Exhibit 10.1

 

DIRECTOR AGREEMENT

 

This DIRECTOR AGREEMENT is dated April 1, 2019 (the “Agreement”) by and between
BROWNIE’S MARINE GROUP, INC., a Florida corporation (the “Company”), and CHARLES
F. HYATT, an individual (the “Director”).

 

WHEREAS, the Company appointed the Director effective as of the date hereof and
desires to enter into an agreement with the Director with respect to such
appointment; and

 

WHEREAS, the Director is willing to accept such appointment and to serve the
Company on the terms set forth herein and in accordance with the provisions of
this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto agree as follows:

 

1. Position. Subject to the terms and provisions of this Agreement, the Company
shall cause the Director to be appointed, and the Director hereby agrees to
serve the Company in such position upon the terms and conditions hereinafter set
forth, provided, however, that the Director’s continued service on the Board of
Directors of the Company (the “Board”) after the initial one-year term on the
Board shall be subject to any necessary approval by the Company’s stockholders.

 

2. Duties.

 

(a) During the Directorship Term (as defined herein), the Director make
reasonable business efforts to attend all Board meetings, serve on appropriate
subcommittees as reasonably requested by the Board, make himself available to
the Company at mutually convenient times and places, attend external meetings
and presentations, as appropriate and convenient, and perform such duties,
services and responsibilities, and have the authority commensurate to such
position.

 

(b) The Director will use his best efforts to promote the interests of the
Company. The Company recognizes that the Director (i) is or may become a
full-time executive employee of another entity and that his responsibilities to
such entity must have priority and (ii) sits or may sit on the board of
directors of other entities, subject to any limitations set forth by the
Sarbanes-Oxley Act of 2002 and limitations provided by any exchange or quotation
service on which the Company’s common stock is listed or traded. Notwithstanding
the same, the Director will provide the Company with prior written notice of any
future commitments to such entities and use reasonable business efforts to
coordinate his respective commitments so as to fulfill his obligations to the
Company and, in any event, will fulfill his legal obligations as a Director.
Other than as set forth above, the Director will not, without the prior
notification to the Board, engage in any other business activity which could
materially interfere with the performance of his duties, services and
responsibilities hereunder or which is in violation of the reasonable policies
established from time to time by the Company, provided that the foregoing shall
in no way limit his activities on behalf of (i) any current employer and its
affiliates or (ii) the board of directors of any entities on which he currently
sits. At such time as the Board receives such notification, the Board may
require the resignation of the Director if it determines that such business
activity does in fact materially interfere with the performance of the
Director’s duties, services and responsibilities hereunder.

 

3. Compensation.

 

(a) Independent Contractor. The Director’s status during the Directorship Term
shall be that of an independent contractor and not, for any purpose, that of an
employee or agent with authority to bind the Company in any respect. All
payments and other consideration made or provided to the Director under this
Section 3 shall be made or provided without withholding or deduction of any
kind, and the Director shall assume sole responsibility for discharging all tax
or other obligations associated therewith.

 

(b) Fee. During the Directorship Term the Director shall receive an annual fee
of $6,000, payable on a quarterly basis at the rate of $1,500 per quarter.

 

 

 

 

(c) Expense Reimbursements. During the Directorship Term, the Company shall
reimburse the Director for all reasonable out-of-pocket expenses incurred by the
Director in attending any in-person meetings, provided that the Director
complies with the generally applicable policies, practices and procedures of the
Company for submission of expense reports, receipts or similar documentation of
such expenses. Any reimbursements for allocated expenses (as compared to
out-of-pocket expenses of the Director) must be approved in advance by the
Company.

 

4. Directorship Term. The “Directorship Term,” as used in this Agreement, shall
mean the period commencing on the date hereof and terminating on the earlier of
the date of the next annual stockholders meeting and the earliest of the
following to occur:

 

(a) the death of the Director;

 

(b) the termination of the Director from his membership on the Board by the
mutual agreement of the Company and the Director;

 

(c) the removal of the Director from the Board by the majority stockholders of
the Company; and

 

(d) the resignation by the Director from the Board.

