Novell has a unique opportunity to make a dramatic and lasting impact on the way we live, work, learn, and govern, as a leader in the e-business world. Novell's success benefits not only the organization—employees, investors, owners, and partners—but also society in general by providing the tools to accomplish personal and business goals. Novell can only be successful in the long term, however, if our employees adhere to the highest standards of business conduct. Therefore, our commitment and vision requires adherence to high ethical standards, in addition to basic compliance with the law. Consequently, where permitted by law, as a condition of employment at Novell, every employee must annually acknowledge that he or she has read Novell's Code of Business Ethics and completed the necessary report accompanying it. Again, where permitted by law, failure to do so by the employee will result in his or her dismissal from Novell.
Among Novell's most fundamental operating principles are adherence to high ethical standards and compliance with all laws and regulations applicable to our business. The reputation of our Company, the quality of our work-place experience, and the satisfaction of our obligations to shareholders depend on each employee achieving these levels of conduct. The Novell Board of Directors has adopted this Code of Business Ethics ("COBE") to inform all employees, including officers, of their legal and ethical obligations to Novell. All employees (including employees of Novell subsidiaries worldwide), agents, consultants, contractors, and representatives are required to comply with COBE. Adherence to COBE will help to create and maintain an environment of trust and loyalty at Novell. It can also prevent violations that could expose Novell, its employees, officers and directors to civil liability and/or criminal prosecution and penalties.
COBE lists or summarizes certain corporate policies whose purpose is to promote ethical and legal behavior by employees and the Company. Where summaries are presented, employees can link to the full policy statement on the Innerweb, Novell's intranet. COBE is not intended to catalogue every activity that may present questions regarding appropriate conduct or list every policy that may address those questions. Its purpose is to state basic principles and to provide guidance to employees in areas that bear special emphasis. Employees are expected to adhere to all approved corporate policies and procedures. Failure to do so can result in disciplinary action up to and including termination. The following is a summary of those policies that are due special emphasis.
A variety of laws applies to the Company and its operations, and some carry criminal penalties. These laws include, but are not limited to, federal and state laws relating to the Company's business, including federal occupational safety laws, and its status as a public Company. Examples of criminal violations of the law include, among others:
making false or misleading disclosures in documents filed with the Securities and Exchange Commission (the "SEC");
trading on inside information;
stealing, embezzling, or misapplying the Company's funds;
using threats, physical force, or other unauthorized means to collect money; or
making a payment for an expressed purpose on the Company's behalf to an individual who intends to use it for a different purpose.
The Company must, and will, report all suspected criminal violations to the appropriate authorities for possible prosecution, and will investigate, address, and report, as appropriate, non-criminal violations.
It is the responsibility of each employee to comply with the laws, rules, and regulations applicable to him or her personally and due to his or her status as an employee. No employee may delegate that responsibility to another person or to the Company.
Employees who are directly or indirectly involved in the preparation of the financial and other disclosures that the Company makes to the public, including in its filings with the SEC or by press release, must, in addition to complying with all applicable laws, rules, and regulations, follow these guidelines:
Act honestly, ethically, and with integrity;
Comply with this COBE;
Endeavor to ensure full, fair, timely, accurate, and understandable disclosure;
Managers should, through leadership and communication make sure that employees of the Company understand the Company's obligations to the public and under the law with respect to its disclosures, including that results are never more important than compliance with the law;
Raise questions and concerns regarding the Company's public disclosures when necessary and ensure that such questions and concerns are appropriately addressed;
Provide the Company's directors, employees, consultants, and advisors involved in the preparation of the Company's disclosures to the public with information that is accurate, complete, objective, relevant, timely, and understandable;
Act in good faith, responsibly, and with due care, competence, and diligence, without misrepresenting material facts or allowing your independent judgment to be subordinated by others;
Proactively promote honest and ethical behavior among peers in your work environment;
Achieve proper and responsible use of and control over all Company assets and resources employed or entrusted to you;
Record or participate in the recording of entries in the Company's books and records that are accurate to the best of your knowledge; and
Comply with the Company's disclosure controls and procedures and internal control over financial reporting.
