OCULUS INNOVATIVE SCIENCES, INC.
of Business Conduct
Effective August 3, 2006
It is the general policy of Oculus Innovative Sciences,
Inc. (the “Company”) to conduct its business
activities and transactions with the highest level
of integrity and ethical standards and in accordance
with all applicable laws. In carrying out this policy,
the Company has adopted the following Code of Business
Conduct (the “Code”).
This Code covers a wide range of
business practices and procedures. It does not cover
every issue that may arise, but it sets out basic principles
to guide all employees, officers and directors of the
Company. All such persons must conduct themselves accordingly
and seek to avoid even the appearance of improper behavior.
Those who violate the standards in this Code or who
fail to cooperate with management directions given
to effect compliance with this Code may be subject
to disciplinary action, possibly including termination
of employment. For guidance with respect to issues
not addressed in this Code, employees should follow
the Company’s internal policies and procedures.
If you have any questions regarding
this Code, you should address these questions to your
supervisor, or to the general counsel or other person
identified by the Company as its compliance officer
Basic Principles and Practices
Compliance with Laws, Rules and Regulations
Company policy requires that our business activities
comply with both the letter and the spirit of all applicable
laws, rules and regulations. Although not all employees
are expected to know the details of these laws, it
is important to know enough to determine when to seek
advice from supervisors, managers or other appropriate
The Company’s products are
subject to a variety of laws and regulations that govern
healthcare and environmental products. Every employee
is responsible for compliance with product regulation
requirements, including marketing approvals, conduct
of clinical studies, good manufacturing practices and
standards, labeling and advertising/promotion requirements.
Employees who come into possession of non-public Company
information must safeguard the information from the
public and not intentionally or inadvertently communicate
it to any person (including family members and friends)
unless the person has a need to know the information
for legitimate, Company-related reasons. This duty
of confidentiality is important both as to the Company’s
competitive position and with respect to the securities
laws applicable to the Company if it becomes a public
company. Confidential information cannot be disclosed
by any employee to any third party unless the third
party has signed a nondisclosure agreement approved
by the Company’s management, and should be divulged
only to persons having a need to know the information
in order to carry out their job responsibilities. You
must also abide by any specific agreements, such as
an Employment, Confidential Information, Invention
Assignment and Arbitration Agreement, regarding confidentiality
between you and the Company.
Consistent with the foregoing, all
employees should be discreet with respect to confidential
information about the Company and not discuss it in
Confidential information related
to the Company can include a variety of materials and
information regarding the ongoing operations and plans
of the Company, and also includes information that
customers or collaborators have provided to us. For
example, confidential information can include product
development plans, clinical and research results, regulatory
matters, patents, trademarks, copyrights, laboratory
processes, product information, information regarding
the financial health of the Company, salary and personnel
information and marketing and sales plans.
Conflicts of Interest
A “conflict of interest” arises when a
person’s loyalties or actions are divided between
the interests of the Company and those of another,
such as a competitor, supplier or customer, or personal
business. A conflict of interest can arise when an
employee takes actions or has interests that may make
it difficult to perform his or her work objectively
and effectively. A conflict of interest may also arise
when an individual, or members of his or her family,
receives an improper personal benefit as a result of
his or her position in, or relationship with, the Company.
Moreover, the appearance of a conflict of interest
alone can adversely affect the Company and its relations
with customers, suppliers and employees.
Employees are expected to use good
judgment, to adhere to high ethical standards and to
avoid situations that create an actual or potential
conflict of interest. It is almost always a conflict
of interest for employees to work simultaneously for
a competitor, customer or supplier. In this regard,
Company personnel shall not have any undisclosed financial
interest in any competitor, supplier, customer, or
strategic partner if that interest would create a conflict
of interest with the Company. If there is such an interest,
the employee should disclose the nature of the interest
to the human resources department or the general counsel,
as appropriate; provided, however, that employees may
maintain small investments in publicly held companies
in which an employee has no influence or control.