 

5. Director’s Representation and Acknowledgment. The Director represents to the
Company that his execution and performance of this Agreement shall not be in
violation of any agreement or obligation (whether or not written) that he may
have with or to any person or entity, including without limitation, any prior or
current employer. The Director hereby acknowledges and agrees that this
Agreement (and any other agreement or obligation referred to herein) shall be an
obligation solely of the Company, and the Director shall have no recourse
whatsoever against any stockholder of the Company or any of their respective
affiliates with regard to this Agreement.

 

6. Director Covenants.

 

(a) Unauthorized Disclosure. The Director agrees and understands that in the
Director’s position with the Company, the Director has been and will be exposed
to and receive information relating to the confidential affairs of the Company,
including, but not limited to, technical information, business and marketing
plans, strategies, customer information, other information concerning the
Company’s products, promotions, development, financing, expansion plans,
business policies and practices, and other forms of information considered by
the Company to be confidential and in the nature of trade secrets. The Director
agrees that during the Directorship Term and thereafter, the Director will keep
such information confidential and will not disclose such information, either
directly or indirectly, to any third person or entity without the prior written
consent of the Company; provided, however, that (i) the Director shall have no
such obligation to the extent such information is or becomes publicly known or
generally known in the Company’s industry other than as a result of the
Director’s breach of his obligations hereunder and (ii) the Director may, after
giving prior notice to the Company to the extent practicable under the
circumstances, disclose such information to the extent required by applicable
laws or governmental regulations or judicial or regulatory process. This
confidentiality covenant has no temporal, geographical or territorial
restriction. Upon termination of the Directorship Term, the Director will
promptly return to the Company and/or destroy at the Company’s direction all
property, keys, notes, memoranda, writings, lists, files, reports, customer
lists, correspondence, tapes, disks, cards, surveys, maps, logs, machines,
technical data, other product or document, and any summary or compilation of the
foregoing, in whatever form, including, without limitation, in electronic form,
which has been produced by, received by or otherwise submitted to the Director
in the course or otherwise as a result of the Director’s position with the
Company during or prior to the Directorship Term, provided that the Company
shall retain such materials and make them available to the Director if requested
by him in connection with any litigation against the Director under
circumstances in which (i) the Director demonstrates to the reasonable
satisfaction of the Company that the materials are necessary to his defense in
the litigation and (ii) the confidentiality of the materials is preserved to the
reasonable satisfaction of the Company.

 

(b) Non-Solicitation. During the Directorship Term and for a period of two (2)
years thereafter, the Director shall not interfere with the Company’s
relationship with, or endeavor to entice away from the Company, any person who,
on the date of the termination of the Directorship Term and/or at any time
during the one year period prior to the termination of the Directorship Term,
was an employee or customer of the Company or otherwise had a material business
relationship with the Company.

 

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(c) Insider Trading Guidelines. Director agrees to execute the Company’s Insider
Trading Guidelines in the form attached hereto.

 

(d) Remedies. The Director agrees that any breach of the terms of this Section 6
would result in irreparable injury and damage to the Company for which the
Company would have no adequate remedy at law; the Director therefore also agrees
that in the event of said breach or any threat of breach, the Company shall be
entitled to an immediate injunction and restraining order to prevent such breach
and/or threatened breach and/or continued breach by the Director and/or any and
all entities acting for and/or with the Director, without having to prove
damages or paying a bond, in addition to any other remedies to which the Company
may be entitled at law or in equity. The terms of this paragraph shall not
prevent the Company from pursuing any other available remedies for any breach or
threatened breach hereof, including, but not limited to, the recovery of damages
from the Director. The Director acknowledges that the Company would not have
entered into this Agreement had the Director not agreed to the provisions of
this Section 6.

 

(e) The provisions of this Section 6 shall survive any termination of the
Directorship Term, and the existence of any claim or cause of action by the
Director against the Company, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Company of the
covenants and agreements of this Section 6.

 

7. Indemnification. The Company agrees to indemnify the Director for his
activities as a member of the Board to the fullest extent permitted under
applicable law and shall use its best efforts to maintain Directors and Officers
Insurance benefitting the Board.

