Sorrento Therapeutics, Inc. (the “Company”) has adopted the following Codeof Business Conduct and Ethics (this “Code”) for directors, executive officers and employees of theCompany. This Code is a statement of goals and expectations for individual and business conduct. Each director,executive officer and employee must comply with the letter and spirit of this Code.
No code or policy can anticipate every situation that may arise. Accordingly, thisCode is intended to serve as a source of guiding principles for directors, executiveofficers and employees. Directors, executive officers and employees are encouraged to bring questions aboutparticular circumstances that may implicate one or more of the provisions of this Code tothe attention of the Chairman of the Audit Committee, who may consult with inside oroutside legal counsel as appropriate.
I. Business and Personal Ethics
We must use the highest ethics to guide our business dealings to ensure that we are always proud to be a part of the Company. It is the obligation of each and every director, officer and employee of the Company to become familiar with the goals and policies of the Company and integrate them into our business.
Company policy requires directors, officers and employees to observe high standards of business and personal ethics in the conduct of their duties and responsibilities. Directors, officers and employees must practice honesty and integrity in their dealings with other directors, officers and employees, the public, the business community, stockholders, business partners, customers, suppliers and government authorities.
Company policy prohibits unlawful discrimination. All persons shall be treated with dignity and respect.
No director, officer or employee should be misguided by any sense of loyalty to the Company or a desire for profitability that might cause him or her to disobey any applicable law or Company policy. Violation of law or Company policy will constitute grounds for disciplinary action, including, when appropriate, termination of employment.
II. Conflicts of Interest
As an employee of the Company, you are expected to act at all times in the Company’s best interests and to exercise sound judgment unclouded by personal interests or divided loyalties. Both in performing your duties at the Company and in your outside activities, you should avoid the appearance as well as the reality of a conflict of interest.
A conflict of interest exists if your circumstances would lead a reasonable person to question whether your motivations are aligned with the Company’s best interests. If, for example, you are involved in an outside activity or have a financial or other personal interest that might interfere with your objectivity in performing your Company duties and responsibilities, you may have, or appear to have, a conflict of interest.
While it is impractical to describe all situations that may create a conflict of interest, the following provides policy guidance about some of the most common conflict of interest situations:
- Use of Company Information for Private Gain
- Friends and Family Stock
- Outside Activities – Non-Profit and Civic Organizations
- Employment Outside Company – Moonlighting
- Service on a Board of Directors of a for Profit Company
- Technical Advisory Boards
- Family and Romantic Relationships
- Family Members or Relatives as Suppliers and other Business Partners
- Kickbacks and Rebates by Suppliers
- Gifts from Vendors, Suppliers or Customers
Please note that the above is not an exhaustive list of examples. There are many other situations that may also create a potential for a conflict of interest or the appearance of a conflict of interest. It is up to you to be aware of the potential for a conflict of interest in your own particular situation and to resolve the issue in accordance with this policy.
A. Improper Payments or Kickbacks
Company policy prohibits commercial bribes, kickbacks and other similar payoffs and benefits paid to or accepted from any suppliers or customers.
Directors, officers, employees and agents are prohibited from receiving, directly or indirectly, anything of a significant value such as free airline tickets from suppliers or otherwise in connection with a transaction entered into by the Company (other than salary, wages or other ordinary compensation from the Company).
Bribery of suppliers or customers includes any payment for the benefit of any representative of the supplier or customer. It includes:
- Gifts of other than nominal value;
- Cash payments by directors, officers, employees or third persons, such as agents or consultants, who are reimbursed by the Company;
- The uncompensated use of Company services, facilities or property, except as may be authorized by the Company; and
- Loans, loan guarantees or other extensions of credit.
This policy does not prohibit expenditures of reasonable amounts for meals and entertainment of suppliers and customers that are an ordinary and customary business expense, if they are otherwise lawful. Expenditures of this type should be included on expense reports and approved under standard Company procedures
B. Service on a Board of Directors of a For Profit Company:
Directors owe a duty of loyalty to the company on whose board they serve. You should carefully consider all potential conflict of interest issues before agreeing to serve on the board of a for profit company.