A conflict of interest can also
arise with respect to employment of relatives and persons
with close personal relationships. If an employee or
someone with whom an employee has a close relationship
(e.g., a family member or close companion) has a financial
or employment relationship with an actual or potential
competitor, supplier or customer, the employee must
disclose this fact in writing to the Compliance Officer.
The Company may take any action that it deems necessary
in its sole discretion to avoid or remedy an actual,
prospective or perceived conflict of interest, including
a reassignment of some or all of the employee’s
duties or change of the employee’s position.
A conflict of interest may not always
be clear; therefore, you should consult with higher
levels of management if you have any questions. Any
employee who becomes aware of a conflict or a potential
conflict should bring it to the attention of the Compliance
You must not take for yourself personally opportunities
that are discovered through the use of Company property
or confidential information or your position without
the consent of the Board or its designees. No employee
may use corporate property, information or their
position for improper personal gain, and no employee
may compete with the Company directly or indirectly
while they are engaged or employed by the Company.
You owe a duty to the Company to advance its legitimate
interests when the opportunity to do so arises.
Although the prosperity of our Company depends on our
ability to outperform our competitors, the Company
is committed to achieving success by fair and ethical
means. We seek to maintain a reputation for honesty
and fair dealing among our competitors and the public
alike. In light of this aim, dishonest, unethical
or illegal business practices are prohibited. An
exhaustive list of unethical practices cannot be
provided. Instead, the Company relies on the judgment
of each individual to avoid such practices. Furthermore,
each employee should endeavor to deal fairly with
the Company’s customers, suppliers, competitors
and employees. No employee should take unfair advantage
of anyone through manipulation, concealment, abuse
of privileged information, misrepresentation of material
facts, or any other unfair business practice.
Company personnel are prohibited
from receiving a payment or anything of value from
a vendor or other entities/individuals in the private
sector in exchange for a purchasing decision, subject
to exception for gifts or nominal value (e.g. non-lavish
meals, marketing materials, t-shirts, caps, etc.).
Donations, Gifts, Payments to Customers and Physicians
The U.S. and most other countries have laws and regulations
that govern the Company’s provision of donations,
gifts, or payments to customers or physicians. The
Company’s policy is that its employees will
comply with all such laws and regulations. The Company
will not pay or otherwise remunerate a physician
or customer in exchange for ordering, prescribing,
purchasing, or recommending the Company’s products.
All business courtesies such as meals, transportation,
and entertainment provided to a physician or customer
must be modest in amount and related to a legitimate
business purpose. Donations to customers or organizations
closely affiliated with customers shall entail a
benefit to society and be made to promote better
health care, demonstrate good corporate leadership,
or serve a genuine educational function. The Company
may enter into legitimate agreements to compensate
customers and physicians for consulting, research,
or other services rendered, and reasonable costs
incurred, where the services have value to the Company
and are provided for fair market value. All such
agreements must be in writing.
Advertising and Promotion
The advertising and promotion of the Company’s
products are subject to extensive regulation. For example,
companies may not promote medical device or drug products
or product indications that are not approved by regulatory
authorities. These regulations also require that you
represent the Company’s products in a manner
consistent with applicable labeling and market approvals.
It is the Company’s policy to promote and market
its products in a lawful and truthful manner in accordance
with the applicable laws and regulations. To help ensure
compliance in this area, all promotional materials
must be reviewed and approved by the appropriate internal
departments prior to distribution.
Health and Safety
The Company strives to provide a safe and healthy work environment. All employees
have responsibility for maintaining a safe and healthy workplace for all
other employees by following the Company’s safety and health rules,
policies and practices and reporting accidents, injuries and unsafe equipment,
practices or conditions.
You are not permitted to use, share or disseminate
confidential information for stock trading purposes
or for any other purpose except the conduct of our
business. To use confidential information for personal
financial benefit or to “tip” others
who might make an investment decision on the basis
of this information is not only unethical but also
Payments to Government Personnel
The United States Foreign Corrupt Practices Act prohibits
giving anything of value, directly or indirectly,
to officials of foreign governments or foreign political
candidates in order to obtain or retain business.
