Annual Report — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K December 31, 2003 40 220K
2: EX-3.B Amended and Restated By-Laws of Company 18 77K
3: EX-14 Code of Ethics of the Company 10 32K
4: EX-21 Subsidiaries of the Company 1 6K
5: EX-23 Consent of Ernst & Young LLP 1 5K
6: EX-31.1 Certification of Chief Executive Officer 2± 9K
7: EX-31.2 Certification of Chief Financial Officer 3 13K
EX-14 — Code of Ethics of the Company
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EXHIBIT 14
LAWSON PRODUCTS, INC.
CODE OF ETHICS
CODE OF ETHICS
INTRODUCTION
Fellow Employees:
This Code of Ethics was adopted by the Board of Directors of Lawson
Products, Inc. and is applicable to all directors and employees of Lawson. It
addresses the legal and ethical principles that must guide all of us in our
work. It is critical to the success of Lawson and in the best interests of its
stockholders that its employees and directors conduct themselves honestly and
ethically. This Code of Ethics is intended as one element in our effort to
ensure lawful and ethical conduct on the part of Lawson Products, Inc. and its
subsidiaries ("Lawson or the "Company") and all of its employees, officers and
directors, which we will refer to, collectively, as employees, and should be
read in conjunction with the Lawson Employee Handbook. To be useful, this Code
of Ethics and the Employee Handbook should be kept handy and reviewed
frequently. You should become familiar with their contents and use them as a
guide when you are unsure of what actions to take.
No single document can cover every situation, however. While business
practices may change over time, our commitment to the highest standards of
integrity remains constant. You may face dilemmas in which you must consider
options and decide what to do. We expect your conduct to be guided by this Code
of Ethics, by your personal sense of right and wrong, and by the answers to the
following questions:
o Is this conduct legal?
o Is my conduct ethical?
o Does my conduct comply with Lawson's policy?
You should be able to answer "yes" to all these questions before
undertaking the conduct.
Most importantly, when questions arise or when you need an
interpretation of policies or procedures, ask for help. Talk with your manager,
to the Human Resources Manager, to the General Counsel or to any corporate
officer.
If you believe that the actions of anyone affiliated with Lawson are
unethical or expose the rest of us to legal or contractual problems, it is your
duty to speak up. Lawson policy prohibits retribution or retaliation of any kind
for doing so.
Ethical principles are often easy to state but sometimes difficult to
apply. Nontheless, living up to this Code of Ethics must be our way of life at
work. It also means showing respect for those whose lives we affect and treating
them as we would want them to treat us, whether that person is a supervisor,
colleague, or subordinate. Integrity is not an occasional requirement. It erodes
when it is not reinforced by practice and weakens if it is not continually
applied to new issues and situations. Whatever you do, remember; when you act on
Lawson's behalf, Lawson's reputation for maintaining the highest ethical
standards is in your hands.
[signed]
Robert J. Washlow
Chairman of the Board and Chief Executive Officer
BUSINESS CONDUCT POLICY
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I. GENERAL STATEMENT OF POLICY
The policy of Lawson is to comply with all applicable federal, state,
foreign and local laws, rules and regulations and to adhere to the highest
ethical standards in the conduct of our business. It is each employee's
responsibility to adhere to this Code of Ethics. Management is responsible for
making sure that proper attention is given to, and that controls are in place
for, promoting compliance with our Code of Ethics and the specific Lawson
policies addressing each area. Employees who fail to abide by these Lawson
policies will face corrective action, up to and including termination from
Lawson. As to executive officers and directors, the requirement that you adhere
to these policies may only be waived by the board of directors of Lawson, and we
will disclose any waiver of these policies made by the board of directors on
behalf of any executive officer or director as required by applicable law.