If your position on the board of directors of another company becomes potentially relevant to a Company decision or action, you must promptly disclose your relationship with the other company to the Company employees responsible for the decision or action and you must not participate in that decision or action on behalf of either the Company or the other company. For example, if a Company business unit is considering a transaction with the company on whose board you serve, you must disclose your relationship with the other company, to the decision makers in your business unit and you must refrain from any discussions about or involvement in the transaction on behalf of either the Company or the other company.
Any employee considering service on another company’s board should understand that such service can lead to personal liability, particularly with financially troubled companies. As your board service is outside the scope of your employment, the Company will not defend or indemnify you if you are sued in your capacity as a board member of another company. The Company’s approval of your request to serve on an outside board does not constitute any endorsement or ratification of any action you take as a board member of another company.
The Company may at times ask an employee to serve on the board of directors of a for- profit organization pursuant to a Company investment in, or strategic partnership with, that organization. The Company may also request that an employee serve on the board of a non-profit organization, such as a standards body. Service on such boards as a representative of the Company is outside the scope of this policy.
C. Technical Advisory Boards
Before accepting appointment to or service on a technical advisory board for a company other than the Company, you should consider whether the entity is offering you this opportunity in order to leverage your relationship with the Company to gain a special advantage for itself with the Company, whether serving on this board will interfere with your ability to exercise your independent judgment in the best interest of the Company, and whether the products and technologies you work on at the Company are so similar to those of the company on whose board you wish to serve that it would be difficult to serve as a technical advisor without using or disclosing Company confidential information and trade secrets. If, after considering these questions, you still wish to serve on the technical advisory board, you must obtain prior written approval from your manager.
If any decision is to be made or action taken by the Company concerning a company for which you serve as a member of a technical advisory board, you must disclose to the Company employees responsible for the decision or action your, relationship to the entity and not participate in that decision or action on behalf of either party.
Employees who are asked by the Company to serve on a technical advisory board of another company as part of the Company’s job duties are not required to obtain approval under this policy.
D. Outside Activities – Non-Profit Organizations
The Company may encourage its employees to be active in their communities and to volunteer their time to bona fide charitable, educational, civic, and trade organizations, provided of course that such activities do not detract from their job performance. Participation in these types of activities does not generally require prior approval.
In taking on outside obligations, however, you should guard against possible conflicts of interest or the appearance of such conflicts. If participation in an outside activity has the potential to cloud your judgment, prevent you from acting in the Company’s best interests, or create an appearance that you will not act objectively, you must refrain from participation in the activity unless you obtain prior written approval.
You must also honor your non-disclosure obligation in all your outside activities. If an outside organization’s interests are so closely related to your work at the Company that you might inadvertently use or disclose Company confidential information in the course of that outside work, you must not participate in the organization.
Employees who are asked by the Company to serve on the board of non-profit organizations, such as public standards bodies, as part of their Company job, are not required to obtain conflict of interest approval.
III. Corporate Opportunities
Directors, executive officers and employees owe a duty to the Company to advance itslegitimate interests when the opportunity to do so arises. Directors, executive officersand employees are prohibited from: (a) taking for themselves personally opportunities that arediscovered through the use of corporate property, information or the director’s orexecutive officer’s position; (b) using the Company’s property, information, or positionfor personal gain; or (c) competing with the Company, directly or indirectly, for businessopportunities, provided, however, if the Company’s disinterested directors determine thatthe Company will not pursue an opportunity that relates to the Company’s business, adirector, executive officer or employee may do so.
Company directors, officers and employees often learn confidential or proprietary information about the Company, its business partners and customers. Confidential information includes all non-public information thatmight be of use to competitors, or harmful to the Company or its customers, if disclosed. Company policy prohibits directors, officers and employees from disclosing confidential or proprietary information outside the Company, either during or after their relationship with the Company, without Company authorization to do so.
