CODE OF BUSINESS CONDUCT AND ETHICS
MedicalCV, Inc. (the "Company") is committed to conducting its business with the highest standards of integrity and honesty and in compliance with applicable law. This Code of Business Conduct and Ethics (“Code”) is an overarching code of conduct and is intended to confirm our commitment to our values and to promote business conduct that is:
- honest and ethical;
- legal and in compliance with applicable laws, rules and regulations of the places where we conduct business;
- professional, respectful and dignified with respect to the treatment of employees, customers, suppliers and others we encounter in conducting our business;
- designed to produce products and services consistent with the highest standards of quality; and
- excellent in all respects.
This Code is further designed to promote full, fair, accurate, timely, and understandable disclosure in reports and documents, including those that the Company files with, or submits to, the Securities and Exchange Commission and in other public communications made by the Company; and accountability for our actions, including adherence to this Code. This Code is supplemented by other subsidiary policies, such as “MedicalCV’s Guidelines on Interactions with Health Care Professionals”, and standard operating procedures that will be adopted and amended by the Company from time to time to reflect the laws, regulations and mores influencing current Company business practices.
1. Introduction to the Code:
This Code is applicable to all members of the Board of Directors (the “Board”), officers, employees, contractors, and other agents working under the Company’s direction (“Representatives”). Representatives who deal with persons outside the Company are responsible for communicating this Code to them where appropriate.
This Code cannot deal with every situation that may arise. Representatives are strongly encouraged to identify potentially problematic issues and discuss them at an early stage with the Chief Executive Officer (“CEO”), the Chief Financial Officer (“CFO”) (collectively, the CEO and the CFO are referred to herein as the ”Corporate Officers”) or a Board member. In addition, especially where actions are to be taken in new or unclear situations, Representatives should ask themselves:
Do I have all of the facts? What more do I need to know?
Who will this action affect and how?
Would my action inspire trust? Is it ethical, legal and in keeping with the Code and with the values and principles described in the Code?
Would this action cause harm, including to anyone's health or safety?
Are there better alternatives?
Do I need to counsel with or disclose information to anyone inside or outside the Company?
If an applicable law conflicts with this Code, then Representatives must comply with the law. If a local custom or policy is less stringent than this Code, Representatives must, nevertheless, comply with this Code.
All Representatives are responsible for complying with this Code and ensuring that members of their immediate families and households also comply with those matters that are applicable to them. Representatives must avoid not only actual violations, but also the appearance of any improper conduct. It is the responsibility of the Company's directors, officers and managers to model, monitor, and encourage compliance with this Code.
Any Representatives who violate this policy may be subject to disciplinary action, including possible termination of their employment or other relationship with the Company and, if warranted, legal proceedings.
Representatives who know of violations must immediately report the violations, using the mechanisms outlined below. There will be no retaliation against individuals who report violations. Anyone with a question about a potential violation or the interpretation of this policy should contact a Corporate Officer or a member of the Board.
This Code will be reviewed, updated, and regularly communicated to all Representatives as appropriate.
2. Compliance with Laws, Rules and Regulations:
All Representatives must comply at all times with applicable laws, rules and regulations (collectively, "laws"), including employment laws, antitrust laws, securities laws, FDA and other healthcare related laws, and insider trading laws. Representatives must be mindful of the fact that laws of the federal government as well as those of the states and other countries in which the Company operates may be applicable in a given situation. It is the responsibility of each individual who has responsibility in areas affected by these laws to be sufficiently knowledgeable so as to avoid violations of applicable law and to seek advice where appropriate. No individual is ever authorized to violate applicable law, and any question regarding the legal validity of an action should be directed to a Corporate Officer, a member of the Board, or the Company's legal counsel.
3. Relationships with Customers:
Representatives must deal fairly and honestly with the Company’s customers (including potential customers and health care professionals or entities in a position to recommend or influence the purchase or use of Company products) and not take actions that are prohibited by applicable law or ethical standards. The Company intends to follow its own company-established “MedicalCV Guidelines on Interactions with Health Care Professionals” (“Guidelines”) which are largely based upon the standards set forth in the Code of Ethics on Interactions with Health Care Professionals adopted by AdvaMed dated September 3, 2003 ("AdvaMed Code") found at http://www.advamed.org. All Representatives who deal with customers should read and understand the Guidelines.
