Brinker International's Policy Governing the Improper Use of Material Nonpublic Information and Trading in Brinker's Securities
Brinker has certain policies regarding the disclosure or use by Brinker personnel of "material nonpublic information" (sometimes called "insider information") relating to Brinker. Violation of these policies could result in termination of employment, removal from the Board and penalties including fines and jail sentences. In the event of a violation, a person can be held responsible regardless of whether he or she personally benefited from a securities transaction.
The attached Brinker policies are summarized as follows:
- Any information regarding Brinker possessed by an employee or Director, which has not yet been disclosed to the general public, should be thought of as confidential information and should not be discussed with any person outside of Brinker including relatives.
- Any employee or Director possessing information regarding Brinker, which has not yet been disclosed to the general public, may not use such information in determining whether to buy or sell securities of Brinker.
- Any information possessed by an employee or Director regarding a company with whom Brinker may be engaged in a business transaction should be thought of as confidential information and should neither be discussed with any person outside of Brinker nor used by such employee or Director in determining whether to buy or sell securities of Brinker or of such other company.
IF YOU HAVE ANY QUESTIONS OR DOUBTS REGARDING THE ATTACHED POLICIES OR INFORMATION POSSESSED BY YOU:
- Presume the information is material and nonpublic.
- Do not discuss such information with any person outside of Brinker
- Contact the Chief Financial Officer or the General Counsel.
Employees and Directors may be subject to civil and/or criminal penalties if they trade in securities of Brinker while in possession of material nonpublic information concerning Brinker. In recent years, the Securities and Exchange Commission has aggressively sought and prosecuted persons who traded on "inside information," as it is sometimes called. The courts can impose fines of up to three times the profit gained or loss avoided on such transactions. In addition, in certain cases, criminal prosecution is probable. All employees are subject to this rule, not just persons who are officers or directors of Brinker.
Brinker has adopted the following policies with respect to insider trading by employees:
- Information Presumed to be "Material Nonpublic information." In general, information is "material nonpublic information" if it is nonpublic or confidential information relating to Brinker or its affairs and if its disclosure to the public would be likely to affect the market price of Brinker's securities and/or would affect investors' decisions to purchase or sell securities (i.e., stock, debentures or options) of Brinker. Either positive or negative information may be material. In most cases, information concerning the following events should be presumed to be "material":
- Periodic earnings information prior to public press release.
- Brinker projections of future earnings or losses.
- Declaration of stock splits and stock dividends.
- Changes in previously disclosed financial information.
- Mergers, acquisitions, or takeovers.
- Proposed issuances of new securities or repurchase of securities.
- Significant changes in operations.
- Significant increases or declines in net income.
- Extraordinary borrowings.
- Major litigation.
- Financial liquidity problems.
- Significant changes in management.
- Increases or decreases in dividends.
- Use of Material Nonpublic Information by Brinker Employees. IT IS ILLEGAL TO BUY OR SELL SECURITIES ON THE BASIS OF MATERIAL NONPUBLIC INFORMATION. Employees and Directors should not engage in transactions using information concerning Brinker that has not been made public. When in doubt, the information involved should be presumed to be material and not to have been made public. Disclosure of such information to persons other than Brinker personnel whether directly, in the form of a recommendation to purchase or sell Brinker securities or in any other manner, violates Brinker policy and federal law and is prohibited.
- Personal use of Material Nonpublic Information. Brinker policy prohibits the purchase or sale of any Brinker security or the exercise of options for any Brinker security by any employee or Director of Brinker at any time when such individual has knowledge of material nonpublic information concerning Brinker until at least the trading day after the day such material information has been released to the public.
- Nondisclosure of Material Nonpublic Information. It is also illegal under the federal securities laws to disclose (or "tip") material nonpublic information to another person who subsequently uses that information to his profit. In order to minimize such liability, employees and Directors of Brinker should follow the following policies:
- To reduce the chances of inadvertent tipping of inside information, any nonpublic information that might be considered material should not be discussed with any person outside Brinker. Such information should be regarded as particularly sensitive, confidential information.
- Employees and Directors should avoid recommending to any person the purchase or sale of Brinker securities.
- Caution must especially be used when receiving inquiries from securities analysts, companies in the same business as Brinker, and members of the press. All such inquiries should be referred to the Chief Financial Officer or, in his or her absence, the General Counsel of Brinker.
- Insider Information and Securities of Other Companies. Employees and Directors occasionally come into possession of material nonpublic information with respect to other companies. In addition, inside information is frequently disclosed in connection with negotiations, particularly those involving tender offers, acquisitions, and major financing transactions. A person receiving material nonpublic information in such a manner has the same duty not to disclose or use that information in connection with securities transactions as such person has with respect to Brinker securities.
- Extraordinary Precautions in Special Situations. When Brinker is involved in a matter or transaction that is unusually sensitive (e.g., stock offering, merger, takeover, acquisition) and, if disclosed, could reasonably be expected to have a material effect on the market price of Brinker securities or securities of another company involved in the same matter or transaction, employees and Directors should consider taking extraordinary precautions to prevent misuse or unauthorized disclosure of such information to other employees not working on such matter and/or other parties. Such measures, in the appropriate situation, might include the following:
- Use of code names or numbers to disguise the identity of one or more parties.
- Maintaining the files in a secure (preferably locked) room or office to which access is restricted.
- Avoiding the storage of information on computers.
- Shredding waste paper and documents.
- Special rules often apply when Brinker is offering or selling its securities or when a bidder has taken steps to commence a tender offer for Brinker. Before trading in any of Brinker's securities when such events are taking place, you should consult with the General Counsel or Chief Financial Officer of Brinker.
- No employee or Director shall sell short or engage in transactions in options, puts, or calls with respect to securities of Brinker.
- Pre-Clearance of All Securities Trades By Directors, Officers, and Other Key (e.g., Financial, Legal, etc.) Personnel. To provide assistance in preventing inadvertent securities violations and avoiding even the appearance of an improper transaction (which could result, for example, where an officer engages in a trade while unaware of a pending major development), Brinker has adopted the following procedures:
- All transactions in Brinker stock (acquisitions, dispositions, transfers, stock options, etc.) by members of the Board of Directors, officers and other key personnel (as designated by the Board of Directors) must be pre-cleared by the General Counsel's office. If any such person contemplates a transaction, he or she should contact the General Counsel in advance.
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