This Code of Business Conduct and Ethics (referred to hereinafter as the
“Code”) sets forth Cinedigm Digital Cinema Corp.’s (the “Company’s” or “our”)
policies with respect to the way we conduct our business. The provisions of
this Code are designed to promote honest and ethical behavior among our
employees, officers and directors.
In the course of performing our various roles in the
Company, each of us will encounter ethical questions under a variety of
circumstances. Moments of ethical uncertainty may arise in our dealings with
colleagues, with customers or with other parties such as governmental
entities or members of our community. In fulfilling the high professional
standards of excellence, integrity and ethical behavior, compliance with
governmental laws is not enough. Our employees should never be content with
simply obeying the letter of the law, but must also strive to conduct
themselves in an honest and ethical manner. This Code provides clear rules to
assist our employees, officers and directors in taking the proper actions
when faced with an ethical dilemma. For guidance with respect to issues not
addressed in this Code, employees are directed to our Employee Manual, which
sets forth the Company’s policies on a wide range of issues that arise in the
course of employment.
Our reputation is our greatest asset, and it depends on
the character of our employees. In order to protect this asset, the Company
will not tolerate unethical or illegal behavior by employees, officers or
directors. Those who violate the standards in this Code will be subject to
disciplinary action. If you are concerned about taking an action that may
violate the Code or become aware of a violation by another employee, officer
or director, follow the guidelines set forth in Sections 10 and 11 of this
This Code applies equally to all employees, officers and
directors of the Company. All references to employees contained in this Code
should be understood as referring to officers and directors as well.
1. COMPLIANCE WITH LAWS, RULES AND REGULATIONS
The Company will not tolerate violations of law, rules or regulations or
lapses in ethics or integrity. All employees must comply with those laws,
rules and regulations that govern or apply to the Company’s business, and
must abide by the letter and the spirit of these laws, rules and regulations.
Whenever an applicable law, rule or regulation is unclear or seems to
conflict with either another law or any provision of this Code, all employees
are urged to seek clarification from their supervisor or the Ethics Officer
(the “Ethics Officer”), who shall initially be the Chairman of the Company’s
Audit Committee (the “Audit Committee”). Beyond mere compliance with the law,
we should always conduct our business with the highest standards of honesty
and integrity. In the final analysis, we should operate our business in such
a way that we would be proud to have all the facts disclosed.
2. CONFLICTS OF INTEREST
All of the Company’s employees should be scrupulous in avoiding any action or
interest that conflicts, or gives the appearance of a conflict, with the
Company’s interests. A “conflict of interest” exists whenever an individual’s
private interests interfere or conflict in any way (or even appear to
interfere or conflict) with the interests of the Company. 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 for the
Company objectively and effectively. 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 with
the Company, whether from a third party or from the Company.
In order to avoid a potential conflict of interest, an employee
may not receive any payments, compensation or gifts, other than gifts of
nominal value, from any entity or person that does business, or seeks to do
business, with the Company. Employees must be sensitive to other potential
conflicts of interest that may arise, and use their best efforts to avoid the
Conflicts of interest may not always be clear-cut, so if a
question arises, an employee should consult with the Ethics Officer. If an
employee, officer or director has any questions regarding the Company’s
policy on conflicts of interest, or needs assistance in avoiding a potential
conflict of interest, he or she is urged to seek the advice of a supervisor
or the Ethics Officer. Any employee who is aware of a transaction or
relationship that could reasonably be expected to give rise to a conflict of
interest in violation of this section must inform the appropriate personnel
in accordance with the procedures set forth in Section 11 of this Code.
3. CORPORATE OPPORTUNITIES
Employees are prohibited from taking for themselves, personally,
opportunities that are discovered through the use of Company property,
Company information or their position in the Company. Furthermore, employees
may not use Company property, information or influence, or their position in
the Company, for improper personal gain. Finally, employees have a duty to
advance the Company’s legitimate interests when the opportunity to do so
arises. Consequently, employees are not permitted to compete with the
Sometimes the line between personal and Company benefits
is difficult to draw, and sometimes both personal and Company benefits may be
derived from certain activities. The only prudent course of conduct for our
employees is to make sure that any use of Company property or services that
is not solely for the benefit of the Company is approved beforehand through
the Ethics Officer.
4. INSIDER TRADING
Employees may become aware of confidential, non-public information concerning
the Company and the parties with which the Company does business. The Company
prohibits employees from using such confidential information for personal
financial gain, such as for purposes of stock trading, or for any other
purpose other than the conduct of the Company’s business. Employees must
maintain the confidentiality of such information and may not make disclosures
to third parties, including members of the employee’s family. All non-public
information about the Company should be treated as confidential information.
To use non-public information for personal financial benefit or to “tip”
others who may make stock trades on the basis of this information is not only
unethical, but is also illegal. In addition to possible legal sanctions, any
employee found to be in violation of the Company’s insider trading policy
will face decisive disciplinary action. Employees are encouraged to contact
the General Counsel of the Company with any questions concerning this policy.
