**CODE
OF BUSINESS CONDUCT AND ETHICS**
 **(as
approved by the Board of Directors on April 5, 2005)**
 
 **THIS
CODE APPLIES TO EVERY DIRECTOR, OFFICER, AND EMPLOYEE OF ELECTRONIC SENSOR
TECHNOLOGY, INC., (THE “COMPANY”).**
  To
further the Company's fundamental principles of honesty, loyalty, fairness and
forthrightness, the Board of Directors of the Company (the " *Board* :") has
established and adopted this Code of Business Conduct and Ethics (this
“ *Code* ”).
  This Code
strives to deter wrongdoing and promote the following six objectives:
  ·
    honest
      and ethical conduct;  ·
    avoidance
      of conflicts of interest;  ·
    full,
      fair, accurate, timely and transparent
disclosure;  ·
    compliance
      with applicable government and self-regulatory organization laws, rules
      and regulations;  ·
    prompt
      internal reporting of Code violations; and  ·
    accountability
      for compliance with the Code.  Below, we
discuss situations that require application of our fundamental principles and
promotion of our objectives. If you believe there is a conflict between this
Code and a specific procedure, please consult the Company's Board of Directors
for guidance.
  Each of
our directors, officers and employees is expected to:
  ·
    understand
      the requirements of your position, including Company expectations and
      governmental rules and regulations that apply to your
      position;  ·
    comply
      with this Code and all applicable laws, rules and
    regulations;  ·
    report
      any violation of this Code of which you become aware;
  and  ·
    be
      accountable for complying with this Code.  
   
