**Exhibit 14**

** **

**ALDILA, INC.**

 

**CODE OF BUSINESS CONDUCT AND ETHICS**

 

I.                                         **Statement of Principles**

 

Our longstanding policy isto maintain the highest standards of integrity and ethical conduct in ourrelations with our stockholders, our employees, our customers and suppliers,and all governmental authorities.  ThisCode of Business Conduct and Ethics is intended to provide basic principles toguide your conduct.  Although it coversa wide range of business practices, and identifies a number of corporatepolicies, it does not cover every issue that may arise in the conduct of ourbusiness.  We expect all of ourdirectors, officers and employees, as well as our agents and representatives,to conduct themselves appropriately, in a manner which will enhance thereputation of our Company and will avoid even the appearance of improperpersonal or business conduct.

 

We believe strongly thatethical behavior is important in its own right.  Ethical behavior is also good for our business, as it enhancesand protects our reputation.  Areputation for ethical conduct should make people more eager to work for us, todo business with us, or to be our customer or our supplier.  We have tried to create a culture of thehighest ethical standards since the Company’s founding, and we intend tocontinue to encourage this culture in the future.

 

We expect all of ourdirectors, officers, employees, agents and representatives to comply with thisCode, except in cases where an applicable law conflicts with the Code.  We intend to enforce the provisions of thisCode vigorously, and violators will be subject to disciplinary action, whichmay include dismissal.

 

If you have questions aboutthe provisions of this Code, apparent conflicts between this Code andapplicable law, or your conduct or the conduct of others, in a particularcircumstance, please follow the procedures set forth in Section 17 of thisCode.  *Youare encouraged to report any failure—or apparent failure—to adhere to thestandards set forth in this Code in accordance with those procedures, and youshould also know that you may do so without fear of retribution*.  If you are, for any reason, uncomfortablereporting any such failure to, or discussing any other problem or issue underthis Code with, any senior officer or other employee of the Company, you shouldnote that legal counsel to the Company and one of our independent directors areavailable for that purpose.  Contactinformation for these individuals and the key officers and employees responsiblefor supervising performance in accordance with this Code are set forth in anattachment to this Code.

 

II.                                     **Rules of Conduct**

 

*1.**             Compliance with Laws,Rules and Regulations*

 

Proper conduct begins withcompliance with applicable domestic and foreign laws, rules and regulations,both their specific provisions and their intended purpose.  Although we operate in the context ofbusiness customs and market practices in particular global markets, alldirectors, officers and employees worldwide must always respect and obey theapplicable laws of the

 

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United States.  All directors, officers and employees withany involvement in our international operations must also respect and obey theapplicable laws of our host countries. Although our directors, officers and employees are not expected to knowall of the details of these laws, it is important to be aware of applicablelaws and to check if there is any uncertainty as to what applicable laws maybe.  If you need advice on applicablelaws, you should contact Robert J. Cierzan for information regarding theappropriate source for legal advice in the area in question.

 

From time to time, theCompany may provide training programs, manuals, memoranda or other resourcesfor assisting directors, officers and employees with complying with lawsrelevant to their responsibilities within the Company.

 

*2.**             Conflicts of Interest*

 

Each director, officer andemployee of the Company owes a duty of loyalty to the Company.  Business decisions and actions must be basedon the interests of the Company, not on an individual’s personal interests orconsiderations.  A “conflict ofinterest” occurs when an individual’s private interest interferes in any way—oreven appears to interfere—with the interests of the Company as a whole.

 

A conflict situation canarise when a director, officer or employee takes actions or has interests thatmay make it difficult to perform his or her work for the Company objectivelyand effectively.  Conflicts of interestalso may arise when a director, officer or employee, or a member of his or herfamily, receives improper personal benefits as a result of his or her positionin the Company.  Loans to, or guaranteesof obligations of, directors, officers or employees and their family membersare of special concern because they may create conflicts of interest.  Notwithstanding the preceding sentence, theCompany may, from time to time, make small loans to employees who are notofficers or directors.

 

Employees involved with thepurchasing of products and services for the Company or with the sale ofproducts by the Company must deal with suppliers and customers in arespectable, professional and legal manner. As a general rule, employees should not directly or indirectly acceptgifts or incentives (other than those of nominal value) from suppliers orcustomers.  If there is ever anyquestion as to the appropriateness of accepting any good or service from asupplier or customer, employees should either decline the good or service orcheck with a supervisor before accepting it.

