MICROMEM TECHNOLOGIES INC

CONFLICT OF INTEREST POLICY

Revised Date:  June 25, 2008

Policy

Integrity and commitment are among Micromem Technologies Inc. (“the Company”) core values. These values imply that each Employee, Officer and Board Director acts in the best interest of the Company and refrains from any conduct or activity that is actually or potentially detrimental to the well being of the Company, or that may be so perceived.

A conflict of interest arises when an individual, or the organization he or she represents or has an interest in, has a real, potential or perceived, direct or indirect competing interest to the Company’s activities.  This competing interest may result in the employee, or an immediate family member to them or entities in which they have an interest, being in a position to benefit from the situation or resulting in the Company not being able to achieve a result which would be in the best interests of the Company. 

This policy shall indicate certain areas which are of concern to the Company so that conflicts of interest or situations where such interests might exist will be fully disclosed so that any necessary corrective action may be taken.

1.      Definitions

For the purpose of this policy, an employee is defined as:

         a)   a “Supervisor” being any person employed by the Company in a supervisory capacity, together with any other persons or positions identified by Management as being subject to this Policy;

         b)   an “Officer” being an individual appointed or designated as an officer of the Company;

         c)   a “Director” being a member of the Board of Directors of the Company, together with any non-Director member of a committee of the Board of Directors;

1. Independent Director means a Director, or a member of their immediate family, who has no direct or indirect material relationship with the Company within the last three (3) years as an Employee or Executive Officer of the Company; and
1. Has not received any direct compensation during any twelve (12) month period over the last three years as an Employee, Executive Officer or as a Consultant.

1. an “Immediate Family Member” being any person who resides in the same house of an employee where a familial relationship exists; and

1. a “Consultant” being an individual hired to perform services for a specific project or period of time; the nature of the work performed will determine whether or not they are perceived to be subject to this policy.

2.      Guidelines

A conflict of interest shall be deemed to exist in the following circumstances:

         a)   Employees shall not acquire or maintain any private or personal interest that interferes in any way (or would appear to interfere) with the Company’s interests.  Among other things, no employee shall take any action or have any interest that may make it difficult to perform his or her duties objectively or effectively or shall receive improper personal benefits as a result of his or her position with the Company.  No employee shall provide or promote any advantage to any friend, family member, or to any business or personal acquaintance to the detriment of the Company or of any person seeking to do business with the Company.  An employee shall report to the President & CEO or other person as may be designated from time to time by the Board, any conflict of interest or potential conflict of interest, as soon as practicable after becoming aware thereof.

         b)   Employees owe a duty to the Company to advance the Company’s legitimate interests when the opportunity to do so arises and shall not:

1. Take for themselves personally, opportunities that are discovered through the use of corporate property, information or position;
2. Use corporate property, information or position for personal gain; or
3. Compete with the Company.

         c)   Employees shall maintain the confidentiality of information entrusted to them by the Company and those with whom it does business, except when disclosure is authorized or legally mandated.  “Confidential information” includes all non-public information that might be harmful to the Company or its stakeholders, if disclosed.

         d)   Each employee shall deal fairly with the Company’s stakeholders, partners, suppliers, competitors, directors or employees.  An employee shall not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair dealing practices in an effort toward personal gains.

         e)   No employee shall not offer, solicit or accept transfers of economic benefit to or from any third party with whom the Company has, or is considering having, any contractual or binding relationship or arrangement of interest, other than incidental gifts, customary hospitality or other benefits of nominal value, as defined in the Company’s Travel and Expense Policy.

         f)   Employees who are in full-time employment of the Company shall not solicit or accept corporate directorships or acquire a disclosable interested (defined as more than 5% of the shares of any company) without prior written approval of the President & CEO.  In this regard, any person who holds such a directorship or who owns such shares at the time of becoming a full-time employee of the Company should immediately seek written approval of the above mentioned individual with respect thereto.  This prohibition extends to the directorship of any non-profit or public service corporation or organization if the holding of such directorship creates, or has the potential of creating a conflict of interest.

         g)   The Company will not knowingly enter into a material contract or engage in any material transaction in which an employee has an interest without the prior approval of the Board.

               For the purposes of this Policy, an employee is deemed to have interest in a contract or transaction under the following circumstances:

1. Is a party to the contract or transaction;
2. Is an officer, director, partner (or person in any similar relationship to the party in question) of a party to the contract or transaction; or
3. Has an investment interest in a party to the contract or transaction that is material to the employee or immediate family member of the employee.

3.      Disclosure

Each employee shall be required to submit in writing a “Declaration of Interest” detailing the interests that arise personally or from an immediate family member on an annual basis or as soon as the interest becomes known to the employee to the Manager, Human Resources & Administration.

If at any time an employee finds that they have or are considering the assumption of an outside relationship for financial benefit or personal interest; or if he or she is in doubt as to the proper application of this policy statement, he or she should promptly make all facts known the President & CEO and refrain from any exercises of responsibility in any manner which might reasonably be considered to be affected by such adverse interest.  Upon full disclosure of the facts, the President & CEO will determine the validity of whether or not a conflict of interest exists.

4.      Compliance

Any employee who violates this Policy shall face disciplinary action up to and including termination of his or her employment or other relationship with the Company.  The violation of this Policy may also violate certain laws.  If the Company discovers that an employee has violated such laws, it may refer the matter to the appropriate authorities.