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Salomon Smith Barney [LOGO OF A MEMBER TRAVELERS GROUP]
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SECURITIES AND COMMODITIES TRANSACTIONS
BY U.S. BASED EMPLOYEES
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A. Scope of Applicability
This Policy sets forth the minimum requirements for all U.S. based employees
except those employed in the Firm's retail branch offices. The Policy applies to
all of the Firm's institutional business units and corporate headquarters
personnel including the Equity, Fixed Income and Proprietary Trading
Departments, the Municipals Division, the Investment Banking Department, the
Research Department, the Institutional Branch Offices, and all control and
support functions (e.g., Operations, the Financial Division, Branch
Administration, Legal, Compliance, Internal Audit, BTO, Human Resources, etc.).
Individual business units may adopt additional requirements. Employees should
consult their supervisor regarding any additional restrictions. While similar
policies apply to employees located at the Firm's overseas affiliates, such
local policies may be more or less stringent depending on local requirements and
circumstances. Financial Consultants and employees of the Firm's retail branch
offices should consult the Compliance Desktop Manual on FCI (COMP DTOP/HELP) for
policy provisions applicable to their personal trading activity.
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B. Overview
To protect the integrity of the Firm in the conduct of its businesses, it is
essential that employees conduct their personal trading activities in a manner
that withstands public scrutiny and does not create the appearance of
impropriety. Employee trading activity should be oriented toward a philosophy of
investment as distinguished from speculation. Employees should not engage in a
pattern of frequent short-term trading activity or transact on the basis of
rumors or "tips." Moreover, personal trading activities must not distract from
full-time work responsibilities.
In order to achieve these objectives and fulfill its regulatory obligation to
monitor and supervise such activity, the Firm has adopted the following Policy.
Compliance with this Policy will be monitored. Violations may be grounds for
disciplinary action up to and including termination of employment.
The Firm reserves the right at any time to restrict trading in any security or
commodity by any employee, or to require cancellation of any trade or
liquidation of any position established or maintained in an employee account.
Any such cancellation or liquidation may be at the employee's expense. The Firm
may at any time impose special conditions or restrictions on securities or
commodities trading.
This Policy is in addition to, and is not intended to limit or in any way
supersede the Firm's Policy regarding the treatment of material, non-public
information. Employees must never trade in a security or commodity while in
possession of material, non-public information about the issuer or the market
for those securities or commodities, even if the employee has satisfied all
other requirements of this Policy.
June 1, 1998
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Any questions regarding this policy should be directed to Elizabeth Cox at
212-816-1734 or Michael Schwartz at 212-723-2135.
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C. Covered Employee Accounts
These policies and procedures apply to all transactions in securities,
commodities or other financial instruments in "covered employee accounts." A
covered employee account is any account in which the employee has a financial
interest or has the power, directly or indirectly, to make or influence
investment decisions, which includes accounts of:
. the employee's spouse
. the employee's children, the children's spouses, and any other related
individuals provided that they reside in the same household with, or are
financially dependent upon the employee; and
. any other individual to whose financial support the employee materially
contributes.
For purposes or other persons who by reason of their employment are required to
conduct their securities, commodities or other financial transactions in a
manner inconsistent with this Policy, or in other exceptional circumstances,
employees may submit a written request for an exemption to the Compliance
Department. Requests for exemptions should be directed to Michael Schwartz.
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D. Excluded Accounts
This Policy does not apply to the following types of accounts:
1. Mutual Funds purchased directly from the fund company, its captive
distributor or transfer agent. Employees may not maintain securities
accounts with other broker/dealers for the purpose of investing in
mutual funds.
2. Estate or trust accounts in which an employee or related person has a
beneficial interest, but no power to affect or ability to influence
investment decisions.
3. Keoghs and 401(k)s where the employee has no power to invest in
individual securities.
4. CDs, money market, savings or checking accounts at banks provided that
the account does not, by its terms, allow for the execution of
securities or commodities transactions.
Such accounts may be maintained outside the Firm, are not subject to trading
restrictions or holding periods, and need not be disclosed to the Compliance
Department.