 

Employees (including officers)should not have other outside employment or business interests that place themin the position of appearing to be conflict with the Company or that make itdifficult for an employee to discharge his or her duties to the Companyeffectively.  In particular, outsideemployment of any sort with competitors, suppliers or customers may not beundertaken without prior clearance from the Company.  Investments in competitors, suppliers or customers, while notabsolutely prohibited, also may raise serious concerns, particularly ifsignificant to financial situation of the employee in question.  Such investments may also expose a director,officer or employee to risks regarding insider trading (see Section 5 of thisCode).  In order to monitor these risks,the Company may from time to time request that directors, officers

 

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and employees inform it of anyinvestments in particular companies that are competitors or with whom theCompany does business.

 

It is not possible to listall situations in which a conflict of interest may exist or may appear toexist.  We must rely on the integrityand good judgment of our directors, officers and employees in avoidingsituations that may create a conflict of interest.

 

If questions arise, youshould consult with your supervisor, higher levels of management or legalcounsel to the Company.  Any director,officer or employee who becomes aware of a conflict or potential conflict mustbring it to the attention of a supervisor or other appropriate personnel.

 

*3.**             CorporateOpportunities*

 

A director, officer oremployee violates his or her duty of loyalty to the Company if he or shepersonally profits from a business opportunity that rightfully belongs to theCompany.  Directors, officers andemployees are prohibited from taking for themselves opportunities that arediscovered through the use of corporate property or information or as a resultof their position with the Company without the prior written consent of theCompany (which will require the approval of the Board of Directors in the caseof a director or officer).  Directors,officers and employees may not use corporate property, information, or positionfor improper personal gain, and officers and employees may not compete with theCompany directly or indirectly. Directors, officers and employees owe a duty to the Company to advanceits legitimate interests when the opportunity to do so arises.

 

*4.**             Confidentiality*

 

Directors, officers andemployees must maintain the confidentiality of non-public proprietaryinformation entrusted to them by the Company or its customers or other partieswith whom we do business, except when disclosure is authorized or legallymandated.  Generally, the ChiefFinancial Officer can inform you when disclosure is so authorized ormandated.  This principle applies to allcommunications, including, for example, Internet “chat rooms,” even where thecommunication is anonymous.  There aretwo general types of propriety information: (1) the Company’s operating information, such as trade secrets, productdesigns and specifications, business and marketing plans, productiontechnologies, contract terms, customer lists and databases; and (2) theCompany’s unpublished financial results, such as earnings or sales data, ormaterial corporate events that may impact such results.  Information about the Company’s customersand other parties should be assumed to be confidential.

 

Remember that employees, asa condition to employment, signed an agreement to maintain the confidentialityof the Company’s proprietary information and to use such information only inthe course of employment.  Theseobligations continue even after employees leave the Company.

 

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*5.**             Insider Trading*

 

Directors, officers andemployees who have access to non-public information regarding the Company orany other entity as a result of their relationship with the Company are notpermitted to use or share that information for purposes of trading securitiesof the Company or such other entity or for any other purpose except the conductof our business.  All non-publicinformation should be considered confidential information.  To use non-public information for personalfinancial benefit or to “tip” others who might make an investment decision onthe basis of this information is both unethical and illegal.  If you have any questions, please consultthe Chief Financial Officer or legal counsel to the Company.  With respect to trading in the securities ofthe Company, directors and executive officers are expected to provide the ChiefFinancial Officer advance notification of the intent to engage in trades; othermanagement and executive office employees are required to refrain from tradingexcept during “window periods” in accordance with the Company’s insider tradingpolicy.

 

*6.**             Fair Dealing*

 

We are committed to businesssuccess by maintaining the highest standards of ethics and responsibility.  We must always conduct all aspects of ourbusiness with integrity, honesty and fairness. We must respect and protect any confidential or proprietary informationshared with us by customers, suppliers or others.  No director, officer or employee acting on behalf of the Companyshould take unfair advantage of others through dishonest, unethical or illegalpractices, including false or misleading statements.