Novell must keep accurate and complete records of Company transactions. Internal transactions and transactions between Novell and outside individuals and organizations must be promptly and accurately recorded (1) in accordance with generally accepted accounting principles and practices, (2) in accordance with Novell's accounting and finance policies, and (3) in a manner that reasonably reflects the underlying transactions and events. No one shall cause Novell to enter into a transaction that is not approved and executed in accordance established policies and procedures (e.g. creation of side letters or obtaining goods or services without a purchase order). All reporting (e.g. expense reports, invoice transmittals, revenue summaries) must be accurate, honest, timely, and a fair representation of the facts.
Novell policy is to comply strictly with all applicable antitrust and competition laws. Novell operates in a highly competitive environment. As a result, the antitrust laws are an important fact of everyday business life. The antitrust laws are complex and must be complied with strictly. Routine business decisions involving prices, terms and conditions of sale, dealings with suppliers and customers, and many other matters present potential problems under antitrust laws. The penalties for violating antitrust laws can be severe, making the stakes high. It is therefore essential that Novell employees be aware of the antitrust laws and guard against their violation. Novell employees must not:
Discuss pricing or pricing practices with a competitor,
Divide customers, markets, or territories with a competitor,
Agree with anyone not to deal with another company,
Force a customer to buy one product in order to get another product, or
Attempt to control a customer's resale price.
As a general rule, all equipment, systems, services, networks, and software belonging to Novell are for business use only. However, Novell makes an exception for incidental personal use (see below). Novell reserves the right to audit, access, and disclose all information and data (including electronic mail messages), stored on or in any Novell equipment or furniture, for any purpose. Any illegal or unauthorized use of Novell equipment, systems, services, networks, or software by an employee at any time may subject the employee to disciplinary action up to and including legal action and/or termination of employment. Employees may not access Novell data unless they are authorized and have a Novell business-related need to do so. Unauthorized possession, modification, destruction, use, or disclosure of such data is prohibited. Making, acquiring, or using unauthorized copies of any computer software is not permitted.
For purposes of this policy, "incidental personal use" includes, by way of example, writing a personal letter, making a telephone call to a friend or family member, sending a personal e-mail message, accessing the web, etc. Conversely, and by way of example, it does not include using Novell equipment to operate a side business. In any event, the primary use of Novell equipment must be for Novell business purposes, and any incidental personal use must be legal, ethical, and appropriate and must not interfere with the conscientious performance of an employee's Novell duties.
Employees must respect and protect the complete confidentiality of Novell's business information. Confidential business information is information:
To which employees may have access in the course of their work;
That is generally unavailable to the public; and
That relates to Novell, its customers, business partners, competitors, or others.
Employees may not use confidential business information to advance their personal interest through investment activities or in any other way. This prohibition extends to the disclosure of such information to outsiders or to other employees whose duties do not require them to have the information. It also extends to the unauthorized disclosure of such information to press representatives or financial and trade analysts, or disclosure to anyone who may stand to profit by such information.
Employees have a duty to avoid financial, business, or other relationships that might be opposed to the interests of Novell or that might interfere with the proper performance of their duties, responsibilities, or loyalty to Novell. The term "conflict of interest" describes any circumstance that could cast doubt on an employee's ability to act in a manner consistent with Novell's best interests. Employees must conduct themselves in a manner that avoids even the appearance of conflict between their personal interests and those of Novell.
An employee's best course of action is to review specific situations with his or her manager. If there is any doubt as to whether there may be an actual or perceived conflict of interest, the employee and manager should consult with the Ethics Officer or another member of the Compliance and Ethics Committee or the chairman of the Employee Conflict of Interest Committee. These individuals are listed at the end of this document.
