Anti-Bribery &
Anti-Corruption Policy
Table of Contents
PURPOSE
Qtrac, Inc. (the "Company") has implemented and will continuously maintain a compliance and
ethics program to educate employees about applicable laws and legislation aimed at preventing bribery
and corruption and to proactively prevent the violations of these laws.
This program is in its nascent stage and has been implemented as a standard practice across existing and
new employees as part of the Company's standard operating procedure.
The purpose of the Anti-Bribery & Anti-Corruption Policy (referred to as "the Policy") is to help the
Company comply with applicable laws including the Foreign Corrupt Practices Act (US) and the Bribery Act
(UK) (together referred to in this Policy as the "Anti-Corruption Laws"). Anti-Corruption Laws make it
illegal for the Company, its officers, directors, employees and agents, and any stockholders acting on
their behalf, to bribe any person or entity. The Company is also required to keep accurate and complete
books and records and to maintain proper internal accounting controls. The Company's Code of conduct
policy and procedure should read in conjunction with this policy.
All Company personnel are expected to conduct Company business legally and ethically. Improper gifts,
payments or offerings of anything of value to customers, partners, government officials or other third
parties could be violations of the Anti-Corruption Laws and might jeopardize the Company's growth and
reputation. The use of Company funds or assets for any unlawful, improper or unethical purpose is
prohibited. Specifically, it is the Company's policy to comply fully with Anti-Corruption Laws.
I. APPLICATION
The Company has implemented this Policy to prevent the violation of Anti-Corruption Laws, along with
complementary standards and procedures required to be followed by the Company's officers, directors,
employees, agents, consultants, joint ventures, and by contractors, vendors and sub-contractors with
responsibilities that include interactions with third parties on behalf of the Company. This Policy, and
its standards and procedures, are intended to eliminate any conduct that may violate Anti-Corruption
Laws.
The Policy extends to all of the Company's domestic and foreign operations, including operations
conducted by any departments, subsidiaries, agents, consultants or other representatives, and the
operations of any joint venture or other business enterprise outside the United States in which the
Company is a participant, if any. This Policy also extends to all of the Company's financial
record-keeping activities and is integrated with the obligations to which the Company is already subject
by virtue of the federal and state securities laws, including the U.S. Securities and Exchange Act of
1934.
The manner in which the Company may obtain or retain business, whether through: (a) submission of a
winning bid; (b) direct negotiation with a prospective customer; (c) joining an existing concession; (d)
negotiating a joint venture; or (e) engaging a third party as an agent or reseller, could create an
environment in which the risk of bribery or other corrupt behavior may be increased.
It is against Company policy to bribe any person, directly or indirectly. There are U.S. and foreign
laws that prohibit commercial bribery, and employees must not knowingly violate any such laws or engage
any third party agents that may knowingly violate such laws. Employees responsible for the engagement of
third party agents should use the procedures outlined in this Policy. If an employee has any questions
about the application of the anti-bribery provisions in general, or the use of these Policy guidelines
in connection with a transaction, then he or she should consult with a member of the Anti-Bribery &
Corruption Committee, as defined in this Policy.
The Company's procedures are designed such that officers, employees, and agents will exercise due care
to refrain from delegating substantial discretionary authority to individuals, within or outside the
Company, who an officer or employee knows, or should know through the exercise of reasonable due
diligence, may engage in illegal activities.
The Company will conduct quarterly reviews of its corporate policies and compliance programs regarding
the anti-corruption laws of each jurisdiction to which the Company, its officers, employees, agents,
contractors, sub-contractors, affiliates, and subsidiaries may be subject.
II. SUMMARY OF ANTI-CORRUPTION LAWS
A. Anti-Bribery Provisions
Anti-Corruption Laws generally make it illegal to bribe third parties, including but not limited to
business people and foreign officials in order to obtain or retain business or to secure any improper
advantage.
