Business Ethics and Conduct

The successful business 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 the spirit and letter of all applicable laws and regulations, as well as a scrupulous regard for the highest standards of conduct and personal integrity.

The continued success of Rinnai America is dependent upon our clients' trust and we are dedicated to preserving that trust. Employees owe a duty to Rinnai America, its clients, shareholders, and business partners to act in a way that will merit the continued trust and confidence of the public.

Rinnai America will comply with all applicable laws and regulations and expects its directors, officers, employees, vendors, customers, or other organizations that have a business relationship with the Company, to conduct business in accordance with the letter, spirit, and intent of all relevant laws and 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.

· 3^rd parties: Appropriate action up to and including termination of the business relationship and any legal action as allowable by law.

801 Regulatory Requirements

Rinnai America’s activities are monitored by regulatory entities. The Company seeks to maintain positive relations with these entities by ensuring that all company activities, including research, development, manufacturing, marketing, sales and distribution of our products meet or exceed the requirements of applicable laws and regulations.

It is company policy to properly track adverse events and report such events to the appropriate regulatory authority in accordance with applicable laws and regulations.

830 Antitrust and Competition Laws

Antitrust and competition laws protect free enterprise. These laws prohibit agreements and practices that reduce competition, such as price-fixing and agreeing with competitors to boycott suppliers or customers. U.S. and foreign laws prohibit anti-competitive behavior and imposes criminal sanctions, including jail time, for certain violations.

Examples of unlawful behavior can include anti-competitive agreements among competitors that involve:

· Prices, pricing policies or terms and conditions of sale (including promotions, discounts and allowances)

· Credit terms and billing practices

· Profits or profit margins

· Prices and terms for competitive bids or RFP responses

· Allocation of sales territories

· Allocation or division of customers

· Refusals to deal with a supplier, distributor or customer

· Type or quality of products or services

· Terms of warranties or guarantees, and/or

· Output restrictions or production volume controls

Rinnai America desires to avoid creating even the appearance of an improper agreement or understanding by keeping communications with our competitors to a minimum and ensuring there is a legitimate business reason for all such communications. Agreements do not need to be in writing or even clearly stated to be considered anti-competitive. An anti-competitive agreement can be inferred from circumstances (for example, a government may infer a violation if you state an intention to alter prices when competitors are present, then follow up on that stated intention with an increase or reduction in pricing).

Customers must not be required, as a condition to doing business, to take a product or service they do not want in order to get a Company product or service they do want. Where the customer is a reseller (and not an authorized agent), Rinnai America cannot set the customer’s resale prices 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 (like capacity constraints).

The Company belongs to a number of trade associations. By their very nature, these trade associations bring competitors together to discuss issues of concern to our industry.

Although these contacts are constructive in many ways, they are not immune from the antitrust laws and employees must take extra care to make certain that there are no improper communications at these meetings or at trade shows. Therefore, contacts should be limited situations that do not violate or even appear to violate the antitrust laws.

860 Bribery and Corruption

The United States, individual States and other countries in which we do business have laws that forbid the making, offer or promise of any payment or anything of value (directly or indirectly) to a government official (including political parties and candidates and 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 made outside of the home state (or in a foreign country). To put it simply, bribery is illegal worldwide and it is against Company policy to engage in bribery. For this reason, no payments, gifts or services should be given to government officials, including employees of public institutions that are intended to influence or even appear to be intended to influence, that official’s actions with respect to the Company. In any situation where a payment or gift is given, it must be legal and legitimate and must be accurately recorded in Rinnai America’s books and records.

Given the multifaceted relationship between our Company and government and quasi-government officials, it is important that we adhere to Rinnai America’s policy against illegal payments and gifts to government officials.

861 Gifts, Favors, Travel and Entertainment

Exchanging social amenities or business gifts of a modest value such as small gifts, meals and entertainment is a common practice meant to create good will and establish trust in business relationships and is permitted. Rinnai America’s policy is to use good judgment and moderation when giving or receiving entertainment or gifts, and avoid situations that could compromise or appear to compromise your impartiality. With respect to gifts, as a general rule it is 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 America’s products and services.

Solicitation of gifts is never appropriate. From time to time, the Company will ask its customers, suppliers, and business partners whether our employees have solicited gifts or entertainment. Employees may accept small gifts valued at $150 or less, such as promotional items (T-shirts, mugs, baseball caps), given in the regular course of business. However, small gifts from any party should not exceed $500 in any year.

It is against Rinnai America’s policy to give money or anything of value to any United States government employee, for any purpose.

It is against Rinnai America’s policy to accept discounts on personal purchases of a supplier’s or customer’s products or services unless such discounts are offered to the Company employees in general.

Rinnai America employees may accept entertainment that is reasonable in the context of the business or that advances the Company’s interests. For example, a Company employee accompanying a business contact to a cultural, sporting event or business meal, or attending a supplier’s holiday or celebration function, would be acceptable in most cases. However, travel and accommodations create more serious concerns. To maintain a positive and ethical work environment; employees may not accept travel or accommodations without the consent of the employee’s manager. Even if the entertainment has a business purpose, accepting travel and lodging can create the appearance of impropriety. If the trip truly has a business purpose, perhaps Rinnai America should pay for it. If the business purpose is minor, perhaps the employee should pay his/her own way. Employees may not entertain guests, employees, or customers in establishments focused on “adult entertainment” (such as nude dance clubs or gambling establishments), which are not suited for general business.

870 Marketing Integrity

Rinnai America is committed to the truthful and accurate communication of information about our products and services to governmental and regulatory officials, customers and the general public. It is against company policy for promotional materials to be misleading, deceptive, fraudulent or insincere. Rinnai America’s policy is to make sure that any promotional materials regarding our products will:

· Be supported by sound data;

· Be consistent with local product labeling;

· Include an appropriate balance of information on both benefits and risks; and

· Be approved through the Company’s system for promotional review.

880 Conflicts Of Interest

Rinnai America business decisions and actions must be based wholly on the best interests of the Company and not be 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 someone’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 employees must be promptly and fully disclosed to management in writing and must be disclosed on the employee’s annual compliance certification. If an officer or Executive of the Company, the employee must disclose any potential conflict or interest to the President and such potential conflicts must be approved.

882 Personal Investments and Other Financial Opportunities

When an employee or a close relative or any other person with whom an employee has a close personal relationship, has a direct or indirect financial interest in an organization that is a competitor, customer, vendor, or that has any business relationship with the Company, a conflict of interest may exist. Rinnai America strongly discourages such investments.

Rinnai America will apply a rule of reason to pre-existing investments. Pre-existing small investments may not be a problem. A small investment is an investment in a publicly held company which is less than 3% of an employee’s total investment portfolio. 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

Employees may serve on the board of directors of community or not-for-profit organizations if the activity does not impair the employee’s ability to do his/her job or otherwise create a conflict. To make sure these activities do not create a conflict of interest or other problem with employment, employees must notify management and obtain approval prior to accepting such responsibilities.

Employees may not serve on the board of directors of any for-profit company without first notifying management and obtaining approval. Employees may not serve on the board of directors of a competitor of Rinnai America or a company which has a significant commercial relationship with Rinnai America without the approval of the President of Rinnai America.

884 Political Activity

Rinnai America encourages political activity and participation in electoral politics by employees 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 property or equipment for this purpose. We will not allow any direct or indirect contributions to political candidates, office holders or any political parties to be 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: 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. Such political contributions will not be reimbursed by the Company.