 **Table
Of Contents**
  **ETHICS
      ADMINISTRATOR**
    
    **3****ACCOUNTING
      POLICIES**
    
    **3****AMENDMENTS
      AND MODIFICATIONS OF THIS CODE**
    
    **3****ANTI-BOYCOTT
      AND U.S. SANCTIONS LAWS**
    
    **3****ANTITRUST
      AND FAIR COMPETITION LAWS**
    
    **4****BRIBERY**
    
    **5****COMPLIANCE
      WITH LAWS, RULES AND REGULATIONS**
    
    **5****COMPUTER
      AND INFORMATION SYSTEMS**
    
    **5****CONFIDENTIAL
      INFORMATION BELONGING TO OTHERS**
    
    **5****CONFIDENTIAL
      AND PROPRIETARY INFORMATION**
    
    **6****CONFLICTS
      OF INTEREST**
    
    **7****CORPORATE
      OPPORTUNITIES AND USE AND PROTECTION OF COMPANY
      ASSETS**
    
    **8****DISCIPLINE
      FOR NONCOMPLIANCE WITH THIS CODE**
    
    **8****DISCLOSURE
      POLICIES AND CONTROLS**
    
    **8****ENVIRONMENT,
      HEALTH AND SAFETY**
    
    **9****FILING
      OF GOVERNMENT REPORTS**
    
    **9****FOREIGN
      CORRUPT PRACTICES ACT**
    
    **9****INSIDER
      TRADING OR TIPPING**
    
    **10****INTELLECTUAL
      PROPERTY: PATENTS, COPYRIGHTS AND TRADEMARKS**
    
    **11****INVESTOR
      RELATIONS AND PUBLIC AFFAIRS**
    
    **11****POLITICAL
      CONTRIBUTIONS**
    
    **11****PROHIBITED
      SUBSTANCES**
    
    **12****RECORD
      RETENTION**
    
    **12****REPORTING
      VIOLATIONS OF THIS CODE**
    
    **12****WAIVERS**
    
    **13****CONCLUSION**
    
    **13**
 
   **ETHICS
ADMINISTRATOR**
  All
matters concerning this Code shall be heard by the Board of
Directors.
  **ACCOUNTING
POLICIES**
  The
Company will make and keep books, records and accounts, which in reasonable
detail accurately and fairly present the Company’s transactions.
  All
directors, officers, employees and other persons are prohibited from directly or
indirectly falsifying or causing to be false or misleading any financial or
accounting book, record or account. You and others are expressly prohibited from
directly or indirectly manipulating an audit, and from destroying or tampering
with any record, document or tangible object with the intent to obstruct a
pending or contemplated audit, review or federal investigation. The commission
of, or participation in, one of these prohibited activities or other illegal
conduct will subject you to federal penalties, as well as to punishment, up to
and including termination of employment.
  No
director, officer or employee of the Company may directly or indirectly make or
cause to be made a materially false or misleading statement, or omit to state,
or cause another person to omit to state, any material fact necessary to make
statements made not misleading, in connection with the audit of financial
statements by independent accountants, the preparation of any required reports
whether by independent or internal accountants, or any other work which involves
or relates to the filing of a document with the Securities and Exchange
Commission (“ *SEC* ”).
  **AMENDMENTS
AND MODIFICATIONS OF THIS CODE** ****
  There
shall be no amendment or modification to this Code except upon approval by the
Board of Directors.
  In case
of any amendment or modification of this Code that applies to an officer or
director of the Company, the amendment or modification shall be posted on the
Company's website within two days of the board vote or shall be otherwise
disclosed as required by applicable law or the rules of any stock exchange or
market on which the Company's securities are listed for trading. Notice posted
on the website shall remain there for a period of twelve months and shall be
retained in the Company's files as required by law.
  **ANTI-BOYCOTT
AND U.S. SANCTIONS LAWS** ****
  The
Company must comply with anti-boycott laws of the United States, which prohibit
it from participating in, and require us to report to the authorities any
request to participate in, a boycott of a country or businesses within a
country. If you receive such a request, report it to your immediate superior,
our CEO, or to the chairman of the Board of Directors. We will also not engage
in business with any government, entity, organization or individual where doing
so is prohibited by applicable laws.
 
