EXHIBIT 99.1
SPAN-AMERICA MEDICAL SYSTEMS, INC.
CODE OF CONDUCT
INTRODUCTION
Span-America Medical Systems, Inc. (the "Company") is committed to a
policy of adhering to the highest ethical standards in the conduct of its
business operations. Although the Company has confidence in the integrity and
loyalty of all of its employees and their adherence to the highest public
awareness of corporate behavior, a code of conduct reaffirming the Company's
position is desirable.
This statement of business ethics and principles shall serve as a code
of conduct for all of the Company's directors, officers and employees. While it
is not intended that this statement cover every situation that might arise, it
should be well understood that the Company places great emphasis on sound
business ethics founded upon honesty, fairness and adherence to the law, and
that any questionable practice should be weighed against these principles.
Public confidence and trust is of the utmost importance to our Company and it is
vitally important that this confidence and trust never be lost or compromised.
COMPLIANCE WITH LAWS AND REGULATIONS
It is the intent of the Company to operate in strict compliance with
all laws and regulations that may be applicable to its business operations.
Since some laws and regulations appear ambiguous and difficult to interpret,
employees should seek advice through the Human Resource Department or their
immediate supervisor whenever necessary to comply fully with the Company's
policy to observe and follow all laws and regulations.
CONFLICTS OF INTEREST
It is the policy of the Company that, without prior disclosure to and
approval from the Company's Board of Directors at no time shall a director,
officer or employee of the Company have any position with or substantial
interest in any other business enterprise, the existence of which would
conflict, or might reasonably be assumed to conflict, with the proper
performance of one's Company duties and responsibilities, or which might tend to
affect one's independence of judgment with respect to transactions between the
Company and such other business enterprise.
There will be no exceptions and full compliance with this policy is
expected.
PURCHASES AND SALES OF EQUIPMENT, PROPERTY, SERVICES, ETC.
Purchases and sales of equipment, supplies, property and
services by the Company are to be made on the basis of merit and
without favoritism. All purchases should be carried out by obtaining
competitive bids from at least three different vendors whenever
possible and practicable. Bids should be obtained for ongoing purchases
on a yearly basis or at the end of contract terms. Bids should be taken
for individual jobs done on a one-time basis when practicable.
OUTSIDE FEES
No fees, commissions or other pecuniary benefits should be
accepted, either directly or indirectly from any source, except the
Company, for arranging or effecting any purchase or sale of property,
services or any investment by the Company.
TRANSACTIONS WITH AFFILIATES AND INTERLOCKING RELATIONSHIPS
As a general rule, the Company should not enter into any
material transaction with its own directors, employees or with
enterprises in which they have material interests. Prior to any such
material transaction, a full disclosure should be made to prevent any
potential conflict of interest.
To fully comply with the applicable statutes in these
instances, any director or employee who is interested in a transaction
either personally or through an interlocking relationship, cannot
participate in the transaction on behalf of the Company, nor
participate in that portion of any Board meeting or its committee at
which the transaction is being considered.
AWARDING CONTRACTS TO WORK TO RELATIVES AND/OR BUSINESS ASSOCIATES
Any personal responsible for awarding contracts or work must
disclose to the Chief Financial Officer of the Company ("CFO") any
contract or work awarded to a relative and/or business associate. A
relative is to include spouses, parents, children, brothers, sisters,
aunts, uncles, cousins and step or in-law relations. A business
associate is any person(s) with whom you have an investment or interest
in a business or property of over $5,000.
This is not to preclude any relative and/or business associate
from receiving a contract or work from the Company, if the best
interest of the Company is served. This is to ensure that the Company
and the individual responsible for the awarding of the contract or work
are protected from even the appearance of any conflict of interest.
OUTSIDE ACTIVITIES AND INTERESTS
The Company encourages its personnel to take an active part in civic,
charitable, cultural and educational activities. However, before accepting any
outside employment or obligations which might compete or conflict with the
interests of the Company, employees should first secure the approval of the
President or a Vice President of their respective department. No person shall
engage in any outside employment or consulting work which will encroach upon
one's performance as a full-time employee of the Company. No person shall own or
acquire property or other business interests if their operation or value would
create a conflict of interest with the Company. It is also impermissible to
divert to oneself or to others any business opportunity in which the Company
might become involved. Any material or substantial interests one has in any
other corporation or incorporated enterprise, which engages or may engage in
transactions with the Company, should be reported to the CFO.
