The purpose of this Insider Trading Policy (this “Policy”) is to promote compliance with applicable securities laws by Apple Rush Company, Inc., APRU Brands and their respective subsidiaries (“APRU ” or the “Company”) and all directors, officers and employees thereof, in order to preserve the reputation and integrity of APRU Brands as well as that of persons affiliated therewith.
The Policy is applicable to all managers, advisors, directors, officers and employees of the Company. Every director, officer, advisor and employee of the Company must read and retain this Policy. Unless the context otherwise requires, references to the “Company” in this Policy refer to the Company, Apple Rush Company, Inc. and or APRU and their respective subsidiaries.
Questions regarding this Policy should be directed to the Company’s Investor Relations Officer and/or General Counsel.
It is the Company’s policy that no (i) director, officer or other employee of the Company; (ii) agent or advisor of the Company (such as its auditors, consultants or attorneys), (iii) persons identified as insiders under Section VI.D. of this Policy, or (iv) Related Person (as defined below) thereof (individually a “Covered Person” and, collectively, the “Covered Persons”) having material, nonpublic information relating to the Company may buy or sell shares of Class A Common Stock or other capital stock or securities of the Company (collectively, “Company Securities”) or engage in any other action to take advantage of, or pass on to others, such information. This Policy also applies to material, nonpublic information relating to any other company with publicly-traded securities, including our members or suppliers, obtained in the course of employment by or association with APRU.
To avoid even the appearance of impropriety, additional restrictions on trading Company Securities apply to directors and executive officers. See Section VI.
Investing in Company Securities provides an opportunity to share in the future growth of the Company. Investment in the Company and sharing in the growth of the Company, however, does not mean short-range speculation based on fluctuations in the market. Such activities may put the
personal gain of a Covered Person in conflict with the best interests of the Company and its stockholders.
Any person (including Covered Persons) who possesses material, nonpublic information is considered an insider as to that information.
The materiality of information depends upon the circumstances. Information is considered “material” if there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision, or if the facts would have been viewed by the reasonable investor as having significantly altered the “total mix” of information publicly available. Material information can be positive or negative and can relate to virtually any aspect of a company’s business and impact the value of any type of security – debt or equity.
Some examples of material information include:
The above list is only illustrative, many other types of information may be considered “material,” depending on the circumstances. The materiality of particular information should be reviewed on a frequent basis.
Information is “nonpublic” if it is not available to the general public. In order for information to be considered public, it must be widely disseminated in a manner making it generally available to investors through such media as Dow Jones, Thomson Reuters, The Wall Street Journal, the Associated Press or United Press International. The circulation of rumors, even if accurate and reported in the media, does not constitute effective public dissemination.
In addition, even after a public announcement of material information, a reasonable period of time must elapse in order for the market to react to the information. Generally, two full trading days following publication is viewed as a reasonable time period before such information is deemed to be public. Therefore, if an announcement is made before the commencement of trading on a Monday, an employee (as an example) may trade in Company Securities starting on Wednesday of that week, because two full trading days would have elapsed by then (all of Monday and Tuesday). If the announcement is made on Monday after trading begins, the employee may not trade in Company Securities until Wednesday. If the announcement is made on Friday after trading begins, the employee may not trade in Company Securities until Tuesday of the following week.
For purposes of this Policy, a Related Person includes (1) a person’s spouse and minor children and anyone else living in such person’s household, (2) partnerships in which such person is a general partner, (3) trusts of which such person is a trustee, (4) estates of which such person is an executor and (5) other equivalent legal entities that such person controls. Although a person’s parent or sibling is not considered a Related Person (unless living in the same household), a parent or sibling may be a tippee for securities laws purposes. See Section V.E below for a discussion on the prohibition on “tipping.”
Material, nonpublic information is strictly confidential and must not be disclosed whether through written, oral or electronic means to anyone, except the persons within the Company or third party agents of the Company such as investment banking advisors or outside legal counsel whose positions or roles require them to know such information, until such information has been publicly released by the Company.
No insider may place a purchase or sell order or recommend that another person place a purchase or sell order in Company Securities including initial elections, changes in elections or reallocation of funds relating to 401(k) plan accounts, when such person has knowledge of material, nonpublic information concerning the Company. Further, no insider may make loans, pledges, gifts, charitable donations or other contributions of Company Securities when such person has knowledge of material, nonpublic information concerning the Company.
Insiders may participate in the Apple Rush Company, Inc.. Employee Stock Purchase Plan (“ESPP”) pursuant to its terms, subject to the limitations set forth in the ESPP and this Policy. Participation in the ESPP is equivalent to the decision to purchase Company Securities. Accordingly, insiders must make their election to participate in the next upcoming ESPP purchase period during an open trading window and only after receipt of pre-clearance under this Policy. Automatic renewals of ESPP participants under the terms of the ESPP need not be pre-cleared if the terms of participation are not changed by the participant. Any participation changes permitted under the ESPP during a purchase period (such as payroll deduction amounts or withdrawals from the
ESPP) must be pre-cleared by insiders under this Policy prior to making any such changes. Any Company Securities acquired under the ESPP must be sold by insiders in accordance with this Policy.
Directors, executive officers and significant stockholders (beneficial holders of 5% or more of the Company’s issued and outstanding stock) or other insiders may elect to sell shares pursuant to contracts, plans or instructions complying with the requirements of Rule 10b5-1(c)(1) under the Securities Exchange Act of 1934, as amended (“Rule 10b5-1 Plans”) and are not per se prohibited by this Policy so long as such 10b5-1 Trading Plans are entered into in good faith while the insider is not in possession of material, nonpublic information; provided, that the adoption and maintenance of any such Rule 10b5-1 Plans by an insider must comply with any and all policies of the Company applicable to such insider with respect to the adoption and maintenance of Rule 10b5-1 Plans.
