Inspire Pharmaceuticals, Inc. - Corporate Governance

Inspire Whistleblower Policy

Inspire Pharmaceuticals, Inc. ("Inspire") is committed to providing a workplace conducive to open discussion of its business practices. It is Inspire's policy to comply with all applicable federal, state and local laws that protect employees against unlawful threats, discrimination, retaliation or discharge by their employer as a result of their lawfully reporting information regarding, or their participating in investigations involving, corporate fraud or other violations by Inspire or its agents of federal, state or local law, rule, regulation or ordinance or the company's internal procedures regarding financial reporting or other law. Specifically, Inspire policy prevents any employee from being subject to disciplinary or retaliatory action by Inspire or any of its employees or agents as a result of the employee's:

disclosing or threatening to disclose an activity, policy or practice to a supervisor or government or law enforcement agency, where the employee has reasonable cause to believe that the information discloses a violation or possible violation of federal, state or local law, rule, regulation or ordinance; or
objecting to or refusing to participate in any activity or practice, where the employee has a good faith, reasonable cause to believe that the activity or practice causes or will result in a violation of federal, state or local law, rule, regulation or ordinance; or
providing information, causing information to be provided, filing, causing to be filed, testifying, participating in a proceeding filed or about to be filed, or otherwise assisting in an investigation, hearing, inquiry, proceeding or court action regarding any conduct that the employee reasonably believes involves a violation of:

federal criminal law relating to securities fraud, mail fraud, bank fraud, or wire, radio and television fraud, or other fraud, or
any rule or regulation of the Securities and Exchange Commission, or
any provision of federal, state or local law relating to fraud against stockholders, investors, clients, customers, employees, former employees, retirees or pensioners of the employer, or any government agency, or
any clear mandate of public policy concerning the public health, safety, welfare or protection of the environment,

where, with respect to investigations, such information or assistance is provided to or the investigation is being conducted by a federal regulatory agency, a member of Congress, any federal, state or local governmental body, any law enforcement official, or a person at Inspire with supervisory or similar authority over the employee.

However, employees who file reports or provide evidence which they know to be false or without a good faith, reasonable belief in the truth and accuracy of such information will not be protected by the policy statement and may be subject to disciplinary action, including termination of their employment. In addition, except to the extent required by law, Inspire does not intend this Policy to protect employees who violate the confidentiality of any applicable confidentiality obligations with regard to Inspire's trade secret or other confidential information. Employees considering providing information that may violate these privileges or reveal Inspire trade secrets are advised to consult an attorney before doing so.

Inspire has designated Stephen Celestini as the Chief Compliance Officer responsible for administering this Policy. The Compliance Officer is responsible for receiving, collecting, reviewing, processing and resolving concerns and reports by employees and others on the matters described above and other similar matters. Employees are encouraged to bring to the attention of and discuss issues and concerns of the type covered by this Policy with their supervisor, who is in turn responsible for informing the Compliance Officer of any concerns raised. If the employee prefers not to discuss these sensitive matters with his or her own supervisor, the employee may instead discuss such matters with the Compliance Officer. The Compliance Officer will refer complaints submitted, as he determines to be appropriate, as required under the directives of the Board of Directors (or a Committee of the Board) or as required by applicable law, to the Board or an appropriate Committee of the Board. If an employee is uncomfortable speaking with the Compliance Officer, the employee may contact Ken Lee, Chairman of the Audit Committee of the Board of Directors, regarding his or her concern. Under all circumstances, an employee submitting a matter should be comfortable doing so on an anonymous basis. However, if submitting a matter anonymously, please be sure to provide sufficient information to allow a full investigation of the matter. Employees who choose to identify themselves will receive (i) a notice of receipt of their submission or report within two (2) business days or as soon as practicable thereafter and (ii) a response to their submission or report within 20 business days or as soon as practicable thereafter.

Inspire will treat all communications under this Policy in a confidential manner, except (a) as required by law, (b) to the extent necessary to conduct a complete and fair investigation, and (c) as appropriate to allow reviews of Inspire's operations by its Board of Directors, its committees, and its independent registered public accounting firm.