GIFTS AND ENTERTAINMENT
The receiving of substantial gifts, favors, discounts, entertainment,
hospitality or other gratuities involving persons doing business or seeking to
do business with the Company is discouraged. Many vendors have budgets that
allow them to pay for trips, golf tournaments, etc., for their customers. Every
effort should be made for the Company to receive a cash payment from these
vendors so that the Company has the ability to administer these funds for the
best use of the Company. However, if any gift with a value over $250 is
accepted, it should be reported to the CFO. The decision to receive substantial
gifts, favors, discounts, entertainment, hospitality or other gratuities made
payable to the Company for the benefit of the Company should be approved by the
Chairman of the Board and/or President with consent from the Board of Directors.
It is not always easy to discern between what is and is not proper to
accept from a customer or business associate. Each decision has to be made in
view of the total circumstances and in light of whether a public disclosure of
the facts would prove embarrassing or detrimental to the Company.
PROHIBITION ON PERSONAL LOANS TO DIRECTORS AND EXECUTIVE OFFICERS
The securities laws and Company policy prohibit the Company from
extending any personal loan or making any other extension of credit to the
Company's executive officers and directors, guaranteeing any indebtedness of its
executive officers or directors, or arranging for any other party to make a loan
or extend credit in any form to any of the Company's executive officers or
directors.
Certain transactions between the Company and its executive officers and
directors, such as advancement of job relocation, travel, and other expenses by
the Company to its executive officers and directors and split-dollar life
insurance policies issued to executive officers and directors may violate the
securities laws. Therefore, Company policy prohibits these transactions unless
they are approved in advance by the Company's legal counsel.
CORPORATE HOSPITALITY OF PUBLIC OFFICIALS
Any acts of hospitality directed toward government officials on a
local, state or national level should be so limited in nature and scope as to
avoid the appearance of any impropriety. The acts must be viewed from the
perspective of whether there is any possibility that the action will impugn the
reputation of the public official or the Company. It should be assumed that all
such acts would later become a matter of public knowledge.
PROTECTION OF CONFIDENTIAL INFORMATION
It is Company policy that employees respect the confidential nature of
information coming into their hands by virtue of their employment position. This
applies not only to access to information about business or technology, but also
to information accumulated on applicants, personnel and others contacted in the
Company's operations. Not only is such information not to be discussed while
employed by the Company, but also it is to remain confidential should an
employee's relationship with the Company be terminated.
ANTI-TRUST AND TRADE REGULATION
The Company has a firm commitment to prevent any violations of
anti-trust and trade regulation law. The basic purpose of the legislation in
this area is to prevent any unfair, restrictive or collusive practices. The laws
specifically forbid: (1) joint action which constitutes contract, combination
and conspiracy in restraint of trade; (2) action by any individual or company
that monopolizes or tends to monopolize or restrain trade; and, (3) price
discrimination, and exclusive dealing and tie-in arrangements.
Should there be some question concerning an action which is about to be
taken and which might involve violation of any anti-trust or trade regulation
law, one should consult first with the CFO.
PROPER ACCOUNTING AND INTERNAL CONTROLS
The Company expects and demands compliance with accepted accounting
rules and controls at all times. The Company's books, records, and accounts must
be created and maintained so that they at all times accurately and fairly
reflect all transactions involving the receipt or disposition of Company assets.
Any attempt to create false or misleading records or cause others to create
false or misleading records is forbidden. No undisclosed funds or accounts shall
be established for any purpose. All assets of the Company, in particular bank
accounts in which Company cash is on deposit, shall be recorded in the regular
books of the Company. No entries may be made in the Company's books or records
that intentionally conceal or disguise the true nature of any Company
transaction.
It is important that financial statements and related disclosures made
by the Company be free of material errors. It is the policy of the Company to
fully and fairly disclose the financial condition of the Company in compliance
with all applicable accounting principles, laws, rules, and regulations. The
integrity of the Company's financial statements and internal controls is vital
to its success. Compliance with the Company's system of internal accounting
controls is required.
No information should be concealed from the Company's independent
auditors. Company policy prohibits any employee from knowingly making or causing
others to make a materially misleading, incomplete, or false statement to an
accountant, an attorney, or any other person in connection with an audit or any
filing with any governmental or regulatory entity (such as NASDAQ or the
Securities and Exchange Commission). You must not take any action to
fraudulently influence, coerce, manipulate, or mislead any independent public or
certified accountant engaged in the performance of an audit of the Company's
financial statements for the purpose of rendering such financial statements
materially misleading. You must not omit or cause others to omit any material
fact that is necessary to prevent a statement made in connection with an audit,
filing, or examination of the Company's financial statements from being
misleading.
If you have information or knowledge of any false or misleading entry
on the books of the Company, any attempt to influence, coerce, manipulate, or
mislead an auditor, or any other questionable accounting or auditing matter or
internal control matter, you must promptly report the matter to the Audit
Committee. Reports may be made anonymously and should be made as described below
under the heading "Discovery and Reporting of Violations."
