A. Required Disclosure

The SEC has added new Item 406 to Regulation S-K requiring a reporting company to disclose in its annual report whether the company has adopted a code of ethics that applies to the company's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. If the company has not adopted such a code of ethics, it must disclose the reasons why it has not done so.

In addition to providing the required disclosure, the new rules require a reporting company to either:

• file a copy of its code of ethics as an exhibit to its annual report;
• post the text of its code of ethics on its Internet web site, provided that the company discloses its Internet address and its intention to provide disclosure in this manner in its annual report; or
• provide an undertaking in its annual report to provide a copy of its code of ethics to any person without charge upon request.

For purposes of this new disclosure item, the term "code of ethics" is defined as a codification of standards that is reasonably designed to deter wrongdoing and to promote:

• honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
• full, fair, accurate, timely, and understandable disclosure in reports and documents that a company files with, or submits to, the SEC and in other public communications made by the company;
• compliance with applicable governmental laws, rules and regulations;
• the prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and
• accountability for adherence to the code.

C. Disclosure Regarding Changes to, or Waivers from, the Code of Ethics

The SEC has added an item to the list of Form 8-K triggering events to require disclosure of the nature of any amendment to the company's code of ethics that applies to its principal executive officer or senior financial officers and the nature of any waiver, including an implicit waiver from a provision of the code of ethics granted by the company to one of these specified officers, the name of the person to whom the company granted the waiver and the date of the waiver.

The rules define the term "waiver" as the approval by the company of a material departure from a provision of the code of ethics. They define the term "implicit waiver" as the company's failure to take action within a reasonable period of time regarding a material departure from a provision of the code of ethics that has been made known to an executive officer of the company.

Currently, a company must file a Form 8-K within five business days after it has made a change to, or granted a waiver from, its code of ethics. The SEC is considering shortening the filing deadlines for Form 8-K's to two days. Presumably, such a change would apply to this disclosure as well.

Technical, administrative and other non-substantive amendments need not be disclosed. The SEC also provided that as an alternative to reporting this information on Form 8-K, a company may disclose this information on its Internet web site, but only if it had disclosed in its most recently filed annual report on Form 10-K its Internet web site address and that it intends to disclose these events on its Internet web site. Web site disclosure has to be made within the same five-business day time period proposed for Form 8-K filings, and the information must be kept available on the web site for a period of at least 12 months after the initial posting. The information could be removed from the web site after the 12-month posting period, but the company would have to retain the disclosure for at least five years and make it available to the SEC upon request.

D. Transition Period

Companies must comply with the disclosure requirements in their annual reports for fiscal years ending on or after July 15, 2003. They must also comply with the requirements regarding disclosure of amendments to, and waivers from, their ethics codes on or after the date on which they file their first annual report in which disclosure of their code of ethics is required.

E. Code of Ethics

Attached hereto is a draft of a proposed Code of Ethics for the Company. It will be discussed at the next meeting of the Board of Directors.

The foregoing is meant to be a summary only. If you wish to discuss specific situations, please contact Ted Tashlik or Martin Goldwyn.

CODE OF ETHICS

It is the policy of the Corporation that the Chief Executive Officer, the Chief Financial Officer and all senior accounting personnel adhere to and advocate the following principles governing their professional and ethical conduct in the fulfillment of their responsibilities:

• Act with honesty and integrity, avoiding actual or apparent conflicts of interest between personal, private interests and the interests of the Corporation and its stockholders.
• Act in good faith, responsibly, with due care and diligence, without misrepresenting or omitting material facts or allowing independent judgment to be compromised.
• Discharge responsibilities with a view to causing all materials made public and all reports filed with, or furnished to, the Securities and Exchange Commission (the "SEC") or any self-regulatory organization ("SRO") to contain information which is complete, fair, accurate, timely and understandable.
• Promote adherence to this Code of Ethics among peers and subordinates.
• Comply fully and completely with all applicable governmental laws, rules and regulations and all applicable regulatory rules and guidelines, including SEC and SRO rules and regulations.

The Corporation may waive application of this Code of Ethics, on a case by case basis, only when circumstances warrant granting such a waiver. Changes in, and waivers to, this Code of Ethics may be made only by the Corporation's Audit Committee or the full Board of Directors. All substantive changes and waivers to this Code of Ethics must be properly disclosed as required pursuant to applicable laws and regulations.

This Code of Ethics is not intended to, and does not constitute an employment contract or assurance of continued employment, and does not create any rights in any employee, client, supplier, competitor, stockholder or any other person or entity.