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E. Location of Covered Employee Accounts
Except as provided below, all covered employee accounts must be maintained at
Salomon Smith Barney. All orders must be entered through a Salomon Smith Barney
Financial Consultant ("FC"). Employees may not deal directly with any Firm
trading desk for their personal transactions. Employees may open accounts with
any Salomon Smith Barney FC of their choice but must ensure that such accounts
are properly coded as Employee or Employee Related Accounts and that the
employee's supervisor is listed as an "interested party" to receive account
statements. Employees should contact an FC, Branch Office Manager, or the
Employee Investment Branch for more detailed information on account opening
procedures.
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Employees may establish discretionary accounts managed by a Salomon Smith Barney
FC or the Salomon Smith Barney Asset Management Division. Transactions in such
accounts will be subject to the trading restrictions set forth on the Restricted
List but will not be subject to a minimum holding period or the other
Departmental Trading Restrictions listed below provided that the employee has no
power to affect or influence investment decisions for the account. The FC must
document the fully discretionary nature of the account.
Exceptions:
Employees seeking exceptions to the requirement that covered employee accounts
be maintained at the Firm must obtain prior written approval from the Compliance
Department. Such requests should be submitted to Michael Schwartz. For any
outside accounts that are approved, the Compliance Department will issue a
letter to the entity carrying the account directing that entity to furnish
copies of confirmations and account statements to the employee's supervisor as
well as to the Compliance Department.
Exceptions will generally be granted for the following types of accounts and,
once approved, such accounts will not be subject to trading restrictions,
holding period requirements, or any additional departmental requirements:
. Fully Discretionary or Managed Accounts: Employees may have
discretionary accounts managed by an external investment advisor
registered as such with the SEC. Only transactions directed by a
registered investment advisor in a fully discretionary account will be
exempt under this proviso. For this type of account, no communication
between the investment adviser and the employee with regard to
investment decisions is permitted to occur prior to execution. Employees
seeking approval for such accounts must provide a letter signed by the
investment adviser confirming that he or she is a duly registered
investment advisor, that the account will be fully discretionary, and
that the employee will have no power to affect or influence investment
decisions.
. Direct Investment Programs: Employees may participate in direct
investment programs which allow the purchase of securities directly from
the issuer without the intermediation of a broker/dealer provided that
the timing and size of purchases are established by a pre-arranged
schedule (e.g., direct investment plans or dividend reinvestment plans).
. Independent Spousal Accounts: Accounts of an employee's spouse who has
an independent source of income or assets and in which the employee has
no financial interest (i.e., the employee is not a joint account holder)
and no ability to control or influence the investment decisions may be
maintained outside the Firm. The employee must sign and submit a request
form to the Compliance Department attesting that he or she has not
funded the account, has no financial interest in the account, and will
have no ability to control or influence investment decisions.
Exceptions may also be granted where (i) the employee has a joint account with
the employee's spouse who is employed at another broker/dealer and the account
is maintained in accordance with the policies of that broker-dealer (the
respective positions of both spouses will be considered in determining whether
or not approval will be granted); or (ii) the employee has a position at another
broker/dealer that cannot be transferred to Salomon Smith Barney (in which case
the exception will apply only to the non-transferable securities). Employees
with such accounts must obtain pre-trade approval for all transactions in these
accounts from the Compliance Pre-Approval Hotline at 212-816-1734. Such
transactions are subject to the trading restrictions, holding period
requirements, and any applicable departmental restrictions listed below.
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The Compliance Department will consider other exceptions on a case-by-case
basis, but will only grant approval for compelling reasons.
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F. Trading Restrictions
1. Restricted List: All Firm employees are subject to the trading restrictions
set forth on the Restricted List. All FCs and branch offices have access to
the Restricted List on FCL. FCs are responsible for ensuring that all
employee trades comply with the Restricted List.
2. Minimum Holding Period: Securities purchased by employees must be held for a
minimum of 60 calendar days calculated on a First In, First Out or "FIFO"
basis regardless of how the employee may treat the transaction for tax
purposes. Short sales, options and futures transactions are also subject to a
60-day holding period. A shorter holding period may be allowed to avoid
personal hardship but only with the prior written approval of the employee's
supervisor (MD or SVP level). Employees will not be permitted to make a
practice of early liquidations. Accordingly, employees should avoid trading
in securities of any entity that is in bankruptcy or subject to a tender
offer, recapitalization or other extraordinary activity.
