EXHIBIT 14
DHB INDUSTRIES, INC.
CODE OF BUSINESS CONDUCT AND ETHICS
INTRODUCTION
DHB Industries, Inc. and its subsidiaries (the "Company") is committed
to the principle of honest and ethical conduct in all aspects of its business.
With the adoption of the Sarbanes-Oxley Act of 2002, and rules adopted by the
Securities and Exchange Commission (the "Commission"), all publicly held
companies have been encouraged to adopt and make available to the public written
codes of conduct and ethics. The following Code of Business Conduct and Ethics
(this "Code") is intended to be a codification of the business and ethical
principles which have been a part of the Company, and is intended, among other
things, to promote:
o honest and ethical conduct, including the ethical handling of
actual or apparent conflicts of interest between personal and
professional relationships;
o avoidance of conflicts of interest, including disclosure to an
appropriate person or persons identified in this Code of any
material transaction or relationship that reasonably could be
expected to give rise to such a conflict;
o full, fair, accurate, timely, and understandable disclosure in
reports and documents that the Company files with, or submits to,
the Commission and in other public communications made by the
Company;
o compliance with applicable governmental laws, rules and
regulations;
o the prompt internal reporting of Code violations to an appropriate
person or persons identified in this Code; and
o accountability for adherence to this 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 of the Company. All Company employees must conduct
themselves accordingly and seek to avoid even the appearance of improper
behavior. In appropriate circumstances, this Code should also be provided to and
followed by the Company's agents and representatives, including consultants.
If a law conflicts with a policy in this Code, the employee must comply
with the law; however, if a local custom or policy conflicts with this Code, the
employee must comply with the Code. If an employee has any questions about these
conflicts, the employee should ask his or her supervisor how to handle the
situation.
Any employee who violates the standards in this Code will be subject to
disciplinary action. IF AN EMPLOYEE IS IN A SITUATION THAT THE EMPLOYEE BELIEVES
MAY VIOLATE OR LEAD TO A VIOLATION OF THIS CODE, THE EMPLOYEE SHOULD FOLLOW THE
GUIDELINES DESCRIBED IN SECTION 14 OF THIS CODE.
1. COMPLIANCE WITH LAWS, RULES AND REGULATIONS
Obeying the law, both in letter and in spirit, is the foundation on
which the Company's ethical standards are built. All employees must respect and
obey the laws of the cities, states, and countries in which the Company
operates. 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 personnel.
The Company holds information and training sessions to promote
compliance with laws, rules and regulations, including insider-trading laws.
As noted, the Company is subject to various federal and state laws
which govern various aspects of all businesses generally. A few examples, not
intended to be all-inclusive, are laws which regulate conduct in the workplace,
such as sexual harassment laws and laws which prohibit discrimination based on
age, sex, race, national origin or the like.
As a publicly held company, we are subject to significant regulation
under the federal securities laws. Again, an example is our obligation to timely
and accurately file all reports that we are required to file with the
Commission, including the accurate filing of required financial information.
Our products must meet legal and industry-mandated standards and
specifications, which are designed to promote the effectiveness of our products
for various uses. The Company expects all of its employees to comply with
Company practices and procedures, which are intended to foster compliance with
legal and industry standards.
Various of our departments have applicable policies and procedures
through which our managers, in conjunction with our senior management, assist
the Company as part of their functions in complying with applicable laws and
regulations. We expect all of our employees to cooperate in this respect and
observe the policies and procedures set out by managers with respect to legal
compliance. Where an employee reasonably believes that the Company is not
compliant with any law or regulation, we encourage our employees to bring that
matter up directly with the employee's immediate supervisor and, if the matter
is not ultimately resolved by either a reasonable explanation or action taken to
rectify any non-compliance, we encourage the employee to bring the matter
directly to the attention of the Company's Chairman or the Company's President.
With respect to financial matters in particular, and not just confined
to those of our employees performing accounting or internal auditing functions,
the Company's policy is that, if an employee believes that the Company has or is
about to engage in any financial irregularity or impropriety, the matter be
brought to the attention of the Chairman of our Audit Committee. This may be
done anonymously and without fear of reprisal of any sort. Any complaint
directed to the Chairman of the Audit Committee may be sent by mail or e-mail as
follows: Jerry Krantz, Krantz Financial, 500 N. Broadway, Suite 251, Jericho, NY
11753 or jk2insure@aol.com
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2. FINANCIAL INFORMATION AND DEALINGS WITH EXTERNAL AUDITORS
The honest and accurate recording and reporting of financial
information is of critical importance to the Company. This is not only essential
in order for senior management to make informed responsible business decisions,
but is also essential to the Company's ability to file accurate financial
reports with the Securities and Exchange Commission; to enable the Company to
comply with various laws relating to the maintenance of books and records and
financial reporting; to enable the Chief Executive Officer and Chief Financial
Officer of the Company to make their necessary certifications in connection with
the periodic filing by the Company of financial information; and to inform the
stockholders of the Company and the investing public of accurate financial
information of the Company.