 -3-
 ****
**ANTITRUST
AND FAIR COMPETITION LAWS**  The
purpose of antitrust laws of the United States and most other countries is to
provide a level playing field to economic competitors and to promote fair
competition. No director, officer or employee, under any circumstances or in any
context, may enter into any understanding or agreement, whether express or
implied, formal or informal, written or oral, with an actual or potential
competitor, which would illegally limit or restrict in any way either party’s
actions, including the offers of either party to any third party. This
prohibition includes any action relating to prices, costs, profits, products,
services, terms or conditions of sale, market share or customer or supplier
classification or selection.
 It is our
policy to comply with all U.S. antitrust laws. This policy is not to be
compromised or qualified by anyone acting for or on behalf of our Company. You
must understand and comply with the antitrust laws as they may bear upon your
activities and decisions. Anti-competitive behavior in violation of antitrust
laws can result in criminal penalties, both for you and for the Company.
Accordingly, any question regarding compliance with antitrust laws or your
responsibilities under this policy should be directed to our CEO or the chairman
of the Board of Directors, who may then direct you to our legal counsel. Any
director, officer or employee found to have knowingly participated in violating
the antitrust laws will be subject to disciplinary action, up to and including
termination of employment.
  Below are
some scenarios that are prohibited and scenarios that could be prohibited for
antitrust reasons. These scenarios are not an exhaustive list of all prohibited
and possibly prohibited antitrust conduct.
  ·
    Proposals
      or agreements or understanding, express or implied, formal or informal,
      written or oral, with any competitor regarding any aspect of competition
      between the Company and the competitor for sales to third
      parties;  ·
    Proposals
      or agreements or understandings with customers which restrict the price or
      other terms at which the customer may resell or lease any product to a
      third party; or  ·
    Proposals
      or agreements or understandings with suppliers which restrict the price or
      other terms at which the Company may resell or lease any product or
      service to a third party.  The
following business arrangements could raise anti-competition or antitrust law
issues. Before entering into them, you must consult with our CEO or the chairman
of the Board of Directors, who may then direct you to our legal counsel:
  ·
    Exclusive
      arrangements for the purchase or sale of products or
    services;  ·
    Bundling
      of goods and services; or  ·
    Agreements
      to add an employee of the Company to another entity’s board of
      Directors.  -4-
 ****
 **BRIBERY** ****
 You are
strictly forbidden from offering, promising or giving money, gifts, loans,
rewards, favors or anything of value to any governmental official, employee,
agent or other intermediary (either inside or outside the United States) which
is prohibited by law. Those paying a bribe may subject the Company and
themselves to civil and criminal penalties. When dealing with government
customers or officials, no improper payments will be tolerated. If you receive
any offer of money or gifts that is intended to influence a business decision,
it should be reported to your supervisor our CEO or the chairman of the Board of
Directors immediately.
  The
Company prohibits improper payments in all of its activities, whether these
activities are with governments or in the private sector.
  **COMPLIANCE
WITH LAWS, RULES AND REGULATIONS** ****
  The
Company's goal and intention is to comply with the laws, rules and regulations
by which we are governed. In fact, we strive to comply not only with
requirements of the law but also with recognized compliance practices. All
illegal activities or illegal conduct are prohibited whether or not they are
specifically set forth in this Code.
  Where law
does not govern a situation or where the law is unclear or conflicting, you
should discuss the situation with your supervisor, our CEO or the chairman of
the Board of Directors, who may then direct you to our legal counsel. Business
should always be conducted in a fair and forthright manner. Directors, officers
and employees are expected to act according to high ethical standards.
  **COMPUTER
AND INFORMATION SYSTEMS** ****
  For
business purposes, officers and employees are provided telephones and computer
workstations and software, including network access to computing systems such as
the Internet and e-mail, to improve personal productivity and to efficiently
manage proprietary information in a secure and reliable manner. You must obtain
the permission from your supervisor or our CEO to install any software on any
Company computer or connect any personal laptop to the Company network. As with
other equipment and assets of the Company, we are each responsible for the
appropriate use of these assets. Except for limited personal use of the
Company's telephones and computer/e-mail, such equipment may be used only for
business purposes. Officers and employees should not expect a right to privacy
of their e-mail or Internet use. All e-mails or Internet use on Company
equipment is subject to monitoring by the Company.
  **CONFIDENTIAL
INFORMATION BELONGING TO OTHERS** ****
  You must
respect the confidentiality of information, including, but not limited to, trade
secrets and other information given in confidence by others, just as we protect
our own confidential information. This includes, but is not limited to partners,
suppliers, contractors, competitors or customers. However, certain restrictions
about the information of others may place an unfair burden on the Company's
future business. For that reason, directors, officers and employees should
coordinate with your supervisor or the CEO to ensure appropriate agreements are
in place prior to receiving any confidential third-party information. In
addition, any confidential information that you may possess from an outside
source, such as a previous employer, must not, so long as such information
remains confidential, be disclosed to or used by the Company. Unsolicited
confidential information submitted to the Company should be refused, returned to
the sender where possible and deleted, if received via the Internet.
  -5-
 ****
 **CONFIDENTIAL
AND PROPRIETARY INFORMATION** ****
 
 
  It is the
Company's policy to ensure that all operations, activities and business affairs
of the Company and our business associates are kept confidential to the greatest
extent possible. Confidential information includes all non-public information
that might be of use to competitors, or that might be harmful to the Company or
its customers if disclosed. Confidential and proprietary information about the
Company or its business associates belongs to the Company, must be treated with
strictest confidence and is not to be disclosed or discussed with others.
 
