ALDILA, INC.
CODE OF BUSINESS CONDUCT AND ETHICS
I. Statement of Principles
Our longstanding policy is to maintain the highest standards of integrity and
ethical conduct in our relations with our stockholders, our employees, our
customers and suppliers, and all governmental authorities. This Code of Business
Conduct and Ethics is intended to provide basic principles to guide your
conduct. Although it covers a wide range of business practices, and identifies
a number of corporate policies, it does not cover every issue that may arise
in the conduct of our business. We expect all of our directors, officers
and employees, as well as our agents and representatives, to conduct themselves
appropriately, in a manner which will enhance the reputation of our Company
and will avoid even the appearance of improper personal or business conduct.
We believe strongly that ethical behavior is important in its own right. Ethical
behavior is also good for our business, as it enhances and protects our reputation.
A reputation for ethical conduct should make people more eager to work for
us, to do business with us, or to be our customer or our supplier. We have
tried to create a culture of the highest ethical standards since the Company's
founding, and we intend to continue to encourage this culture in the future.
We expect all of our directors, officers, employees, agents and representatives
to comply with this Code, except in cases where an applicable law conflicts
with the Code. We intend to enforce the provisions of this Code vigorously,
and violators will be subject to disciplinary action, which may include dismissal.
If you have questions about the provisions of this Code, apparent conflicts
between this Code and applicable law, or your conduct or the conduct of others,
in a particular circumstance, please follow the procedures set forth in Section
17 of this Code. You are encouraged to report any failure—or apparent
failure—to adhere to the standards set forth in this Code in accordance
with those procedures, and you should also know that you may do so without
fear of retribution. If you are, for any reason, uncomfortable reporting any
such failure to, or discussing any other problem or issue under this Code with,
any senior officer or other employee of the Company, you should note that legal
counsel to the Company and one of our independent directors are available for
that purpose. Contact information for these individuals and the key officers
and employees responsible for supervising performance in accordance with this
Code are set forth in an attachment to this Code.
II. Rules of Conduct
1. Compliance with Laws, Rules and Regulations
Proper conduct begins with compliance with applicable domestic
and foreign laws, rules and regulations, both their specific provisions
and their intended
purpose. Although we operate in the context of business customs and market
practices in particular global markets, all directors, officers and employees
worldwide must always respect and obey the applicable laws of the United
States. All directors, officers and employees with any involvement
in our international
operations must also respect and obey the applicable laws of our host countries.
Although our directors, officers and employees are not expected to know all
of the details of these laws, it is important to be aware of applicable laws
and to check if there is any uncertainty as to what applicable laws may be.
If you need advice on applicable laws, you should contact Robert J. Cierzan
for information regarding the appropriate source for legal advice in the
area in question.
From time to time, the Company may provide training programs, manuals, memoranda
or other resources for assisting directors, officers and employees with complying
with laws relevant to their responsibilities within the Company.
2. Conflicts
of Interest
Each director, officer and employee of the Company owes a duty
of loyalty to the Company. Business decisions and actions must
be based on the interests
of the Company, not on an individual's personal interests or considerations.
A “conflict of interest” occurs when an individual’s
private interest interferes in any way—or even appears to interfere—with
the interests of the Company as a whole.
A conflict situation can arise when a director, officer or employee takes
actions or has interests that may make it difficult to perform his or
her work for
the Company objectively and effectively. Conflicts of interest also may
arise when a director, officer or employee, or a member of his or her
family, receives
improper personal benefits as a result of his or her position in the
Company. Loans to, or guarantees of obligations of, directors, officers
or employees
and their family members are of special concern because they may create
conflicts of interest. Notwithstanding the preceding sentence, the Company
may, from
time to time, make small loans to employees who are not officers or directors.