There are two circumstances where supervisors will generally grant exceptions
to the minimum 60-day holding period. The first arises when the value of an
employee's investment declines by 15% or more from the original acquisition
price. This exception is intended to avoid financial hardship and may not be
used repeatedly in order to engage in what amounts to short term trading. It
does not apply to transactions in options, futures or Travelers Group
securities. The second exception arises when an employee purchases a security
while Salomon Smith Barney's Research Department has a buy recommendation (a
"1" or "2" rating) and subsequently the Research Department downgrades the
rating to a sell recommendation (a "4" or "5"). In such circumstances, the
employee may generally sell prior to the expiration of the 60-days but only
after the research restriction period (usually one trading day) has expired.
(see Research Restriction below)
3. Interaction with Customer Orders: Orders for covered employee accounts may
never take precedence over client orders and may not be submitted as a
prearranged cross with a customer account.
4. Research Restriction: All employees of the Firm are prohibited from
purchasing or selling securities in accordance with a new or changed research
recommendation from the Firm for one full trading day following the issuance
of such recommendation. If the recommendation occurs prior to the opening of
the market, the restriction applies for the full trading day. If the
recommendation occurs during market hours, the restriction applies for the
remainder of the day and, in some instances, for the next full trading day.
During the research restricted period, employees may not trade any equity,
convertible, or high yield securities issued by the covered company
(including warrants, rights, and options for such securities) on the
applicable side of the market. This Policy does not prohibit trades against
the research recommendation (e.g., an employee may sell during a research
restriction imposed because an analyst has upgraded the recommendation, or
has initiated coverage with a buy). Securities subject to this restriction
will be so designated on FCI. As with the Restricted List, FCs are
responsible for ensuring that all employee trades comply with posted research
restrictions.
5. New Issues/Public Offerings: Employees may not purchase new issues of
corporate securities (including IPOs, secondary equity distributions, debt or
convertible offerings and any other syndicate offering) on the offering
whether or not Salomon Smith Barney is an underwriter and regardless of
whether the offering is considered a "hot issue." After the public offering
has been
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completed, purchases are permitted in the secondary market subject to the
other provisions of this Policy.
Employees may place orders for new issues of certain municipal securities
during the retail order period through their FC. The FC must alert the
Syndicate Desk that such orders are employee orders when they are submitted.
When there is no special retail order period, employee orders within a
priority class will only be filled after all institutional and retail
customer orders at that priority level have been filled.
6. Additional Departmental Restrictions: Because of the nature of certain
employees' activities and in order to avoid the appearance of a conflict
between their business activities and their personal investments, additional
restrictions or approval requirements apply to employees engaged in the
following activities:
Trading
. Employees on the OTC Equity Trading Desk are prohibited from trading
securities covered by the Desk in their personal accounts. No exceptions
will be permitted.
. Employees of all other trading desks (Fixed Income, Municipals, and
Equities) must obtain pre-approval, in writing, from the Desk Head for
any personal account transactions involving securities traded by those
respective Desks or related derivatives. The employee placing the order
cannot price the security involved. No Compliance approval is required.
. Over-the-Wall traders are prohibited from trading the securities or
related derivatives of any issuers involved in the transaction for which
they are providing assistance.
Investment Banking
. Employees of the Investment Banking Department must obtain pre-trade
approval from the Chinese Wall/Control Group for all trades in debt and
equity securities and related derivatives except U.S. government or
government agency securities. Call the Compliance Pre-approval Hotline
at 212-816-1734 for trade approvals. Approvals are only good for the
trading day on which they are given. Generally, trade approval will be
denied for any security on the Watch, Restricted, or Proprietary Lists
or that is subject to a research restriction or other compliance related
restriction.
. Investment Bank employees may not trade in the securities and related
derivatives of issuers for which they are currently providing or have
provided services in the last 30 days.
. For securities and related derivatives of an issuer for which the
employee's group has coverage responsibilities, the employee must obtain
approval from the group head prior to requesting approval from the
Chinese Wall/Control Group. Such transactions are subject to a six month
holding period. Trades involving all other securities are subject to a
60 day holding period.