The Guildeines are intended to provide guidance about appropriate interactions with customers to all employees of MedicalCV Inc. (or any subsidiary) conducting business within the United States to enable the Company to remain in compliance with the FDA’s advertising and promotion regulations and guidance promulgated under and pursuant to the Food, Drug and Cosmetic Act (FDCA), the Anti-kickback Statute and the False Claims Act. Representatives, including contractors conducting business on behalf of MedicalCV, must also comply with these Guidelines. Representatives interacting with customers outside of the United States should refer to the MedicalCV policy applicable to their country for guidance on conducting business in their respective jurisdiction. These policies apply to any expenditure by MedicalCV Representatives, regardless of whether the expenditure is reimbursed by the Company. In other words, any “personal” money given to or spent for the benefit of a MedicalCV customer is considered money given or spent by the Company.
As used in this Code, and the Guidelines, the term “customer” means any individual or organization that purchases, recommends, uses, or prescribes products manufactured or distributed by MedicalCV or an individual who is in a position to determine whether a MedicalCV product is purchased, recommended, used, or prescribed. This can include physicians, nurses, office administrators, purchasing agents, within hospitals, clinical practices, HMOs, GPOs, etc.
The following general standards and principles should at all times guide our interactions with customers:
- MedicalCV will encourage ethical business practices and socially responsible industry conduct, and will not use any unlawful inducement in order to sell, lease, recommend or arrange the sale, lease, or prescription of its products.
- At MedicalCV, we believe that enduring customer relationships are based on integrity and trust. We seek to gain advantage over competitors through superior products, research, engineering, manufacturing, marketing and service, never through improper business practices.
- MedicalCV’s relationships with customers are intended to benefit patient care and enhance the practice of medicine. Interactions should be focused on informing customers and prospective customers about products, providing scientific and educational information, and supporting medical research and education and should not, at any time, entice representatives of customers to place their own personal interests above those of the organizations they represent or the patients who will use or need the Company’s products.
- MedicalCV will not, directly or indirectly, offer or solicit any kind of payments or contributions for the purpose of obtaining, giving, keeping or rewarding business.
Representatives may not make payments to customers or provide meals, travel expenses, entertainment, gifts, or other benefits to customers in exchange for the customer’s agreement to purchase products or services from the Company, or as a reward for the purchase of products or services, nor may Representatives provide benefits to a customer’s friends, relatives, or organizations closely affiliated with the customer in exchange for or as a reward for such business. The Company’s policy on gifts, educational and practice-related terms is set forth in the Section E of the Guidelines.
Providing free or reduced charge products (including discounts, rebates, bundling, samples, and provision of free products or services) to customers may present special issues for the Company. Representatives involved in these or similar transactions must consult with a Corporate Officer before entering into any such transaction. The Company’s policy on discounts, rebates and “bundling” is set forth in Section J of the Guidelines.
Representatives may not provide meals, travel expenses, entertainment, gifts, or other benefits to customers, unless such benefits (1) comply with all applicable laws and ethical standards (including the standards of the recipient’s employer or professional organization); (2) are appropriate as to place, time, nature, and value, and not extravagant or lavish; (3) have a valid business purpose; (4) are infrequent; (5) do not influence or give the appearance of influencing the recipient’s decisions; and (6) comply with the additional requirements set forth below.
Where it is appropriate for the Company to pay expenses associated with certain conferences, trainings, programs, or other meetings, any such meetings must be held in a place and under circumstances that are conducive to the productive and effective exchange of information. Any meals, lodging, or entertainment provided by the Company at such meetings must be modest in value and subordinate in time and focus to the primary business purpose of the meeting.
In no event will any meeting or other expenses or benefits be provided to a customer if any such action violates the customer’s own rules, professional standards, or the law.
The Guidelines address the following other topics related to interactions with health care professionals:
- Training and Education by or on behalf of MedicalCV (Section A)
- Third-party Educational or Professional Meetings (Section B)
- Sales and Promotional Meetings (Section C)
- Scholarships and Educational Funds (Section D)
- Consultants (Section F)
- Provision of Services (Section G)
- Research Grants and Agreements (Section H)
- Patient Referral Support Activities (Section I)
See also, the Company’s Travel and Expense Reimbursement Policy for more detail on payment of customer expenses.
4. Conflicts of Interest:
A conflict of interest occurs when an individual's private interest interferes, or appears to interfere, with the best interest of the Company. A conflict of interest may arise if an individual takes actions or has interests that may make it difficult to perform the Company's work objectively and effectively. Conflicts of interest may also arise if an individual, or a member of his or her family, receives improper personal benefits as a result of his or her position in the Company.
Representatives must seek to avoid any conflict of interest with the Company. Representatives must also seek to avoid all situations that could present an appearance of a conflict of interest.