Employees involved with the purchasing of products and services for the
Company or with the sale of products by the Company must deal with suppliers
and
customers in a respectable, professional and legal manner. As a general
rule, employees
should not directly or indirectly accept gifts or incentives (other than
those of nominal value) from suppliers or customers. If there is ever
any question
as to the appropriateness of accepting any good or service from a supplier
or customer, employees should either decline the good or service or check
with a supervisor before accepting it.
Employees (including officers) should not have other outside employment
or business interests that place them in the position of appearing to
be conflict
with the Company or that make it difficult for an employee to discharge
his or her duties to the Company effectively. In particular, outside
employment of any sort with competitors, suppliers or customers may not
be undertaken
without prior clearance from the Company. Investments in competitors,
suppliers or customers, while not absolutely prohibited, also may raise
serious concerns,
particularly if significant 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 this Code). In order to monitor
these risks,
the Company may from time to time request that directors, officers and
employees
inform it of any investments in particular companies that are competitors
or with whom the Company does business.
It is not possible to list all situations in which a conflict of interest
may exist or may appear to exist. We must rely on the integrity and good
judgment
of our directors, officers and employees in avoiding situations that
may create a conflict of interest.
If questions arise, you should consult with your supervisor, higher levels
of management or legal counsel to the Company. Any director, officer
or employee who becomes aware of a conflict or potential conflict must
bring
it to the
attention of a supervisor or other appropriate personnel.
3. Corporate
Opportunities
A director, officer or employee violates
his or her duty of loyalty to the Company if he or she personally
profits from a business opportunity
that
rightfully belongs to the Company. Directors, officers and employees
are prohibited from
taking for themselves opportunities that are discovered through the
use
of corporate property or information or as a result of their position
with the
Company without the prior written consent of the Company (which will
require the approval of the Board of Directors in the case of a director
or officer).
Directors, officers and employees may not use corporate property, information,
or position for improper personal gain, and officers and employees
may not compete with the Company directly or indirectly. Directors,
officers
and
employees owe a duty to the Company to advance its legitimate interests
when the opportunity
to do so arises.
4. Confidentiality
Directors, officers and employees must maintain the confidentiality
of non-public proprietary information entrusted to them by the
Company or
its customers
or other parties with whom we do business, except when disclosure
is authorized or legally mandated. Generally, the Chief Financial
Officer
can inform
you when disclosure is so authorized or mandated. This principle
applies to all
communications, including, for example, Internet “chat rooms,” even
where the communication is anonymous. There are two general types of propriety
information: (1) the Company’s operating information, such as trade secrets,
product designs and specifications, business and marketing plans, production
technologies, contract terms, customer lists and databases; and (2) the Company’s
unpublished financial results, such as earnings or sales data, or material
corporate events that may impact such results. Information about the Company’s
customers and other parties should be assumed to be confidential.
Remember that employees, as a condition to employment, signed an
agreement to maintain the confidentiality of the Company’s
proprietary information and to use such information only in the
course of employment. These obligations
continue even after employees leave the Company.
5. Insider Trading
Directors, officers and employees who have access
to non-public information regarding the Company or any other entity
as a result
of their relationship
with the Company are not permitted to use or share that information
for purposes of trading securities of the Company or such other
entity or
for any other
purpose except the conduct of our business. All non-public
information 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 both unethical and illegal. If
you have any questions, please consult the Chief Financial
Officer or legal counsel to the Company. With respect to trading
in the
securities of the Company,
directors and executive officers are expected to provide the
Chief Financial Officer advance notification of the intent
to engage in trades; other management
and executive office employees are required to refrain from
trading except during "window periods" in accordance
with the Company's insider trading policy.
6. Fair Dealing
We are committed to business success by maintaining
the highest standards of ethics and responsibility. We must always
conduct
all aspects
of our business with integrity, honesty and fairness. We
must respect and protect
any confidential
or proprietary information shared with us by customers,
suppliers or
others. No director, officer or employee acting on behalf
of the Company should
take unfair advantage of others through dishonest, unethical
or illegal practices,
including false or misleading statements.
