**EXHIBIT 14.1**

 

 

 

 

 

 

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Table of Contents

 
| Letter to Directors and Employees from the CEO       | 2      |
|------------------------------------------------------|--------|
| Message from the Corporate Compliance Officer        | 3      |
| Code of Business Conduct / Ethical Business Practice | 4      |
| Corporate Policies                                   |   |
| Antitrust & Competition                          | 6      |
| Bribery                                              | 7      |
| Confidential Information                             | 8      |
| Conflicts of Interest                                | 9      |
| Equal  Opportunity Employer                          | 11     |
| Fraud &  Similar Irregularities                  | 12     |
| Harassment                                           | 13     |
| Health & Safety                                  | 14     |
| Inside  Information and Securities Trading           | 15     |
| Political  Activities & Contributions            | 16     |
| Acknowledgment of Receipt                            | 17     |

 

 

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***ALetter to Directors and Employees on the Importance of Following theCode of Business Conduct***

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***Dear Directors and Employees,***

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*The influx of gold and silver from the New World toEurope has been associated with the rise of capitalism in the West.  Equally important, however, was theProtestant notion of pre-destination as preached by Calvin and Zwingli: Theybelieved that whether or not a person was in a state of “grace” waspre-determined.  The way you led yourlife was a sign of being in a state of grace, or not.  Therefore people who didn’t lie, kept theirword, written or oral, didn’t cheat, steal, were humble, worked hard, did notparticipate in hedonistic activities, and above all succeeded in business“knew”, as did everyone around them, that they were in a state of grace.  The integrity of contractual agreements,honesty, giving a productive day’s work for a day’s pay, humility in the faceof hubris, etc., were as necessary an element to the development and success ofcapitalism as was the gold and silver bullion from the New World.*

* *

*Prospect is a capitalistic enterprise.  We have competitors for our contracts, ourphysicians, and the patients we manage. To stay in business we need to make a profit.  We need to be in a state of grace.  We get there in part by being ethical andpracticing the behavior I have alluded to above.  This handbook will give a concise descriptionof our Company’s journey and will give you values and guidelines for the typeof behavior Prospect wishes to be known by in the business and medicalcommunity.  We as a Company take breachesof this code and deviations from honesty and forthrightness in our businessdealings very seriously.  We believe thatadherence to them will promote the success of our Company and our collectiveeconomic security.*

* *

* *

***Sincerely,***

 

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***JacobY. Terner, M.D.***

***Chairmanof the Board and Chief Executive Officer***

***ProspectMedical Holdings, Inc.***

*** ***

 

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***AMessage to Directors and Employees:***

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*As Directors andemployees of Prospect, we are responsible for conducting the business affairsof the Company in accordance with applicable laws, in a moral and honestmanner, and with the highest professional and ethical standards.*

* *

*To make certain that weunderstand what is expected of us, Prospect and the Board of Directors haveadopted the following policies.*

* *

*The Code of Business Conduct /Ethical Business Practice, and subsequent policies (the “Code”) included hereincontain commonsense rules of conduct.  Iask that you read them carefully and completely, because it is essential thatyou fully comply with these policies in the future.  If you have any questions, talk them overwith your manager or another member of management.  If you still have questions, you may contactme directly.*

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*Please sign theacknowledgment page confirming you have received the Code, understand itrepresents mandatory policies of the Company and agree to abide by it.  Return the signed copy to the Human ResourcesDepartment where it will be placed in your personnel file and keep the Code forfuture reference.*

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*Thank you for your kind attentionto this matter.*

* *

***Sincerely,***

 

*** ***

***LindaHodges***

***ExecutiveVice President and Corporate Compliance Officer***

***ProspectMedical Holdings, Inc.***

*** ***

 

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*** ***

**Code of Business Conduct Ethical Business Practice**

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Directors and employees of Prospect, itssubsidiaries, and affiliated companies (the “Company”) are to conduct theirbusiness affairs in accordance with the highest ethical standards.  Policies are to be applied in good faith withreasonable business judgment to enable the Company to achieve its operating andfinancial goals within the framework of the Law.  Directors and employees shall not conductthemselves in a manner that is directly or indirectly detrimental to the bestinterests of the Company or in a manner which would bring financial or anyother gain to any Director or employee at the expense of Prospect.  Moral as well as legal obligations will befulfilled openly, promptly, and in a manner that will reflect pride on theCompany’s name.