DOCUMENT RETENTION AND MAINTENANCE
Documents created in the course of conducting the Company's business
should be retained in accordance with applicable law and Company policy. You
should ask the Company's CFO if you have any questions regarding document
retention.
The Company prohibits employees and directors from altering,
destroying, mutilating, concealing, covering up, falsifying, or making a false
entry in any record, document, or other object, or attempting to do so with the
intent of impairing the object's integrity or availability for use in an
official proceeding or impeding, obstructing, or influencing the investigation
or proper administration of any matter within the jurisdiction of any
governmental agency or bankruptcy court.
UNAUTHORIZED TRANSACTIONS
At no time shall a director, officer or employee of the Company use the
Company name or influence to purchase goods or services for their personal
benefit or obtain special pricing or discounts. In addition, no director,
officer or employee shall take advantage of the Company personnel, equipment or
supplies for their personal use or benefit.
FULL COMMUNICATION WITH MANAGEMENT
Senior management personnel must be informed at all times of matters
that might be considered sensitive in preserving the Company's reputation.
Concealing information from management is incompatible with Company policies and
such conduct will not be tolerated.
SECURITIES LAWS
The requirements of the federal securities laws are of utmost concern
to the Company and its employees. It is the Company's policy that all
disclosures to the investing public shall be truthful, timely and not
misleading. This includes, but is not limited to, annual reports, press
releases, reports to analysts or securities dealers, and letters to
shareholders. The Company recognizes that the investing public is entitled to
have truthful and full information about any company, and that it is unfair for
a person possessing material information about a company to trade in that
company's securities when that information is not known to other potential
traders or investors. Therefore, employees may not trade in or pledge any
securities of the Company while in possession of material, non-public
information. Information is "material" if it is important enough to affect
someone's decision to buy, sell or hold the Company's securities. Company
employees must not disclose material inside information to anyone, except to
Company officers whose positions require them to know, until the information has
been released publicly.
EQUAL OPPORTUNITY
The Company's practices and philosophy support and foster its
commitment to provide equal employment opportunities in all job classifications
without regard to race, color, sex, religion, national origin, age, veteran
status, disability or marital status in accordance with federal, state and local
laws, rules and regulations. This policy relates to all phases of employment,
including but not limited to recruitment, employment, placement, promotion,
transfer, recall, termination, rates of pay and other forms of compensation and
benefits, selection for training, tuition reimbursement and social and
recreational programs.
It is the Company's policy to comply completely with all applicable
federal, state and local employment laws. The Company is committed to a policy
of offering equal employment opportunities in every aspect of employment and
seeks to employ and promote the most capable and promising individuals
available.
COMPLIANCE WITH POLICY
To help assure that all directors, officers and employees of the
Company follow these policies and continue to fulfill their responsibilities to
consumers, stockholders and society, each employee is expected to be thoroughly
familiar with the provisions outlined herein. This policy statement should be
referred to at least annually and more often if instances arise where there
appears to be some questionable practice or procedure.
The Company is continually monitoring areas of social and corporate
concern, and will be relying heavily upon its personnel to maintain and ensure
strict compliance with the highest corporate ethical standards.
FAILURE TO COMPLY; WAIVER
A failure by any employee or director to comply with the laws or
regulations governing the Company's business or this Code of Conduct may result
in disciplinary action, up to and including immediate termination of employment
and, if warranted, may subject the employee or director to legal proceedings.
The Company is committed to ensuring that enforcement of this Code of Conduct is
prompt and consistent. If any employee of the Company, other than the President
or any Vice President, is alleged to have violated this Code of Conduct, the CFO
is responsible for determining whether an investigation regarding the alleged
misconduct should be undertaken, overseeing any such investigation, determining
whether any violation occurred, and determining what disciplinary action, if
any, is warranted. In fulfilling these responsibilities, the CFO may consult
with such other members of management and employees, including members of the
Company's Human Resources department, and outside advisors as he shall deem
necessary to ensure that the process by which violations are determined is fair
and that enforcement of this Code of Conduct is prompt and consistent. The
Company's audit committee shall monitor the actions taken by the CFO to enforce
this Code of Conduct.
If any director or the President or any Vice President is alleged to
have violated this Code of Conduct, the Company's audit committee is responsible
for determining whether an investigation regarding the alleged misconduct should
be undertaken, overseeing any such investigation, determining whether any
violation occurred, and determining what action, if any, should be taken by the
Company. In fulfilling these responsibilities, the Audit Committee may consult
with such members of management and Company employees, including members of the
Company's Human Resources department, and outside advisors as it shall deem
necessary to ensure that the process by which violations are determined is fair
and that enforcement of this Code of Conduct is prompt and consistent.
