Article I: Purpose
This conflict of interest policy is designed to foster public confidence in the integrity of Chemical City Paper, Inc. (the “Corporation”) and to protect the Corporation interest when it is contemplating entering a transaction (defined below) that might benefit the private interest of a member of the Board of Directors, or of an employee of the Corporation.
Article II: Definitions
Insider means any member of the Board of Directors, the Chief Executive Officer, or any officer or employee of the Corporation who has the authority to execute a transaction on behalf of the Corporation.
Interest means any commitment, investment, relationship, obligation, or involvement, financial or otherwise, direct or indirect, that may influence a person’s judgment, including receipt of compensation from the Corporation, a sale, loan, or exchange transaction with the Corporation.
A conflict of interest is present when, in the judgment of the Board of Directors, an insider’s stake in the transaction is such that it reduces the likelihood that an insider’s influence can be exercised impartially in the best interests of the Corporation.
Transaction means any transaction, agreement, or arrangement between an insider and the Corporation, or between the Corporation and any third party where an insider has an interest in the transaction or any party to it.
Article III: Procedures
1. Duty to Disclose
Each insider shall disclose to the Board all material facts regarding his or her interest in the transaction promptly upon learning of the proposed transaction.
2. Determining Whether a Conflict of Interest Exists
With regard to an insider, the Board shall determine if a conflict of interest exists. The insider(s) and any other interested person(s) involved with the transaction shall not be present during the Board’s discussion or determination of whether a conflict of interest exists, except as provided in Article IV below.
3. Procedures for Addressing a Conflict of Interest
The Board shall follow the procedures set forth in Article IV in order to decide what measures are needed to protect the Corporation’s interests in light of the nature and seriousness of the conflict, to decide whether to enter into the transaction and, if so, to ensure that the terms of the transaction are appropriate.
Article IV: Review by the Board
The Board may ask questions of and receive presentation(s) from the insider(s) and any other interested person(s), but shall deliberate and vote on the transaction in their absence. The Board shall ascertain that all material facts regarding the transaction and the insider’s conflict of interest have been disclosed to the Board and shall compile appropriate data, such as comparability studies, to determine fair market value for the transaction.
After exercising due diligence, which may include investigating alternatives that present no conflict, the Board shall determine whether the transaction is in the Corporation’s best interest, for its own benefit, and whether it is fair and reasonable to the Corporation; the majority of disinterested members of the Board then in office may approve the transaction.
Article V: Records of Proceedings
The minutes of any meeting of the Board pursuant to this policy shall contain the name of each insider who disclosed or was otherwise determined to have an interest in a transaction; the nature of the interest and whether it was determined to constitute a conflict of interest; any alternative transactions considered; the members of the Board who were present during the deliberations on the transaction, those who voted on it, and to what extent interested persons were excluded from the deliberations; any comparability data or other information obtained and relied upon by the Board and how the information was obtained; and the result of the vote, including, if applicable, the terms of the transaction that was approved and the date it was approved.
Article VI: Annual Disclosure and Compliance Statements
Each insider shall annually sign a statement on the form attached as Exhibit A, that:
affirms that the person has received a copy of this conflict of interest policy, has read and understood the policy, and has agreed to comply with the policy; and
discloses the person’s financial interests and family relationships that could give rise to conflicts of interest.
Article VII: Violations
If the Board has reasonable cause to believe that an insider of the Corporation has failed to disclose actual or possible conflicts of interest, including those arising from a transaction with a related interested person, it shall inform such insider of the basis for this belief and afford the insider an opportunity to explain the alleged failure to disclose. If, after hearing the insider’s response and making further investigation as warranted by the circumstances, the Board determines that the insider has failed to disclose an actual or possible conflict of interest, the Board shall take appropriate disciplinary and corrective action.
Article VIII: Annual Reviews
To ensure that the Corporation operates in a manner consistent with its status as a Corporation exempt from federal income tax, the Board shall authorize and oversee an annual review of the administration of this conflict of interest policy. The review may be written or oral. The review shall consider the level of compliance with the policy, the continuing suitability of the policy, and whether the policy should be modified and improved.
Adopted June 2020.