Equity Capital Markets/Syndicate
. Employees of Equity Capital Markets/Syndicate must obtain pre-trade
approval from the Chinese Wall/Control Group for all trades in debt and
equity securities and related derivatives except U.S. government
securities, U.S. government agency securities, and investment grade
debt. Call the Compliance Pre-approval Hotline at 212-816-1734 for trade
approvals. Approvals are only good for the trading day on which they are
given. Generally, trade approval will be denied for any security on the
Watch, Restricted, or Proprietary Lists or that is subject to a research
restriction or other compliance related restriction.
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. Employees of Equity Capital Markets/Syndicate may not trade in the
securities or related derivatives of issuers for whom the desk has
participated as an underwriter in connection with an offering in the
last 30 days. The 30 day period is calculated from the day an offering
is fully sold.
Fixed Income Capital Markets/Syndicate
. Employees of Fixed Income Capital Markets/Syndicate must obtain pre-
trade approval, in writing, from the Managing Director responsible for
supervising the relevant desk for all trades of debt or equity
securities except U.S. government or U.S. government agency securities.
Approval will be denied for any security for which the desk is involved
in a pending or current offering.
. Employees of Fixed Income Capital Markets/Syndicate may not trade the
securities of issuers for whom the desk has participated as underwriter
in connection with an offering in the last 30 days. The 30 day period is
calculated from the day an offering is fully sold.
Equity Research
. Employees of the Equity Research Department must obtain pre-trade
approval, in writing, from a Supervisory Analyst for all trades in debt
and equity securities except U.S. government securities, U.S. government
agency securities, municipal securities, and investment grade debt. If
the security is on the Supervisory Research Control/Research Quiet List,
the employee must also obtain approval from Research Counsel.
. Analysts must liquidate positions in a security and its related
derivatives held in their personal accounts prior to initiating coverage
about that issuer unless the analyst's position conflicts with the
pending recommendation (i.e., the analyst is long the stock and plans to
initiate coverage with a neutral or sell recommendation [3, 4 or 5
rating] or the analyst is short the stock and plans to initiate coverage
with a buy recommendation [1 or 2 rating]) in which case the analyst may
not change his or her position until three (3) business days after the
research is made public. Limited exceptions will be granted on a case by
case basis.
. Other than for the purpose of liquidating a position in advance of
initiating coverage pursuant to this Policy, analysts may not buy or
sell any security or related derivative of an issuer about which they
are issuing or contemplating issuing (or know that another analyst is
doing so) a report or manifold that will contain an initiation of
coverage, a change of recommendation or a material change in earnings
estimate or other similarly material information until three (3)
business days after such research is made public. This restriction also
applies to anyone who becomes aware of the same information concerning
imminent or planned publication.
. Analysts may trade stocks in the industry they follow but cannot buy or
sell in contradiction to the Firm's published rating.
. Transactions by analysts involving securities or related derivatives of
an issuer within their personal coverage area are subject to a six (6)
month holding period.
. Over-the-Wall research analysts are prohibited from trading the
securities or related derivatives of any issuer involved in the
transactions for which they are providing assistance.
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Fixed Income - Corporate Bond, High Yield, and Emerging Market Research
Employees of Corporate Bond, High Yield, and Emerging Market Research
must obtain pre-trade approval, in writing, from the Head of Corporate
Bond Research for all employee trades in debt and equity securities
except U.S. governments and U.S. government agencies. Transactions
involving securities or related derivatives within the employee's
personal coverage area are subject to a six month holding period. For
employees of High Yield Research, all high yield securities are
considered to be covered securities.
Municipal Sales, Trading and Syndicate
Employees of Municipal Sales, Trading and Syndicate must obtain pre-
trade approval, in writing, from an MD business head or, in the case of
branch employees, the branch manager for any transaction in the
secondary market involving municipal securities. All transactions must
be executed through an FC. Employees will not be permitted to purchase a
municipal security in the secondary market from the Firm's trading desk
until it has been publicly offered for 24 hours.