Only the Board of Directors may waive application of any part of this
Code of Conduct to a director, the President, any Vice President, or any other
executive officer of the Company. In the event that a waiver is granted to any
of these persons, the Company will disclose such waiver promptly to the
Company's shareholders, along with the reasons for the waiver. Only the Board,
the CEO, or the CFO may waive application of any provision of this Code of
Conduct to any other Company employee. A waiver will be granted only if a
determination is made that the waiver is appropriate and after implementation of
any controls that are necessary or appropriate to protect the Company.
DISCOVERY AND REPORTING OF VIOLATIONS
The Company's employees are critical to maintaining an effective
compliance system. In addition to your personal responsibility for following the
standards outlined in this Code of Conduct, you are responsible for raising
concerns about risks to the Company. If you believe that another employee or a
director has violated, or may violate, a law, rule, regulation, or this Code of
Conduct or if you are instructed to perform an action that you believe is in
violation of a law, rule, regulation, or this Code of Conduct, you must report
that information immediately in the manner described above under the heading
"Failure to Comply; Waiver." Whenever you are in doubt, it is best to raise your
concern. All communications, including your calls, notes, and/or e-mails will be
appropriately investigated and kept as confidential as possible.
A separate reporting procedure is available for the confidential and
anonymous submission of concerns that you may have regarding questionable
accounting or auditing matters or internal controls. Any such concerns may be
reported to the Audit Committee of the Board of Directors by sending a written
communication to the Audit Committee or any one or more of the members of the
Audit Committee by mail, c/o Director of Human Resources, Span-America Medical
Systems, Inc., 70 Commerce Center, Greenville, South Carolina 29615 or by fax to
864-288-8692. YOU DO NOT HAVE TO GIVE YOUR NAME. The Audit Committee will
oversee any investigation of matters reported through this procedure. You may
also use this procedure to make a report confidentially and anonymously if you
believe that any executive officer of the Company has violated, or may violate,
a rule, regulation, or this Code of Conduct or if you are instructed by an
executive officer of the Company to perform any action that you believe is in
violation of a law, rule, regulation, or this Code of Conduct.
No employee acting in good faith will be subject to discipline for
providing information regarding suspected violations of law, Company policy, or
this Code of Conduct to the CFO or Audit Committee pursuant to the procedures
set forth in this Code of Conduct, to any other employee of the Company, or to
any governmental authority. Company policy prohibits any director, officer, or
employee from retaliating or taking any harmful action against any Company
employee for providing truthful information regarding a suspected violation of
law to any governmental authority or for cooperating or assisting in any
investigation or providing testimony in any governmental proceeding.
STATEMENT OF ACKNOWLEDGMENT
I have read the Company's Code of Conduct, consisting of eight pages,
and have retained a copy for my future guidance. It is my understanding that
this Code is only a guide to possible conflicts of interest and that all
potential conflicts and business ethics problems are to be reported to the CFO
whether or not they are of the type discussed in the Code.
I understand that I am to advise the CFO in writing immediately if any
situation arises involving a possible conflict of interest or unethical business
action. I understand that I am to advise the Audit Committee of the Company if I
have any concerns regarding questionable accounting or auditing matters or
internal controls. I further understand that I am to advise the Audit Committee
of the Company if I believe that any executive officer of the Company, such as
the CEO or CFO, has violated or may have violated this Code of Conduct or any
other applicable law.
I currently have no personal interests, nor does any member of my
immediate family have personal interests, other than those set forth below,
which may conflict with the interests of the Company. In addition, I release the
Company from any liability in the event an investigation is conducted relative
to any violation of this policy.
Disclosures (If none, state none):
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Signature: Date:
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Printed Name: Position:
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THIS PAGE IS TO BE COMPLETED IMMEDIATELY AND RETURNED TO THE ATTENTION
OF .
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LIST ANY RELATIVE (AS DEFINED IN PARAGRAPH D ON PAGE 2) THAT IS CURRENTLY
EMPLOYED BY THE COMPANY AND THE DEPARTMENT IN WHICH THEY ARE EMPLOYED.
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LIST ANY RELATIVE (AS DEFINED IN PARAGRAPH D ON PAGE 2) THAT MAY BE EMPLOYED BY
A VENDOR DOING BUSINESS WITH THE COMPANY AND THE COMPANY BY WHICH THEY ARE
EMPLOYED.
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RETURN THIS SHEET WITH THE "STATEMENT OF ACKNOWLEDGEMENT" FORM TO
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