This Code of Ethics briefly summarizes the conduct required by key
policies and guidelines in effect in the U.S. and in many overseas locations and
is intended to remind us of the need to act ethically in all we do. Because the
business and legal environment in which Lawson operates is extremely complex, it
would be impossible to formulate a single policy that would govern all possible
situations. Lawson's non-U.S. operations may, in addition, have policies in
effect that complement and support Lawson's ethical approach. Non-U.S. employees
are governed by the applicable non-U.S. policies in their operations as well as
the business with integrity principles described in this Code of Ethics.
It is each employee's responsibility to acquire and maintain a working
knowledge of the business laws and ethics policies as applicable to your
responsibilities with Lawson. If employees have any questions concerning the
application of this Code of Ethics to a particular situation, or need additional
information concerning an issue not covered by the Code of Ethics, they should
contact the General Counsel or Human Resources department of Lawson. If you ever
are unsure about a situation or pending decision, about the proper application
of this Code of Ethics or about what is required by the law in any given
situation, they must consult with the General Counsel or Human Resources
department. In this way, you can obtain more information about the relevant
policy of Lawson.
If you have reason to believe that the actions of anyone at Lawson
violate this Code of Ethics, are otherwise unethical or expose the Company to
legal or contractual problems, you should notify promptly the General Counsel or
Chairman of the Board of Director's Audit Committee. You may choose to remain
anonymous in reporting any possible violation of this Code. In addition, you may
report concerns regarding questionable accounting or auditing matters
confidentially and anonymously by utilizing our web-based and telephone hotline
program. (See the Lawson website for further information.) Lawson policy
prohibits retribution or retaliation for any information or reports that you
provide that are based on a reasonable belief or concern that a violation of
this Code of Ethics might have occurred or is planned.
II. BUSINESS PRACTICES AND LEGAL COMPLIANCE
A. CONFLICTS OF INTEREST
As an employee of Lawson, each individual owes a duty of loyalty to
Lawson. Therefore, employees must use Lawson's property, its business
opportunities and their positions with Lawson exclusively for the benefit of
Lawson. This means that employees must act in the best interests of Lawson, not
their own, and that they must always seek to advance the goals of Lawson as
established by management and the Board of Directors.
Each employee will act at all times honestly and ethically, including
the ethical handling of actual or apparent conflicts of interest between
personal and professional relationships. For purposes of this Code of Ethics,
the phrase "actual or apparent conflict of interest" shall be broadly construed
and include, for example, direct conflicts, indirect conflicts, potential
conflicts, apparent conflicts and any other personal, business or professional
relationship or dealing that has a reasonable possibility of creating even the
mere appearance of impropriety.
It is essential that all employees, both professionally and personally,
take reasonable steps to avoid situations that may create a conflict of
interest, or the potential for conflict of interest or the appearance of a
conflict of interest.
Some examples of (but not limited to) potential conflicts of interest
are:
1. Investing in any company that sells products or services similar
to Lawson's, or any company doing or seeking to do business with
Lawson, other than relatively small investments in securities
widely held by the general public;
2. Working for, or on behalf of, any such company;
3. Placing Company business with relatives or friends, or working on
a Company project that will have a direct impact on the financial
interests of relatives or friends;
4. Encouraging companies dealing with Lawson to buy supplies or
services from relatives or friends;
5. Borrowing money from companies doing or seeking to do business
with Lawson other than on generally available terms;
6. Participating in the regulatory or other activities of a
community or governmental body that have a direct impact on the
business of Lawson;
7. Hiring or supervising a relative or close friend;
8. A personal relationship with another employee or vendor that
affects one's ability to do one's job or disrupts the workplace;
9. Working for another company which conflicts with one's duties
and responsibilities at Lawson by affecting one's ability to
do his/her job, work his/her regularly scheduled shift, or
work his/her stated available hours.
Each employee is responsible for recognizing situations in which a
conflict of interest is present or might arise and reporting the situation to
the appropriate level of management. Where an employee believes it is not
possible or not beneficial to Lawson to avoid any of these situations, or to
avoid any other conflict of interest, the employee must inform his or her
supervisor and make full written disclosure (in advance whenever possible) to
the General Counsel of Lawson.
