Code of Business Conduct for Employees
6. Our Shareholders
6.1. Accounting, Reporting and Disclosures Shall be Accurate and Useful
6.1.a. Full, fair, accurate, timely and understandable reporting and disclosure is a critical factor for the making of sound business and investment decisions by the Company, its shareholders, and other parties that conduct business with the Company. It is our policy to maintain accurate and complete accounting and business records, and to provide financial reporting, business information and disclosures that are full, fair, accurate, timely and understandable.
6.1.b. Application of the standard of “full, fair, accurate, timely and understandable” requires careful judgment and balance. For example, preliminary information may be available that does not meet the requirements for fullness, fairness or accuracy, even though it would be very “timely.” Judgment is required to consider other factors, such as the requirements for confidentiality and protection of proprietary information. Additionally, there are laws and regulations that govern the timing and manner in which information may be disclosed outside of the Company. For example, SEC regulations generally prohibit the Company from disclosing material non-public information to only selected investors.
6.1.c. The Company provides financial statements and other disclosures through its public reporting processes. All such information and disclosures must comply with the requirements of the Tully’s Code of Business Conduct, the requirements of Generally Accepted Accounting Principles (GAAP), and all applicable laws and regulations, including those under the administration of the Securities Exchange Commission (SEC) and other authorities. This information includes periodic filings on SEC forms such as Forms 10-Q and 10-K, other informational and registration filings (such as Forms 8-K, S-1 and others), reports and letters to shareholders, proxy statements, and press releases.
6.1.d. This information is usually disseminated by printed document and in electronic form (e.g., the SEC’s EDGAR site). However, such information also may be disclosed through speeches, interviews, letters or email, and it is essential that employees use caution in such communications in order to avoid unintentional selective disclosures of non-public Company information. Regardless of the form of the communication, it must comply with the requirements of the Tully’s Code of Business Conduct.
6.1.e. Full, fair, accurate, timely and understandable reporting and disclosure depend entirely upon the accurate and timely processing, documentation, and recording of transactions and events in accordance with generally accepted accounting principles, in compliance with applicable laws and regulations, and in compliance with Tully’s policies, procedures and system of internal controls. All employees must execute their job duties in a manner that supports these requirements. No false, incomplete, misleading or artificial entries or disclosures may be made in the Company’s records or reports, and the intentional delay or omission of a required entry or disclosure is also prohibited.
6.1.f. The accounting records of the Company are maintained primarily by the Tully’s Accounting Department, which also prepares (in conjunction with legal counsel, Company management, the Board of Directors, and the Company’s independent auditors) most of the Company’s public reporting of financial data and other disclosures. Although these persons have direct responsibility in these matters, the accuracy of such information depends upon the fullness, fairness, accuracy, timeliness and understandability of the information provided to them by the Company’s employees and its business information systems. Accordingly, employees in management and other sensitive positions will be required to execute period certifications of compliance in this regard, and any employee may be required to do so at the discretion of the President, Chief Financial Officer, Company Compliance Officer, or the Board of Directors. Refusal to execute such a certification, or the execution of a false certification, may constitute a violation of the Tully’s Code of Business Conduct.
6.1.g. The Company engages an independent public accounting firm to audit its financial statements and to independently determine whether they meet the requirements of GAAP and the SEC. The independent auditor is engaged on behalf of the Company, its shareholders and the Board of Directors, and reports to the Audit Committee of the Board of Directors. Tully’s employees must fully cooperate with the independent auditor and the Audit Committee in the performance of their duties, and must provide full, fair and accurate information and documentation in response to their inquiries. The independent auditor has full access to the confidential and proprietary Company information needed for completion of their audit engagement.
6.2. Insider Trading Compliance
6.2.a. Tully’s employees may have access to information about the Company that is not generally available to the public. All employees have a responsibility to keep company information confidential until it is officially made public. If the non-public information is "material," the disclosure of that information or the possession of it while making investment decisions can result in a violation of the federal securities laws. Under no circumstances may any employee trade in Tully’s stock if the employee possesses material, non-public information about the Company.
6.2.b. Information is "Material" if it would be expected to (a) affect the decision of a reasonable investor to purchase or sell the Company’s securities, or (b) alter the market price of the Company’s securities. It is sometimes difficult to determine whether particular information is or is not material under this definition. An employee should consider information about Tully’s "material" if it would affect in any way his or her own consideration of whether to buy, sell, or hold Tully’s stock.
6.2.c. The most common example of "inside information" is information about the Company’s financial performance that has not yet been publicly disclosed. Examples also may include information about significant events, such as new products or customers, acquisitions or divestitures, and substantial contract awards or terminations that have not yet been made public.
6.2.d. Information is considered to be "non-public" until (a) it has been released and reported in the media or included in publicly available documents filed with the SEC, and (b) investors have had sufficient time to absorb the information. This period varies depending on the type of information released and the market’s expectations relating to the subject matter of the release.
6.2.e. Tully’s may adopt specific trading restrictions for certain employees to guard against insider trading. These additional restrictions are designed to protect the employees and the Company from liability associated with inappropriate use of inside information.
6.2.f. Insider trading is illegal and unethical, and employees should not trade in any stock or other securities on the basis of such "inside information," including inside information employees may learn about a company with which Tully’s does or might do business.
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