We encourage appropriate business entertainment and gifts
as a way to generate good will and improve working relationships.
However,
directors, officers,
employee members and their families should not offer, give
or accept cash gifts, gifts that are excessive, or gifts
that
violate
any
law
or
appear
to be a bribe
or pay-off. Particular care needs to be taken outside the
United States, where gift giving that conforms to local
custom and
practice may nonetheless
violate
United States laws against bribery of foreign officials.
Please discuss with your supervisor, the Chief Financial
Officer or
legal counsel
to the Company
any gifts or proposed gifts which deviate from known customary
business practices or which you are not certain are appropriate.
7.
Discrimination and Harassment
We are firmly committed to providing
equal opportunity in all aspects of employment and, consistent
with the Company’s long-established policies, we have
a “zero tolerance policy” for all illegal
discrimination and harassment. Harassment covers a wide
range of conduct,
including unwelcome sexual advances
or the use of racial epithets. Please refer to the Company’s
[Discrimination/Anti-Harassment Policy].
8. Health, Safety
and Environmental Concerns
We take pride in our ability
to offer a safe and healthful work environment. Each of us is responsible
for maintaining
a safe
and healthy workplace
by following appropriate safety and health rules and
reporting workplace accidents,
injuries
and unsafe conditions.
The Company is committed to the protection of the environment
and the conservation of natural resources by complying
with all environmental
laws and regulations.
Each employee is responsible for knowing the environmental
requirements which are likely to apply to his or her
work.
We do not permit violence or threatening behavior. “Violence” includes
physically harming another, shoving, pushing, harassing, intimidating,
coercing, brandishing weapons, and threatening or talking of engaging
in those or similar
activities. It is the intent of this Code of Conduct to ensure
that no one associated with our Company, including directors, officers,
employees, stockholders,
suppliers and customers, ever feels threatened by the action or
conduct of a director, officer or employee.
Employees are not permitted to drink alcoholic beverages
[(except Company supplied beverages at Company-sponsored
social events)]
or use illegal
drugs on Company
premises, to bring intoxicants into Company buildings
or on Company grounds or to come onto Company premises
while
under
the influence
of alcohol
or illegal drugs. Possession or use of illegal drugs
or intoxicants on Company
premises
or while on Company business will not be tolerated.
9.
Accounting Practices and Record-Keeping
No code of conduct can review
the extensive accounting requirements which the Company must fulfill.
To meet
these obligations,
however, the Company
must
rely on employee truthfulness in accounting and financial
practices. 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, generally accepted accounting principles
and to the Company’s system of internal
controls. All transactions should be posted promptly.
Directors, officers and employees may not participate
in any misstatement of the Company’s accounts.
There are no circumstances that justify the maintenance
of unrecorded or “off-the-books” funds
or assets, unless permitted by applicable law or regulation.
Even where permitted by applicable law or regulation,
the Company is
likely to be required to make
disclosure regarding such transactions.
Timely and accurate recording and reporting of information
is essential for the conduct of the Company’s business. Business expenses,
hours worked, payments made and similar matters should be documented
and recorded timely
and accurately. Directors and officers should consult legal counsel
to the Company and employees should consult their supervisors if
they are not sure
whether a certain expense is legitimate. Guidelines are available
from [the Accounting Department].
Business records and communications, such as e-mails,
internal reports, memos and similar items, often
become public.
E-mails should be given
the same
forethought as any written memoranda. You should
assume e-mails will be saved and that
they may be forwarded to others. We should avoid
references that could be misunderstood or misinterpreted
in light
of subsequent events. You
should retain or destroy
records, including e-mails, only in accordance with
the Company’s
established record retention policies. In the event
of litigation or governmental investigation
please consult [legal counsel to the Company].
10.
