pre-clearance procedures and blackout periods. As stated in the Policy, however, all Rule 10b5-1 trading plans must be approved in advance by the Chief Financial Officer or his designee in the New York City Finance Department.
If you are aware of material nonpublic information when you terminate employment or services, you may not trade in the Company's securities until that information has become public or is no longer material. In all other respects, the procedures set forth in this Addendum will cease to apply to your transactions in Company securities upon the expiration of any blackout period that is applicable to your transactions at the time of your termination of employment or services.
Compliance with Section 16 and Rule 144
Directors and executive officers are responsible for compliance with Section 16 of the Securities Exchange Act and Rule 144 of the Securities Act in connection with their transactions in the Company's securities. The requirements of the Securities Trading Policy and this Addendum do not supersede the required compliance with your obligations under Section 16 or Rule 144.
Section 16. Directors and executive officers should be aware that most transactions in Company securities, including stock option exercises and phantom stock option exercises, are subject to the accelerated two business day reporting requirements under Section 16. The Company's policy is to assist directors and officers in completing and filing their Section 16 reports. It is important that the Finance Department receive prompt notice of reportable transactions, so that the Company can assist in filing the required reports on a timely basis. Pre-clearance is not the same as actual notice of a sale. Also, any 10b5-1 trades are not subject to pre-clearance, but still must be reported within 2 business days on a Form 4.
Rule 144. Directors and executive officers are required to file Form 144 before making open market sales of Company stock. This form is generally prepared and filed by your broker.
Your compliance with this Addendum and the Company's Securities Trading Policy is of the utmost importance both for you and for the Company. If you have any questions about this Addendum, the Securities Trading Policy or their application to any proposed transaction, you may obtain additional guidance from the Finance Department.
All Covered Persons must execute a certificate (which will be provided to them) certifying as to their understanding of, and intent to comply with, the Company's Securities Trading Policy and this Addendum.
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|Covered Persons (Subject to Blackout Periods)||Subject to Pre-Clearance|
|Members of the Board of Directors||Yes|
|Executive Officers (those named in the Form 10-K)||Yes|
|Other Titles?||If notified|
|Controllers (if notified)||If notified|
|Personnel in the Finance Department (if notified)||If notified|
|Personnel in the Investor Relations Department||Yes|
|Other||As designated by the Chief Financial Officer|