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                               OWOSSO CORPORATION
                       CODE OF BUSINESS CONDUCT AND ETHICS

Introduction

                  This Code of Business Conduct and Ethics 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 directors, officers, and
employees of the Company. All of our directors, officers, and employees must
conduct themselves accordingly and seek to avoid even the appearance of improper
behavior.

                  If a law conflicts with a policy in this Code, you must comply
with the law; however, if a local custom or policy conflicts with this Code, you
must comply with the Code. If you have any questions about these conflicts, you
should ask your supervisor how to handle the situation.

                  This Code of Conduct will be strictly enforced. All managers
and supervisors are required to enforce this policy and are not permitted to
sanction or condone violations. There will be serious adverse consequences for
non-adherence to the Code, which may include removal from a position as director
or officer, and dismissal as an employee of the Company. If you are in a
situation which you believe may violate or lead to a violation of this Code, you
should follow the procedures described in Sections 14-16 of this Code.

1. Compliance with Laws

                  Obeying the law, both in letter and in spirit, is the
foundation on which this Company's ethical standards are built. All directors,
officers, and employees must obey the laws of the United States and the cities
and states in which we operate. 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.

2. Ethical Conduct

                  Beyond compliance with laws, the Company requires that all its
directors, officers, and employees act in a manner which meets the highest
standards of ethical behavior. This includes the obligation to avoid any actual
or apparent conflicts of interest in personal and professional relationships.
The honesty and integrity of our business conduct must not be compromised. The
Company will not condone ethical violations for the sake of personal gain,
personal advantage, expediency, or perceived business advantage.

3. Accounting, Auditing Matters, and Public Disclosure Obligations

                  The Company's requirement that directors, officers, and
employees follow the highest ethical standards applies directly to all actions
which involve business accounting, financial reporting, internal accounting
controls, auditing matters, and public disclosure obligations. Full, fair,
accurate, timely, and understandable disclosure is required in all reports and
documents that the Company files with, or submits to, the Securities Exchange
Commission and in any other public communications.





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                  The Audit Committee of the Company has adopted special
procedures for the receipt, retention, and treatment of complaints regarding
accounting, internal accounting controls, or auditing matters. These procedures
are set out in Sections 15 and 16 of this Code.

4. Conflicts of Interest

                  A "conflict of interest" exists when a person's private
interest may or does interfere with the interests of the Company. A conflict can
arise when a director, officer, or employee takes actions or has interests that
may make it difficult to perform his or her Company work objectively and
effectively. Conflicts of interest may also arise when a director, officer, or
employee, or member of his or her family, receives improper personal benefits as
a result of his or her position with the Company.

                  It is almost always a conflict of interest for a Company
employee to work simultaneously for a competitor, customer or supplier.
Employees are 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 our competitors, customers or suppliers, except on our behalf. Conflicts of
interest are prohibited as a matter of Company policy, except in circumstances
approved by the Board of Directors or the Audit Committee of the Board.

                  Conflicts of interest may not always be clear-cut, so if you
have a question, you should consult with higher levels of management or the
Company's Audit Committee. Any director, officer, or employee who becomes aware
of a conflict or potential conflict should bring it to the attention of a
supervisor or follow the procedures described in Section 15-16 of this Code.

                  Directors, officers, and employees owe a duty to the Company
to advance its legitimate interests when the opportunity to do so arises. In
particular:

                  o No payments, loans, employment or promises of employment,
investment opportunities, vacation trips, gifts or entertainment (other than
entertainment conforming to generally accepted business practices or gifts of
nominal value not reasonably calculated to influence a decision) may be offered
to or accepted by any director, officer, or employee or a relative of such a
person as a condition of the initial or continued engagement of a consultant,
broker, vendor or third party working for the Company.