Conflicts of interest arise in many ways and it is not possible to list all of them. The following is a non-exhaustive list of examples of situations that must be avoided by employees and their immediate family members or cleared in advance in writing by the Ethics Officer:
Acting as a director, officer, employee, or agent of a Novell competitor, customer, or supplier.
Acting as a director, officer, or agent of a charitable organization that receives material contributions from Novell.
Accepting gifts or favors from Novell competitors, customers, or suppliers in violation of Novell's Gifts and Entertainment Policy (or other more restrictive department policy).
Owning or acquiring any interest with a value that is significant to the employee in a company that is a Novell competitor or supplier.
Investing in an entity in which Novell has (or is considering obtaining) a financial interest.
Engaging in a personal business opportunity that is related to Novell's current or reasonably anticipated business (for example, developing or marketing a software product, providing service and support, writing a book on a Novell product, etc.).
Purchasing materials or services on behalf of Novell from a supplier in which the employee or the employee's family member has a material financial interest.
Representing Novell in any transaction in which the employee has a personal financial interest.
Disclosing or using an employee's knowledge or information about Novell for the personal profit or advantage of the employee or anyone else.
Engaging in an outside business activity during regular business hours.
Providing direct supervision of, or responsibility for, the performance evaluations, pay or benefits of a family member also employed at Novell.
An employee may not use a friend, family member, or other entity for purposes of circumventing this conflict of interest policy. Employees have an ongoing duty to disclose situations that may constitute the appearance of or an actual conflict of interest.
Novell's policy is to maintain a drug-free workplace. Accordingly, employees may not unlawfully manufacture, distribute, possess, use, or be under the influence of prohibited substances at any time on Novell premises, while on Novell business, or while driving vehicles owned, rented, or leased by Novell. This policy applies to Novell employees, contractors, and temporary employees working on Novell premises. Novell will impose penalties on any such employee, contractor, or temporary employee, including disciplinary action up to and including termination. Any employee convicted of a drug violation occurring in the workplace must notify Human Resources within five days of the conviction.
Novell is an equal opportunity employer. It takes continual positive actions to provide equal opportunity in all business activities without regard to an individual's race, color, religion, sex, age, marital status, disability, national origin, veteran status, sexual orientation, or any other factor protected by law. Further, it is the policy of Novell to make reasonable accommodation for the employment of disabled persons.
The principles of Equal Employment Opportunity (EEO) are to be observed in all Human Resources actions including, but not limited to, employment, transfers, promotions, compensation, and related matters.
Alleged illegal discrimination complaints are reviewed by the appropriate Human Resources staff member as soon as they are reported. Novell management is required to notify Human Resources of any incident of alleged illegal discrimination reported to them by an employee. Reports and investigations of discrimination concerns are treated confidentially. Novell does not engage in or tolerate retaliation by its employees against those who bring allegations of discrimination to the attention of Human Resources or any member of Novell management.
Novell strives to provide a working environment where employees are fairly treated, feel safe, and can work without unnecessary distraction from other employees or from the outside. Novell expects employees to conduct themselves in accordance with high standards of business conduct. Employees who do not comply with the expected standards of conduct may be subject to disciplinary action, which may, based on the nature of the conduct, include immediate termination of employment with or without prior notice.
Engaging in any behavior that is unethical, dishonest, reckless, damaging, or disruptive to the conduct of business, or any other unacceptable act, as determined by the Company, is prohibited.
Novell respects the personal privacy of its employees. This extends to personal messages and personal items in the work place. However, Novell reserves the right to inspect work spaces and to audit, access, and disclose all information and data (including electronic mail messages), stored on or in any Novell equipment or furniture, for any purpose.
Novell policy is to comply fully with U.S. and host country export controls. An export is defined in the U.S. Export Administration Regulations as "an actual shipment or transmission of items out of the United States." The definition includes tangible and intangible transfers. No employee or other person acting on behalf of Novell or its worldwide subsidiaries may ship, mail, hand-carry, download, or in any other way export any Novell product, service, or technology from the U.S. or host countries in which Novell does business unless:
The export may lawfully be made to the intended recipient in the intended country of destination;
The export is authorized by the U.S. and/or other host country government; and
The individual has obtained an export license review and approval by an appropriate person in Novell's International Trade Services Department.