For purposes of this Policy, a "foreign official" means any officer or employee of a foreign government
(i.e., other than the United States) or any department, agency, or instrumentality thereof (which
includes a government-owned or government-controlled state enterprise) or of a "public international
organization," any person acting in an official capacity for or on behalf of a foreign government or
government entity or of a public international organization, any foreign political party or party
official, or any candidate for foreign political office. Thus, foreign officials include not only
elected officials, but also consultants who hold government positions, employees of companies owned by
foreign governments, political party officials intermediaries and others.
The term "public international organization" includes such organizations as the World Bank, the
International Finance Corporation, the International Monetary Fund, and the Inter-American Development
Bank. A member of the Company's Anti-Bribery & Corruption Committee should be contacted if there is a
question whether an organization falls within the scope of the Policy.
As Anti-Corruption Laws prohibit both direct and indirect payments to third parties, the Company can be
liable for improper payments made by its agents or other business associates. Accordingly, corrupt
behavior is not excused by inserting a third party between the Company and the prospective customer or
foreign official. Nor is the Company excused where such behavior was not sanctioned by the Company, but
it knew or should have known that the agent or business associate it employed was likely to engage in
such activity based on readily available information.
B. Record Keeping, Accounting and Payment Practices
The record-keeping provisions of Anti-Corruption Laws require the Company to keep its books, records and
accounts in reasonable detail, accurately and such that they fairly reflect all transactions and
dispositions of assets. Thus, Anti-Corruption Laws prohibit the mischaracterization or omission of any
transaction on a company's books or any failure to maintain proper accounting controls that result in
such a mischaracterization or omission. Keeping detailed, accurate descriptions of all payments and
expenses is crucial for compliance purposes. Accordingly, Company employees must follow applicable
standards, principles, laws and Company practices for accounting and financial reporting. In particular,
employees must be timely and complete when preparing all reports and records required by management.
When dealing with transactions covered by this Policy, employees must obtain approval from the Company's
Anti-Bribery & Corruption Committee, and, when appropriate, from the proper foreign governmental
entities. Prior to paying or authorizing a payment to a third party and in particular to a foreign
official, Company employees or agents should be sure that no part of such payment is to be made for any
purpose other than that to be fully and accurately described in the Company's books and records. No one
may create an undisclosed or unrecorded account of the Company for any purpose. False or artificial
entries may not be made in the books and records of the Company for any reason. Finally, personal or
third party funds may not be used to accomplish what is otherwise prohibited by Company policy.
C. Internal Controls
The Company has an obligation to establish effective accounting controls over all of its business
transactions. This legal duty is satisfied by devising and maintaining a system of internal accounting
controls sufficient to provide reasonable assurances that:
(a)transactions are executed in accordance with management's general or specific
authorization;
(b)transactions are recorded as necessary (i) to permit preparation of financial statements
in conformity with generally accepted accounting principles or any other criteria applicable to such
statements, and (ii) to maintain accountability for assets;
(c)access to assets is permitted only in accordance with management's general or specific
authorization; and
the recorded accountability for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. The Company's employees are expected to
facilitate the Company's compliance with its legal requirements to maintain adequate internal accounting
and transactional controls and to cooperate fully with the Company's accountants, financial analysts,
internal and external auditors, and all other personnel designated or appointed by the Company to enact
and monitor these accounting and financial controls. Any attempt by an employee to circumvent these
internal accounting and financial controls, or a failure by an employee to cooperate fully with the
Company's accounting and financial personnel charged with devising and maintaining these internal
controls, is a serious breach of Company policy, which may result in disciplinary action up to and
including termination of employment for cause.
III. DUE DILIGENCE AND SELECTION OF THIRD PARTY REPRESENTATIVES AND BUSINESS PARTNERS
The Company is dedicated to the dynamic and profitable expansion of its operations. The Company will
compete for all business opportunities vigorously, fairly, ethically, and legally, and will negotiate
contracts in a fair and open manner. Regardless of any pressure exerted by local custom in a particular
region, the Company will conduct business using only legal and ethical means.