 

8. Non-Waiver of Rights. The failure to enforce at any time the provisions of
this Agreement or to require at any time performance by the other party hereto
of any of the provisions hereof shall in no way be construed to be a waiver of
such provisions or to affect either the validity of this Agreement or any part
hereof, or the right of either party hereto to enforce each and every provision
in accordance with its terms. No waiver by either party hereto of any breach by
the other party hereto of any provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions at
that time or at any prior or subsequent time.

 

9. Notices. Every notice relating to this Agreement shall be in writing and
shall be given by personal delivery or by registered or certified mail, postage
prepaid, return receipt requested; to:

 

If to the Company:

 

Brownie’s Marine Group, Inc.

3001 NW 25th Ave.

Pompano Beach, Florida 33306

Attn: President

 

If to the Director :

 

The address set forth on the signature page below.

 

Either of the parties hereto may change their address for purposes of notice
hereunder by giving notice in writing to such other party pursuant to this
Section 9.

 

10. Binding Effect/Assignment. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective heirs, executors,
personal representatives, estates, successors (including, without limitation, by
way of merger) and assigns. Notwithstanding the provisions of the immediately
preceding sentence, neither the Director nor the Company shall assign all or any
portion of this Agreement without the prior written consent of the other party.

 

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11. Entire Agreement. This Agreement (together with the other agreements
referred to herein) sets forth the entire understanding of the parties hereto
with respect to the subject matter hereof and supersedes all prior agreements,
written or oral, between them as to such subject matter.

 

12. Severability. If any provision of this Agreement, or any application thereof
to any circumstances, is invalid, in whole or in part, such provision or
application shall to that extent be severable and shall not affect other
provisions or applications of this Agreement.

 

13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without reference to the
principles of conflict of laws. All actions and proceedings arising out of or
relating to this Agreement shall be heard and determined in any court in Broward
County, Florida and the parties hereto hereby consent to the jurisdiction of
such courts in any such action or proceeding; provided, however, that neither
party shall commence any such action or proceeding unless prior thereto the
parties have in good faith attempted to resolve the claim, dispute or cause of
action which is the subject of such action or proceeding through mediation by an
independent third party.

 

14. Legal Fees. The parties hereto agree that the non-prevailing party in any
dispute, claim, action or proceeding between the parties hereto arising out of
or relating to the terms and conditions of this Agreement or any provision
thereof (a “Dispute”), shall reimburse the prevailing party for reasonable
attorney’s fees and expenses incurred by the prevailing party in connection with
such Dispute; provided, however, that the Director shall only be required to
reimburse the Company for its fees and expenses incurred in connection with a
Dispute if the Director’s position in such Dispute was found by the court,
arbitrator or other person or entity presiding over such Dispute to be frivolous
or advanced not in good faith.

 

15. Modifications. Neither this Agreement nor any provision hereof may be
modified, altered, amended or waived except by an instrument in writing duly
signed by the party to be charged.

 

16. Tense and Headings. Whenever any words used herein are in the singular form,
they shall be construed as though they were also used in the plural form in all
cases where they would so apply. The headings contained herein are solely for
the purposes of reference, are not part of this Agreement and shall not in any
way affect the meaning or interpretation of this Agreement.

 

17. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 

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IN WITNESS WHEREOF, the Company has caused this Director Agreement to be
executed by authority of its Board of Directors, and the Director has hereunto
set his hand, on the day and year first above written.

 

  BROWNIE’S MARINE GROUP, INC.       By:     Name: Robert Carmichael   Title:
Chief Executive Officer         DIRECTOR       Charles F. Hyatt   Address:

 

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Memorandum

 

TO:All Directors, Officers, Employees, Consultants and 10% Owners    
FROM:Brownie’s Marine Group, Inc.     RE:Insider Trading Guidelines

 

 

 

I.General

 

Our attorneys have advised us that the Insider Trading and Securities Fraud
Enforcement Act of 1988 (the “Act”) requires BROWNIE’S MARINE GROUP, INC. (the
“Company”) to adopt certain procedures in order to prevent its directors,
officers, employees, consultants and other insiders including 10% owners (any,
an “Insider”) from trading in the Company’s securities based on material
non-public information (“Insider Trading”).