B. GIFTS AND SAMPLES
In addition to avoiding actual conflicts of interest, employees must
not permit their judgment as an employee of Lawson to be influenced by personal
considerations, or create any appearance that they are seeking to obtain
business or contracts for Lawson based on improper considerations.
For this reason, employees may not accept any gifts or entertainment
that is of more than immaterial value given for the purpose of furthering a
business relationship between Lawson and any customer, supplier or other person
seeking to do business with Lawson. For this purpose a "gift" includes any
gratuitous service, loan, discount, entertainment, money, commissions, bonuses,
trips or article of value. Any additional exceptions to the foregoing of similar
nature must be approved by the General Counsel of Lawson or his designee.
No employee should make payments or transfer assets to officials or
employees of any governmental body in order to influence that body's decision.
The Company complies with the U.S. Foreign Corrupt Practices Act and the laws of
other countries which prohibit the payment of money or anything of value to any
person who is a government official, member of a political party or candidate
for political office, solely for the purpose of obtaining, retaining or
directing business.
C. CONFIDENTIAL INFORMATION
All information about Lawson's business and its plans that has not been
disclosed to the public is a valuable asset that belongs to Lawson. Employees
must never (i) use any confidential information relating to Lawson for any
purpose other than the performance of their duties to Lawson, or (ii) disclose
any confidential information/trade secrets relating to Lawson to anyone,
including relatives, friends, or other persons or companies, without written
advance authorization by the General Counsel of Lawson.
D. INTELLECTUAL PROPERTY
In the performance of assigned duties, employees may develop ideas,
inventions, software, or create original works of authorship relating to the
business of Lawson (herein known as "Intellectual Property"). In consideration
of the compensation paid to each employee by Lawson, it is the understanding
between Lawson and each employee that Lawson shall have certain rights in the
Intellectual Property. Where the subject matter of such Intellectual Property
(i) results from or is suggested by any activity which the employee may do for
or on behalf of Lawson, (ii) is created, invented or developed on Lawson time or
using Lawson's facilities, or (iii) is related to Lawson's business, the
employee shall assign all rights in such Intellectual Property to Lawson.
At the request of Lawson, either during employment or after termination
thereof, each employee shall execute or join in executing all papers or
documents required for filing of a patent or copyright applications in the
United States and such foreign countries as Lawson may elect for the
Intellectual Property. Each employee shall assign such patent and copyright
applications to Lawson or its nominee and shall provide Lawson and its agents or
attorneys with all reasonable assistance in the preparation and prosecution of
such applications, including drawings, specifications and the like, all at the
expense of Lawson. Each employee shall do all things that may be necessary to
establish, protect, and maintain the rights of Lawson or its nominee in the
Intellectual Property in accordance with the intent of this Code of Ethics.
E. FINANCIAL STATEMENTS AND OTHER DISCLOSURES
The integrity of Lawson's financial reporting is of the utmost
importance. Accounting and financial reporting practices must be fair and
proper, in accordance with generally accepted accounting principles (GAAP), and
using management's best judgments where necessary. No employee shall, directly
or indirectly, take any action to fraudulently influence, coerce, manipulate or
mislead Lawson's independent public auditors for the purposes of rendering the
financial statements of Lawson misleading.
Lawson does not condone practices that might lead to fraudulent
financial reporting. While difficult to give an all-inclusive definition of
fraudulent financial reporting, it is in general any intentional or reckless
conduct, whether by act or omission, that results in materially misleading
financial statements. Clear, open and frequent communication among all
management levels and personnel on all significant financial and operating
matters will substantially reduce the risk of problems in the accounting and
financial reporting areas as well as help achieve operating goals. All
management employees are expected to be aware of these risks and to communicate
accordingly.
Each employee must ensure that all reasonable and necessary steps
within his or her areas of responsibility are taken to provide full, fair,
accurate, timely and understandable disclosure in reports and documents that
Lawson files with or submits to the Securities and Exchange Commission or state
regulators, and in all other regulatory filings. In addition, employees must
provide full, fair, accurate, and understandable information whenever
communicating with Lawson's stockholders or the general public.
