Business Ethics

The successful operation and reputation of Rinnai America is built upon the principles of fair dealing and ethical conduct of our employees.

Our reputation for integrity and excellence requires careful observance of all applicable laws and regulations, as well as a scrupulous regard for the highest standards of conduct and personal character.

Our continued success depends upon our clients’ trust, and we are dedicated to preserving that trust. Our employees owe a duty to our company and its clients, shareholders and business partners to act in a way that merits the continued confidence of the public.

Rinnai America complies with all applicable laws and regulations. We expect our directors, officers, employees, vendors, customers and others with whom we have a business relationship to conduct business in accordance with the letter, spirit and intent of all relevant laws. And we expect these parties to refrain from any illegal, dishonest or unethical conduct.

Failure to comply with this policy will result in management action as follows:

• Employees: Discipline up to and including immediate termination
• 3rd Parties: Appropriate action up to and including termination of the business relationship and any legal action allowable by law

801 Regulatory Requirements

Rinnai America’s activities are monitored by regulatory entities, and we seek to maintain positive relations with these entities. As such, we ensure that all company activities, including research, development, manufacturing, sales and distribution of our products, meet or exceed applicable laws and regulations.

As a matter of company policy, we track and report adverse events to the appropriate regulatory authorities, in accordance with applicable laws and regulations.

830 Anti-Trust and Competition Laws

Anti-trust and competition laws protect free enterprise by prohibiting agreements and practices that reduce competition, such as price fixing or agreeing with competitors to boycott suppliers or customers. U.S. and foreign laws impose criminal sanctions, including jail time, for certain violations.

Some examples of unlawful actions include anti-competitive agreements among competitors that involve:

• Prices, pricing policies or terms and conditions of sale (including promotions, discounts or allowances)
• Credit terms and billing practices
• Profits or profit margins
• Prices and terms for competitive bids or RFP responses
• Allocation of sales territories or customers
• Type or quality of products or services
• Terms of warranties or guarantees
• Output restrictions or production volume controls

At Rinnai America, we strive to avoid creating even the appearance of an improper agreement or understanding by keeping communication with competitors to a minimum and ensuring there is a legitimate business reason for all communications. Even unwritten agreements or those not clearly stated can be considered anti-competitive, and an anti-competitive agreement can be inferred from circumstances. For example, a government can infer a violation if, in the presence of competitors, you state an intention to alter prices, and then follow up with an increase or reduction in pricing.

Customers must not be required to take a product or service they don’t want in exchange for securing a Rinnai product or service they do want. Where the customer is a reseller (but not an authorized agent), Rinnai America cannot set the customer’s resale process or other terms or conditions of sale.

Rinnai America must never impede any customer’s telecommunications decisions or unreasonably discriminate against competitors desiring access to its network with valid business reasons, e.g. capacity constraints.

Our membership in a number of trade associations allows us to gather with our competitors and discuss issues of common concern within our industry. However, while these contacts are constructive, they are not immune from anti-trust laws. Employees must take extra care to ensure there is no improper communication at these meetings or trade shows. Contacts should be limited situations that don’t violate or even appear to violate anti-trust laws.

860 Bribery and Corruption

The United States, individual states and other countries where we do business have laws that forbid making, offering or promising any payment or other compensation (directly or indirectly) to a government official (including political parties, candidate or foreign officials), particularly when the payment is intended to influence an official act or decision to win or retain business. These laws apply even when the payment is provided outside of the home state or in a foreign country.

To put it simply, bribery is illegal worldwide and is against company policy. Therefore, no payments, gifts or services should be given to government officials, including employees or public institutions that are intended to influence (or to even appear to be intended to influence) that official’s actions with respect to Rinnai. Whenever a payment or gift is given, it must be legal and legitimate and must be recorded in Rinnai America’s books and records.

861 Gifts, Favors, Travel and Entertainment

Exchanging social amenities of modest value – such as small gifts, meals and entertainment – is a common, permitted practice meant to create good will and establish trust in business relationships. Rinnai America’s policy is to use good judgment and moderation when giving or receiving such amenities and to avoid situations that could compromise or appear to compromise an employee’s impartiality. It is, as a general rule, against company policy for employees to offer or accept cash or a cash equivalent (such as a money order).  No business gift should ever be conditioned upon or be a reward for purchasing, prescribing or promoting Rinnai products or services.