 

Agreements, whether contractual or verbal,will be honored.  No bribes, bonuses,kickbacks, lavish entertainment, or gifts will be exchanged for specialposition, price, or privilege.  It isCompany policy that contracts are reviewed by legal counsel.  By contract, we mean each agreement,memorandum of understanding, or other document or arrangement that couldreasonably be expected to impose an obligation. Please bear in mind that your conduct and/or your conversations mayhave, under certain circumstances, the unintended effect of creating anobligation which the company cannot meet. 

 

The Company requires Directors and employees to observe high standardsof business and personal ethics in the conduct of their duties andresponsibilities.  Directors andemployees must practice honesty and integrity in every aspect of dealing withother Directors and employees, the public, the business community,stockholders, customers, members and government authorities.

 

Directors and employees will maintain theconfidentiality of the Company’s sensitive or proprietary information and willnot use such information for their personal benefit or the benefit of anotherperson or entity.

 

Directors and employees shall refrain,both during and after their employment, from publishing any oral or writtenstatements about the Company or any of its Directors or employees that areslanderous, libelous or defamatory. Statements disclosing private or confidential information about their businessaffairs or constituting an intrusion into their private lives should beavoided.

 

Directors and employees will comply withthe executive stock ownership requirements set forth by the Board of Directors.

 

The Company prohibits unlawful discrimination against Directors andemployees, stockholders, members, customers or suppliers on account of race,color, age, sex, religion or national origin. All persons shall be treated with dignity and respect and they shall notbe interfered with in the conduct of their duties and responsibilities.

 

 

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Directors and employees should not be misguided by any sense of loyaltyto the Company or a desire for profitability that might cause them to disobeyany applicable law or Company policy. Illegal behavior on the part of any Director or employee in theperformance of Company duties will not be condoned or tolerated. 

** **

The Company is committed to evaluating theeffectiveness of the Code through various efforts on an ongoing basis.  To identify areas that are deficient or needto be improved the Corporate Compliance Officer considers: Audit Committeefindings; departmental audit reports; Corrective Action Plans (which are aresult of regulatory audits performed quarterly); routine audits conducted byManagement; and the review of departmental policies and procedures.  Through these processes, we are continuouslyassessing the effectiveness of the program and finding ways to improve it.

 

Adherence to and support of the Code is acondition of employment.  Violation may resultin disciplinary action, which may include termination.

 

The Code of Business Conduct and EthicalBusiness Practice will be distribuued to new Directors and employees and bedistributed again to all Directors and employees annually at the beginning ofeach calendar year.  Directors andemployees are required to sign the acknowledgment confirming they have receivedthe Code, read it and understand it represents mandatory policies of theCompany and agree to abide by it.  TheCompany welcomes any suggestions to help improve its business conduct.

 

Directors andemployees can report violations of the Law or the Code by calling the Ethicsand Compliance Hotline at 1 (877) 888-0002. The Hotline is open 24 hours a day, 7 days a week, and is operated by anindependent company.  Directors andemployees may remain anonymous and translators are available.

 

Approved by the Board of Directors onFebruary 20, 2004.

 

 

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**Antitrust & Competition**

 

No Director or employee of the Company shall enter into any understanding,agreement, plan or scheme, express or implied, formal or informal, with anycompetitor to fix prices, contract terms, territories or customers:  The Chief Executive Officer must authorizeany discussion with competitors in connection with a project in which thecompetitor is an alliance partner, joint venturer or subcontractor.

 

Directors and employees responsible for the conduct or practices of theCompany which could in any way involve antitrust or anti-competitive activitiesshould consult with their manager or another appropriate member of managementabout such matters.

 

There shall be no exception to this Policy, nor shall it be compromisedor qualified by anyone acting for or on behalf of the Company.

 

 

Approved by the Board ofDirectors on February 20, 2004.

 

 

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**Bribery**

** **

The Company prohibits payment to suppliers or customers in the form ofbribes, kickbacks or payoffs.  Directorsand employees are also prohibited from receiving, directly or indirectly from athird party, anything of a significant value (other than salary or otherordinary compensation paid by the Company) in connection with a transactionentered into by the Company.