The Code does not attempt to describe every possible conflict of interest, but examples include:
- Where an employee making a purchasing decision for the Company is a friend or relative of a supplier or has a financial or other interest in the supplier or another relationship with the supplier;
- Where an employee receives gifts or other benefits from a supplier;
- Where an employee is employed by, consults with, or has any financial or other interest in a competitor;
- Where an employee has other business relationships with a competitor or supplier; or
- Where an employee uses Company property or resources for his or her own purposes.
Whenever an individual believes a situation involves, or may reasonably be expected to involve, a conflict of interest with the Company, he or she should promptly advise a Corporate Officer or a member of the Board. The Representative should make such disclosure before any actions are taken that would affect a transaction in which the Company is involved.
In addition, Representatives must notify the Chief Financial Officer in writing prior to accepting any appointment to the board of directors or an advisory board of any other Company whether privately or publicly held.
Since conflicts of interest may not always be obvious, it is important that employees consult with a Corporate Officer or member of the Board concerning any situation raising questions regarding a potential conflict of interest.
5. Confidentiality:
Representatives must not disclose any Company confidential or proprietary information or trade secrets (“Confidential Information”) to anyone, except as specifically authorized by management and as is necessary to conduct the Company’s business, or when disclosure is required by law. Confidential Information includes all non-public information of or about the Company. Confidential Information includes, but is not limited to, the Company’s research and development information, technical know-how, engineering and manufacturing ideas, designs, plans, including business, strategic, financial, sales and marketing plans, programs and data, financial information, such as revenue and profitability information, personnel information such as salaries, benefits and performance information, and customer purchasing histories, preferences, and needs, along with customer information that has been provided to the Company.
Representatives must also protect the confidentiality of any patient information or records they may learn of or have access to in the course of Company business ("Patient Information"). Patient information is protected not only by the policies of the Company, but also by federal and state laws. Any patient information must be secured and protected as required by such federal and state law.
Representatives must actively protect Confidential Information and Patient Information, including by refraining from discussing sensitive matters in non-private places, limiting access to work areas, disposing of documentation in accordance with Company policies and directions, and not removing such information from the Company’s premises except as expressly authorized by the Company. Any request for Confidential Information or Patient Information, including a subpoena or any legal process, should be immediately referred to a Corporate Officer.
6. Use of Company Assets:
Representatives should protect the Company's assets and ensure their efficient use. Theft, carelessness, and waste have a direct impact on the Company's profitability. All Company assets should be used only for legitimate business purposes.
7. Corporate Opportunities:
Representatives have a duty of loyalty to the Company and must use their best efforts to advance the Company’s interests. No Representative may use Company property, information or his or her Company position for personal gain or to compete with the Company, whether directly or indirectly. Opportunities that are discovered through the use of the Company resources or on Company time belong to the Company, and Representatives may not benefit personally from such opportunities, unless the Representative has first notified the Company of the opportunity and has been advised by the Board in writing that the Company has no interest in the opportunity and that the Representative may pursue it.
8. Health and Safety:
The Company is committed to a safe and healthy work environment and to compliance with applicable health and safety laws. All Representatives are expected to conduct their work in a safe manner and in compliance with these laws and Company standards.
9. Professional Work Environment and Relationships:
The Company is committed to promoting a work environment and work-related relationships that are positive, professional, and productive. This includes an environment that is free from harassment of all types and one in which employees treat each other and others who they encounter in connection with Company business with dignity and respect, and in a manner that is appropriate to a professional workplace.
It is the Company’s policy to prohibit discrimination on the basis of race, color, creed, gender, age, national origin, religion, disability, sexual orientation, or any other status protected under applicable law. Harassment based on protected-class status, including racial or sexual harassment, will not be tolerated nor will retaliation against anyone who reports such harassment in good faith. Harassment includes conduct that has the purpose or effect of unreasonably interfering with an individual's work performance or creating an intimidating, hostile, or offensive working environment.
It is the responsibility of employees to treat each other appropriately and of the Corporate Officers and other managers to model and encourage a positive, professional, and productive work environment that is in compliance with this policy and to monitor compliance with this policy.
In addition to adhering to the Code, employees must comply with the policies set forth in the Company’s current version of the Employee Handbook, which is provided to all employees.