No employee shall falsify the books and records of the Company or
otherwise knowingly circumvent or fail to implement the internal accounting
controls of the Company as they now exist or as they may be modified, revised,
amended or supplemented.
The external auditors of the Company play an integral role in the
financial reporting process through their annual examination and report on the
Company's financial statements and their review of periodic reports of the
Company. Open and honest fair dealings with our external auditors is therefore
essential. No employee of the Company, whether an officer, director or part of
the Company's accounting department, shall make any false or misleading
statement to any external auditor of the Company in connection with an audit or
examination of the financial statements of the Company or the preparation or
filing of any document or report. Similarly, no employee of the Company shall
engage in any conduct to fraudulently influence, coerce, manipulate or mislead
any accountant engaged in the audit or review of any financial statements of the
Company.
3. CONFLICTS OF INTEREST
A "conflict of interest" exists when an individual's private interest
interferes in any way - or even appears to conflict - with the interests of the
Company as a whole. A conflict situation can arise when an employee, officer or
director takes actions or has interests that may make it difficult to perform
his or her work on behalf of the Company in an objective and effective manner.
Conflicts of interest may also arise when an employee, officer or director, or a
member of his or her family, receives improper personal benefits as a result of
his or her position in the Company. Loans by the Company to, or guarantees by
the Company of obligations of, employees and/or their family members may create
conflicts of interest.
It is almost always a conflict of interest for a Company employee to
work simultaneously for a competitor, customer or supplier. An employee is not
allowed to work for a competitor as a consultant or board member. The best
policy is to avoid any direct or indirect business connection with the Company's
customers, suppliers or competitors, except on the Company's behalf.
Conflicts of interest are prohibited as a matter of Company policy,
except under guidelines approved by the Company's Board of Directors. Conflicts
of interest may not always be clear-cut, so if a question arises, the employee
should consult with higher levels of management or the Company's internal
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auditor or Chief Financial Officer. Any employee, officer or director who
becomes aware of a conflict or potential conflict should bring it to the
attention of a supervisor, manager or other appropriate personnel, or consult
the procedures described in Section 14 of this Code.
4. INSIDER TRADING
Employees who have access to confidential information are not permitted
to use or share that information for stock trading purposes or for any other
purpose except the conduct of the Company's business. All non-public information
about the Company should be considered confidential information. To use
non-public 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 illegal. If a question arises, the employee should consult
the Company's Chief Financial Officer. The Company has separately prepared and
distributed an Insider Trading Policy dated March 2003, addressing these and
other matters relating to securities trading by Company personnel.
5. CORPORATE OPPORTUNITIES
Employees, officers and directors are prohibited from taking for
themselves personally opportunities that are discovered through the use of
corporate property, information or position, except with the prior consent of
the Company's Board of Directors. No employee may use corporate property,
information or position for improper personal gain, and no employee may compete
with the Company directly or indirectly. Employees, officers and directors owe a
duty to the Company to advance its legitimate interests when the opportunity to
do so arises.
6. COMPETITION AND FAIR DEALING
The Company seeks to outperform competitors fairly and honestly. The
Company seeks competitive advantages through superior performance, never through
unethical or illegal business practices. Stealing proprietary information,
possessing trade secret information that was obtained without the owner's
consent, or inducing such disclosures by past or present employees of other
companies is prohibited. Each employee, officer and director should endeavor to
respect the rights of and deal fairly with the Company's customers, suppliers,
competitors and employees. No employee, officer or director should take unfair
advantage of anyone through manipulation, concealment, abuse of privileged
information, misrepresentation of material facts, or any other intentional
unfair-dealing practice.
To maintain the Company's valuable reputation, compliance with the
Company's quality processes and safety requirements is essential. In the context
of ethics, quality requires that the Company's products and services meet
reasonable customer expectations. All inspection and testing documents must be
handled in accordance with all applicable regulations.
The purpose of business entertainment and gifts in a commercial setting
is to create good will and sound working relationships, not to gain unfair
advantage with customers. No gift or entertainment should ever be offered,
given, provided or accepted by any Company employee, family member of an
employee, or agent unless it (1) is not a cash gift, (2) is consistent with
customary business practices, (3) is not excessive in value, (4) cannot be
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construed as a bribe or payoff, and (5) does not violate any laws or
regulations. An employee should discuss with his or her supervisor any gifts or
proposed gifts that the employee is not certain are appropriate.