Public Finance Department
Employees of the Public Finance Department must obtain pre-trade
approval, in writing, from the Department Head for any transaction in
the primary (other than during a retail order period) or secondary
market involving municipal securities. All transactions must be executed
through an FC. Employees will not be permitted to purchase a municipal
security in the secondary market from the Firm's trading desk until it
has been publicly offered for 24 hours.
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G. Supervisory Review
Supervisors are responsible for reviewing their employees' personal trading
activity for any transaction or pattern of transactions that is inconsistent
with this Policy. Supervisors should notify the Compliance Department whenever:
(i) a trade required managerial pre-approval but was not, in fact, approved
prior to the trade date; (ii) a trade was made by an employee whom you believe
may have possessed confidential information; (iii) a trade or trading pattern
appears to be inconsistent with Salomon Smith Barney's philosophy of investment
as distinguished from speculation, trading on the basis of rumors, etc; (iv) a
trade or trading pattern is inconsistent with departmental restrictions; or (v)
there is reason to believe a trade or trading pattern might otherwise be
inappropriate. Supervisors will receive periodic reports listing the personal
securities transactions of the employees within the supervisor's area of
responsibility. Supervisors should evidence their review of such documents
(e.g., by initialing the cover page) and maintaining them in the unit's files
for a period of three (3) years. Where the Policy requires pre-trade approval by
a supervisor, the supervisor is responsible for maintaining documentation of
such approvals also for a period of three (3) years. In addition, all employee's
personal trading activity is subject to review by the Compliance Department.
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H. Transactions in Options and Futures
Employees may buy or sell derivative instruments such as individual stock
options, options and futures on indexes and options and futures on fixed-income
securities, and may buy or sell physical commodities and futures and forwards on
such commodities. Transactions in such products may be
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effected only through accounts maintained in accordance with this Policy and are
subject to any approval requirements or Additional Departmental Restrictions
applicable to the employee. All such transactions are subject to a 60-day
holding period and employees may not trade such securities if they will expire
in less than 60 days. The Firm will permit an exception for an individual stock
option that is part of a hedged position where the underlying stock is subject
to a 60-day holding period, e.g., a call written against a long stock position.
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I. Securities of Travelers Group Inc.
Covered employee accounts may purchase securities of Travelers Group at any time
as long as the employee does not have any material non-public information about
Travelers Group at the time of the trade. No pre-trade approval is necessary.
Employees who purchase such securities must do so for investment purposes only.
Accordingly, all employee purchases of Travelers Group stock or related options
are subject to a 60-day holding period.
Salomon Smith Barney believes that no employee should have a financial interest
in having the stock of Travelers Group decline in price. Therefore, the
following rules apply to all employees (including FCs):
Permitted transactions:
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1. Shorts against the box
2. The use of puts and calls as part of a strategy to hedge a long
position (securities must be deliverable)
3. Purchases of calls
Prohibited transactions:
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1. Short sales
2. Sales of naked options
3. Purchases of puts for speculative purposes
4. Speculative option strategies (i.e., straddles, combinations,
spreads)
5. Any transactions related to the hedging of unvested CAP shares*
*Participants in Salomon Inc.'s Equity Partnership Plans ("EPP") may hedge a
long position in Travelers Group stock but may only do so with respect to
deliverable shares that are not restricted as to transferability and are not
held in any retirement plan maintained by the Firm.
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J. Limited Partnership and Other Private Transactions
The NASD requires employees of NASD member firms to disclose to their employer
any "private securities transactions" in which they engage. "Private securities
transactions" include, but are not limited to, purchases or sales of limited
liability equity interests such as participations in hedge funds, oil and gas
ventures, real estate syndicates, limited partnerships, private placements, or
other forms of investment not made available to the general public. Any employee
intending to engage in such a transaction must obtain pre-approval from their
business unit supervisor and the Compliance Department. Requests for approval
should be submitted on an Outside Investments Request Form (which is included in
the forms package issued to all new employees or may be obtained from the Human
Resources Department) and directed to Michael Schwartz in the Compliance
Department. Taking into consideration the nature and/or complexity of any given
investment, please allow sufficient time for Compliance review and any possible
follow-up questions or issues which may
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arise. The Compliance Department reserves the right to deny approval where the
private securities transaction presents an actual or potential conflict of
interest.
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