 Unless
otherwise agreed to in writing, confidential and proprietary information
includes any and all information from which the Company may derive an economic
benefit, including, but not limited to, methods, inventions, improvements or
discoveries, whether or not patentable or copyrightable, and any other
information of a similar nature disclosed to the directors, officers or
employees of the Company or otherwise made known to the Company as a consequence
of or through employment or association with the Company (including information
originated by the director, officer or employee). This can include, but is not
limited to, information regarding the Company's business, products, processes,
and services. It also can include information relating to research, development,
inventions, trade secrets, intellectual property of any type or description,
data, business plans, marketing strategies, engineering, contract negotiations,
contents of the Company intranet and business methods or practices.
  The
following are examples of information that is not considered confidential:
  ·
    information
      that is in the public domain to the extent it is readily
      available;  ·
    information
      that becomes generally known to the public other than by disclosure by the
      Company or a director, officer or employee; or  ·
    information
      you receive from a party that is under no legal obligation of
      confidentiality with the Company with respect to such
      information.  We have
exclusive property rights to all confidential and proprietary information
regarding the Company or our business associates. The unauthorized disclosure of
this information could destroy its value to the Company and give others an
unfair advantage. You are responsible for safeguarding Company information and
complying with established security controls and procedures. All documents,
records, notebooks, notes, memoranda and similar repositories of information
containing information of a secret, proprietary, confidential or generally
undisclosed nature relating to the Company or our operations and activities,
including any copies thereof, unless otherwise agreed to in writing, belong to
the Company and shall be held by you in trust solely for the benefit of the
Company. Confidential or proprietary information must be delivered to the
Company by you on the termination of your association with us or at any other
time we request.
  -6-
 ****
 **CONFLICTS
OF INTEREST** ****
 
 
  Conflicts
of interest can arise in virtually every area of our operations. A “conflict of
interest” exists whenever an individual’s private interests interfere or
conflict in any way (or even appear to interfere or conflict) with the interests
of the Company. We must strive to avoid conflicts of interest. We must each make
decisions solely in the best interest of the Company. Any business, financial or
other relationship with suppliers, customers or competitors that might impair or
appear to impair the exercise of our judgment solely for the benefit of the
Company is prohibited.
  Here are
some examples of conflicts of interest:
  ·
    ***Family
      Members***—Actions
      of family members may create a conflict of interest. For example, gifts to
      family members by a supplier of the Company are considered gifts to you
      and must be reported. Doing business for the Company with organizations
      where your family members are employed or that are partially or fully
      owned by your family members or close friends may create a conflict or the
      appearance of a conflict of interest. For purposes of this Code “family
      members” includes any child, stepchild, grandchild, parent, stepparent,
      grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
      daughter-in-law, brother-in-law or sister-in-law, and adoptive
      relationships.  ·
    ***Gifts,
      Entertainment, Loans, or Other Favors***—Directors,
      officers and employees shall not seek or accept personal gain, directly or
      indirectly, from anyone soliciting business from, or doing business with,
      the Company, or from any person or entity in competition with us. Examples
      of such personal gains are gifts, non-business-related trips, gratuities,
      favors, loans, and guarantees of loans, excessive entertainment or
      rewards. However, you may accept gifts of a nominal value. Other than
      common business courtesies, directors, officers, employees and independent
      contractors must not offer or provide anything to any person or
      organization for the purpose of influencing the person or organization in
      their business relationship with us.  Directors,
officers and employees are expected to deal with advisors or suppliers who best
serve the needs of the Company as to price, quality and service in making
decisions concerning the use or purchase of materials, equipment, property or
services. Directors, officers and employees who use the Company's advisors,
suppliers or contractors in a personal capacity are expected to pay market value
for materials and services provided.
  ·
    ***Outside
      Employment***—Officers
      and employees may not participate in outside employment, self-employment,
      or serve as officers, directors, partners or consultants for outside
      organizations, if such activity:  o
    reduces
      work efficiency;  o
    interferes
      with your ability to act conscientiously in our best interest;
      or  o
    requires
      you to utilize our proprietary or confidential procedures, plans or
      techniques.  -7-
 