 

The Company also prohibits Directors and employees from paying anybribe, kickback or other similar unlawful payment to, or otherwise enteringinto a sensitive transaction with, any public official, political party,candidate for public office or other individual, to secure any contract,concession or other favorable treatment for the Company or for personal gain.  Any extraordinary payments, includingextravagant entertainment or gifts of significant value (in general this meansthe cost will not exceed $100), for the express purpose of obtaining orretaining business or unduly influencing some matter in favor of the Company isprohibited.  Directors and employees whomake such agreements are subject to appropriate action by the Company, as wellas the legal consequences of applicable Law.

 

Bribes, kickbacks and payoffs include, but are not limited to: Giftsother than nominal value (in general this means the cost will not exceed $100);the uncompensated use of Company services, facilities or property; loans, orloan guarantees or other extensions of credit.

 

This Policy does not prohibit reasonable expenditures for meals andentertainment of suppliers and customers, which are an ordinary and customarybusiness expense.  These expendituresshould be included on expense reports and approved under standard Companyprocedures.

 

 

Approved by the Board of Directors on February 20, 2004.

 

 

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**Confidential Information**

 

In carrying out the Company’s business, Directors and employees oftenlearn confidential or proprietary information about the Company, its customers,suppliers or members.  An unauthorizeddisclosure could be harmful to the Company or helpful to a competitor.

 

Therefore, no Director or employee entrusted with or otherwiseknowledgeable about information of a confidential or proprietary nature shalldisclose or use that information outside the Company or for personal gain,either during or after employment without the valid and proper writtenauthorization from the Company. 

 

The company also works with proprietary!data of suppliers, members andcustomers.  The protection of such datais of the highest importance and must be discharged with the greatest care forthe Company to merit the continued confidence of such persons.  No Director or employee shall disclose or useconfidential or proprietary information owned by someone other than the Companyto non-employees without Company authorization, or disclose the information toothers unless a need-to-know basis is established.

 

In general when describing or talking about Prospect, it is safe tomention what we do and not how we do it or how much it costs.

 

 

Approved by the Board of Directors on February 20, 2004.

 

 

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**Conflicts of Interest**

 

Directors and employees have a duty to the Company to advance theCompany’s legitimate interests when the opportunity to do so arises.  Timely and proper disclosure of possibleconflicts of interest that Directors and employees may have in connection withjob duties and responsibilities is necessary to protect the best interests ofthe Company.  Possible conflict ofinterest situations should be promptly and fully disclosed to the ChiefExecutive Officer.

 

A conflict of interest may occur if outside activities, personalfinancial interests, or other interests influence one’s ability to makeobjective decisions in the course of their responsibilities as a Director oremployee.  A conflict of interest mayalso exist if the demands of any outside activities hinder or distractDirectors or employees from the performance of their responsibilities or causethe individual to use Company resources for other than Company business.

 

The Company has always been concerned with outside business interestsof its Directors and employees that might possibly conflict with the interestsof the Company.  An adequate definitionof what constitutes a conflict of interest is most difficult.  However, the Company expects and requiresDirectors and employees to be honest and ethical in the handling of actual orapparent conflicts of interest between personal and business relationships.

 

There are certain situations which the Company will always consider tobe a conflict of interest.  These occurif any person having a close personal relationship with the Director oremployee, such as, spouse, parents, children, siblings, in-laws, any personliving in the same home with the Director or employee or any business associateof the Director or employee:

 

1.             Obtains a significant financial or other beneficialinterest in one of the Company’s suppliers, customers or competitors withoutfirst notifying the Company and obtaining written approval from the ChiefExecutive Officer;

 

2.             Engages in a significant personal business transactioninvolving the Company for profit or gain, without first notifying the Companyand obtaining written approval from the Chief Executive Officer;

 

3.             Accepts money, gifts, hospitality, loans, guarantees ofobligations or other special treatment from any supplier, customer orcompetitor of the Company; 

 

4.             Participates in any sale, loan or gift of Companyproperty without first notifying the Company and obtaining written approvalfrom the Chief Executive Officer;

 

5.             Learns of a business opportunity through associationwith the Company and discloses it to a third party or invests in or takes theopportunity personally without first notifying the Company;

 

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6.             Uses corporate property, information, or position forpersonal gain; or

 

7.             Competes with the Company.

 

 

Approved by the Board of Directors on February 20, 2004.

