US NUCLEAR CORP.

INSIDER TRADING POLICY

 

Purpose

 

This Insider Trading Policy (the “Policy”) provides guidelines with respect to transactions in the securities of US Nuclear Corp., a Delaware corporation (the “Company”), and the handling of confidential information about the Company and the companies with which the Company does business. The Company’s Board of Directors has adopted this Policy to promote compliance with federal, state and foreign securities laws that prohibit certain persons who are aware of material nonpublic information about a company from: (i) trading in securities of that company; or (ii) providing material nonpublic information to other persons who may trade on the basis of that information.

 

Persons Subject to the Policy

 

This Policy applies to all officers and directors of the Company and its subsidiaries, all members of the Company’s Board of Directors and all employees of the Company and its subsidiaries. The Company may also determine that other persons should be subject to this Policy, such as contractors or consultants who have access to material nonpublic information. This Policy also applies to family members, other members of a person’s household and entities controlled by a person covered by this Policy, as described below.

 

Transactions Subject to the Policy

 

This Policy applies to transactions in the Company’s securities (collectively referred to in this Policy as “Company Securities”), including the Company’s common stock, options to purchase common stock, the Company’s bonds or notes, or any other type of securities that the Company may issue, including (but not limited to) preferred stock, convertible debentures and warrants, as well as derivative securities that are not issued by the Company, such as exchange-traded put or call options or swaps relating to the Company Securities.

 

Individual Responsibility

 

Persons subject to this Policy have ethical and legal obligations to maintain the confidentiality of information about the Company and to not engage in transactions in Company Securities while in possession of material nonpublic information. Each individual is responsible for making sure that he or she complies with this Policy, and that any family member, household member or entity whose transactions are subject to this Policy, as discussed below, also comply with this Policy. In all cases, the responsibility for determining whether an individual is in possession of material nonpublic information rests with that individual, and any action on the part of the Company, the Compliance Officer or any other employee or director pursuant to this Policy (or otherwise) does not in any way constitute legal advice or insulate an individual from liability under applicable securities laws. You could be subject to severe legal penalties and disciplinary action by the Company for any conduct prohibited by this Policy or applicable securities laws, as described below in more detail under the heading “Consequences of Violations.”

 

 

Administration of the Policy

 

Robert I. Goldstein, the Company’s President and Chief Executive Officer, shall serve as the Compliance Officer for the purposes of this Policy, and in his absence, Rachel Boulds, the Company’s Chief Financial Officer, or another employee designated by the Compliance Officer shall be responsible for administration of this Policy. All determinations and interpretations by the Compliance Officer or his designee shall be final.

 

Statement of Policy

 

It is the policy of the Company that no director, officer or other employee of the Company (or any other person designated by this Policy or by the Compliance Officer as subject to this Policy) who is aware of material nonpublic information relating to the Company may, directly, or indirectly through family members or other persons or entities:

 

1.

Engage in transactions in Company Securities, except as otherwise specified in this Policy under the headings “Transactions Under Company Plans,” “Transactions Not Involving a Purchase or Sale” and “Rule 10b5-1 Plans;”

 

2.

Recommend the purchase or sale of any Company Securities;

 

3.

Disclose material nonpublic information to persons within the Company whose jobs do not require them to have that information, or outside of the Company to other persons, including, but not limited to, family, friends, business associates, investors and expert consulting firms, unless any such disclosure is made in accordance with the Company’s policies regarding the protection or authorized external disclosure of information regarding the Company; or

 

4.

Assist anyone engaged in, or to engage in, the above activities.

 

In addition, it is the policy of the Company that no director, officer or other employee of the Company (or any other person designated as subject to this Policy) who, in the course of working for the Company, learns of material nonpublic information about a company with which the Company does business, including a supplier or vendor of the Company, may trade in that company’s securities until the information becomes public or is no longer material.

 

There are no exceptions to this Policy, except as specifically noted herein. Transactions that may be necessary or justifiable for independent reasons (such as the need to raise money for an emergency expenditure), or small transactions, are not excepted from this Policy. The securities laws do not recognize any mitigating circumstances, and, in any event, even the appearance of an improper transaction must be avoided to preserve the Company’s reputation for adhering to the highest standards of conduct.