 

Engaging in securities transactions on the basis of material non-public
information (“Insider Trading”) or the communication of such information to
others who use it in securities trading (“Tipping”) violates the federal
securities laws. Such violations are likely to result in harsh consequences for
the individuals involved, including exposure to investigations by the Securities
and Exchange Commission (“SEC”), criminal and civil prosecution and disgorgement
of any profits realized or losses avoided through use of the non-public
information and penalties three times the profits or losses avoided.
Additionally, the SEC routinely obtains court orders barring a person from being
an officer and director of a public company. The Sarbanes-Oxley Act of 2002
(“Sarbanes”) increased the maximum criminal fine for individuals from $1 million
to $5 million and the maximum jail sentence from 10 to 20 years. Furthermore,
Sarbanes increased the maximum fine on the public companies from $2.5 million to
$25 million. Further, Insider Trading violations expose the Company, its
management and other personnel acting in supervisory capacities to potential
civil liabilities and penalties for the actions of employees under their control
who engage in Insider Trading violations.

 

This Memorandum constitutes the Company’s implementation of the requirements of
the Act and sets forth the policies and procedures to assure that material
non-public information will not be used by Insiders in securities transactions
and that the confidentiality of such information will be maintained. These
policies and procedures also apply to securities transactions by individuals who
reside in the same household with Insiders. Strict compliance with these
policies and procedures is expected of all Insiders, including members of their
households, and any infringement thereof may result in sanctions, up to and
include termination of office or employments.

 

II.The Statement of Policy

 

  A.General

 

All Insiders are expected to maintain the confidentiality of non-public
information. Disclosure of such information to persons outside the Company,
whether or not in the form of a recommendation to purchase or sell the
securities of the Company, is prohibited. If anyone becomes aware of a leak of
material information, whether inadvertent or otherwise, this should immediately
be reported to our Chief Financial Officer.

 

As a general policy, the Company and all Insiders shall follow all laws, rules
and regulations, including those relating to Insider Trading. This includes SEC
Regulation FD (for fair disclosure). Regulation FD embodies the policy that
selective disclosure of material nonpublic information is illegal. Although
there are certain limitations, Insiders are to assume these limitations do not
apply. When there is any doubt, the Company’s Chief Financial officer or
securities counsel must be consulted. Additionally, an SEC rule provides that a
person who trades in a security on the basis of material non-public information
violates the law if that person (1) obtains or uses the information in a breach
of a fiduciary or other duty, and (2) knows or is reckless in not knowing that
the information has been provided in breach of a duty.1

 

 

1 There is also a specific SEC rule, which broadens the application of this
policy to tender offers. As a practical matter, if an Insider hears of any
information relating to a potential tender offer, the Insider may not trade in
the securities involved or divulge the information to anyone who might trade on
it. The Insider is required to immediately contact the chief financial officer
of the Company’s securities counsel.

 

 

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  B.Prohibited Activities

 

  ● No Insider can purchase or sell the Company’s securities without complying
with the guidelines described in this Memorandum first obtaining preclearance,
as described below. The policy applies to anyone in the Company at any level and
may even apply to persons not employed by the Company if they have access, by
any means (including but not limited to tips from others) to material non-public
information about the Company.         ● While this Policy seems rather simple,
like most other legal matters, its application is more complex. Not only is it
illegal to engage in Insider Trading or convey such information to others in
breach of a duty, it is generally illegal to tip such information to others who
may trade in the securities involved or to recommend the purchase or sale of
securities to others while you are in possession of such information. While
there are exceptions to this general rule, it is the policy of the Company that
no person should trade while in possession of material non-public information or
tip such information to others without first receiving authorization as provided
below. This policy applies to your personal transactions and those indirectly
through a spouse, friend, corporation or other entity. This applies to the
securities of the Company and of other corporations. Thus, if in the course of
the Company’s business, you learn of material non-public information concerning
another corporation (such as a customer or supplier) you should abstain from
trading in that corporation’s securities.         ● Although the Act and other
legal prohibitions against Insider Trading only apply to material information,
what is “material” is often difficult to evaluate and is always judged in
hindsight. Generally, material information is information an investor would
consider important in determining whether to buy or sell a security. It may
involve the Company’s earnings or losses, addition or loss of a member of
management, significant new contract or termination of such a contract, mergers
and acquisitions, stock splits, adoption or changes of a dividend policy,
earnings information, progress or research and development, etc. Some additional
examples are listed in Section III D below. Confirmation of this or any other
material information by anyone affiliated with the Company will be considered
material non-public information and can expose the Company and the employees to
liability.         ● Because of the difficulty in determining materiality, you
must discuss the matter with our Chief Financial Officer or our securities
counsel prior to a purchase or sale of the Company’s securities.2         ● No
Insider may buy or sell Company securities during any of the four “Blackout
Periods” that occur each fiscal year. For information on Blackout Periods, see
Section III A below. This provision shall not be waivable and no preclearance
shall be available during those periods.