Exporting is a privilege. Non-compliance or deviation from Novell's export control policy can subject Novell, its subsidiaries, directors, officers, employees, and agents to severe criminal and civil penalties, including the complete denial of Novell's export privileges. If you suspect or are aware of any violation or export control problem, call the Director of International Trade Services or the Law Department.
Giving Gifts - Government Employees & Officials
Laws and regulations concerning business transactions with many national, state, provincial and municipal governments and agencies, either prohibit government employees or officials from accepting gifts, gratuities or entertainment or otherwise limit such acceptance of gifts, gratuities or entertainment.
Novell prohibits giving any government or agency employee or official a gift, gratuity, or entertainment unless it is first established that it is permitted by applicable law. If you need advice, or if you have reason to believe that giving a gift or entertainment to a government official or employee may violate a law or regulation, discuss the matter with your supervisor and, if necessary, with Novell's Legal Department.
Receiving Gifts - Employees
By receiving gifts or entertainment, an employee may create the impression that he or she favors a supplier, consultant, or business partner for reasons of personal advantage rather than because of price, quality, or service. An employee who is directly involved in acquiring products or services from an outside vendor must use special care to avoid the existence—or even the appearance—of impropriety.
Novell does not prohibit the receipt of gifts and entertainment (some departments may have stricter guidelines). Employees are expected to use good judgment and to accept gifts or entertainment only if all of the following apply:
The gift or entertainment is of limited value (US $250 or less from a single supplier in a calendar year) and in a form that it will not be construed as a bribe or payoff;
Giving and accepting the gift or entertainment is consistent with accepted ethical customs and practices; and
Disclosure of the gift or entertainment to fellow employees would not embarrass the recipient employee or Novell.
Questions regarding the appropriateness of accepting a gift or offer of entertainment should be addressed to the Ethics Officer. Exceptions of this policy require the prior written consent of the employee's Senior Vice President and the Ethics Officer.
Novell strives to provide a work environment free from harassment in all forms including sexual harassment and discrimination based on race, religion, national origin, age, gender, sex, sexual orientation, or disability. Harassment, in general, is unwelcome or unwanted, offensive behavior expressed by an employee toward another, which may include such conduct as slurs, jokes, intimidation or any other verbal or physical attack upon a person based on race, religion, age, gender, disability, national origin, sex, sexual orientation, the performance of sexual favors as a condition of an employee's employment status, or conduct that creates an intimidating, hostile, or offensive working environment. Sexual harassment is unwanted sexual advances, or visual, verbal, or physical conduct of a sexual nature. It includes all forms of offensive behavior, including gender-based harassment of a person of the same sex as the harasser. Sexual harassment is not to be tolerated in the workplace or in other work-related settings such as business trips and business-related social events.
Any employee found to have harassed or otherwise discriminated against another employee or individual with a business relationship with Novell is subject to disciplinary action up to and including termination of employment. Retaliation against an employee who reports alleged harassment or discrimination because of a prohibited reason will not be tolerated.
It is Novell's policy to comply with all laws, rules, and regulations governing trading in company securities by insiders. Employees may not buy or sell Novell securities on the basis of material, non-public information ("inside information") nor may Employees possessing inside information disclose ("tip") such information to any other person (including family members) where such information may be used by such person to his or her profit by trading securities. The law forbids employees—and anyone who obtains information from an employee—from buying or selling securities on the basis of inside information, no matter how small the transaction. Violation of insider trading provisions can result in criminal penalties, including liability for damages, large fines, and imprisonment.
Employees who conduct business outside the United States must comply with the specific laws and regulations of the host country. Any questions concerning specific appropriate international conduct should be directed to the Law Department.