 

Definition of Material Nonpublic Information

 

Material Information. Information is considered “material” if a reasonable investor would consider that information important in making a decision to buy, hold or sell securities. Any information that could be expected to affect the Company’s stock price, whether it is positive or negative, should be considered material. There is no “bright-line” standard for assessing materiality; rather, materiality is based on an assessment of all of the facts and circumstances and is often evaluated by enforcement authorities with the benefit of hindsight. While it is not possible to define all categories of material information, some examples of information that may be regarded as material are:

 

• Financial results;

 

• Projections of future revenues, earnings or losses, or other earnings guidance;

 

• Accounting issues;

 

• A pending or proposed merger, acquisition or tender offer;

 

• A pending or proposed acquisition or disposition of a significant asset;

 

• A pending or proposed joint venture, alliances or strategic partnerships;

 

• A Company restructuring;

 

• A disposition of a subsidiary;

 

• Significant related party transactions;

 

• A change in dividend policy, the declaration of a stock split, or an offering of additional securities;

 

• Bank borrowings or other financing transactions out of the ordinary course, including equity or debt offerings;

 

• The establishment of a repurchase program for Company Securities;

 

• Major marketing changes and initiatives;

 

• A change in management;

 

• A change in auditors or notification that the auditor’s reports may no longer be relied upon;

 

• Development of a significant new product, process, or service;

 

 

• Pending or threatened significant litigation, or the resolution of such litigation;

 

• Impending bankruptcy or the existence of severe liquidity problems;

 

• Significant actions by regulatory bodies;

 

• Major labor disputes;

 

• The gain or loss of a significant contractor or supplier;

 

• The imposition of a ban on trading in Company Securities or the securities of another company; or

 

• Ratings change by a rating agency.

 

When Information is Considered Public. Information that has not been disclosed to the public is generally considered to be nonpublic information. In order to establish that the information has been disclosed to the public, it may be necessary to demonstrate that the information has been widely disseminated. Information generally would be considered widely disseminated if it has been disclosed through the Dow Jones “broad tape,” newswire services, a broadcast on widely-available radio or television programs, publication in a widely-available newspaper, magazine or news website, or public disclosure documents filed with the Securities and Exchange Commission (the “SEC”) that are available on the SEC’s website. By contrast, information would likely not be considered widely disseminated if it is available only to the Company’s directors, employees, consultants or if it is only available to a select group of analysts, brokers and institutional investors.

 

Once information is widely disseminated, it is still necessary to afford the investing public with sufficient time to absorb the information. As a general rule, information should not be considered fully absorbed by the marketplace until after the first full trading day after the day on which the information is released. For example, the Company’s first fiscal quarter ends on March 31 and assume the Company’s results are reported on Monday, April 23 at 9:00 a.m. Eastern Time (which is before trading on the NASDAQ Stock Market); no trading would be permitted until Tuesday, April 24. Alternatively, the Company’s first fiscal quarter ends on March 31 and assume the Company’s results are reported on Monday, April 23 at 10:00 a.m. Eastern time (which is after trading begins on NASDAQ); no trading would be permitted until Wednesday, April 25. Depending on the particular circumstances, the Company may determine that a longer or shorter period should apply to the release of specific material nonpublic information.

 

Transactions by Family Members and Others

 

This Policy also applies to your family members who reside with you (including a spouse, a child, a child away at college, stepchildren, grandchildren, parents, stepparents, grandparents, siblings and in-laws), anyone else who lives in your household, and any family members who do not live in your household but whose transactions in Company Securities are directed by you or are subject to your influence or control, such as parents or children who consult with you before they trade in Company Securities (collectively referred to as “Family Members”). You are responsible for the transactions of these other persons and therefore should make them aware of the need to confer with you before they trade in Company Securities, and you should treat all such transactions for the purposes of this Policy and applicable securities laws as if the transactions were for your own account. This Policy does not, however, apply to personal securities transactions of Family Members where the purchase or sale decision is made by a third party not controlled by, influenced by or related to you or your Family Members (such as a mutual fund).

 

 

Transactions by Entities that You Influence or Control

 

This Policy applies to any entities that you influence or control, including any corporations, limited liability companies, partnerships or trusts (collectively referred to as “Controlled Entities”), and transactions by these Controlled Entities should be treated for the purposes of this Policy and applicable securities laws as if they were for your own account.