 

We encourage appropriatebusiness entertainment and gifts as a way to generate good will and improveworking relationships.  However,directors, officers, employee members and their families should not offer, giveor accept cash gifts, gifts that are excessive, or gifts that violate any lawor appear to be a bribe or pay-off. Particular care needs to be taken outside the United States, where giftgiving that conforms to local custom and practice may nonetheless violateUnited States laws against bribery of foreign officials.  Please discuss with your supervisor, theChief Financial Officer or legal counsel to the Company any gifts or proposedgifts which deviate from known customary business practices or which you arenot certain are appropriate.

 

*7.**             Discrimination andHarassment*

 

We are firmly committed toproviding equal opportunity in all aspects of employment and, consistent withthe Company’s long-established policies, we have a “zero tolerance policy” forall illegal discrimination and harassment. Harassment covers a wide range of conduct, including unwelcome sexualadvances or the use of racial epithets. Please refer to the Company’s [Discrimination/Anti-Harassment Policy].

 

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*8.**             Health, Safety andEnvironmental Concerns*

 

We take pride in our abilityto offer a safe and healthful work environment.  Each of us is responsible for maintaining a safe and healthy workplaceby following appropriate safety and health rules and reporting workplaceaccidents, injuries and unsafe conditions.

 

The Company is committed tothe protection of the environment and the conservation of natural resources bycomplying with all environmental laws and regulations.  Each employee is responsible for knowing theenvironmental requirements which are likely to apply to his or her work.

 

We do not permit violence orthreatening behavior.  “Violence”includes physically harming another, shoving, pushing, harassing, intimidating,coercing, brandishing weapons, and threatening or talking of engaging in thoseor similar activities.  It is the intentof this Code of Conduct to ensure that no one associated with our Company,including directors, officers, employees, stockholders, suppliers andcustomers, ever feels threatened by the action or conduct of a director,officer or employee.

 

Employees are not permittedto drink alcoholic beverages [(except Company supplied beverages atCompany-sponsored social events)] or use illegal drugs on Company premises, tobring intoxicants into Company buildings or on Company grounds or to come ontoCompany premises while under the influence of alcohol or illegal drugs.  Possession or use of illegal drugs or intoxicantson Company premises or while on Company business will not be tolerated.

 

*9.**             Accounting Practicesand Record-Keeping*

 

No code of conduct canreview the extensive accounting requirements which the Company mustfulfill.  To meet these obligations, however,the Company must rely on employee truthfulness in accounting and financialpractices.  All of the Company’s books,records, accounts and financial statements must be maintained in reasonabledetail, must appropriately reflect the Company’s transactions and must conformboth to applicable legal requirements, generally accepted accounting principlesand to the Company’s system of internal controls.  All transactions should be posted promptly.  Directors, officers and employees may notparticipate in any misstatement of the Company’s accounts.  There are no circumstances that justify themaintenance of unrecorded or “off-the-books” funds or assets, unless permittedby applicable law or regulation.  Evenwhere permitted by applicable law or regulation, the Company is likely to berequired to make disclosure regarding such transactions.

 

Timely and accuraterecording and reporting of information is essential for the conduct of theCompany’s business.  Business expenses,hours worked, payments made and similar matters should be documented andrecorded timely and accurately. Directors and officers should consult legal counsel to the Company andemployees should consult their supervisors if they are not sure whether a certainexpense is legitimate.  Guidelines areavailable from [the Accounting Department].

 

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Business records andcommunications, such as e-mails, internal reports, memos and similar items,often become public.  E-mails should begiven the same forethought as any written memoranda.  You should assume e-mails will be saved and that they may beforwarded to others.  We should avoidreferences that could be misunderstood or misinterpreted in light of subsequentevents.  You should retain or destroy records,including e-mails, only in accordance with the Company’s established recordretention policies.  In the event oflitigation or governmental investigation please consult [legal counsel to theCompany].

 

*10.**          Protection and ProperUse of Company Assets*

 

All directors, officers andemployees should protect the Company’s assets, including its proprietaryinformation, to ensure their efficient use. Theft, carelessness and waste have a direct impact on our profitability.  All Company assets (including Companyequipment) should be used only for legitimate business purposes.  The direct or indirect use by directors,officers or employees of any Company funds or assets for charitable orpolitical contributions of any kind, or the establishment or administration ofany committee or other organization for raising or making charitable orpolitical contributions, within or without the United States, is prohibitedunless approved by the Board of Directors. Notwithstanding the preceding sentence, an aggregate annual amount of$5,000 of charitable and/or political contributions may be authorized withoutapproval by the Board of Directors.  Anysuspected incident of misuse of Company assets, fraud or theft should beimmediately reported for investigation.