In carrying out the Company's business, employees often learn confidential or
proprietary information about the Company, our customers, prospective
customers or other third parties. Employees must maintain the confidentiality
of all information so entrusted to them, except when disclosure is authorized
or legally mandated. Confidential or proprietary information includes, among
other things, any non-public information concerning the Company, including
our business, financial performance, results or prospects, and any non-public
information provided by a third party with the expectation that the
information will be kept confidential and used solely for the business
purpose for which it was conveyed. All employees must exercise care not to
misuse confidential information obtained during his or her employment.
6. PROTECTION AND PROPER USE OF COMPANY ASSETS
All of the Company’s assets should be used for legitimate business purposes,
and all employees must make all reasonable efforts to protect the Company’s
assets and ensure their efficient use. Theft, carelessness and waste have a
direct impact on the Company’s profitability and must therefore be avoided.
The suspected occurrence of fraud or theft should be immediately reported to
the appropriate person in accordance with the procedures set forth in Section
11 of this Code. An employee’s obligation to protect the Company’s assets
extends to the Company’s proprietary information. Proprietary information
includes intellectual property such as patents, trademarks, copyrights and
trade secrets. Any employee who uses or distributes such proprietary
information without the Company’s explicit authorization will be subject to
disciplinary measures, as well as potential legal sanctions.
7. 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. We seek to maintain a reputation for fair dealing among
our competitors and the public alike. In light of this aim, the Company
prohibits employees from engaging in any unethical or illegal business
practices. An exhaustive list of unethical practices cannot be provided.
Instead, the Company relies on the judgment of each individual employee to
avoid such practices. Furthermore, each employee should endeavor to deal
fairly with the Company’s customers, suppliers, competitors and other
employees. No employee should take unfair advantage of anyone through
manipulation, concealment, abuse of privileged information, misrepresentation
of material facts or any other unfair business practice.
8. BOOKS AND RECORDS AND ACCOUNTING CONTROLS
The Company takes pride in the open honesty of its accounting system, and
relies on the cooperation of all employees who are involved in keeping
financial records of any type in maintaining the integrity of the system.
Company policy requires that all books and records be maintained accurately,
and that no fund, asset, liability, revenue or expense be concealed or
incompletely recorded for any purpose. Furthermore, all entries must be
supported by documentation adequate to permit the books and records to be
verified by audit.
The Company’s internal auditing mechanism is essential to
ensuring the accurate reporting of the Company’s financial information. The
Audit Committee has the responsibility to review the Company’s policies and
practice with respect to financial reporting. By conducting this review, the
Audit Committee helps the Company identify deficiencies in its practices so
that they can be promptly corrected. Auditors shall have unrestricted access
to all of the Company documents and records. All employees are required to
cooperate fully with internal and external audits. In no case may an employee
make a false or misleading statement to any internal or external auditor, withhold
records or otherwise interfere with an audit. An employee who has knowledge
of any unreported or improperly reported financial activity must report such
information to a supervisor, the Ethics Officer or the Audit Committee.
Please consult Section 11 of this Code regarding an employee’s right to
report questionable accounting or auditing practices to the Audit Committee.
All employees must comply with the provisions of this Code. Any waiver of
this Code for executive officers or directors may be made only by the Board
of Directors of the Company (the “Board”) or a Board committee, and will be
promptly disclosed to the public as required by law. When necessary, a waiver
will be accompanied by appropriate controls designed to protect the Company.
10. COMPLIANCE GUIDELINES AND RESOURCES
In some situations, our employees may not be certain how to proceed in
compliance with this Code. This uncertainty may concern the ethical nature of
the employee’s own acts or the employee’s duty to report the unethical acts
of another. When faced with this uncertainty, the employee should carefully
analyze the situation and make use of the resources of the Company when
determining the proper course of action. The Company also encourages
employees to talk to their supervisors when in doubt about the best course of
action. The following items should be considered:
Gather all the facts. Do not take any action that may
violate the Code until you have gathered all the facts that are required to
make a well-informed decision, and, if necessary, you have consulted with
your supervisor, the Ethics Officer or the General Counsel of the Company.
Is the proposed action illegal or contrary to policy? If
the proposed action is illegal or contrary to the provisions of this Code,
you should not carry out the act. If you believe that the Code has been
violated by an employee, an officer or a director, you must promptly report
the violation in accordance with the procedures set forth in Section 11.
Discuss the problem with your supervisor. It is your
supervisor’s duty to assist employees in complying with this Code. Feel
free to discuss a situation that raises ethical issues with your supervisor
if you have any questions. You will suffer no retaliation for seeking such
guidance. If you are not comfortable raising an ethical issue or discussing
a possible or actual violation with your supervisor, or you have done so
and the supervisor has not responded to your problem, you must seek
assistance elsewhere within the Company.
Additional resources. Your supervisor is available to
speak with you about problematic situations. The General Counsel of the
Company is also available to assist you in complying with those aspects of
the Code that involve more complex issues, such as insider trading and
conflicts of interest.
