PRIME HOSPITALITY CORP.

CODE OF BUSINESS CONDUCT AND ETHICS

 

 

 

 

 

 

 

 

 

 

 

 

Adopted [      ], 2004


Introduction

This Code of Business Conduct and Ethics (this “Code”) covers a wide range of business practices and procedures.  It does not cover every issue that may arise, but it sets out basic principles to guide all directors, executive officers and employees of Prime Hospitality Corp. (the “Company”) and the employees of its subsidiaries (the “associates”).  All of our associates must conduct themselves accordingly and seek to avoid even the appearance of improper behavior.  We expect you to share our commitment to product and service excellence.  We must be unfailingly honest and trustworthy in our operations and in our relationships with our customers and our employees.  We expect you to demonstrate the same high standards of ethical conduct in your dealings with customers, co-workers and the Company itself.  This Code should also be provided to and followed by the Company’s agents and representatives, including consultants.

The purpose of this Code is to deter wrongdoing and to promote:

·         honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

·         full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission (the “SEC”) and in other public communications made by the Company;

·         compliance with applicable governmental laws, rules and regulations;

·         the prompt internal reporting of violations of this Code to the appropriate persons identified in this Code; and

·         accountability for adherence to this Code.

If a law conflicts with a policy in this Code, you must comply with the law.  If you have any questions about these conflicts, you should ask your supervisor how to handle the situation.

Those who violate the standards in this Code will be subject to disciplinary action, up to and including termination of employment.  If you are in a situation which you believe may violate or lead to a violation of this Code, follow the guidelines described in Section 14 of this Code.

1.                  Compliance with Laws, Rules and Regulations

Obeying the law, both in letter and in spirit, is the foundation on which the Company’s ethical standards are built.  All associates must respect and obey the laws of the cities, states and countries in which we operate.  Although not all associates are expected to know the details of these laws, it is important to know enough to determine when to seek advice from supervisors, managers or other appropriate personnel.

The Company will not knowingly assist other persons or entities with whom we have business dealings in violating any law or regulation.  For example, we will not misrepresent or confirm facts known to be false to the auditors of a customer or supplier for the purpose of allowing the customer or supplier to prepare false financial statements or financial information.

If requested, the Company will hold information and training sessions to promote compliance with laws, rules and regulations, including insider trading laws.

(a)               Insider Trading

Associates who have access to confidential information are not permitted to use or share that information for stock trading purposes or for any other purpose except the conduct of our business.  All non-public information about the Company should be considered confidential information.  To use non-public information for personal financial benefit or to “tip” others who might make an investment decision on the basis of this information is not only unethical but also illegal.  In addition, the Company has adopted an Insider Trading and Confidentiality Policy Statement which governs the Company’s directors’ and officers’ trading in securities of the Company.  If you have any questions, please consult your supervisor, the Company’s Chief Executive Officer (the “CEO”) or Chief Financial Officer (the “CFO”). 

(b)               Discrimination

It is the policy of the Company to provide equal employment opportunity in full compliance with all federal, state and local regulations.  This means that our employment practices are implemented without regard to race, color, national origin, ancestry, citizenship, gender, marital status, sexual orientation, religion, creed, age, disability, veteran status, liability for military service, or any other characteristic protected by federal, state or local laws. Consistent with these laws, the Company prohibits unlawful discrimination in hiring, promotion, discharge, pay, job training, benefits or other aspects of employment.  All associates of the Company are responsible for supporting our Equal Employment Opportunity Policy.

Any employee who believes that he/she has been subjected to discrimination is strongly encouraged to bring this to the immediate attention of his/her immediate supervisor or manager or directly to the CEO or the CFO.  We will investigate all complaints, maintaining confidentiality to the extent that this is possible.  Keep in mind that we must gather information from others during our investigation.  Any employee raising a good faith complaint or report of unlawful discrimination will not be subject to any form of retaliation or discipline.  If our investigation confirms the allegations, we will take corrective action.  If you observe unlawful discrimination in our workplace, we consider it to be your responsibility to inform us so that we can conduct an investigation.

(c)                Harassment

It is the policy of the Company to provide an environment that is free from harassment based on race, color, national origin, ancestry, citizenship, gender, marital status, sexual orientation, religion, creed, age, disability or any legally protected characteristic or circumstance.  It is the policy of the Company to maintain a workplace that is free from the intimidation, coercion or harassment, including sexual harassment, of any employee.  Such conduct is not only a violation of applicable law; it is also a violation of Company policy. Incidents of harassment by employees, supervisors, managers, contractors, vendors or customers will not be tolerated and should be promptly reported as outlined in this section.  We will take whatever action is needed to ensure that this conduct is prevented and/or corrected.