7. DISCRIMINATION AND HARASSMENT
The diversity of the Company's employees is a tremendous asset. The
Company is firmly committed to providing equal opportunity in all aspects of
employment and will not tolerate any illegal discrimination or harassment or any
kind. Examples include derogatory comments based on racial or ethnic
characteristics and unwelcome sexual advances.
8. HEALTH AND SAFETY
The Company strives to provide each employee with a safe and healthful
work environment. Each employee has responsibility for maintaining a safe and
healthy workplace for all employees by following safety and health rules and
practices and reporting accidents, injuries, and unsafe equipment, practices, or
conditions.
Violence and threatening behavior are not permitted. Employees should
report to work in condition to perform their duties, free from the influence of
illegal drugs or alcohol. The use of illegal drugs in the workplace will not be
tolerated.
9. RECORD-KEEPING
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. Unrecorded or "off the books"
funds or assets should not be maintained unless permitted by applicable law or
regulation.
Business records and communications should always be retained and not
destroyed unless in accordance with to the Company's record retention policies.
In accordance with those policies, in the event of litigation or governmental
investigation, employees must consult with the Company's Chief Financial Officer
before taking any action because it is critical that any impropriety or possible
appearance of impropriety be avoided.
10. CONFIDENTIALITY
Employees, officers and directors must maintain the confidentiality of
confidential information entrusted to them by the Company or its customers,
except when disclosure is authorized by an executive officer or required or
mandated by laws, regulations, subpoenas or judicial/court orders. Confidential
information includes all non-public information that, if disclosed, might be of
use to competitors or harmful to the Company or its customers. It also includes
information that suppliers and customers have entrusted to us. The obligation to
preserve confidential information continues even after employment ends.
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11. PROTECTION AND PROPER USE OF COMPANY ASSETS
All employees, officers and directors 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 for investigation. Company assets
should be used for legitimate business purposes and should not be used for
non-Company business, though incidental personal use may be permitted.
The obligation of employees to protect the Company's assets includes
its proprietary information. Proprietary information includes intellectual
property, such as trade secrets, patents, trademarks and copyrights, as well as
business, marketing and service plans, engineering and manufacturing ideas,
designs, databases, records, salary information, and any unpublished financial
data and reports. Unauthorized use or distribution of this information would
violate Company policy. It could also be illegal and result in civil or even
criminal penalties.
12. MAKING OF IMPROPER PAYMENTS
The laws of the United States, as well as the laws of many foreign
countries, prohibit a wide variety of payments, gifts or other things of value
to be given to officials of foreign governments as an inducement to obtain
business from those governments or in those countries. All employees must be
mindful of these legal restrictions, and must avoid any conduct that might be
considered to violate such laws and regulations.
13. WAIVERS OF THE CODE OF BUSINESS CONDUCT AND ETHICS
Any waiver of this Code for executive officers or directors may be made
only by the Board or a Board committee and will be promptly disclosed to
stockholders as required by law or stock exchange regulation.
14. REPORTING ANY ILLEGAL OR UNETHICAL BEHAVIOR
Employees are encouraged to talk to supervisors, managers or other
appropriate personnel when in doubt about the best course of action in a
particular situation. Employees should report any observed illegal or unethical
behavior and any perceived violations of laws, rules, regulations or this Code
to appropriate supervisors or managerial personnel. It is the policy of the
Company not to allow retaliation for reports of misconduct by others made in
good faith by employees. Employees are expected to cooperate in internal
investigations of suspected misconduct.
15. COMPLIANCE PROCEDURES
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:
o MAKE SURE YOU HAVE ALL THE FACTS. In order to reach the right
solutions, we must be as fully informed as possible.
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o ASK YOURSELF: WHAT SPECIFICALLY AM I BEING ASKED TO DO? DOES IT
SEEM UNETHICAL OR IMPROPER? 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.
o 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.
o 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.
o SEEK HELP FROM COMPANY RESOURCES. In the rare case where it may
not be appropriate to discuss an issue with your supervisor, or
where you do not feel comfortable approaching your supervisor with
your question, discuss it locally with your office manager or your
Human Resources manager. If that also is not appropriate, call
Company headquarters to seek out the appropriate person to deal
with your concern. If you prefer to write, address your concern to
the Company's Chief Executive Officer or Chief Financial Officer.
o 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. The Company does
not permit retaliation of any kind against employees for good
faith reports of ethical violations.
o ALWAYS ASK FIRST, ACT LATER: If you are unsure of what to do in
any situation, seek guidance BEFORE YOU ACT.
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