 

Transactions Under Company Plans

 

This Policy does not apply in the case of the following transactions, except as specifically noted:

 

Stock Option Exercises. This Policy does not apply to the exercise of an employee stock option acquired pursuant to the Company’s plans, or to the exercise of a tax withholding right pursuant to which a person has elected to have the Company withhold shares subject to an option to satisfy tax withholding requirements. This Policy does apply, however, to any sale of common stock as part of a broker-assisted cashless exercise of an option, or any other market sale for the purpose of generating the cash needed to pay the exercise price of an option.

 

Restricted Stock or Restricted Stock Unit Awards. This Policy does not apply to the vesting of restricted stock or restricted stock units, or the exercise of a tax withholding right pursuant to which you elect to have the Company withhold shares of stock to satisfy tax withholding requirements upon the vesting of any restricted stock or restricted stock units. The Policy does apply, however, to any market sale of restricted stock or sale of common stock underlying restricted stock or restricted stock units.

 

The Company 401(k) Plan. This Policy does not apply to purchases of Company Securities in the Company’s 401(k) plan resulting from your periodic contribution of money to the 401(k) plan pursuant to your payroll deduction election. This Policy does apply, however, to certain elections you may make under the Company’s 401(k) plan, including: (a) an election to increase or decrease the percentage of your periodic contributions that will be allocated to the Company stock fund; (b) an election to make an intra-plan transfer of an existing account balance into or out of the Company stock fund; (c) an election to borrow money against your 401(k) plan account if the loan will result in a liquidation of some or all of your Company stock fund balance; and (d) an election to pre-pay a 401(k) plan loan if the pre-payment will result in allocation of loan proceeds to the Company stock fund.

 

Other Similar Transactions. Any other purchase of Company Securities from the Company or sales of Company Securities to the Company are not subject to this Policy.

 

 

Transactions Not Involving a Purchase or Sale

 

Bona fide gifts are not transactions subject to this Policy, unless the person making the gift has reason to believe that the recipient intends to sell the Company Securities while the officer, employee or director is aware of material nonpublic information, or the person making the gift is subject to the trading restrictions specified below under the heading “Additional Procedures” and the sales by the recipient of the Company Securities occur during a blackout period. Further, transactions in mutual funds that are invested in Company Securities are not transactions subject to this Policy.

 

Special and Prohibited Transactions

 

The Company has determined that there is a heightened legal risk and/or the appearance of improper or inappropriate conduct if the persons subject to this Policy engage in certain types of transactions. It therefore is the Company’s policy that any persons covered by this Policy may not engage in any of the following transactions, or should otherwise consider the Company’s preferences as described below:

 

Short-Term Trading. Any director or officer of the Company who purchases (or sells) Company Securities in the open market may not sell (or purchase) any Company Securities of the same class during the six months following the purchase (or vice versa) without the prior approval of the Compliance Officer or his designee.

 

Pursuant to Section 16(b) of the Securities Act of 1933, a director or officer that engages in short-term trading shall be liable to the Company to pay damages consisting of the short-swing profits realized by the officer or director regardless of the intent of the director or officer in engaging in the transactions. Occasionally, prejudgment interest and other amounts also may be payable. The damages are payable to the Company. Section 16(b) is enforced solely through private actions by either the Company or the stockholders acting on the Company’s behalf. There is no criminal liability associated with violation of Section 16(b).

 

Short Sales. Short sales of Company Securities (i.e., the sale of a security that the seller does not own) are prohibited. In addition, Section 16(c) of the Exchange Act prohibits officers and directors from engaging in short sales. (Short sales arising from certain types of hedging transactions are governed by the paragraph below captioned “Hedging Transactions.”)

 

Publicly-Traded Options. Transactions in put options, call options or other derivative securities, on an exchange or in any other organized market, are prohibited by this Policy. (Option positions arising from certain types of hedging transactions are governed by the next paragraph below.)

 

Hedging Transactions. Hedging or monetization transactions can be accomplished through a number of possible mechanisms, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds. Directors, officers and employees are prohibited from engaging in any hedging or monetization transactions.