Company employees are expected to conduct themselves in a business like manner at all times.  Any behavior that is coercive, intimidating, harassing or sexual in nature is inappropriate and prohibited.  This includes, but is not limited to, slurs, jokes or degrading comments concerning any of the characteristics that are protected by law or Company policy.

Any verbal, physical or visual conduct that belittles or demeans an individual because of his or her race, color, national origin, ancestry, citizenship, religion, creed, gender, marital status, sexual orientation, age, disability or other legally or company protected characteristic or circumstance is specifically prohibited.  Although it may not be the INTENT of an employee to OFFEND another employee, such behavior is prohibited if it has the effect of offending another employee.

Sexual harassment is a form of misconduct, which undermines the integrity of any relationship.  No employee should be subject to unsolicited and unwelcome sexual overtones or conduct, either verbal or physical.  Sexual harassment does not refer to casual conversation or compliments of a socially acceptable nature.  It refers to behavior which is not welcome and which is personally offensive, interfering with effectiveness or creating an uneasy atmosphere.  Such conduct, whether committed by supervisors or non-supervisory personnel, is specifically prohibited.  Any such action will bring prompt and certain action, including possible termination.

Sexual harassment can include, but is not limited to, any of the following kinds of behavior:

·                    explicit sexual propositions ;

·                    sexual innuendo ;

·                    sexually suggestive comments;

·                    sexually oriented teasing or kidding;

·                    sexually oriented jokes;

·                    obscene gestures or language;

·                    obscene or sexually suggestive pictures or drawings; and

·                    physical contact, such as patting, pinching or touching.

Any employee who believes that he/she has been subjected to sexual harassment is strongly encouraged to bring this to the immediate attention of his/her immediate supervisor or manager or directly to the CEO or the CFO.  We will investigate all complaints, maintaining confidentiality to the extent that this is possible.  Keep in mind that we must gather information from others during our investigation.  Any employee raising a good faith complaint or report of unlawful harassment will not be subject to any form of retaliation or discipline. When our investigation confirms the allegations, we will take corrective action.  If you observe or believe you have been subjected to harassment in our workplace, we consider it to be your responsibility to inform us so that we can conduct an investigation.

(d)               Anti-Trust Compliance

You are expected to fully comply with all anti-trust regulations.  In particular, none of us can collaborate with any competitor in determining the price of any Company product or service or in deciding to conduct business in any particular market or geographic area or with any particular customer.  In addition, no associate may exchange information with a competitor about the price of, or the cost of providing, any Company product or service. Refer all related questions to the CEO or the CFO.

2.                  Conflicts of Interest

A “conflict of interest” exists when a person’s private interest interferes in any way with the interests of the Company.  A conflict situation can arise when an associate takes actions or has interests that may make it difficult to perform his or her Company work objectively and effectively.  Conflicts of interest may also arise when an associate, or members of his or her family, receives improper personal benefits as a result of his or her position in the Company.  Loans to, or guarantees of obligations of, associates and their family members may create conflicts of interest.

It is almost always a conflict of interest for a Company employee to work simultaneously for a competitor, customer or supplier.  You are not allowed to work for a competitor as a consultant or board member.  The best policy is to avoid any direct or indirect business connection with our customers, suppliers or competitors, except on our behalf.  Consistent with this policy, we do not permit the employment of immediate relatives within the same department because it could create an actual or perceived conflict of interest.  Conflicts of interest are prohibited as a matter of Company policy, except under guidelines approved by the Board of Directors of the Company (the “Board of Directors” or the “Board”).  Conflicts of interest may not always be clear-cut, so if you have a question, you should consult with higher levels of management.  Any associate who becomes aware of a conflict or potential conflict should bring it to the attention of a supervisor, manager or other appropriate personnel or consult the procedures described in Section 14 of this Code.

3.                  Corporate Opportunities

Associates, officers and directors are prohibited from taking for themselves personally opportunities that are discovered through the use of corporate property, information or position without the consent of the Board of Directors.  No associate may use corporate property, information or position for improper personal gain, and no associate may compete with the Company directly or indirectly.  Associates owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises.

4.                  Competition and Fair Dealing

We must deal fairly with customers, vendors and competitors and fulfill our obligations even when they are detrimental to our profits.  All estimates and commitments to both customers and co-workers should be made with the expectation that they will be achieved.

Stealing proprietary information, possessing trade secret information that was obtained without the owner’s consent or inducing such disclosures by past or present associates of other companies is prohibited.  Each associate should endeavor to respect the rights of and deal fairly with the Company’s customers, suppliers, competitors and associates.  No associate should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other intentional unfair-dealing practice.