10. Fair Competition:
The Company’s competitive advantage must be the result of its performance and not any unethical, illegal, or other unfair business practices. Representatives may not, for example, use proprietary or Confidential Information of another company, present false or misleading information, or offer or receive any payments prohibited by law or this Code. Representatives must comply with applicable anti-trust and competition laws. These laws are complex and vary from state to state. Among other things, however, Representatives may not engage in discussions or develop agreements, plans, or understandings with competitors that could be considered anti-competitive, including any regarding pricing, allocating territories, or setting production limits. The Company also prohibits illegal tying and pricing discrimination, and other conduct prohibited by law. Representatives should seek advice from a Corporate Officer or the Company's legal counsel when any questions concerning competitive practices arise.
11. Scientific Research and Development:
The research, development and testing of the Company's products is key to its success. Such work must be conducted with rigor and attention to detail and must strictly comply with professional standards, privacy requirements, research standards and all applicable laws and regulations. Recorded data must be completely accurate. No false or inaccurate data should ever be recorded in the course of research, development, or testing of the Company’s products.
12. Insider Trading:
Representatives who have material information about the Company that has not been released to the public may not disclose the information to others or use that information for securities trading purposes or any other purpose except to conduct Company business. Any employee who has questions about whether information is or is not public or material must consult with a Corporate Officer before using, trading on, or disclosing any such information. In order to assist the Company in its efforts to ensure compliance with laws against insider trading, the Company has adopted an Insider Trading Policy. If you have any questions regarding this policy, please consult our Chief Financial Officer.
13. Public and Media Contacts:
Contact regarding Company business with news media, securities, and other analysts, attorneys and members of the general public must be made only through the direction of a Corporate Officer. Any inquiries should be directed to a Corporate Officer immediately and Representatives should not comment on Company business. Any summons, complaint, subpoena or other legal document, should immediately be sent to a Corporate Officer. If an inquiry is made by a governmental entity, a Corporate Officer should be notified so that the Company may respond promptly and appropriately.
14. Political Contributions/Payments to Governmental Officials:
The Company encourages private engagement in the political process. However, no political contributions, including any use of Company property or other resources, will be made by the Company, except to the extent contributions may be made in connection with a political action committee that is authorized by law. Moreover, no payment (including money, gifts, property, or services) will be made by the Company to any government officials that could be interpreted in any way as an effort to influence a government official's act or decision.
15. Payments to Government Personnel:
The Company strictly prohibits making illegal payments to government officials of any country. The U.S. Foreign Corrupt Practices Act (“FCPA”) prohibits giving anything of value, directly or indirectly, to officials of foreign governments or foreign political candidates in order to obtain or retain business. Additionally, a number of U.S. laws and regulations address when U.S. government personnel may or may not accept business gratuities. In addition to violating Company’s policies, the promise, offer, or delivery of a gift, favor or other gratuity to a government official or employee in violation of these rules could constitute a criminal offense. State and local governments, as well as foreign governments, may have similar rules. Questions and/or requests for interpretations should be reviewed and all actions should be pre-approved by the Company's legal counsel.
16. Anti-Boycott Laws:
U.S. law prohibits taking actions or entering into agreements that have the effect of furthering any unsanctioned boycott of a country that is friendly to the United States. This prohibition applies to individuals and companies located in the United States, U.S. citizens and permanent residents anywhere in the world, and most activities of U.S. subsidiaries abroad. In general, the following actions, as well as any agreements to take such actions, are prohibited:
- refusing to do business with other persons or companies because of their nationality;
- discriminating in employment practices;
- furnishing information on the race, religion, gender or national origin of any U.S. person;
- furnishing information about any person’s affiliations or business relationships with a boycotted country or with any person believed to be blacklisted by a boycotting country; or
- utilizing letters of credit that contain prohibited boycott provisions.
The Company is required by law to report any request to take action, or any attempt to reach agreement on such action, that would violate these prohibitions. Employees should be familiar with the policies of their business unit that are designed to ensure compliance with these laws. Employees should also be aware that boycott-related requests can be subtle and indirect. Questions and/or requests for interpretations should be reviewed and all actions should be pre-approved by the Company's legal counsel.
17. U.S. Embargoes and Sanctions:
The Company must comply fully with U.S. economic sanctions and embargoes restricting U.S. persons, corporations, and foreign subsidiaries from doing business with certain countries, organizations, groups and individuals, as well as individuals and entities acting on their behalf. U.S. economic sanctions may restrict investments in certain targeted countries or may restrict trading in goods, technology, or services with such countries. U.S. persons may not approve or facilitate transactions by a third party that the U.S. person could not do directly. Questions and/or requests for interpretations should be reviewed and all actions should be pre-approved by the Company's legal counsel.