This practice of fairness and professionalism must extend to the activities of the Company's agents,
consultants, representatives and business partners, particularly those third parties who are in a
position to violate Anti-Corruption Laws (individually Third Party and collectively Third Parties). The
Company should be careful to avoid situations involving Third Parties that might lead to a violation of
Anti-Corruption Laws. Therefore, prior to entering into an arrangement with any Third Party who may act
on behalf of the Company in a country or territory, the Company will perform a due diligence
investigation and obtain assurances of compliance with the provisions of Anti-Corruption Laws. It is
important to note that the responsibility for the initiation of this process lies with the sales
representatives or the business manager for the region in question.
Company employees must follow the Company's requirements governing investigating, pre-qualifying,
certifying and entering into agreements with Third Parties who will act on behalf of the Company in
international transactions. A Third Party may be selected only after careful consideration of
appropriate information depending on the circumstances. The Third Party must agree to appropriate
monitoring and audit procedures by the Company or its designee.
In the event the Company merges with or acquires another company, the Company will review and evaluate
all existing Third Party relationships with the acquired or merging company to bring about prompt
compliance of the merged or acquired company with this Policy and the requirements of Anti-Corruption
Laws.
All contracts and contract renewals within the scope of the Anti-Corruption Laws will contain provisions
that represent that the parties have not engaged in activities, which contravene applicable
anti-corruption laws.
In addition, each Third Party agreement shall contain an agreement that the Third Party shall provide
the Company with audit rights and an undertaking that it shall not retain any sub-agent, sub-contractor,
or representative without the prior written consent of the Company. Such contracts shall also provide
for termination if there is violation of such undertakings, representations, and agreements.
The Company will determine the regions or countries that pose higher risks of corruption. It may also
conduct audits of operations in such regions or countries of:
A.the operating unit's books and records, with specific attention to payments and
commissions to agents, consultants, contractors, and subcontractors with responsibilities that include
interactions with individuals who may be considered foreign officials and to contributions to or by
joint ventures;
B.internal controls in respect to the retention of, and ongoing relationships with,
selected agents, consultants, contractors, subcontractors, and joint venture partners sufficient to
detect, and ensure compliance with, the Company's third party retention policies and procedures;
C.selected Third Parties; and
D.statement of employees, consultants, agents, contractors, subcontractors, and joint
venture partners.
Failure to follow Company's requirements regarding Third Parties will subject an employee to
disciplinary action and potential criminal sanctions.
IV. PENALTIES
Anti-Corruption Laws are generally criminal statutes, and imposes severe criminal sanctions and
liability on individuals and corporations that fail to comply with its provisions.
For instance, individuals who violate the anti-bribery provisions of the Foreign Corrupt Practices Act
(the "FCPA"), criminal penalties include fines of up to $250,000 or twice the amount of the gross
pecuniary gain resulting from the improper payment, imprisonment of up to five years, or both.
Corporations may be fined up to $2,000,000, or, alternatively, twice their pecuniary gain, for criminal
violations of the FCPA's anti-bribery provisions. In addition to criminal penalties, a civil penalty of
up to $600,000 per violation may be imposed upon any company that violates the anti-bribery provisions,
and against any officer, director, employee or agent of a company, or a stockholder acting on behalf of
a company that violates the Act. The U.S. Department of Justice and the U.S. Securities Exchange
Commission may also obtain injunctions to prevent FCPA violations.
Individuals who willfully violate the accounting provisions of the FCPA may be fined up to $1,000,000,
imprisoned for up to twenty years, or both per violation. A corporation may be fined up to $25,000,000.
Alternatively, both individuals and corporations violating the FCPA's accounting provisions may be
subject to fines of up to twice the amount of any pecuniary gain or loss resulting from such violation.