Soliciting gifts is never appropriate. From time to time, we may ask customers, suppliers and business partners whether out employees have solicited gifts or entertainment. Employees may accept small gifts valued at $150 or less, such as promotional items (t-shirts, mugs, caps, etc.). However, small gifts from any party should not exceed $500 in any year.

Rinnai employees may accept entertainment that is reasonable in the context of business or that advances the company’s interest. For example, it would be acceptable for a Rinnai employee, in most cases, to accompany a business contact to a cultural or sporting event or business meal or to attend a supplier’s holiday function.

However, to maintain a positive and ethical work environment, an employee may not accept travel and accommodations without the consent of the employee’s manager. Because accepting travel and lodging can create the appearance of impropriety, even where there is a legitimate business purpose, perhaps Rinnai America should pay for such trips. If the business purpose is minor, perhaps the employee should pay his/her own way.

Given the multifaceted relationship between our company and government and quasi-government officials, it is against Rinnai America’s policy to give money or anything of value, for any purpose, to government officials, both in the U.S. and abroad.

It is also against company policy for employee’s to accept discounts on personal purchases of a supplier’s or customer’s products or services, unless the discounts are offered to company employees in general.

Finally, employees may not entertain guests, employees or customers in establishments focused on “adult entertainment” not suitable for general business, e.g. nude dance clubs or gambling establishments.

870 Marketing Integrity

Rinnai America is committed to the truthful and accurate communication of information about our products and services to governmental and regulatory agencies, customers and the general public. To ensure promotional materials adhere to company policy prohibiting misleading, deceptive, fraudulent or insincere information, these materials must:

• Be supported by sound data
• Be consistent with local product labeling
• Include an appropriate balance of information on both benefits and risks
• Be approved through the company’s system for promotional review

880 Conflicts of Interest

Business decisions and actions must be based wholly on the best interests of the company and not motivated by personal or other considerations or relationships. A conflict of interest arises when an employee puts his or her personal, social, financial, political or other interest before the interests of Rinnai America. Even the appearance of a conflict can damage an employee’s reputation and that of the company. Any situation that creates or appears to create a conflict of interest with the interests of Rinnai America must be avoided.

881 Disclosure

Any potential conflict of interest on the part of an employee must be promptly and fully disclosed to management in writing and must be disclosed on the employee’s annual compliance certification. Officers or executives of the company must disclose any potential conflicts of interest to the president, and such potential conflicts must be approved.

882 Personal Investments and Other Financial Opportunities

A conflict of interest can arise when an employee, close relative or other person with whom the employee has a close, personal relationship also has a direct or indirect financial interest in an organization that is a company competitor, customer, vendor or other business contact. Rinnai America strongly discourages such investments.

A rule of reason will be applied to pre-existing investments. A small pre-existing investment (less than 3% of an employee’s total investment portfolio) in a publicly held company may not be an issue. However, when an employee’s pre-existing investments are not small; they must be fully disclosed and approved as described above under “Disclosure.”

883 Board Memberships

An employee may serve on the boards of directors of community and not-for-profit organizations, provided the activity doesn’t impair the employee’s ability to do his/her job or otherwise create a conflict. To ensure there is not conflict of interest or other problem with employment, an employee must notify management and obtain approval prior to accepting such a position.

Employees may not serve on the board of directors for competitors of Rinnai America or for a company which has a significant commercial relationship with Rinnai America without the approval of the president of Rinnai America.

884 Political Activity

We encourage employees’ political activity and participation in electoral politics, where appropriate. However, such activity must occur strictly in an individual and private capacity and not on behalf of the company. Employees may not conduct personal political activity on company time or use company resources for this purpose.

Company policy prohibits direct or indirect contributions to political candidates, office holders or any political parties made on behalf of Rinnai America, unless the contribution is legal and directly authorized by the president of Rinnai America. Items that can be considered political contributions include, but aren’t limited to: purchasing tickets to political events, furnishing company goods or services, loan of company personnel during working hours, or payment for advertisements and other campaign expenses.