The Company also works with proprietary data of business partners, customers and suppliers. This is an important trust and must be discharged with the greatest care for the Company to merit the continued confidence of its business partners, customers and suppliers. Directors, executive officers and employees must maintain the confidentiality of informationentrusted to them by the Company, its business partners, customers and suppliers, and any other confidentialinformation about the Company that comes to them, from whatever source, in theircapacity as a director, executive officer or employee, except when disclosure is authorized or requiredby laws or regulations.
V. Protection and Proper Use of Company Assets
Company assets, such as information, materials, supplies, equipment, time, intellectual property, software, hardware, and facilities, among other property, are valuable resources owned, licensed, or otherwise belonging to the Company. Safeguarding Company assets is the responsibility of all directors, officers and employees. All Company assets should be used for legitimate business purposes. Theft, loss, misuse, carelessness and waste of assets have a direct impact on the Company’s profitability. Directors, executive officers and employees must not use Company time, employees, supplies, equipment, tools, buildings or other assets for personal benefit without prior authorization.
VI. Fair Dealing
Directors, executive officers and employees shall deal fairly and directors and executive officers shall oversee fair dealing byemployees and officers with the Company’s directors, officers, employees, customers,suppliers, business partners and competitors. None should take unfair advantage of anyone throughmanipulation, concealment, abuse of privileged information, misrepresentation ofmaterial facts or any other unfair dealing practices.
VII.Use and Disclosure of Inside Information and Compliance with Applicable Laws
The laws of the United States and many other countries regulate the use and disclosure of material inside information concerning the Company. Information is “inside information” if it has not been publicly disclosed. The Company prohibits the use of material inside information or the disclosure of material inside information to anyone other than persons within the Company whose positions require them to know such information. In addition, all Company directors, officers and employees must respect and comply with all applicable laws, regulations, rules and regulatory orders.
VIII. Improper Influence
In conducting our business, our directors officers and employees and others associated with us are expected to adhere to high ethical standards and comply with the applicable laws in all countries to which they operate, travel or otherwise do business, including laws prohibiting corruption (such as bribery) or the conduct of business with certain specified individuals, companies or countries. The fact that, in some countries, certain laws are not enforced or that violation of those laws is not subject to public criticism will not be accepted as an excuse for noncompliance. In addition, we expect employees to comply with any applicable laws, rules and regulations of their home country governing the conduct of business by citizens of such country and corporations while outside of such country.
Company policy and the U.S. Foreign Corrupt Practices Act prohibits the Company and its directors, officers, employees and agents from corruptly offering or giving anything of value in violation of laws to:
- An official, including any person acting in an official capacity for a government or an official of a public international organization;
- A political party official or political party; or
- A candidate for political office;
directly or indirectly, for the purpose of influencing any act or decision of these officials in their official capacity or in violation of their lawful duties or to secure any improper advantage in order to help the Company obtain or retain business or direct business to any person. Employees are expected to read, understand and comply with the Company’s Anti-Corruption Policy.
IX. Accuracy of Records
The integrity, reliability and accuracy in all material respects of the Company’s books, records and financial statements is fundamental to the Company’s continued and future business success. No director, executive officer or employee may cause the Company to enter into a transaction with the intent to document or record it in a deceptive or unlawful manner. In addition, no director, executive officer or employee may create any false or artificial documentation or book entry for any transaction entered into by the Company. Similarly, executive officers and employees who have responsibility for accounting and financial reporting matters have a responsibility to accurately record all funds, assets and transactions on the Company’s books and records.