 You must
inform your supervisor or the CEO of any outside employment, including the
employer’s name and expected work hours.
  You
should report any actual or potential conflict of interest involving yourself or
others of which you become aware to your supervisor or our CEO. Officers and
directors should report any actual or potential conflict of interest involving
yourself or others of which you become aware to the chairman of the Board of
Directors.
  **CORPORATE
OPPORTUNITIES AND USE AND PROTECTION OF COMPANY ASSETS**
  You are
prohibited from:
  ·
    taking
      for yourself, personally, opportunities that are discovered through the
      use of Company property, information or position;  ·
    using
      Company property, information or position for personal gain;
      or  ·
    competing
      with the Company.  You have
a duty to the Company to advance its legitimate interests when the opportunity
to do so arises.
  You are
personally responsible and accountable for the proper expenditure of Company
funds, including money spent for travel expenses or for customer entertainment.
You are also responsible for the proper use of property over which you have
control, including both Company property and funds and property that customers
or others have entrusted to your custody. Company assets must be used only for
proper purposes.
  Company
property should not be misused. Company property may not be sold, loaned or
given away regardless of condition or value, without proper authorization. Each
director, officer and employee should protect our assets and ensure their
efficient use. Theft, carelessness and waste have a direct impact on the
Company's profitability. Company assets should be used only for legitimate
business purposes.
  **DISCIPLINE
FOR NONCOMPLIANCE WITH THIS CODE** ****
  Disciplinary
actions for violations of this Code can include oral or written reprimands,
suspension or termination of employment or a potential civil lawsuit against
you. The violation of laws, rules or regulations, which can subject the Company
to fines and other penalties, may result in your criminal prosecution.
  **DISCLOSURE
POLICIES AND CONTROLS** ****
  The
continuing excellence of the Company's reputation depends upon our full and
complete disclosure of important information about the Company that is used in
the securities marketplace. Our financial and non-financial disclosures and
filings with the SEC must be transparent, accurate and timely. We must all work
together to insure that reliable, truthful and accurate information is disclosed
to the public.
  -8-
 