 

The term “inside” refers to non-public information. The key fact to remember is
that merely because a stockbroker or friend also has knowledge of the
information does not make it public. One common misconception is that material
information loses its “non-public” status as soon as a press release is issued.
Information is generally non-public until (i) it is filed with the SEC or a
press release is issued, and (ii) the public has had a period of time (as much
as 24 hours) to fully absorb the information.

 

 

2 If the non-public information relates to the securities of another
corporation, prior clearance should also be obtained.

 

 

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The Restrictions

 

  ● All Insiders of the Company are expected to maintain the confidentiality of
non-public information, unless the information is disclosed as part of the
ordinary business of the Company. Disclosure of such information to persons
outside the Company, whether or not in the form of a recommendation to purchase
or sell the securities of the Company, is prohibited. You should not discuss
confidential information within the hearing range of outsiders, including
friends and relatives. It is particularly important to exercise care and refrain
from discussing nonpublic information in public places such as elevators,
trains, taxis, airplanes, lavatories, restaurants or other places where the
discussions might be overheard.         ● In addition, it is our policy that
without first receiving written permission from our Chief Financial Officer, no
one will be permitted to purchase or sell the Company’s securities, while
Insiders possess material non-public information concerning the Company.

 

As a corollary to this policy, no Insider who purchases Company securities in
the open market may sell any Company securities of the same class during the six
months following the purchase.

 

  ● No Insider may engage in short sales of the Company’s securities. In
addition, Section 16(c) of the Securities Exchange Act of 1934 prohibits
officers and directors from engaging in short sales.         ● No Insider may
enter into a hedging transaction involving Company securities without first
obtaining preclearance of the proposed transaction. Any request for preclearance
of a hedging or similar arrangement must be submitted at least two weeks prior
to the proposed execution of documents evidencing the proposed transaction and
must set forth a justification for the proposed transaction.         ● No
Insider who will be required to file notices, including Form 144 with the SEC
either before or after their sales, may hold Company securities in a margin
account or pledge Company securities as collateral for a loan. An exception to
this prohibition may be granted where a person wishes to pledge Company
securities as collateral for a loan and clearly demonstrates the financial
capacity to repay the loan without resort to the pledged securities. Any person
who wishes to pledge Company securities as collateral for a loan must submit a
request for preclearance at least two weeks prior to the proposed execution of
documents evidencing the proposed pledge.         ● No former Insider in
possession of material non-public information at the time their status as an
Insider terminates may trade in Company securities until that information has
become public or is no longer material.

 

 C.Stock Options/Warrants

 

This Memorandum shall also apply to (i) the exercise of stock options or
warrants (ii) any sale of stock as part of a broker-assisted cashless exercise
of options or warrants, or any other market sale for the purpose of generating
the cash needed to pay the exercise price of an option or warrant and (iii) any
sale of common stock received upon exercise of options or warrants.