Employees must comply with U.S. anti-boycott laws that prohibit U.S. citizens and companies from supporting in any way one foreign country's boycott of another foreign country (for example, a boycott of Israel). In some cases, the mere receipt of a request to participate in a boycott must be reported to the U.S. government. Failure to report may constitute a legal violation, even if the Novell employee has refused to participate in the boycott.
All employees involved in international business are expected to familiarize themselves with Novell's Foreign Corrupt Practices Act Policy ("FCPA"). The FCPA can be divided into two parts: Accounting Standards and Payments to Foreign Officials. The provision relating to Accounting Standards requires publicly-held companies to maintain accurate records and maintain an adequate system of internal accounting controls. The provision relating to Payments to Foreign Officials prohibits all U.S. companies and officers, directors, employees, agents, or stockholders from bribing foreign governmental or political officials in order to obtain or retain business.
In certain circumstances, so-called "facilitating payments" or "grease payments" in nominal amounts, may be provided to low-level foreign government functionaries to obtain or expedite the performance of ministerial or legitimate customary duties, such as mail delivery, security, and customs clearance, where the practice is usual and customary in that country.
Employees may provide gifts, favors, and entertainment of nominal value (generally US$100 or less) to agents or employees of foreign customers, including foreign government officials, if all of the following apply:
The employee has received prior written approval from an appropriate Novell executive;
The gift is lawful, customary, and necessary in conducting business in the particular country; and
Public disclosure of the facts would not in any way embarrass or prejudice Novell.
In all instances, amounts spent for gifts and entertainment must be properly reflected in Novell's books, records, and accounts. Local controllers and finance managers are responsible for seeking guidance from the Chief Financial Officer and General Counsel on all questionable transactions.
Novell's Internet Usage Policy provides guidelines for the use of the Internet both in relation to Company business and to such incidental personal use as is permitted by Company policies. Employees' use of the Internet must be an appropriate use of Company resources including time, equipment, software, and networks. At all times, the use of the Internet must be lawful and in compliance with Company policies. Novell recognizes that understanding and using the Internet is critical to the future success of the Company. Thus, employees are encouraged to use Novell equipment and bandwidth to access the Internet for legitimate business needs and limited personal needs that are appropriate and in keeping with the purposes of Novell policies.
Novell policy is to comply strictly with laws, rules, and regulations governing political activities, including political contributions. Novell encourages participation in the political process by its employees. However, the U.S. government, some states, and some other countries have enacted laws regulating political activity, including campaign contributions, in order to limit the political influence of certain types of contributors. For more information and specific guidelines relating to political contributions, please refer to Novell's Political Contributions Policy.
Compliance with Novell policies regarding online privacy and propriety in communications is mandatory. Novell's guidelines for web pages require providing users with notice of information practices, choices in how information can be used, opportunity to access, update or correct contact information, protection of personally identifiable information, and means for allowing visitors to contact the administrator. Any Novell web site that collects user data must follow the Novell Privacy Guidelines and to the extent applicable, Novell's Email, Telemarketing, Faxing, and Postal Mail policies.
Novell requires all employees to follow applicable guidelines and laws when communicating with third parties via email, telephone, and fax. Employees can access the following policy statements on the Innerweb for details:
U.S. Mail Guidelines
Novell is committed to making accurate and timely public disclosure of all business and financial information required by law, regulation, or sound business policy, without advantage to any particular analyst or investor, consistent with the requirements of the Fair Disclosure Regulation ("Regulation FD") of the Securities and Exchange Commission. Novell's policy is to balance its interests in maintaining an open dialogue with stockholders, potential investors, and the market against its need for confidentiality about key business and operating strategies. Novell will continue to provide stockholders and the market with access to key information reasonably required to make an informed decision on whether to invest in Novell stock, in a manner consistent with the requirements of Regulation FD and other applicable rules and regulations.
No employee is authorized to communicate business or financial information about Novell that is non-public, material information, except through Novell-sanctioned, public disclosure, and only then with the prior approval of the Chief Financial Officer and the General Counsel.