 The
Company must disclose to the SEC, current security holders and the investing
public information that is required, and any additional information that may be
necessary to ensure the required disclosures are not misleading or inaccurate.
The Company requires you to participate in the disclosure process, which is
overseen by our CEO and CFO. The disclosure process is designed to record,
process, summarize and report material information as required by all applicable
laws, rules and regulations. Participation in the disclosure process is a
requirement of a public company, and full cooperation and participation by our
CEO, CFO and, upon request, other employees in the disclosure process is a
requirement of this Code.
  Officers
and employees must fully comply with their disclosure responsibilities in an
accurate and timely manner or be subject to discipline of up to and including
termination of employment.
  **ENVIRONMENT,
HEALTH AND SAFETY** ****
  The
Company is committed to managing and operating our assets in a manner that is
protective of human health and safety and the environment. It is our policy to
comply, in all material respects, with applicable health, safety and
environmental laws and regulations. Each employee is also expected to comply
with our policies, programs, standards and procedures.
  **FILING
OF GOVERNMENT REPORTS** ****
  Any
reports or information provided, on our behalf, to federal, state, local or
foreign governments should be true, complete and accurate. Any omission,
misstatement or lack of attention to detail could result in a violation of the
reporting laws, rules and regulations.
  **FOREIGN
CORRUPT PRACTICES ACT** ****
  The
United States Foreign Corrupt Practices Act prohibits giving anything of value,
directly or indirectly, to foreign government officials or foreign political
candidates in order to obtain, retain or direct business. Accordingly, corporate
funds, property or anything of value may not be, directly or indirectly, offered
or given by you or an agent acting on our behalf, to a foreign official, foreign
political party or official thereof or any candidate for a foreign political
office for the purpose of influencing any act or decision of such foreign person
or inducing such person to use his influence or in order to assist in obtaining
or retaining business for, or directing business to, any person.
  You are
also prohibited from offering or paying anything of value to any foreign person
if it is known or there is a reason to know that all or part of such payment
will be used for the above-described prohibited actions. This provision includes
situations when intermediaries, such as affiliates, or agents, are used to
channel payoffs to foreign officials.
  -9-
 ****
 **INSIDER
TRADING OR TIPPING** ****
 Directors,
officers and employees who are aware of material, non-public information from or
about the Company (an “ *insider* ”), are
not permitted, directly or through family members or other persons or entities,
to:
  ·
    buy
      or sell securities (or derivatives relating to such securities) of the
      Company, or  ·
    pass
      on, tip or disclose material, nonpublic information to others outside the
      Company including family and friends.  Such
buying, selling or trading of securities may be punished by discipline, up to
and including termination of employment; civil actions, resulting in penalties
of up to three times the amount of profit gained or loss avoided by the inside
trade or stock tip, or criminal actions, resulting in fines and jail time.
  Examples
of information that may be considered material, non-public information in some
circumstances are:
  ·
    undisclosed
      annual, quarterly or monthly financial results, a change in earnings or
      earnings projections, or unexpected or unusual gains or losses in major
      operations;  ·
    undisclosed
      negotiations and agreements regarding mergers, concessions, joint
      ventures, acquisitions, divestitures, business combinations or tender
      offers;  ·
    undisclosed
      major management changes;  ·
    a
      substantial contract award or termination that has not been publicly
      disclosed;  ·
    a
      major lawsuit or claim that has not been publicly
    disclosed;  ·
    the
      gain or loss of a significant customer or supplier that has not been
      publicly disclosed;  ·
    an
      undisclosed filing of a bankruptcy petition by the
  Company;  ·
    information
      that is considered confidential; and  ·
    any
      other undisclosed information that could affect our stock
      price.  The same
policy also applies to securities issued by another company if you have acquired
material, nonpublic information relating to such company in the course of your
employment or affiliation with the Company.
  When
material information has been publicly disclosed, each insider must continue to
refrain from buying or selling the securities in question until the third
business day after the information has been publicly released to allow the
markets time to absorb the information.
  -10-
 ****
 **INTELLECTUAL
PROPERTY: PATENTS, COPYRIGHTS AND TRADEMARKS** ****
  Except as
otherwise agreed to in writing between the Company and an officer or employee,
all intellectual property you conceive or develop during the course of your
employment shall be the sole property of the Company. The term intellectual
property includes any invention, discovery, concept, idea, or writing whether
protectable or not by any United States or foreign copyright, trademark, patent,
or common law including, but not limited to, designs, materials, compositions of
matter, machines, processes, improvements, data, computer software, writings,
formula, techniques, know-how, methods, as well as improvements thereof or
know-how related thereto concerning any past, present, or prospective activities
of the Company. Officers and employees must promptly disclose in writing to the
Company any intellectual property developed or conceived either solely or with
others during the course of your employment and must render any and all aid and
assistance, at our expense, to secure the appropriate patent, copyright, or
trademark protection for such intellectual property.
  Copyright
laws may protect items posted on a website. Unless a website grants permission
to download the Internet content you generally only have the legal right to view
the content. If you do not have permission to download and distribute specific
website content you should contact your supervisor or our CEO, who may refer you
to our legal counsel.
  If you
are unclear as to the application of this Intellectual Property Policy or if
questions arise, please consult with your supervisor or our CEO, who may refer
you to our legal counsel.
  **INVESTOR
RELATIONS AND PUBLIC AFFAIRS** ****
  It is
very important that the information disseminated about the Company be both
accurate and consistent. For this reason, all matters relating to the Company's
internal and external communications are handled by our CEO (or, if retained for
such purpose, a public relations consultant). Our CEO (or a public relations
consultant retained by the Company) is solely responsible for public
communications with stockholders, analysts and other interested members of the
financial community. Our CEO (or a public relations consultant retained by the
Company) is also solely responsible for our marketing and advertising activities
and communication with employees, the media, local communities and government
officials. Our CEO serves as the Company's spokesperson in both routine and
crisis situations.
  **POLITICAL
CONTRIBUTIONS** ****
  You must
refrain from making any use of Company, personal or other funds or resources on
behalf of the Company for political or other purposes which are improper or
prohibited by the applicable federal, state, local or foreign laws, rules or
regulations. Company contributions or expenditures in connection with election
campaigns will be permitted only to the extent allowed by federal, state, local
or foreign election laws, rules and regulations.
  You are
encouraged to participate actively in the political process. We believe that
individual participation is a continuing responsibility of those who live in a
free country.
  -11-
 ****
 **PROHIBITED
SUBSTANCES** ****
 