                  o No payments (other than fees for services), loans,
employment or promises of employment, investment opportunities, vacation trips,
gifts or entertainment (other than entertainment conforming to generally
accepted business practices or gifts of nominal value not reasonably calculated
to influence a decision) may be offered to or accepted by any consultant,
broker, vendor, government official or a relative of such third party in
connection with any services being performed for the Company.

                  o No director, officer, or employee may recommend any third
party for work for the Company on a project or development of the Company where
the third party's compensation is paid on the basis of any kickback or fee
sharing arrangement with the director, officer, or employee, nor may a director,



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officer, or employee recommend any third party without full disclosure and
written approval by the President and Chief Executive Officer or Senior Vice
President, if such third party has any familial or pre-existing monetary
relationship with the director, officer, or employee or if such director,
officer, or employee has an equity or stock ownership position in such third
party.

                  o No employee shall, in his capacity as an employee, make any
loan, donation, contribution or payment to a political party, candidate, or
political action committee, for or on behalf of the Company or any project or
development in which the Company is engaged, nor shall an employee of the
Company reimburse any individual who does. (Nothing contained in this tenet
shall prohibit an employee from taking any of the above actions in his or her
name, provided that the action is exclusively on the employee's own accord and
is not an indirect means of accomplishing one of the prohibited actions).

                  o No employee shall use or appropriate materials, property,
equipment, systems and procedures (if proprietary in nature) owned by the
Company for his or her own personal financial gain except to the extent
necessary for the performance of his or her duties for the Company.

                  In short, 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 be
offered, given, provided or accepted by any Company employee, family member of
an employee unless it: (1) is not a cash gift, (2) is consistent with customary
business practices, (3) is not excessive in value, (4) cannot be construed as a
bribe and is not reasonably calculated to influence a decision and (5) does not
violate any laws or regulations. Please discuss with your supervisor any gifts
or proposed gifts which you are not certain are appropriate.

                  o No employee shall purchase or obtain any goods or services
from any of the Company's vendors or suppliers without the prior written
approval of the President of the Company.

5. Insider Trading

                  Directors, officers, and 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 our
business and in strict conformance with all applicable laws and SEC regulations.
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. The Company's policy on
insider trading is set forth more fully in the "Policy Statement on Dealing with
Company Information, Including Inside Information and Securities Insider
Trading" furnished to all directors, officers, and employees. If you have any
questions, please consult the Company's Audit Committee.




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6. Competition and Fair Dealing

                  We seek to outperform our competition fairly and honestly. We
seek 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 should endeavor to respect the rights of
and deal fairly with the Company's customers, suppliers, competitors and
employees. No employee should take unfair advantage of anyone through
manipulation, concealment, abuse of privileged information, misrepresentation of
material facts, or any other intentional unfair-dealing practice.

7. Discrimination, Harassment and Retaliation

                  The diversity of the Company's employees is a tremendous
asset. We are firmly committed to providing equal opportunity in all aspects of
employment and will not tolerate discrimination, harassment or retaliation. The
Company's policy against discrimination applies to any legally protected status
including race, color, gender, religion, national origin, disability, veteran
status, and age. This policy also prohibits discrimination against any person
who provides information to a federal regulatory or law enforcement agency, a
member of Congress or any committee of Congress, or to a supervisor concerning
conduct which the employee reasonably believes constitutes a violation of
securities laws or any provision of federal law relating to fraud against
shareholders. The Company also prohibits discriminatory harassment of any
employee covered by the policy against discrimination.

                  No director, officer, or employee may retaliate against an
individual for bringing a complaint of discrimination or for participating in an
investigation or proceeding involving a complaint of discrimination.

                  No one may take any action harmful to any person for providing
to a law enforcement officer any truthful information relating to the commission
or possible commission of any federal offense.

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 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

                  The Company requires honest and accurate recording and
reporting of information in order to make responsible business decisions. For
example, only the true and actual number of hours worked should be reported.