Note that the Company is prohibited by the Act from indemnifying employees or other individuals acting
on the Company's behalf from any personally imposed fines.
In addition to civil and criminal penalties, a person or company that violates the FCPA may be precluded
from doing business with the U.S. government. Other penalties include denial of export licenses and
debarment from programs under the Commodity Futures Trading Commission and the Overseas Private
Investment Corporation.
In addition to criminal or civil sanctions by government agencies, violations of Anti- Corruption Laws
and/or this Policy will also result in discipline by the Company that may include termination of
employment.
The Company has established and will maintain an Anti-Bribery & Corruption Committee (the Committee) to
supervise (i) all existing Third Parties for purposes of business development or lobbying in a foreign
jurisdiction, (ii) the retention of any new Third Party for purposes of business development or lobbying
in a foreign jurisdiction, (iii) the retention of any new Third Party for a project in which a foreign
government or public international organization, or instrumentality of these entities, is the ultimate
customer or beneficiary, and (iv) all related contracts. The Committee also will review the suitability
of all prospective Third Parties, as well as the adequacy of the due diligence performed in connection
with the selection of the Third Party, any subsequent due diligence relating to the continued
suitability of the Third Party, and any due diligence in connection with the proposed retention of Third
Parties for purpose of business development in a jurisdiction other than the United States. This
Committee will never be composed of persons who are subordinate to the most senior officer of the
department or unit responsible for the relevant transaction. The Committee will comprise the Company's
Chief Compliance Officer for the Company's international matters, or, in each case, his or her designee.
The Company's General Counsel (FCPA) will moderate any divisions within or non-unanimous decisions
formed by the Committee.
The Committee will oversee the Company's formation of business relationships, focusing on the reputation
and qualifications of these Third Parties for purposes of business development and lobbying in foreign
jurisdictions, and for purposes of projects for foreign governments or public international
organizations or instrumentalities of these entities. The "due diligence" conducted to verify that this
oversight is effective will be maintained in the Committee's files.
The Company's Anti-Bribery & Corruption Committee is responsible for oversight of the policies,
standards, and procedures established by this Policy. The Committee has the authority and responsibility
to adopt and enforce monitoring and auditing systems reasonably designed to monitor conduct of the
Company's employees and Third Parties, including the authority to retain outside counsel, investigators,
and independent auditors to conduct investigations and audits. In addition, the Committee is authorized
to modify the procedures adopted pursuant to the Policy, and to make modifications to the Policy as
needed.
The Company has established a reporting system by which officers, employees, agents, consultants, and
other representatives, as well as Third Parties, may report suspected criminal or improper conduct
directly to the members of the Anti-Bribery & Corruption Committee. Absent fraud, employees and Third
Parties who make complaints related to this Policy shall not be the subject of retribution for the
filing of such reports.
V. RESPONSIBILITIES OF ALL COMPANY EMPLOYEES INVOLVED IN INTERNATIONAL MATTERS
This Policy will be communicated to all employees with responsibilities that include interactions with
third parties, which pose a risk of violation of Anti-Corruption Laws. The Company will hold training
concerning the requirements of Anti-Corruption Laws on a periodic basis for its employees involved in
foreign projects. Every Company employee whose duties are likely to be carried out in places covered by
Anti-Corruption Laws is expected to read, understand, and comply with this Policy. Periodic
certifications of compliance with this Policy will be required, as will participation in Company
Anti-Corruption training sessions as instructed by Company management.
Company employees, who learn of a violation, or suspected violation of Anti-Corruption Laws, are
instructed to contact the Company's Anti-Bribery & Corruption Committee without delay. If you have
questions or problems concerning this Policy, you should contact the Committee at:
Anti-Bribery & Corruption Committee c/o Chief Compliance Officer Qtrac, Inc.
27810 Avenue Hopkins
Valencia, CA 91355
Valencia, CA 91355