The purpose of business gifts in a commercial setting is to create good will and sound working relationships, not to gain unfair advantage with customers.  No gift should ever be offered, given, provided or accepted by any employee, family member of an employee or agent unless it:  (1) is not a cash gift, (2) is consistent with customary business practices, (3) is not excessive in value (less than $150.00), (4) cannot be construed as a bribe or payoff and (5) does not violate any laws or regulations.  Please discuss with your supervisor or the CEO or the CFO any gifts or proposed gifts which you are not certain are appropriate.  You may also not accept special discounts or loans from any person or company doing, or seeking to do, business with the Company.

5.                  Outside Employment

If you are considering outside employment, you must discuss these issues with your supervisor.  You will generally be permitted to secure outside employment provided that such employment does not:

·                    interfere with your responsibilities at the Company;

·                    present a conflict of interest with the Company’s interests or the interests of any Company customer or vendor; or

·                    involve the use of confidential information learned directly or indirectly through your employment at the Company.

6.                  Health and Safety

(a)                The Company strives to provide each employee with a safe and healthy work environment.  Each employee has responsibility for maintaining a safe and healthy workplace for all associates by following safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions.

(b)               Violence and threatening behavior are not permitted.  The Company promotes a workplace that is free from the effects of drug and alcohol use.  You are prohibited from possessing, using and selling alcohol or illegal drugs during work time or on the Company’s premises.  If you need to take a prescribed or over-the-counter drug that impairs your judgment or performance in any way, you are required to notify your supervisor, the CEO or the CFO before you start work.

You are expected to report any suspected violation of drug-related laws occurring on the Company’s premises or during work time to your supervisor, the CEO or the CFO who may then contact the appropriate law enforcement agency.  Also, you must notify your supervisor, the CEO or the CFO if you have been involved in any criminal drug statute violation occurring on the Company’s premises no later than five days after such conviction.

If you need assistance in addressing an alcohol or drug problem, your supervisor, the CEO or the CFO may be able to help you, in confidence, to identify a related service provider.  You are still responsible for your own performance, which will be evaluated consistent with other employees, regardless of your efforts to solve a personal problem.

7.                  Record-Keeping

The Company requires honest and accurate recording and reporting of information in order to make responsible business decisions.  For example, only the true and actual number of hours worked should be reported.

Many associates regularly use business expense accounts, which must be documented and recorded accurately.  If you are not sure whether a certain expense is legitimate, ask your supervisor or your controller.

All of the Company’s books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Company’s transactions and must conform both to applicable legal requirements and to the Company’s system of internal controls.  Unrecorded or “off the books” funds or assets should not be maintained unless permitted by applicable law or regulation.

Business records and communications often become public, and we should avoid exaggeration, derogatory remarks, guesswork or inappropriate characterizations of people and companies that can be misunderstood.  This applies equally to e-mail, internal memos and formal reports.  Records should always be retained or destroyed according to the Company’s record retention policies.  In accordance with those policies, in the event of litigation or governmental investigation please consult with your supervisor.

8.                  Confidentiality

Associates must maintain the confidentiality of confidential information entrusted to them by the Company or its customers, except when disclosure is authorized or required by law or regulations.  Confidential information includes all non-public information that might be of use to competitors, or harmful to the Company or its customers, if disclosed.  It also includes information that suppliers and customers have entrusted to us.  The obligation to preserve confidential information continues even after an associate’s relationship with the Company ends. 

9.                  Protection and Proper Use of Company Assets

The Company’s assets should not be improperly used or misused.  All associates should endeavor to protect the Company’s assets and ensure their efficient use.  Theft, carelessness, and waste have a direct impact on the Company’s profitability.  Any suspected incident of fraud or theft should be immediately reported for investigation.  Company equipment should not be used for non-Company business, though incidental personal use may be permitted.

The obligation of associates to protect the Company’s assets includes its proprietary information.  Proprietary information includes intellectual property such as trade secrets, patents, trademarks and copyrights, as well as business, marketing and service plans, engineering and manufacturing ideas, designs, databases, records, salary information and any unpublished financial data and reports.  Unauthorized use or distribution of this information would violate Company policy.  It could also be illegal and result in civil or even criminal penalties.  The Company complies with all software licenses and copyright requirements.  Software, manuals or any other copyrighted material may not be copied.

10.              Payments to Government Personnel

The U.S. Foreign Corrupt Practices Act prohibits giving anything of value, directly or indirectly, to officials of foreign governments or foreign political candidates in order to obtain or retain business.  It is strictly prohibited to make illegal payments to government officials of any country.