 

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**Equal Opportunity Employer**

 

In its hiring and promotion policies, the Company is committed toproviding equal opportunity to all qualified individuals.  The Company will endeavor to create aworkforce that is a reflection of the diverse population of the communities inwhich it operates.

 

The Company will comply with applicable Law governing equal employmentopportunities to assure that there is no unlawful discrimination against anyemployee or applicant.

 

This policy relates to all phases of employment, including recruitment,placement, hiring, promotion, transfer, compensation, benefits, training, andeducational, social and recreational programs. It covers all other personnel actions in all job categories and at alllevels, including employment of qualified disabled individuals.  It is intended to provide employees with aworking environment free of discrimination, harassment, intimidation orcoercion relating directly or indirectly to race, color, religion, disability,sex, age or national origin.

 

An employee who believes he or she has been or is being subjected todiscrimination should bring this matter to the attention of his or herimmediate supervisor, department head or the Human Resources Director.  If Management receives a complaint ofdiscrimination, they shall report the complaint immediately to the HumanResources Director.  Nothing in thisPolicy requires any employee complaining of discrimination to present thematter to the person who is the subject of the complaint.  All complaints of discrimination will be promptlyinvestigated.  The privacy of the personsinvolved will be protected, except to the extent necessary to conduct a properinvestigation.  If the investigationsubstantiates the complaint, immediate action will be taken to end thediscrimination, prevent its recurrence and remedy the situation.

 

An employee who reports the matter pursuant to this Policy shall not beretaliated against or adversely treated because of the making of the report.

 

 

Approved by the Board of Directors on February 20, 2004.

 

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**Fraud & SimilarIrregularities**

 

Directors and employees are obligated to protect Company assets andensure their efficient use.  Theft,carelessness and waste of Company assets by Directors and employees may resultin their termination and other corrective actions by the Company.  Company assets shall be used only for thelegitimate business purposes of the Company.

 

Fraud includes, but is not limited to, dishonest or fraudulent acts;embezzlement; misappropriation of assets; forgery or alteration of negotiableinstruments such as Company checks and drafts; taking or using Company suppliesor any other Company asset for a purpose other than Company business;unauthorized handling or reporting of Company transactions; and falsificationof Company records or financial statements for personal reasons or any otherreason.

 

Directors and employees are obligated to report any fraud, whethermaterial or not to the Company.  Reportswill be investigated promptly and discreetly. Directors and employees will not suffer adverse consequences as a resultof making such a report.  However,failure to report a fraud will have a direct negative effect on that person’srelations with the Company.

 

 

Approved by the Board of Directors on February 20, 2004.

 

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**Harassment**

 

The Company considers harassment a serious act of misconduct and maysubject an employee to disciplinary action, including immediate discharge.  Management who fail to report violations ofwhich they become aware will be subject to disciplinary action, up to andincluding suspension and termination of employment.  The term “harassment” includes sexual,racial, ethnic, and other forms of harassment, including harassment based upondisability.

 

Some examples of what may be considered harassment, depending on factsand circumstances, include the following:

 

Sexual Harassment. Unwelcome sexual conduct or speech,whether verbal, written or physical, including, among other things, sexualadvances, demands for sexual favors, or other conduct or speech of a sexualnature, whether or not it was designed or intended to promote an intimaterelationship or to intimidate or provoke.

 

Racial Harassment. Unwelcome or derogatory commentsregarding a person’s race, color, ancestry or ethnic heritage; or distribution,including by email or other electronic media, or display in any Company workarea, of written or graphic material of this type.

 

Physical Harassment. Hitting, pushing, touching or otherphysical contact, inappropriate gestures or threats to take such action.

 

Any employee who believes he or she is being harassed should tell theoffending party that he or she objects to that conduct.  This often solves the problem.  However, if an employee is not comfortableconfronting the offending party (or if the offending party’s unwelcome conductcontinues), the employee should advise his or her immediate supervisor.  If the immediate supervisor has not takenwhat the employee regards as appropriate action to solve the problem, theemployee should notify the Human Resources Director.

 

This policy will be strictly enforced. Complaints will be investigated promptly and discreetly.  Directors and employees will not sufferadverse consequences as a result of reporting any act of harassment.