F. SECURITIES LAWS AND INSIDER TRADING
It is both illegal and against this Code of Ethics for any individual
to profit from undisclosed information relating to Lawson or any company with
which we do business. Please refer to Lawson's Insider Trading Policy for
additional information.
G. ANTITRUST LAWS
The U.S. antitrust laws prohibit agreements, either expressed or
inferred, or actions that unreasonably restrain trade, defined as restrictive
practices that may reduce or hinder competition. These laws require that
decisions be made and activities undertaken independently, without any agreement
or coordination with competitors. Among those agreements and activities
constituting clear violations are agreements and understandings to fix or
control prices and other terms of sale; to allocate products, territories or
markets (including store locations); or to limit the production or sale of
products. Accordingly, employees must take great care to avoid any
communications with Lawson's competitors with respect to these or other business
matters.
The antitrust laws also prohibit monopolization and attempted
monopolization. Monopolization consists of a firm having monopoly power, which
is generally defined as a high market share of approximately 70% or more in a
market with high barriers to entry, and engaging in anticompetitive or
exclusionary conduct that enhances or maintains that monopoly power. Attempted
monopolization is very similar, except that a firm must have a dangerous
probability of successfully monopolizing the market, which generally is defined
as possessing a market share of approximately 50% or more in a market with high
barriers to entry. Because intent is an important element to both monopolization
and attempted monopolization claims, Lawson personnel should make every effort
to ensure that nothing in their conduct or written or oral communications
creates the impression of an improper intent to eliminate or injure competitors
or to restrict competition.
The antitrust laws regulate conduct with suppliers and others. For
example, resale price agreements, as opposed to suggested resale prices, are
prohibited by the antitrust laws. In addition, the Robinson-Patman Act prohibits
price discrimination by suppliers and knowingly inducing or receiving
discriminatory pricing by buyers. Individuals involved in pricing discussions
with suppliers must be knowledgeable with respect to resale price agreements and
price discrimination and must consult with the General Counsel as issues arise.
Because of the complexity of the antitrust laws, it is imperative that
advice be sought from the General Counsel regarding this subject.
H. PERSONNEL AND OTHER BUSINESS RECORDS
Employees may not collect or maintain in Lawson's files information
about other employees that is not directly related to their employment. If an
employee receives an inquiry from a third party seeking to verify the fact of
employment or to obtain information that must be disclosed by law, the employee
must not disclose any information to the third party and, instead, refer the
inquiry to the appropriate Human Resources representative.
Inappropriate access or modifications to, or unauthorized copying or
destruction of, accounting or other business records is prohibited. These
prohibitions apply to all business records and data, regardless of whether such
data and records are in written form or electronically stored.
I. DISCRIMINATION AND SEXUAL HARASSMENT
Lawson is committed to a work environment free of any form of
discrimination or sexual harassment. Consistent with its anti-harassment policy
as set forth in the Employee Handbook. Lawson will not tolerate any conduct in
the workplace that constitutes sexual harassment, whether engaged in by
supervisory or non-supervisory personnel. For a complete description of Lawson's
policy against sexual harassment, employees should refer to the Employee
Handbook.
In addition, consistent with Lawson's policy against discrimination in
the workplace, one may not in his or her capacity as a Lawson employee
discriminate against any individual or group on the basis of age, race, color,
sex, religion, national origin, disability or any other characteristic protected
by law. For a complete description of Lawson's policy against discrimination,
employees should refer to the Employee Handbook.
J. ENVIRONMENT
Lawson is committed to doing all that it can to assist in minimizing
the degradation of our natural environment. Accordingly, employees should always
take care in disposing of any waste materials or releasing any discharges into
the air or water and comply with all applicable regulations and procedures
required by law and by Company policy. If an employee is unclear about what is
required, the employee must not dispose of any material or release any
discharges until it is determined what procedures apply.