 

 

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  D.Rule 10b5-1 Plans

 

SEC Rule 10b5-1 generally exempts trading by a third party without guidance from
the Insider, such as a discretionary account. The restrictions outlined above
shall not prohibit transfers of Company securities made pursuant to a written
contract, letter of instruction or plan that (a) complies with the requirements
of Rule 10b5-1 (a “Plan”) and (b) complies with all of the following:

 

  ● Review and Approve the Proposed Arrangement in Advance. The company will
require all Plans to be in writing and submitted to the Company for approval
prior to any transactions under the Plan. This will allow the Company to ensure
that each Plan is in compliance with the requirements of Rule 10b5-1 and Company
policies with regard to pooling and lock-up agreements, among other items,
allowing the individual to conduct transactions under the Plan without
preclearance by the Company. Because of recent concerns arising from possible
abuses of Rule 10b5-1 Plans, the Company may require evidence that the party
exercising trading authority has no personal or substantial business
relationship with the Insider.         ● Add Additional Safeguards. It is
essential that the Company ensure that the Insider does not have possession of
material non-public information at the time the Plan is adopted. Thus, there may
be limited times when a senior executive can establish a Plan. If there is
material non-public information, the Plan cannot be implemented. In addition, if
the Plan is going to be modified or terminated, notice must immediately be given
to the Company and all transactions effected pursuant to the Plan must cease.
Any change to an approved Plan will necessitate submission of the revised Plan
to the Company for review and approval before transactions may resume.         ●
Preclearance Form. To implement our policy, the preclearance form attached to
this Memorandum must be executed prior to any trades in our securities.        
● Consider a Public Announcement. On a case-by-case basis, the Company will
consider whether a public announcement in connection with each Plan under Rule
10b5-1 is appropriate.         ● These steps are taken to preserve the
confidentiality of information within the Company. Each individual who has
access to material information must exercise the utmost caution. If anyone
becomes aware of a leak of material information, whether inadvertent or
otherwise, this should immediately be reported to the Chief Financial Officer.  
      ● Establish Procedures with Third Parties. In order to ensure that a Plan
complies with Rule 10b5-1 in all respects, the Company will set up procedures
with the parties handling the transactions under the Plan, including reminding
them of the need to file Form 144s.

 

All of these measures are necessary to avoid violations under the securities
laws. In addition, new and ongoing releases and interpretations will guide the
Company as to how to apply this Rule to various transactions and improve this
process in the future.

 

III.Definitions

 

 A.Blackout Periods  

 

The four Blackout Periods begin 10 days prior to the end of the last day of each
fiscal quarter and end after the first full business day following the Company’s
issuance of its quarterly (or annual) earnings release or the filing of the
Company’s financial statements with the SEC if no earnings release is issued.
For example, if the quarter ends on September 30, the window closes at the end
of trading on September 20. If the Company then announces its earnings after the
market close on November 1, the trading window would open at the beginning of
trading on November 3.

 

B.Hedging Transactions

 

A hedging transaction is a transaction designed to minimize exposure to an
unwanted business risk. Certain forms, such as zero-cost dollars and forward
sale contracts, allow a person 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 person to continue to
own the covered securities, but without the full risk and rewards of ownership.
When an Insider engages in this type of transaction, this Insider may no longer
have the same objectives as the Company’s other shareholders.

 

 

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  C.Insiders

 

“Insiders” are the parties within the definition in the first paragraph of page
1, but the following persons may also be subject to the restrictions contained
in this Memorandum (i) members of any subsidiary’s Board of Directors; (ii) the
Company’s independent contractors and other persons associated with the Company
and its subsidiaries who receive or have access to the Company’s material
non-public information; and (iii) household and family members of those listed
in (i) and (ii).

 

  D.Material Information

 

Material information is information an investor would deem important in making a
decision to buy or sell securities. Both positive and negative information can
be considered to be 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. Examples of such information include:

 

  ● Financial results         ● Projections of future earnings or losses or
other earnings guidance         ● News of a pending of proposed merger or an
acquisition or disposition of significant assets         ● Impending bankruptcy
or financial liquidity problems         ● Gain or loss of a substantial customer
or supplier         ● Changes in dividend policy         ● New product
announcements of a significant nature         ● Significant pricing changes    
    ● Stock splits         ● New equity or debt offerings         ● Significant
litigation exposure due to actual or threatened litigation         ● Major
changes in management         ● Other important changes in the Company’s
business         ● New major contracts, orders, customers or financing, or the
loss of any of these.