 

 

Margin Accounts and Pledged Securities. Securities held in a margin account may be sold by the broker without the customer’s consent if the customer fails to meet a margin call. Similarly, securities pledged as collateral for a loan may be sold in foreclosure if the customer defaults on the loan. A margin sale or foreclosure sale that occurs at a time when the customer is aware of material nonpublic information or otherwise are not permitted to trade in Company Securities (e.g. a blackout period) may, under some circumstances, result in unlawful trading. Directors, officers and employees are prohibited from placing Company Securities in margin accounts and pledging Company Securities.

 

Standing and Limit Orders. Standing and limit orders (except standing and limit orders under approved Rule 10b5-1 Plans, as described below) create heightened risks for insider trading violations similar to the use of margin accounts. There is no control over the timing of purchases or sales that result from standing or limit orders to a broker, and as a result the broker could execute a transaction when a director, officer or other employee is in possession of material nonpublic information and therefore an insider trading violation may occur. If a person subject to this Policy determines that they must use a standing order or limit order, the order should be limited to short duration and should otherwise comply with the restrictions and procedures outlined below under the heading “Additional Procedures.”

 

Additional Procedures - Pre-Clearance Procedures, Quarterly Trading Restrictions and Event-Specific Trading Restriction Periods

 

The Company has established additional procedures in order to assist the Company in the administration of this Policy, to facilitate compliance with laws prohibiting insider trading while in possession of material nonpublic information, and to avoid the appearance of any impropriety. These additional procedures are applicable only to those individuals described below.

 

Pre-Clearance Procedures. The executive officers, directors, and those persons designated by the Board of Directors as Section 16 filers (collectively, the “Section 16 Filers”) as well as the Family Members and Controlled Entities of such persons, may not engage in any transaction in Company Securities without first obtaining pre-clearance of the transaction from the Compliance Officer or his designee. A request for pre-clearance must be submitted to the Compliance Officer or his designee. The Compliance Officer or his designee is under no obligation to approve a transaction submitted for pre-clearance and may determine not to permit the transaction. If a person seeks pre-clearance and permission to engage in the transaction is denied, then he or she shall refrain from initiating any transaction in Company Securities and should not inform any other person of the restriction.

 

When a request for pre-clearance is made, the requestor should carefully consider whether he or she may be aware of any material nonpublic information about the Company and should describe fully those circumstances to the Compliance Officer. The requestor should also indicate whether he or she has affected any non-exempt “opposite-way” transactions (e.g., sale and purchase or purchase and sale) within the past six months and should be prepared to report the proposed transaction on an appropriate Form 4 or Form 5. The requestor should also be prepared to comply with SEC Rule 144 and file Form 144, if necessary, at the time of any sale.

 

 

Quarterly Trading Restrictions. The Section 16 Filers, senior vice presidents, general managers and those employees that have stock options and/or restricted stock units and other persons designated by the Compliance Officer as subject to this restriction, as well as their Family Members or Controlled Entities, may not conduct any transactions involving the Company Securities (other than as specified by this Policy), during a “Blackout Period” beginning with the sixteenth day of the last month of each fiscal quarter and ending on the beginning of the second trading day following the first full trading day beginning on the date of public disclosure of the Company’s earnings results for that quarter. For example, the Company’s first fiscal quarter ends on March 31 and assume the Company’s results are reported on Monday, April 23 at 9:00 a.m. Eastern Time (which is before trading on the NASDAQ Stock Market); no trading would be permitted until Tuesday, April 24. Alternatively, the Company’s first fiscal quarter ends on March 31 and assume the Company’s results are reported on Monday, April 23 at 10:00 a.m. Eastern time (which is after trading begins on NASDAQ Stock Market); no trading would be permitted until Wednesday, April 25. Under certain very limited circumstances, a person subject to this restriction may be permitted to trade during a Blackout Period, but only if the Compliance Officer concludes that the person does not in fact possess material nonpublic information. Persons wishing to trade during a Blackout Period must contact the Compliance Officer for approval at least two business days in advance of any proposed transaction involving Company Securities.