K. ADVERTISING
All Lawson advertising must be truthful, not deceptive, and comply with
the applicable laws, regulations, and Company advertising policies. Any claims
about the performance or qualities of our products in advertising,
sales-training material, and point-of-purchase displays or literature must be
substantiated before being made. We will hold ourselves and our competitors to
the same high standard when making comparative claims about competing products.
L. POLITICAL ACTIVITIES
Unless authorized, employees who participate in partisan political
activities should not suggest or state that they speak or act for Lawson.
M. PRODUCT SAFETY
Lawson's objective is to manufacture and market products that are safe
for their anticipated use. Employees should immediately report any suspected
product-safety problem to their supervisor.
N. NO CONTRACTUAL RIGHTS
All statements contained in this Code of Ethics are intended to reflect
general policies, principles, and procedures, do not represent contractual
commitments on the part of Lawson and may be changed at any time without notice.
Without limiting the generality of the foregoing, nothing in this Code of Ethics
should be construed to grant to any employee any right to benefits under any
employee benefit plan, program or arrangement.
III. DISSEMINATION AND ENFORCEMENT OF THE CODE OF ETHICS
A. DISSEMINATION
A copy of this Code of Ethics is to be provided to all employees of
Lawson. The Human Resources department will restate and/or republish the policy
periodically as needed.
B. COMPLIANCE CERTIFICATION
All employees of Lawson at the director level and above will be asked
to certify this Code of Ethics upon receipt. By certifying, the employee
acknowledges that he or she has read and understands the conditions of the Code
of Ethics. Employee certifies this Code of Ethics by signing and submitting the
attached acknowledgment.
C. PENALTIES FOR VIOLATIONS OF THE CODE OF ETHICS
It is each employee's responsibility to resolve with the General
Counsel of Lawson any actual or potential conflicts with this Code of Ethics.
Violations of this Code of Ethics, even in the first instance, may result in
disciplinary action up to and including dismissal of employment from Lawson. In
addition, violations of laws applicable to Lawson could result in substantial
fines to Lawson and individual violators and, in certain instances,
imprisonment. Anyone who violates the provisions of this Code of Ethics by
engaging in unethical conduct, failing to report conduct potentially violative
of this Code of Ethics or refusing to participate in any investigation of such
conduct, will be subject to disciplinary actions, up to and including
termination of service with Lawson. Violations of this Code may also constitute
violations of law and may result in civil or criminal penalties for an employee
or Lawson. No improper or illegal behavior will be justified by a claim that it
was ordered by someone in higher authority. No one, regardless of his or her
position, is authorized to direct an employee to commit a wrongful act.
D. REPORTING VIOLATIONS OF THE CODE OF ETHICS
Lawson is committed to supporting its people in meeting these ethical
standards of conduct. If you have reason to believe that the actions of anyone
at Lawson violate this Code of Ethics, are otherwise unethical or expose the
Company to legal or contractual problems, you should notify promptly the General
Counsel or Chairman of the Board of Director's Audit Committee. You may choose
to remain anonymous in reporting any possible violation of this Code. In
addition, you may report concerns regarding questionable accounting or auditing
matters confidentially and anonymously by utilizing our web-based and telephone
hotline program. (See the Lawson website for further information.) Lawson policy
prohibits retribution or retaliation for any information or reports that you
provide that are based on a reasonable belief or concern that a violation of
this Code of Ethics might have occurred or is planned.
Code of Ethics
The undersigned hereby acknowledges that he or she has received a copy
of Lawson's Code of Ethics and that he or she has read and understood this Code
of Ethics in its entirety and agrees to abide by it. The undersigned further
acknowledges that it is his or her responsibility to seek clarification from the
office of Lawson's General Counsel if any application of the Code of Ethics to a
particular circumstance is not clear. The undersigned acknowledges that the
undersigned's continued service with Lawson requires the undersigned to fully
adhere to this Code of Ethics and that failure to do can result in disciplinary
action up to and including termination of the undersigned's employment by
Company.
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(Signature)
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(Date)
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