 

Because of the difficulty in determining materiality, this matter must be
discussed with the Chief Financial Officer and securities counsel prior to the
purchase or sale of the Company’s securities, including its common stock and
exercise of options and warrants.

 

 E.Non-Public Information

 

Non-public information is information that has not been disclosed to the general
public and is not available to the general public. Non-public information will
generally be deemed to be public when (i) it is filed with the SEC or a press
release is issued and the public has had a period of time (as much as 24 hours)
to fully absorb the information.

 

 

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  F.Preclearance

 

Preclearance is required only for the Company’s officers, directors, 10% holders
and others who are uniquely situated to know of material financial or other
information and are given notice in writing from an officer that he or she is
subject to preclearance. Of course, family members of any of these people
require preclearance.

 

Preclearance is the process of getting prior written approval from the Company’s
Chief Financial officer and securities counsel. A request for preclearance must
be submitted to the Chief Financial officer of the company on the form attached
to this memorandum as Exhibit A at least two days in advance of the proposed
transactions.

 

  G.Securities

 

Securities include common stock, preferred stock, options to purchase common
stock, warrants, notes and other derivative securities.

 

  H.Short Sales

 

Short sales are the sale of securities which the seller does not own. The seller
is speculating that the price will fall, in the hope of later purchasing the
same number of securities at a lower price, thereby making a profit. Short sales
of the Company’s securities evidence an expectation on the part of the seller
that the securities will decline in value, and therefore signal to the market
that the seller has no confidence in the Company or its short-term prospects. An
Insider who bets against the Company sends an alarming signal to.his or her
broker.

 

The Company is indebted to all insiders who have helped to make the Company
successful and is appreciative of all efforts on its behalf. To protect the
Company and its shareholders, it is necessary to implement the foregoing policy.
The Company appreciated your continued cooperation and support in this effort.

 

Each of you should sign one copy of this Memorandum and return it to the Company
acknowledging that you have read and understand it. If anyone has any questions
or wants to have an office conference concerning the issues raised by this
Memorandum, please contact the Chief Financial Officer.

 

 

Insider Trading

Page 7

 

I acknowledge that I have read and understand this Memorandum and agree to abide
by the Company’s policy on stock trading.

 

Date: ________________, 201__     Signature           Print Name

 

 

 

 

Exhibit A

 

REQUEST FOR PRECLEARANCE OF

PURCHASE OR SALE OF SECURITIES

 

Name:     Date:  

 

Proposed Transaction: [  ] Purchase of Stock       [  ]  Sale of Stock      
[  ]  Exercise of Options [  ]  Incentive Stock Options       [  ] 
Non-Qualified Options   [  ]  Exercise of Warrants     Date of Grant of Options,
Warrants or Other Securities:      

 [  ]Other [Please explain]  

 

No. of Shares/Options:  

 

Date of Proposed Transaction:  

 

1. Have you made purchase(s) of _________________ (the “Company”) stock within
the last six months?

 

  [  ] Yes  [  ] No

 

If so, please complete:

 

Date(s) of Purchase(s):     No. of Shares:         No. of Shares:         No. of
Shares:  

 

2. Have you made sales of the Company’s stock within the last six months?

 

  [  ] Yes  [  ] No

 

If so, please complete:

 

Date(s) of Sales(s):     No. of Shares:         No. of Shares:         No. of
Shares:  

 

3. Have you made any exercises of conversions of the Company’s options/warrants
or other securities of the Company within the last six months?

 

  [  ] Yes  [  ] No

 

If so, please complete:

 

Date(s) of Exercise(s):     No. of Shares:         No. of Shares:         No. of
Shares:  

 

4. Have you received grants of the Company’s options/warrants or other
securities of the Company within the last six months?

 

  [  ] Yes  [  ] No

 

If so, please complete:

 

Date(s) of Grants(s):     No. of Shares:         No. of Shares:         No. of
Shares:  

 

Request Approved: [  ] Yes [  ] No

 

If Denied, Reason:    

 

Date:    

 

        , Chief Financial Officer