 

 

Approved by the Board of Directors on February 20, 2004.

 

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**Health& Safety**

 

Health and safety is a primary goal of the Company.  The Company will comply with all applicableLaws to protect the health and safety of its employees in the workplace.  Management shall take such actions as arereasonable and necessary to protect Directors, employees and the Company. 

 

To maintain a safe workplace employees must be safety conscious at alltimes.  Employees must advise theirSupervisor or the Human Resources Director if they are aware of any conditionpresenting a danger so that corrective action may be taken to remove thedanger.

 

Employees should report personal injury, however minor, to the HumanResources Department immediately.  Firstaid kits are readily available in all work areas.  In case of emergency, the first person in contactwith the injured or ill worker will be responsible for seeking help.  The Human Resources Department will assist inobtaining treatment for the injured worker. 

 

 

Approved by the Board of Directors on February 20, 2004.

 

 

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**Inside Information and SecuritiesTrading**

 

Employees and Directors should never buy or sell the Company's equitysecurities (including options) if they have material non-public information or"inside information" regarding the Company. Material non-publicinformation or "inside information" is any information which is notpublic and which, if disclosed, can reasonably be expected to have an effect onthe market price of the securities of the Company. Any information that couldbe expected to affect the Company’s stock price, whether it is positive ornegative, should be considered material.

 

Employees and Directors who are aware of inside information regardingthe Company must wait until this information has been fully disclosed to thepublic before trading in the Company’s stock. Full public disclosure generally means disclosure via a report filed bythe Company with the Securities and Exchange Commission or a widely distributedpress release followed by publication in the media, followed, in either case,by three or more days for distribution and interpretation of the information.Anyone who is unsure whether information is material or has been released tothe public should contact the Corporate Compliance Officer to confirm beforetrading.

 

Employees and Directors must never disclose material inside informationto anyone other than persons within the Company whose positions require them toknow the information.  In particular,material information that could be used for securities transactions shouldnever be provided to others. "Tipping" – providing inside information to others – violatesthe obligation of employees and Directors to maintain the confidentiality ofCompany information and can result in violation of the federal securitieslaws.  Confidential corporate plans ordevelopments must never be discussed with "outsiders" (includingfamily members and friends) or other employees who do not require theinformation to properly fulfill their duties.

 

No preferential treatment may be given to any stockholder, potentialinvestor, securities analyst, broker, or other market professional. Therefore,before releasing to any such person any material financial or operating datarelating to the Company, that information must be available to the publicgenerally.  Selective disclosure of anymaterial non-public information about the Company is prohibited except aspermitted by law.

 

 

Approved by the Board of Directors on March 31, 2005.

 

 

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**Political Activities &Contributions**

 

The Company encourages participation in the political process by itsDirectors and employees.  The federalgovernment and some states have, however, enacted Laws regulating campaigncontributions in order to limit the political influence of certain types ofcontributors, such as corporations, to political candidates and participationin political campaigns.

 

The Company will comply with applicable Laws regulating politicalinfluence and campaign contributions.

 

The Company believes strongly in the democratic political process andthat its Directors and employees should take an active interest in fosteringprinciples of good government in the communities in which they live.  Directors and employees may spend their owntime and funds supporting political candidates and issues but the Company willnot reimburse them for time or funds used for political contributions.

 

No Director or employee shall apply pressure, direct or implied, thatinfringes upon an individual’s right to decide whether, to whom and in whatamount a personal political contribution is to be made.

 

Directors and employees who represent the Company in political andgovernmental matters must comply with all Laws that regulate corporateparticipation in public affairs. 

 

When permitted by Law and authorized by the Chief Executive Officer,Company funds and facilities may be used to inform or influence the votingpublic on an issue of importance to the business of the Company and itsstockholders.

 

If a Director or employee is asked to make a political contribution andhe or she has questions regarding this policy or applicable Law, they shouldconsult with the Corporate Compliance Officer.

 

 

Approved by the Board of Directors on February 20, 2004.

 

 

 

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**Code of Business Conduct and Ethical Business Practice**

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**Acknowledgmentof Receipt**

 

I certify that I have received theProspect Medical Code of Business Conduct and Ethical Business Practice,understand it represents mandatory policies of the Company and agree to abideby it.

 

 

 
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