 

Event-Specific Trading Restriction Periods. From time to time, in the judgment of the Compliance Officer, the Section 16 Filers and other employees designated by the Compliance Officer should refrain from trading in Company Securities even sooner than the typical Blackout Period described above. In that situation, the Compliance Officer or his designee may notify these persons that they may not trade in the Company Securities, without disclosing the reason for the restriction.

 

Exceptions. The quarterly trading restrictions and event-driven trading restrictions do not apply to those transactions to which this Policy does not apply, as described above under the headings “Transactions Under Company Plans” and “Transactions Not Involving a Purchase or Sale.” Further, the requirement for pre-clearance, the quarterly trading restrictions and event-driven trading restrictions do not apply to transactions conducted pursuant to approved Rule 10b5-1 plans, described under the heading “Rule 10b5-1 Plans.”

 

  

Rule 10b5-1 Plans

 

Rule 10b5-1 under the Exchange Act provides a defense from insider trading liability under Rule 10b-5. In order to be eligible to rely on this defense, a person subject to this Policy must enter into a Rule 10b5-1 plan for transactions in Company Securities that meets certain conditions specified in the Rule (a “Rule 10b5-1 Plan”). If the plan meets the requirements of Rule 10b5-1, Company Securities may be purchased or sold without regard to certain insider trading restrictions. To comply with the Policy, a Rule 10b5-1 Plan must be approved by the Compliance Officer or his designee and meet the requirements of Rule 10b5-1. No further pre-approval of transactions conducted pursuant to the Rule 10b5-1 Plan will be required.

 

In general, a Rule 10b5-1 Plan must be entered into at a time when the person entering into the plan is not aware of material nonpublic information. Once the plan is adopted, the person must not exercise any influence over the amount of securities to be traded, the price at which they are to be traded or the date of the trade. The plan must either specify the amount, pricing and timing of transactions in advance or delegate discretion on these matters to an independent third party.

 

Post-Termination Transactions

 

This Policy continues to apply to transactions in Company Securities even after termination of service to the Company. If an individual is in possession of material nonpublic information when his or her service terminates, that individual may not trade in Company Securities until that information has become public or is no longer material. The pre-clearance procedures specified under the heading “Additional Procedures” above, however, will cease to apply to transactions in Company Securities upon the expiration of any Blackout Period or other Company-imposed trading restrictions applicable at the time of the termination of service.

 

Consequences of Violations

 

The purchase or sale of securities while aware of material nonpublic information, or the disclosure of material nonpublic information to others who then trade in the Company Securities, is prohibited by the federal and state laws. Insider trading violations are pursued vigorously by the SEC, U.S. Attorneys and state enforcement authorities as well as the enforcement authorities of foreign jurisdictions. Punishment for insider trading violations is severe and could include significant fines and imprisonment. While the regulatory authorities concentrate their efforts on the individuals who trade, or who tip inside information to others who trade, the federal securities laws also impose potential liability on companies and other “controlling persons” if they fail to take reasonable steps to prevent insider trading by company personnel.

 

In addition, an individual’s failure to comply with this Policy may subject the individual to Company imposed sanctions, up to and including termination for cause, whether the employee’s failure to comply results in a violation of law. Nevertheless, a violation of law, or even an SEC investigation that does not result in prosecution, can tarnish a person’s reputation and irreparably damage a career.

 

 

Company Assistance

 

Any person who has a question about this Policy or its application to any proposed transaction may obtain additional guidance from the Compliance Officer, Robert I. Goldstein, who can be reached by telephone at 818-883-7043 or by e-mail at rgoldsteinta@gmail.com or Rachel Boulds, who can be reached by telephone at the number above, or by e-mail at rachelbouldscpa@hotmail.com.

 

Certification

 

All persons subject to this Policy must certify their understanding of, and intent to comply with, this Policy.

 

CERTIFICATION

 

I certify that:

 

1.

I have read and understand the Company’s Insider Trading Policy (the “Policy”). I understand that the Compliance Officer is available to answer any questions I have regarding the Policy.

 

2.

Since the date the Policy became effective, or such shorter period of time that I have been an employee or director of the Company, I have complied with the Policy.

 

3.

I will continue to comply with the Policy for as long as I am subject to the Policy.

 

 

Print Name:_______________________________

 

 

Signature:_________________________________

 

Date:_______________________