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                  Many employees regularly use business expense accounts, which
must be documented and recorded accurately. If you are not sure whether a
certain expense is legitimate, ask your supervisor or your controller.

                  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.

                  Business records and communications often become public, and
we should avoid exaggeration, derogatory remarks, guesswork, or inappropriate
characterizations of people and companies that can be misunderstood. This
applies equally to e-mail, internal memos, and formal reports. Records should
always be retained or destroyed according to the Company's record retention
policies. In accordance with those policies, in the event of litigation or
governmental investigation please consult the Company's Audit Committee.

10. Confidentiality

                  Employees must maintain the confidentiality of the information
entrusted to them by the Company or its customers, except when disclosure is
authorized by the President and Chief Executive Officer, a Senior Vice
President, the Company's Audit Committee, or required by law. Confidential
information includes all non-public information that might be of use to
competitors, or harmful to the Company or its customers, if disclosed. It also
includes information that suppliers and customers have entrusted to us. The
obligation to preserve confidential information continues even after employment
ends.

11. Protection and Proper Use of Company Assets

                  All employees should endeavor to protect the Company's assets
and ensure their efficient use. Theft, carelessness and waste have a direct
impact on the Company's profitability. Any suspected incident of fraud or theft
should be immediately reported for investigation.

                  The obligation of employees to protect the Company's assets
includes the Company's proprietary information. Proprietary information includes
business, marketing and service plans, 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. Payments to Government Personnel

                  The U.S. Foreign Corrupt Practices Act prohibits giving
anything of value, directly or indirectly, to officials of foreign governments
or foreign political candidates in order to obtain or retain business. It is
strictly prohibited to make illegal payments to government officials of any
country. In addition, the U.S. government has a number of laws and regulations
regarding business gratuities which may be accepted by U.S. government
personnel. The promise, offer or delivery to an official or employee of the U.S.
government of a gift, favor or other gratuity in violation of these rules would
not only violate Company policy but could also be a criminal offense. State and
local governments, as well as foreign governments, may have similar rules. The
Company's Audit Committee can provide guidance to you in this area.



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13. Waivers of the Code of Business Conduct and Ethics

                  Any waiver of this Code for executive officers and directors
may be made only by the Board of Directors and will be promptly disclosed as
required by law or stock exchange regulation

14. Personal Responsibility

                  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.

    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 with the Director of
         Human Resources. If that also is not appropriate, call our Audit
         Committee

    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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15. Reporting/Investigation Procedures

                  Any employee who reasonably believes that there has been a
material violation of this Code of Conduct should report it immediately to the
Company's Audit Committee. The Audit Committee (or their designee) will promptly
investigate the matter. The investigation will be handled discreetly and
appropriately, and the information will be disclosed to others only on a need to
know basis and as required by law. There will be no adverse action taken against
employees who report violations of the Code of Conduct or who participate in the
investigation. If the investigation leads to a conclusion that a material
violation of the Code of Conduct has occurred, the Company will take appropriate
corrective action, which may include removal from a position as director or
officer, and dismissal as an employee of the Company.

                  The Company recognizes the potentially serious impact of a
false accusation. Employees are expected as part of the ethical standards
required by this Code of Conduct to act responsibly in making complaints. Making
a complaint without a good faith basis is itself an ethical violation. Any
employee who makes a complaint in bad faith will be subject to appropriate
corrective action including dismissal.

16. Procedures for Submitting Confidential, Anonymous Complaints Regarding
Accounting and Auditing Matters

                  As an alternative to the procedures described in Section 15,
any employee who reasonably believes that there has been a material violation of
this Code of Conduct caused by questionable accounting or auditing matters has
the right to submit a confidential, anonymous complaint to the Company's Audit
Committee. The complaint should be made in written form and provide sufficient
information so that a reasonable investigation can be conducted. The complaint
should be addressed to the Audit Committee of Owosso Corporation, P.O. Box 6660,
Watertown, New York, 13601.














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