In addition, the U.S. government has a number of laws and regulations regarding business gratuities which may be accepted by U.S. government personnel.  The promise, offer or delivery to an official or employee of the U.S. government of a gift, favor or other gratuity in violation of these rules would not only violate Company policy but could also be a criminal offense.  State and local governments, as well as foreign governments, may have similar rules.  We can provide guidance to you in this area.

11.              Waivers of the Code of Business Conduct and Ethics

Any waiver of this Code for executive officers or directors may be made only by the Board of Directors or a Board committee and will be promptly disclosed as required by law or stock exchange regulation. 

12.              Reporting any Illegal or Unethical Behavior

Associates are encouraged to talk to supervisors, managers or other appropriate personnel about observed illegal or unethical behavior and when in doubt about the best course of action in a particular situation.  It is the policy of the Company not to allow retaliation for reports of misconduct by others made in good faith by associates.  Associates are expected to cooperate in internal investigations of misconduct.

13.              Additional Policies for the CEO and Senior Financial Officers

All provisions of this Code bind the CEO, the CFO, the principal accounting officer or controller and all persons performing similar functions (the “senior financial officers”).  In addition to this Code, the senior financial officers are subject to the following additional specific policies:

(a)            All senior financial officers are responsible for full, fair, accurate, timely and understandable disclosure in the periodic reports required to be filed by the Company with the SEC and in the Company’s other public communications.  Accordingly, it is the responsibility of each senior financial officer promptly to bring to the attention of the management and to the Compensation and Audit Committee any material information of which he or she may become aware that affects the disclosures made by the Company in its public filings or public communications or otherwise assist the management in fulfilling its responsibilities.

(b)            Each senior financial officer shall promptly bring to the attention of the management and the Compensation and Audit Committee any information he or she may have concerning (1) significant deficiencies in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize and report financial data or (2) any fraud, whether or not material, that involves management or other associates who have a significant role in the Company’s financial reporting, disclosures or internal controls.

(c)             Each senior financial officer shall promptly bring to the attention of the management and to the Compensation and Audit Committee any information he or she may have concerning any violation of this Code, including any actual or apparent conflicts of interest between personal and professional relationships, involving any members of management or other associates who have a significant role in the Company’s financial reporting, disclosures or internal controls.

(d)            Each senior financial officer shall promptly bring to the attention of the management and to the Compensation and Audit Committee any information he or she may have concerning evidence of a material violation of the securities or other laws, rules or regulations applicable to the Company and the operation of its business, by the Company or any agent thereof, or of violation of this Code or of these additional procedures.

(e)            The Board of Directors shall determine, or designate appropriate persons to determine, appropriate actions to be taken in the event of violations of this Code or of these additional procedures by the senior financial officers.  Such actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to this Code and to these additional procedures, and shall include written notices to the individual involved that the Board has determined that there has been a violation, censure by the Board, demotion or re-assignment of the individual involved, suspension with or without pay or benefits (as determined by the Board) and termination of the individual’s employment.  In determining what action is appropriate in a particular case, the Board of Directors or such designee shall take into account all relevant information, including the nature and severity of the violation, whether the violation was a single occurrence or repeated occurrences, whether the violation appears to have been intentional or inadvertent, whether the individual in question had been advised prior to the violation as to the proper course of action and whether or not the individual in question had committed other violations in the past.

14.              Compliance Procedures

We must all work to ensure prompt and consistent action against violations of this Code.  However, in some situations it is difficult to know if a violation has occurred.  Since we cannot anticipate every situation that will arise, it is important that we have a way to approach a new question or problem.  These are the steps to keep in mind:

·                    Make sure you have all the facts.  In order to reach the right solutions, we must be as fully informed as possible.

·                    Ask yourself, “What specifically am I being asked to do?  Does it seem unethical or improper?”  This will enable you to focus on the specific question you are faced with, and the alternatives you have.  Use your judgment and common sense; if something seems unethical or improper, it probably is.

·                    Clarify your responsibility and role.  In most situations, there is shared responsibility.  Are your colleagues informed?  It may help to get others involved and discuss the problem.

·                    Discuss the problem with your supervisor.  This is the basic guidance for all situations.  In many cases, your supervisor will be more knowledgeable about the question, and will appreciate being brought into the decision-making process.  Remember that it is your supervisor’s responsibility to help solve problems.

·                    Seek help from Company resources.  In the rare case where it may not be appropriate to discuss an issue with your supervisor, or where you do not feel comfortable approaching your supervisor with your question, discuss it locally with your office manager or your human resources manager.

·                    You may report ethical violations in confidence and without fear of retaliation.  If your situation requires that your identity be kept secret, your anonymity will be protected.  The Company does not permit retaliation of any kind against associates for good faith reports of ethical violations.

·                    Always ask first, act later.  If you are unsure of what to do in any situation, seek guidance before you act.

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