X. Quality of Public Disclosures
The Company is committed to providing its stockholders with information about its financial condition and results of operations as required by the securities laws of the United States. It is the Company’s policy that the reports and documents it files with or submits to the Securities and Exchange Commission, and its earnings releases and similar public communications made by the Company, include fair, timely and understandable disclosure. Executive officers and employees who are responsible for these filings and disclosures, including the Company’s principal executive, financial and accounting officers, must use reasonable judgment and perform their responsibilities honestly, ethically and objectively in order to ensure that this disclosure policy is fulfilled. The Company’s senior management are primarily responsible for monitoring the Company’s public disclosure.
XI. Communication of Code
All directors, executive officers and employees will be supplied with a copy of this Code upon beginning service at the Company. Updates of this Code will be provided from time to time. A copy of this Code is also available to all directors, executive officers and employees by requesting one from the human resources department.
XII. Waivers and Amendments of the Code of Business Conduct and Ethics
No waiver of any provisions of the Code for the benefit of a director or an executive officer (which includes without limitation, for purposes of this Code, the Company’s principal executive, financial and accounting officers) shall be effective unless (i) approved by the Board of Directors or, if permitted, a committee thereof, and (ii) if applicable, such a waiver is promptly disclosed to the Company’s stockholders in accordance with applicable United States securities laws and/or the rules and regulations of the exchange or system on which the Company’s shares are traded or quoted, as the case may be.
Any waivers of this Code for the other employees may be made by the Board of Directors, or, if permitted, a committee thereof.
All amendments to this Code must be approved by the Board of Directors or a committee thereof and, if applicable, must be promptly disclosed to the Company’s stockholders in accordance with applicable United States securities laws and/or the rules and regulations of the exchange or system on which the Company’s shares are traded or quoted, as the case may be.
XIII. Duty to Report and Consequences
Every director, officer and employee has a duty to adhere to this Code of Conduct and Ethics and all existing Company policies, and to report to the Company any suspected violations in accordance with applicable procedures. You may report ethical violations in confidence and without fear of retaliation. If your situation requires that your identity be kept secret, your anonymity will be protected. Any executive officer or employee who in good faith reports a suspected violation under this Code by the Company, or its agents acting on behalf of the Company, or who in good faith raises issues or concerns regarding the company’s business or operations, may not be fired, demoted, reprimanded or otherwise harmed for, or because of, the reporting of the suspected violation, issues or concerns, regardless of whether the suspected violation involves the executive officer or employee, the executive officer’s or employee’s supervisor or senior management of the company.
In addition, any executive officer or employee who in good faith reports a suspected violation under this Code which the executive officer or employee reasonably believes constitutes a violation of a federal statute by the Company, or its agents acting on behalf of the Company, to a federal regulatory or law enforcement agency, may not be reprimanded, discharged, demoted, suspended, threatened, harassed or in any manner discriminated against in the terms and conditions of the executive officer’s or employee’s employment for, or because of, the reporting of the suspected violation, regardless of whether the suspected violation involves the executive officer or employee, the executive officer’s or employee’s supervisor or senior management of the company.
If you are aware of a suspected or actual violation of the Code by anyone, including as a result of being contacted by another employee about his or her concern that there may have been a violation, you have a responsibility to promptly report it by (i) contacting the Chair of the Audit Committee (the “Audit Chair“) or (ii) calling the third party hotline. You are expected to provide a specific description of the violation that you believe or suspected has occurred, including any information you have about persons involved and the time of the violation. The Company will investigate any matter so reported promptly and with the highest degree of confidentiality that is reasonable under the specific circumstances and will take appropriate disciplinary and corrective action to maintain the prompt and consistent enforcement of this Code. Any individual who violates this Code is subject to disciplinary action, up to and including termination, and civil and criminal prosecution, if appropriate.
Contact Information for Reports of Possible Violations
Audit Chair: David Deming c/o Sorrento Therapeutics, Inc., 9380 Judicial Drive, San Diego, CA 92121
Third-Party Hotline: 1-877-RPT-LINE (1-877-778-5463). The user name that you should use is “STI” and the password is “Sorrento.”
***Complaints forwarded by mail should be marked as confidential.***