It is strictly prohibited to make illegal payments
to government officials of any country.
In addition, the United States government
has a number of laws and regulations regarding business
gratuities which may be accepted by U.S. government
personnel. The promise, offer or delivery to an official
or employee of the U.S. government of a gift, favor,
or other gratuity in violation of these rules would
not only violate Company policy but could also be a
criminal offense. State and local governments, as well
as foreign governments, may have similar rules.
Protection and Proper Use of Company Assets
No secret or unrecorded fund of Company assets or cash
shall be established or maintained for any purpose.
Anyone spending or obligating Company funds should
be certain that the transaction is properly and appropriately
documented and that the Company receives appropriate
value in return.
All employees should endeavor to
protect the Company’s
assets and ensure their efficient use. Theft, carelessness
and waste have a direct impact on the Company’s
profitability. Any suspected incident of fraud or theft
should be immediately reported to the Compliance Officer
for investigation. Company equipment should not be
used for non-Company business, though incidental personal
use may be permitted.
The Company requires honest and accurate recording
and reporting of information in order to make responsible
business decisions. If you use a business expense
account, expenses to be reimbursed must be documented
and recorded accurately. If you are not sure whether
an expense is appropriate, ask your supervisor.
All of the Company’s books,
records, accounts and financial statements must be
maintained in reasonable detail, must appropriately
reflect the Company’s transactions and must conform
both to applicable legal requirements and to the Company’s
system of internal controls. All Company business data,
records and reports must be prepared truthfully and
accurately. The Company’s business records must
be maintained for the periods specified in the Company’s
applicable record retention policies.
Employees who contribute to or prepare
the Company’s public filings, submissions or
communications should do so in accordance with the
- All accounting records, as well
as reports produced from those records, must be prepared
in accordance with the laws of each applicable jurisdiction.
records must fairly and accurately reflect the transactions
or occurrences to which they relate.
- All records
must fairly and accurately reflect, in reasonable
detail, the Company’s assets,
liabilities, revenues and expenses.
- The Company’s
accounting records must not contain any false or
intentionally misleading entries.
- No transactions
should be intentionally misclassified as to accounts,
departments or accounting periods.
- All transactions
must be supported by accurate documentation in reasonable
detail and recorded in the proper account and in
the proper accounting period.
- No information should
be concealed from internal auditors or independent
- Compliance with the Company’s system
of internal accounting controls is required.
Business records and communications
often become public, and employees should avoid exaggeration,
derogatory remarks, guesswork or inappropriate characterizations
of people and companies that can be misunderstood.
This applies equally to e-mail, internal memos and
All employees must sign a statement
certifying that they have read and understand this
Code and are aware of the consequences of non-compliance
with it; such certification shall be renewed annually.
Violations of this Code or of any direction given by
management in order to effect the provisions, goals,
and aims of this Code may result in disciplinary action,
up to and including termination of employment.
Any waiver of this Code for executive
officers or directors may be made only in writing (including
an explanation of the reason for such waiver) by the
Board of Directors, or a Board committee responsible
for corporate governance, and will be promptly disclosed
as required by law. Any waiver of this Code for other
employees must be approved in writing by the head of
human resources, the general counsel of the Company,
or other appropriate person as may be designated in
the this Code.
Reporting Violations of this Code
Employees are responsible for being
aware of the corporate policies applicable to their
activities and to comply with them fully. If you become
aware of a violation of this Code or believe that a
violation may take place in the future, you must promptly
report the matter. Failure to report a known violation
allows misconduct to go unremedied and is itself grounds
for discipline. Ordinarily, the report may be made
to the employee’s immediate supervisor, the human
resources department, the general counsel of the Company
or any senior manager of the Company, who, in turn,
must report it to the Compliance Officer. If the report
pertains to concerns regarding questionable accounting
or auditing matters, the employee should direct the
report to the Compliance Officer or to the Chair of
the Audit Committee of the Board of Directors, as described
in the Company’s policy entitled “Employee
Complaint Procedures for the Reporting of Accounting
and Auditing Matters.” Management of the Company
shall report any material violations of this Code to
the Audit Committee of the Board of Directors and shall,
on a periodic basis review the Code and discuss its
implementation and any potential revisions to the Code
with the Audit Committee.
