Policy on conflict

of interest

The policy on Conflict of Interest applies to all members of the Board of Directors, officers, executives, employees, and consultants of Victorias Milling Company, Inc. (VMC).

The policy states that all members of the Board of Directors, officers, executives, employees, and consultants of VMC are prohibited from acquiring any personal or pecuniary interest, actual or apparent, that is in conflict with their duties in VMC.

What happens when there is conflict of interest?

When a director, officer, executive, employee, or consultant of VMC:

1. Engages in a prohibited activity as defined above, he or she shall be liable for all damages suffered by the corporation, its stockholders or members, and other persons.

2. Attempts to acquire or acquires, in violation of his duty, any interest adverse to the corporation’s, he or she shall be liable as trustee for the corporation and must account for the profits which otherwise would have accrued to the corporation.

3. Acquires for himself/herself a business opportunity, which should belong to VMC, he or she must account to VMC for all such profits by refunding the same, unless his act has been ratified by a vote of the stockholders owning or representing at least two-thirds of the outstanding capital stock.

On contracts

A VMC contract with one or more of its directors is voidable, at the option of the corporation, unless the following conditions are present:

1. The presence of such director in the board meeting during which the contract was approved was not necessary to constitute a quorum for such meeting;

2. The vote of such director was not necessary for the approval of the contract;

3. The contract is fair and reasonable under the circumstances; and

4. In case the contract is with an officer, it should have been previously authorized by the board of directors.

If any of the first two conditions above is absent, in the case of a contract with a director, such contract may be ratified by the vote of the stockholders representing at least two-thirds of the outstanding capital stock, or at least two-thirds of the members in a meeting called for this specific purpose—as long as full disclosure of the adverse interest of the director(s) involved is made during this meeting and that the contract is fair and reasonable under the circumstances.

In case VMC enters into a contract with a corporation or entity wherein there are interlocking directors between VMC and the contracting corporation, such contract shall not be invalidated on that ground alone (as provided in the Corporation Code) if:

1. The contract is not fraudulent

2. The contract is fair and reasonable

3. The interest of the interlocking director in one corporation is substantial* and his interest in the other corporation(s) is nominal, he shall be subject to the provisions of the preceding paragraph insofar as the latter corporation(s) is concerned.

*Stockholdings exceeding twenty percent of the outstanding capital stock shall be considered substantial for purposes of interlocking directors.

Areas wherein conflict of interest may arise

1. Dealings with/as suppliers, contractors, business partners, consultants, or third parties

2. Dealings with directors, employees, consultants, and prospective employees and consultants

3. Directorship, executive position, and employment in other companies or organizations

4. Use of property, services, and other resources

5. Dealings with dealers and distributors of VMC’s products

6. Dealings with customers or clients

Declaration and disclosure

Directors, officers, executives, employees, and consultants must disclose in writing any actual or potential instances of conflict of interest as defined in this policy.

In case the business transaction/s cannot be avoided or when a particular business transaction or official action may potentially result in a conflict of interest, the director, officer, executive, employee, or consultant concerned shall write a disclosure about such transaction.

The director, executive, officer, employee, or consultant concerned shall likewise inhibit himself/herself from direct or indirect participation at any stage of the transaction and shall not sign any document related to it.