 

*11.**          Payments to GovernmentPersonnel*

 

You are strictly prohibitedfrom offering, promising or giving money, gifts, loans, rewards, favors oranything of value to any governmental official, employee, agent or otherintermediary of the government (either in or outside of the United States) inorder to influence their judgment in conducting government duties or to obtainor retain business.  You also arestrictly prohibited from making payments of any kind to agents or intermediariesif you know or have reason to know that they will pay all or part of suchpayments to accomplish what you are prohibited from doing directly.  Such payments not only violate Companypolicy but also may be a criminal offense.

 

*12.**          Antitrust*

 

The Company is firmlycommitted to compliance at all times with both the letter and spirit of UnitedStates and international antitrust and trade regulation laws, which generallyprohibit agreements or actions that unreasonably restrain trade or competition(such as price fixing, market or customer allocation and boycotts).  When you encounter situations that appear toinvolve antitrust issues, you must contact legal counsel to the Company.

 

*13.**          Stockholder Relations*

 

We value our relationshipswith our stockholders highly.  Anycommunication from a stockholder, or the investment community, requestinginformation relating to our Company should be referred to our head of InvestorRelations.

 

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*14.**          Media Relations*

 

News media contact,responses to media inquiries or public discussion of our Company’s businessshould be made only through a Company public relations spokesperson.  All questions or requests for interviewsfrom trade magazines, news reporters or other media representatives should bereferred to the head of Investor Relations or the Chief Financial Officer.

 

*15.**          Waivers of the Code ofBusiness Conduct and Ethics*

 

Any waiver of this Code forexecutive officers or directors may be made only by the Company’s Board ofDirectors or a Board committee and will be promptly disclosed to stockholdersand others, as required by applicable law or the rules of any exchange ormarket on which the Company’s securities are listed or traded.

 

*16.**          Reporting Any Illegal orUnethical Behavior*

 

We encourage our directors,officers and employees to talk to supervisors, other appropriate personnel, orlegal counsel to the Company about illegal or unethical behavior which theyobserve or learn of, or if they are in doubt about the best course of action ina particular situation.  The Companywill not allow retaliation for reports of misconduct made in good faith bydirectors, officers and employees.  Wealso expect our directors, officers and employees to cooperate in any internalinvestigations of misconduct.

 

*17.**          Procedures*

 

All of us must work toensure appropriate compliance with this Code and prompt and consistent actionagainst violations.  This Code setsforth certain general guidelines, and does not deal with every specificsituation that may arise.  Therefore, wehave provided a mechanism to deal with questions you may have or matters whichyou may wish to report.

 

In certain cases, this Codesuggests particular people to whom to take questions or issues or to whom toreport matters of concern.  In addition,whether or not a particular person is specified, you may always raise questionsor issues or report matters of concern with your direct supervisor or anysupervisor of your direct supervisor. If you feel uncomfortable doing so with your supervisors or with anyperson suggested by this Code, you may also go to the Chief Financial Officeror Chief Executive Officer or to outside legal counsel or to the independentmember of the Board of Directors identified in the Contact Information attachedto this Code.  The intent is that thereshould always be someone to whom you can discuss any question, issue orpossible ethical violation.

 

Remember, you may reportethical violations without fear of retaliation, and if necessary, your identity will be kept secret.

 

As Adopted by the Board of Directors

December 31, 2002

 

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**Aldila, Inc.**

**Code of BusinessConduct and Ethics**

**Contact Information**

 

If youhave a question or issue under the Code of Business Conduct and Ethics, wishotherwise to discuss the Code, or *need toreport possible violations of the Code*, you may contact any of thefollowing persons, as appropriate:

 

*Chief Executive Officer*

Peter R.Mathewson

 

*Chief Financial Officer*

Robert J.Cierzan

 

*Legal Counsel to the Company*

Seltzer,Caplan, McMahon, Vitek

 

Andrew Brooks; brooks@scmv.com

 

*Accountants/Auditors*

Peterson& Co. LLC

 

 

*Designated Independent Member of the Board ofDirectors*

 

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