Reports concerning potential violations
of this Code may also be made directly to the Compliance
Officer, in person or in writing, and may be anonymous,
at the employee’s discretion, through the following:
- Contact the Compliance Officer
using the feedback form at http://oculusis.silentwhistle.com or
by mail at Oculus Innovative Sciences, Inc., 1129
North McDowell Blvd., Petaluma, CA 94954.
- Contact the Compliance Officer
at the following telephone number: (707) 283-0550.
Employees submitting a report on
an anonymous basis are strongly encouraged to keep
a copy of the report (if made in writing) and a record
of the time and date of their submission, as well as
a description of the matter as reported if the report
was not in writing.
Employees are encouraged to provide
as much specific information as possible, including
names, dates, places and events that took place, relevant
documents and the employee’s perception of why
the incident(s) may be misconduct.
If possible, the employee should
provide a means by which she/he can be contacted in
the event that an investigator needs to follow-up or
wants to report back to the employee.
We will not allow retaliation against
an employee for reporting a possible violation of this
Code unless it can be shown that the report was knowingly
false. Retaliation for reporting a federal offense
is illegal under federal law and prohibited under this
Code. Such retaliation will result in discipline up
to and including termination of employment and may
also result in criminal prosecution. The employee is
protected from retaliation even if the investigator
does not agree that there has been a violation. However,
if the employee making the report was involved in improper
activity, the fact that he or she reported it will
not necessarily prevent him or her from being disciplined
for his or her participation in the violation. In these
circumstances, the Company may consider the employee’s
conduct in promptly reporting the information as a
mitigating factor in any disciplinary decision.
We must all work to ensure prompt
and consistent action against violations of this Code.
However, in some situations, it is difficult to know
right from wrong. Since we cannot anticipate every
situation that will arise, it is important that we
have a way to approach a new question or problem. These
are the steps to keep in mind:
- Make sure you have all the facts. In
order to reach the right solutions, one must be as
fully informed as possible.
- Ask yourself: What specifically
am I being asked to do? Does it seem unethical
This will enable you to focus on the specific question
you are faced with, and the alternatives you have. Use
your judgment and common sense; if something seems
unethical or improper, it probably is.
- Clarify your responsibility and role. In
most situations, there is shared responsibility. Are
your colleagues informed? It may help to get
others involved and discuss the problem.
- Discuss the problem with your supervisor. This
is the basic guidance for all situations. In
many cases, your supervisor will be more knowledgeable
about the question, and will appreciate being brought
into the decision-making process. Remember
that it is your supervisor’s responsibility
to help solve problems.
- Seek help from Company resources. In
the event it is inappropriate to discuss an issue
with your supervisor, or if you do not feel comfortable
approaching your supervisor with your question, you
may also call the Compliance Officer.
- You may report ethical violations in confidence
and without fear of retaliation. If your
situation requires that your identity be kept secret,
your anonymity will be protected.
- Always ask first, act later. If
you are unsure of what to do in any situation,
seek guidance before
Accountability for Adherence to this Code
The Board shall determine, or designate
appropriate persons to determine, appropriate actions
to be taken in the event of violations of this Code.
Such actions shall be reasonably designed to deter
wrongdoing and to promote accountability for adherence
to this Code, and shall include written notices to
the individual involved that the Board or its designee
has determined that there has been a violation, and
may include censure by the Board or its designee, demotion
or re-assignment of the individual involved, suspension
with or without pay (as determined by the Board or
its designee) and termination of the individual’s
employment or other service.