Protection and Proper Use of Company Assets
All directors,
officers and employees should protect the Company’s
assets, including its proprietary information,
to ensure their efficient use. Theft,
carelessness and waste have a direct impact on
our profitability. All Company assets (including Company equipment)
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
or political
contributions of any
kind, or the establishment or administration of
any committee or other organization for raising or making charitable
or political
contributions, within or without
the United States, is prohibited unless 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 without approval by the Board of Directors. Any suspected
incident
of misuse of Company assets,
fraud or theft should be immediately reported for
investigation.
11. Payments to Government Personnel
You are strictly prohibited
from offering, promising or giving money, gifts, loans, rewards,
favors
or anything of value
to any governmental
official,
employee, agent or other intermediary of the
government (either in or outside of the
United States) in order to influence their
judgment in conducting government duties or to obtain
or retain business.
You also
are strictly prohibited
from making payments of any kind to agents
or intermediaries if you know or have
reason to know that they will pay all or part
of such payments
to accomplish what you are prohibited from
doing directly. Such payments
not only
violate Company policy but also may be a criminal
offense.
12. Antitrust
The Company is firmly committed to compliance
at all times with both the letter and spirit
of United
States
and international
antitrust and trade
regulation
laws, which generally prohibit 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 to involve antitrust issues,
you must contact legal counsel to the Company.
13.
Stockholder Relations
We value our relationships with our stockholders
highly. Any communication from a stockholder,
or the investment
community, requesting information
relating to our Company should be referred
to our head of Investor
Relations.
14. Media Relations
News media contact, responses to media
inquiries or public discussion of our
Company’s business should be made only through a Company
public relations spokesperson. All questions
or requests for interviews from trade magazines,
news reporters or other media representatives
should be referred to the head of Investor Relations or the Chief
Financial Officer.
15. 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 Company’s Board of Directors
or a Board committee and will be promptly
disclosed to stockholders and others,
as required by applicable law
or the rules of any exchange or market
on which the Company's securities
are listed or traded.
16. Reporting
Any Illegal or Unethical Behavior
We
encourage our directors, officers and employees to talk to supervisors,
other
appropriate personnel,
or
legal counsel
to
the Company about
illegal or unethical behavior which
they observe or learn of, or if
they are
in doubt about the best course
of action in a particular situation.
The Company
will
not allow retaliation for reports
of misconduct made in good faith
by directors,
officers
and employees. We also
expect
our directors,
officers
and employees
to cooperate in any internal investigations
of misconduct.
17. Procedures
All of us must work to ensure appropriate
compliance with this Code and
prompt and consistent action
against violations.
This
Code sets
forth
certain general
guidelines, and does not deal
with every specific situation that may
arise. Therefore,
we have
provided a mechanism
to deal with
questions you may
have or matters which you may
wish to report.
In certain cases, this Code suggests
particular people to whom to
take questions or issues
or to whom to
report matters
of
concern. In addition,
whether or
not a particular person is
specified, you may always raise questions
or issues or
report matters of
concern with your
direct supervisor
or any
supervisor
of your direct supervisor.
If you feel uncomfortable doing
so with
your supervisors
or with any
person suggested by
this Code,
you
may
also go
to the Chief Financial
Officer or Chief Executive
Officer or to outside
legal counsel or to the independent
member of the Board of
Directors identified
in
the
Contact Information attached
to this Code. The intent is
that there should always be someone
to whom you
can discuss
any question,
issue or
possible ethical
violation.
Remember, you may report ethical
violations without fear of
retaliation, and if
necessary, your identity
will
be kept secret.
As Adopted by
the Board of Directors
December 31, 2002
Aldila, Inc.
Code of Business Conduct and
Ethics
Contact Information
If you have a question or issue under the Code
of Business Conduct and Ethics, wish otherwise to discuss the
Code, or need to report
possible violations of the Code, you may contact any of the following
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
Mayer Hoffman McCann P.C.
Designated Independent Member of the Board of Directors
Andrew M. Leitch
aleitch@roadrunner.com |