Inspire's Chief Compliance Officer, Stephen Celestini, may be reached by telephone at (919) 287-1262 or by email at scelestini@inspirepharm.com. Mr. Lee may be reached by telephone at (919) 493-4800 or by email at klee10@nc.rr.com. In the alternative, an employee may submit a matter anonymously by U.S. Mail or overnight courier to either of the following addresses:

PERSONAL AND CONFIDENTIAL COMMUNICATION
ONLY RECIPIENT MAY OPEN
Stephen Celestini c/o Inspire Pharmaceuticals, Inc.
4222 Emperor Boulevard, Suite 200
Durham, NC 27703-8466

or

PERSONAL AND CONFIDENTIAL COMMUNICATION
ONLY RECIPIENT MAY OPEN
Ken Lee
2808 Chelsea Circle
Durham, NC 27707

Additionally, an employee may submit a matter confidentially through an independent firm, Ethical Advocate, using either their website or toll free hotline. Such reports may be made anonymously or on a named basis as chosen by the employee. In order to submit a matter via the website the employee will need to follow directions for creating an account and submitting a report, which are contained on the website located at:

http://www.ethicaladvocate.com

Reports may also be submitted by calling the Ethical Advocate Hotline toll-free at:

Ethical Advocate Hotline
(866) 616-1749

Complaints submitted through this confidential process that involve Inspire's business practices, including its accounting, auditing, and internal auditing controls and disclosure practices will be presented at Inspire's next regularly-scheduled Audit Committee meeting, or if appropriate, at a specially scheduled meeting of the Audit Committee of Inspire's Board of Directors. An employee may utilize this confidential procedure if he or she feels that a complaint previously raised with a supervisor or the Compliance Officer has not been appropriately handled. It is critical that matters be addressed as soon as possible, so that concerns can be resolved before even more serious issues can occur.

If any employee believes he or she has been subjected to any action that violates this Policy, he or she may file a complaint with his or her own supervisor or the Compliance Officer. If it is determined that an employee has experienced any improper employment action in violation of this Policy, such employee will be entitled to appropriate corrective action.

DESCRIPTION OF RESPONSIBILITIES OF COMPLIANCE OFFICER UNDER INSPIRE'S WHISTLEBLOWER POLICY FOR EMPLOYEES WHO REPORT VIOLATIONS OF LAW

The Company will appoint an individual who is responsible for administering the Company's nonretaliation policy for employees who, in good faith, report violations or suspected violations of law (the "Policy"). This person is referred to as the "Compliance Officer." The Compliance Officer will report directly to the Audit Committee of the Company's Board of Directors on matters arising under the Policy and this Description of Responsibilities.

The Compliance Officer's responsibilities under the Policy include:

Administering, implementing and overseeing ongoing compliance under the Policy.
Establishing and administering procedures to assure that employee complaints will be collected, reviewed promptly (including, if appropriate, through an independent investigation into the issues raised), resolved in an appropriate manner, and that documents related to such matters will be retained in accordance with company policy.
Making himself available to discuss with employees any complaints raised or reports filed.
With respect to complaints from employees or non-employees received by Inspire under this Policy relating to its business practices, including its accounting, auditing, and internal auditing controls and disclosure practices, establishing and administering procedures to assure that such complaints will be collected, reviewed promptly, treated or resolved in an appropriate manner, and retained. The Compliance Officer will present any such complaints received by Inspire to the Board of Directors or the Audit Committee of the Board of Directors, as appropriate.
With respect to employee complaints under this Policy relating to Inspire's business practices, including its accounting, auditing, and internal auditing controls and disclosure practices, establishing and administering procedures that enable employees to submit complaints and concerns in a confidential and anonymous manner. The Compliance Officer will present any such complaints received by Inspire to the Board of Directors or the Audit Committee of the Board of Directors, as appropriate.

To ensure that the people responsible for drafting Inspire's public filings and other public disclosures are made aware of complaints involving Inspire's business practices, including its accounting, auditing, and internal auditing controls or disclosure practices made by employees or by others, the Compliance Officer will report to the Board of Directors and the Audit Committee of the Board of Directors as requested and as necessary.

Page last updated: 01-Feb-2008