18. Full, Fair, Accurate, Timely and Understandable Disclosure:
Records and accounts must be complete, accurate, not misleading, and kept in accordance with applicable accounting standards and laws. This standard applies to all Representatives with responsibility for maintaining records and accounts of the Company.
As employees, the Company's Chief Executive Officer (CEO) and Chief Financial Officer (CFO) are bound by the terms of this policy statement, but also are subject to additional policies set forth below.
It is the responsibility of the CEO and CFO to assure full, fair, accurate, timely, and understandable disclosure in the periodic reports required to be filed by the Company with the Securities and Exchange Commission. It is the responsibility of the CEO and CFO to promptly bring to the attention of the Company's Board any material information of which he or she may become aware that affects the disclosures made by the Company in its public filings or otherwise assist the Company in fulfilling its disclosure responsibilities.
The CEO and CFO shall promptly bring to the attention of the Audit Committee of the Board any information he or she may have concerning significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data. Additionally, the CEO and CFO shall promptly bring to the attention of the Audit Committee of the Board any information he or she may have concerning any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's financial reporting, disclosures, or internal controls.
19. Detecting and Reporting Violations:
As noted in Section 1 above, this Code cannot cover every situation. Representatives are encouraged to consult supervisors, managers or other appropriate personnel when in doubt about the best course of action in a particular situation or to otherwise obtain assistance in understanding or interpreting these standards. Moreover, managers should be familiar with the types of violations that might occur in their areas of responsibility and must establish standards and procedures designed to prevent and detect such violations.
The Company encourages the reporting of any actual or suspected violations of law or this Code as follows:
Any employee, contractor or other agent of the Company, including any manager, who is aware of an actual or suspected violation of law or this Code must report the violation immediately to a Corporate Officer or a member of the Board, or to the third party service engaged by the Company, Allegiance Corporation's "Silent Whistle" program ("Allegiance").
Reports or complaints concerning any questionable accounting or auditing matters may be submitted directly to the Audit Committee in accordance with the Company's Whistleblower Policy as set forth in its Employee Resource Guide and the Audit Committee’s Procedures for Whistleblower Complaints adopted December 5, 2007 as amended from time to time.
Although the Company encourages the reporter to identify himself or herself, a person making a report may choose to identify himself or herself or to remain anonymous. Please be aware that if the reporter does not identify himself or herself, the Company may be less able to obtain necessary details to investigate and act on a report.
A Corporate Officer or a member of the Board learning of an actual or suspected violation of the Code (whether through a report from another, or through direct observation) must promptly report such violation to the Chair of the Audit Committee of the Board, with the exception of those matters which are strictly human resources issues and do not involve allegations of illegality, fraud, accounting or audit issues or other violations of this Code. Such human resources issues will initially be addressed internally. Reports made to Allegiance will similarly be reported to the Chair of the Audit Committee or to Human Resources as appropriate.
Corporate Officers must promptly bring to the attention of the Audit Committee of the Board and the Company's legal counsel any information he or she may have concerning evidence of a material violation of the securities or other laws, rules or regulations applicable to the Company and the operation of its business, by the Company or any agent thereof.
The Company strictly prohibits retaliation against employees for reports made in good faith. Anyone who retaliates against an employee(s) for reporting actual or suspected violations will be subject to appropriate disciplinary action up to, and including, termination.
20. Investigation and Action:
The Audit Committee, in consultation with the Company's legal counsel, will determine the procedure for conducting an appropriate and prompt investigation and will inform the Board of such investigation. Representatives are expected to fully cooperate with all such investigations. The results of the investigation will be presented to the Board or its designee.
The Board or its designee shall determine, or designate appropriate persons to determine, appropriate actions to be taken in the event of violations of the Code, including by the Company’s CEO and CFO.
Such actions shall be reasonably designed to deter and prevent future wrongdoing and to promote accountability for adherence to the Code, and may include disciplinary action up to, and including, termination of the Representative's employment or other relationship with the Company. The Board retains the discretion to determine an appropriate action and may consider such factors as it deems appropriate, including the nature, severity, and number of the violation(s), the intentional or inadvertent nature of the action, the extent to which the individual knew or should have known that the action violated the Code, and any past violations by the individual.
21. Waivers:
The Company will disclose the nature of any amendment to this Code that applies to its CEO, CFO, principal accounting officer, or persons performing similar functions and the nature of any waiver, including an implicit waiver, from a provision of the Code granted by the Company to one of the above-specified officers, the name of the person to whom the Company granted the waiver and the date of the waiver. This disclosure will be posted to the Company’s website.