If securities transactions ever become the subject of scrutiny, they are likely to be viewed after the fact with the benefit of hindsight. As a result, before engaging in any transaction relating to the Company Securities an insider should carefully consider how such person’s transaction may be construed in the bright light of hindsight. Again, in the event of any questions or uncertainties about the Policy, please consult the Company’s Investor Relations Officer or any person to which the General Counsel has delegated responsibility for advising on this Policy.
Insiders may be liable for communicating or tipping material, nonpublic information to any third party (“tippee”), even if such third party is not a Related Person. Further, insider trading violations are not limited to trading or tipping by insiders. Persons other than insiders also can be liable for insider trading, including tippees who trade on material, nonpublic information tipped to them and individuals who trade on material, nonpublic information which has been misappropriated.
Tippees inherit an insider’s duties and are liable for trading on material, nonpublic information illegally tipped to them by an insider. Similarly, just as insiders are liable for the insider trading of their tippees, tippees who pass such information along to others who trade on such information will be liable. In other words, a tippee’s liability for insider trading is no different from that of an insider. Tippees can obtain material, nonpublic information by receiving overt tips from others or through, among other things, conversations at social, business or other gatherings.
No insider may trade in options, warrants, puts or calls or similar instrument involving Company Securities or sell Company Securities “short.” Further, no insider may hold Company Securities in margin accounts. Anyone may, of course, in accordance with this Policy and other Company policies, exercise options granted thereto by the Company.
No insider may place purchase or sell orders or recommend that another person place a purchase or sell order involving the securities of another company if such insider learns of material, nonpublic information about such other company in the course of such insider’s employment or other special relationship with APRU Brands.
This Policy continues to apply to transactions in the Company Securities by a Covered Person following termination of employment or other services with the Company if such Covered Person is aware of material, nonpublic information until such time that the information becomes public or is no longer material.
In addition to being subject to all of the other limitations in this Policy, directors, advisors and executive officers of the Company may only buy or sell Company Securities in the public market during the period beginning one full trading days after the release of the Company’s quarterly earnings (by press release or filing of a Form 8-K current report) and ending one calendar month prior to the end of the next fiscal quarter. See Section V.C. for exceptions relating to Rule 10b5-1 Plans (as defined above). Additionally, the Company may establish event-specific black-out periods from time to time which will further limit the time during which directors and executive officers of the Company may buy or sell Company Securities in the public market.
Directors, advisors and executive officers of the Company as such terms are defined pursuant to Section 16 of the Securities Exchange Act of 1934, as amended, must obtain prior clearance from the Company’s General Counsel, or the Investor Relations Officer, before any purchases or sales of Company Securities including any exercise of stock options are made thereby. The General Counsel and/or Investor Relations Officer will consult as necessary with senior management of and/or counsel to the Company before clearing any proposed trade. Each proposed purchase and sale will be evaluated to determine if it raises insider trading concerns or other concerns under the federal or state securities laws and regulations. Any advice will relate solely to the restraints imposed by law and will not constitute advice regarding the investment aspects of any transaction. Clearance of a transaction is valid only for a 48-hour period. If the transaction order for a purchase or sale of Company Securities is not placed within that 48-hour period, clearance of such purchase or sale as the case may be, must be re-requested. If clearance is denied, the fact of such denial must be kept confidential by the person requesting such clearance.
In limited circumstances, the Company’s General Counsel may grant a hardship exception to a Covered Person who is subject to a blackout period and who has an unexpected and urgent need to sell Company Securities in order to generate cash. However, a transaction that may be necessary or seem justifiable for independent reasons including a need to raise money for a personal financial emergency is neither a general exception to this Policy nor a safeguard against
prosecution for violation of insider trading laws. Hardship exemptions may be granted only by the General Counsel and must be requested at least two business days in advance of the proposed trade. Under no circumstances will a hardship exception be granted during an event-specific blackout period or to a director or executive officer.
For the avoidance of doubt, the Company may choose to designate certain individuals as being expressly required to operate as insiders, whether or not they actually possess any specific insider information. For that purpose, every member of the Board of Directors, the Chief Executive Officer and Chief Financial Officer and any other executive officers are deemed to be nominated whether on a published list or not.
It is a condition of employment or continued employment with the Company that every employee read and acknowledge acceptance of this Policy as requested by the Company.
Individuals who trade on material, nonpublic information or tip information to others can be subject to an array of civil and criminal penalties. Violations are taken very seriously by the Securities and Exchange Commission (the “SEC”), the federal agency responsible for enforcing the law in this area. Potential sanctions include:
These penalties can apply even if the individual is not a director or officer of the Company. The SEC has imposed large penalties even when the disclosing person did not profit from the trading. The SEC, NASDAQ Capital Market and Financial Industry Regulatory Authority use sophisticated electronic surveillance techniques to uncover insider trading. In addition to the potentially severe civil and criminal penalties for violation of the insider trading laws, violation of this Policy may result in the imposition by the Company of sanctions, including dismissal from the Company. A conviction or finding of liability for insider trading can also result in individuals being banned generally from employment in the securities or financial services industries or other employment, and even a mere allegation of insider trading can result in severe harm to professional and personal reputation.
Approved by the Apple Rush Company, Inc. Board on December 16, 2019