 
  The use
of alcohol, illegal drugs or other prohibited items, including legal drugs which
affect the ability to perform one’s work duties, are prohibited while on Company
premises. We also prohibit the possession or use of alcoholic beverages,
firearms, weapons or explosives on our property, unless authorized by our CEO.
You are also prohibited from reporting to work while under the influence of
alcohol or illegal drugs. We reserve the right to perform pre-employment and
random drug testing on employees, as permitted by law.
  **RECORD
RETENTION** ****
  The
alteration, destruction or falsification of corporate documents or records may
constitute a criminal act. Destroying or altering documents with the intent to
obstruct a pending or anticipated official government proceeding is a criminal
act and could result in large fines and a prison sentence of up to 20 years.
Document destruction or falsification in other contexts can result in a
violation of the federal securities laws or the obstruction of justice laws.
  **REPORTING
VIOLATIONS OF THIS CODE**
  You
should be alert and sensitive to situations that could result in actions that
might violate federal, state, or local laws or the standards of conduct set
forth in this Code. If you believe your own conduct or that of a fellow employee
may have violated any such laws or this Code, you have an obligation to report
the matter.
  Generally,
you should raise such matters first with an immediate supervisor. However, if
you are not comfortable bringing the matter up with your immediate supervisor,
or do not believe the supervisor has dealt with the matter properly, then you
should raise the matter with our CEO who may, if a law, rule or regulation is in
question, then refer you to our legal counsel. The most important point is that
possible violations should be reported and we support all means of reporting
them.
  Directors
and officers should report any potential violations of this Code to the chairman
of the Board of Directors or to our legal counsel.
  We will
not allow retaliation against an employee for reporting a possible violation of
this Code in good faith. Retaliation for reporting a federal offense is illegal
under federal law and prohibited under this Code. Retaliation for reporting any
violation of a law, rule or regulation or a provision of this Code is
prohibited. Retaliation will result in discipline, up to and including
termination of employment, and may also result in criminal prosecution. However,
if a reporting individual was involved in improper activity the individual may
be appropriately disciplined even if he or she was the one who disclosed the
matter to the Company. In these circumstances, we may consider the conduct of
the reporting individual in reporting the information as a mitigating factor in
any disciplinary decision.
  -12-
  **WAIVERS** ****
  There
shall be no waiver of any part of this Code for any director or officer except
by a vote of the Board of Directors. In case a waiver of this Code is granted to
a director or officer, the notice of such waiver shall be posted on our website
within five days of the Board’s vote or shall be otherwise disclosed as required
by applicable law or the rules of any stock exchange or market on which the
Company's securities are listed for trading. Notices posted on our website shall
remain there for a period of 12 months and shall be retained in our files as
required by law.
  **CONCLUSION** ****
  This Code
is an attempt to point all of us at the Company in the right direction, but no
document can achieve the level of principled compliance that we are seeking. In
reality, each of us must strive every day to maintain our awareness of these
issues and to comply with the Code’s principles to the best of our abilities.
Before we take an action, we must always ask ourselves:
  ·
    Does
      it feel right?  ·
    Is
      this action ethical in every way?  ·
    Is
      this action in compliance with the law?  ·
    Could
      my action create an appearance of impropriety?  ·
    Am
      I trying to fool anyone, including myself, about the propriety of this
      action?  If an
action would elicit the wrong answer to any of these questions, do not take it.
We cannot expect perfection, but we do expect good faith. If you act in bad
faith or fail to report illegal or unethical behavior, then you will be subject
to disciplinary procedures. We hope that you agree that the best course of
action is to be honest, forthright and loyal at all times.
   -13-