It is recognized that, from time to time, some Novell employees will be asked to serve as members of boards of directors of companies that are not affiliated with Novell. Generally, Novell's policy on Conflicts of Interest emphasizes the right of employees to carry on such outside business or other activities as they may deem proper, provided that the activities are legal, do not interfere with performance of Novell duties, do not involve use or misuse of Novell influence or resources, and do not discredit Novell's name. Additionally, Novell recognizes that there may be good business and personal reasons for its employees to have the opportunity to sit on third party boards of directors. As a general rule, service by Novell employees on outside boards is, therefore, permissible so long as it is consistent with the guidelines stated in Novell's Policy for Service on Third-Party Boards of Directors. Any employee desiring to serve on a third-party board of directors must first receive written approval from the General Counsel and the Chief Executive Officer.
Novell's policy is to honor all software copyrights and restrictions for software used on Novell computers. Most computer software is protected by copyright laws and contractual restrictions that safeguard the software manufacturer's investment in creating new software. When Novell or an Employee purchases a copy of a software package, the copyright owner, and not the purchaser of the software, retains the right to control the number of copies made of the software. The purchaser's limited rights to use the software are set out in a license agreement that comes with the software. The precise terms of such licenses vary among software programs, but certain key restrictions are common to most licenses.
This policy establishes procedures that will help ensure that no use of third-party software at Novell infringes the copyright of any party or violates any license. For more information relating to the foregoing, please refer to Novell's Software Licensing and Registration Policy.
Waivers of certain provisions of this COBE with respect to an executive officer must be approved by the Board in accordance with applicable rules and Nasdaq listing standards. In some circumstances, the Company must publicly disclose a waiver and/or amendment of the COBE.
The ethics principles and standards in COBE are necessarily general in nature. From time to time, questions will arise as to whether a particular course of conduct violates COBE or any Company policy. Employees are encouraged to discuss these questions openly with their line managers and HR managers. The Law Department is available to help employees evaluate a particular course of conduct or understand a particular law, regulation, or policy.
The preferred approach for reporting COBE violations is for an employee to talk to his or her manager. If the issue is not resolved within the management chain, the employee may report the violation to the local HR manager. If an employee does not feel comfortable discussing the matter on a local level or requires additional guidance, he or she should contact the Ethics Officer, General Counsel, Chief Financial Officer, Senior Vice President of Human Resources, Vice President Law - People, or call the confidential Novell Ethics Hotline at 1-800-983-3600 or 1-801-861-1416. Contact information for these individuals is provided below.
Reporting known or suspected violations is a sensitive issue. However, employees must recognize that COBE violations damage Novell by creating an unnecessary risk of criminal prosecution or of civil liability and by tarnishing Novell's good reputation. This can have a profoundly adverse effect on the livelihood of all employees. Therefore, employees should report all questionable conduct or violations of COBE. Under no circumstances will any employee be subject to disciplinary or retaliatory action solely as a result of making a good faith report of a violation or potential violation. To the extent possible, Novell will preserve the confidentiality of communications regarding possible violations. For further information, employees can access Novell's Whistleblower Protection Policy on the Innerweb.
Most policy violations can and should be investigated and resolved by managers with the assistance of the HR and Law Departments. For matters that pose significant financial or legal risk to Novell, that are egregious or may set an unwanted precedent, or matters that managers are unable or unwilling to resolve, Novell's Compliance and Ethics Committee (CEC) will assist. The CEC's role is to support managers in responding to serious policy violations by investigating and recommending appropriate action. The CEC's involvement will help ensure consistent application of Company policies and disciplinary responses to policy violations. Managers should inform the CEC of all policy violations so that it can determine whether it should be involved.
Disciplinary actions may include, depending upon the seriousness of the violation, counseling, a warning, discharge from employment, requirement to reimburse Novell for loss or damage caused by the violation, a report to an appropriate government agency or official, or referral of the matter for criminal prosecution.