11. REPORTING PROCEDURES
All employees have a duty to report any violations of this Code, as well as
violations of any laws, rules or regulations. The Company does not permit
retaliation of any kind against employees for good faith reports of ethical
If you believe that the Code has been violated by an
employee, you must promptly report the violation to his or her direct
supervisor or the Ethics Officer. If a report is made to a supervisor, the
supervisor must in turn report the violation to the Ethics Officer. All
violations by an officer or director of the Company must be reported directly
to the Ethics Officer. Every employee also has a right to submit reports of
questionable accounting or auditing practices to the Audit Committee.
Reports may be made in person, by telephone by calling
(973) 290-0027 or in writing by sending a description of the violation and the
names of the parties involved to the appropriate personnel mentioned in the
preceding paragraph. Reports to the Ethics Officer may be sent to the
following address: 55 Madison Avenue, Suite 300, Morristown, NJ 07960.
Reports to the Audit Committee may be sent to the following address: 55
Madison Avenue, Suite 300, Morristown, NJ 07960.
12. DISCIPLINARY ACTION
The Company has implemented the following disciplinary policies to ensure
that prompt and consistent actions are taken in response to Code violations:
Range of Penalties. All violations of this Code will be
treated seriously, and will result in the prompt imposition of penalties
which may include (1) an oral or written warning, (2) a reprimand, (3)
suspension, (4) termination and/or (5) restitution.
Disciplinary Process. The penalty for a particular
violation will be decided on a case-by-case basis, and will depend on the
nature and severity of the violation, as well as the employee’s history of
non-compliance and cooperation in the disciplinary process. Significant
penalties will be imposed for violations resulting from intentional or
reckless behavior. Penalties may also be imposed when an employee fails to
report a violation due to the employee’s indifference, deliberate ignorance
or reckless conduct. Where there is credible evidence of a violation, the
Ethics Officer will determine the appropriate sanction with the assistance
of the Board.
Consistent Enforcement. All employees will be treated
equally with respect to the imposition of disciplinary measures. Pursuant
to this policy, all levels of employees will be subject to the same
disciplinary action for the commission of a similar offense.
13. WHISTLEBLOWER POLICY
The Company's Code of Business Conduct and Ethics (“Code”) requires
directors, officers and employees to observe high standards of business and
personal ethics in the conduct of their duties and responsibilities. As
employees and representatives of the Company, we must practice honesty and
integrity in fulfilling our responsibilities and comply with all applicable
laws and regulations.
Reporting Responsibility: It is the responsibility of
all directors, officers and employees to comply with the Code, and to
report violations or suspected violations in accordance with this
No Retaliation: No director, officer or employee who, in
good faith, reports a violation of the Code shall suffer harassment,
retaliation or adverse employment consequences. An employee who retaliates
against someone who has reported a violation in good faith is subject to
discipline, up to and including termination of employment. This Whistleblower
Policy is intended to encourage and enable employees and others to raise
serious concerns within the Company prior to seeking resolution outside the
Reporting Violations: The Code addresses the Company’s
open door policy, and suggests that employees share their questions,
concerns, suggestions or complaints with someone who can address them
properly. In most cases, an employee’s supervisor is in the best position
to address an area of concern. However, if you are not comfortable speaking
with your supervisor or you are not satisfied with your supervisor’s
response, you are encouraged to speak with someone in the Human Resources
department or anyone in management whom you are comfortable in approaching.
Supervisors and managers are required to report suspected violations of the
Code of Conduct to the Company’s Compliance Officer, who has specific and
exclusive responsibility to investigate all reported violations. For
suspected fraud, or when you are not satisfied or uncomfortable with
following the Company’s open door policy, individuals should contact the
Company’s Compliance Officer directly.
Compliance Officer: The Company’s Compliance Officer is
responsible for investigating and resolving all reported complaints and allegations
concerning violations of the Code, and, at his discretion, shall advise the
Chief Executive Officer and/or the Chairman of the Audit Committee of the
Board of Directors. The Compliance Officer has direct access to the
Chairman of the Audit Committee, and is required to report to the Chairman
of the Audit Committee at least annually on compliance activity. The
Company’s Compliance Officer is the General Counsel. If the General Counsel
is unavailable, unresponsive or potentially involved with the subject
matter of the complaint, you should contact the Chairman of the Audit
Accounting and Auditing Matters: The Audit Committee
shall address all reported concerns or complaints regarding corporate
accounting practices, internal controls or auditing. The Compliance Officer
shall immediately notify the Chairman of the Audit Committee of any such
complaints, and work with the Audit Committee until the matter is resolved.
Acting in Good Faith: Anyone filing a complaint
concerning a violation or suspected violation of the Code must be acting in
good faith, and have reasonable grounds for believing the information
disclosed indicates a violation of the Code. Any allegations that prove not
to be substantiated, and which prove to have been made maliciously or
knowingly to be false, will be viewed as a serious disciplinary offense.
Confidentiality: Violations or suspected violations may
be submitted on a confidential basis by the complainant, or may be submitted
anonymously. Reports of violations or suspected violations will be kept
confidential to the extent possible, consistent with the need to conduct an
Handling of Reported Violations: The Compliance Officer
will notify the sender and acknowledge receipt of the reported violation or
suspected violation within five business days. All reports will be promptly
investigated, and appropriate corrective action will be taken if warranted
by the investigation.