Cinedigm’s Executive Team brings the highest degree of experience and leadership to the company with a proven record of accomplishment, performance, technical expertise and industry experience.
Chairman of the Board & Chief Executive Officer
Chief Operating Officer and CFO
President of Digital Cinema Services, General Counsel, Secretary
Executive Vice-President & Chief Strategy Officer/Entertainment, Cinedigm Entertainment Group
Chief Marketing Officer
SVP Finance & Accounting
President of Software
President of Digital Cinema Services, General Counsel, Secretary
Co-President Cinedigm Entertainment Group
Co-President Cinedigm Entertainment Group
Vice-President of Theatrical Acquisitions, Cinedigm Entertainment Group
Cinedigm’s Board of Directors brings a unique level of insight, experience and leadership that proves invaluable to the company.
Chairman of the Board & Chief Executive Officer Cinedigm
Founder and Chairman Grassmere Partners, LLC
Managing Director MidMark Investments
Director MidMark Investments
President of Digital Cinema Services, General Counsel, Secretary Cinedigm
Chief Operating Officer and CFO Cinedigm
Managing Partner O'Connor, Morss & O'Connor, P.C.
Principal, Sageview Capital, LP
The Board intends to meet at least quarterly and the independent directors serving on the Board intend to meet in executive session (i.e., without the presence of any non-independent directors and management) at least once a year. During the fiscal year ended March 31, 2010 (the “Last Fiscal Year”), the Board held four meetings and the Board members acted twelve times by unanimous written consent in lieu of holding a meeting. Each current member of the Board, who was then serving, attended at least 75% of the total number of meetings of the Board and of the committees of the Board on which they served in the Last Fiscal Year. Messrs. Clevenger, Crotty, Davidoff, Finlay, O’Connor and Ms. Sims are considered “independent” under the rules of the SEC and the NASDAQ.
One director resigned for personal reasons, and no director declined to stand for reelection to the Board for any reason, during the Last Fiscal Year. After such resignation and in accordance with the Company’s By-laws, a new director, Martin B. O’Connor II, was elected to the Board. The Board currently does not provide a process for stockholders to send communications to the Board. In the opinion of the Board, it is appropriate for the Company not to have such a process in place because the Board believes there is currently not a need for a formal policy due to, among other things, the limited number of stockholders of the Company. While the Board will, from time to time, review the need for a formal policy, at the present time, stockholders who wish to contact the Board may do so by submitting any communications to the Company’s Secretary, Mr. Loffredo, at 55 Madison Avenue, Suite 300, Morristown, New Jersey 07960, with an instruction to forward the communication to a particular director or the Board as a whole. Mr. Loffredo will receive the correspondence and forward it to any individual director or directors to whom the communication is directed.
The Company does not currently have a policy in place regarding attendance by Board members at the Company’s annual meetings. However, each of the current directors, who was then serving, attended the 2009 Annual Meeting of Stockholders, and currently intends to attend this Annual Meeting.
The Board has three standing committees, consisting of an Audit Committee, a Compensation Committee and a Nominating Committee.
The Audit Committee consists of Messrs. Brown and Finlay and Ms. Sims. Mr. Finlay is the Chairman of the Audit Committee. The Audit Committee held four meetings in the Last Fiscal Year. The Audit Committee has met with the Company’s management and the Company’s independent registered public accounting firm to review and help ensure the adequacy of its internal controls and to review the results and scope of the auditors’ engagement and other financial reporting and control matters. Mr. Finlay is financially literate, as that term is defined under the rules of Nasdaq. Mr. Finlay is also a financial expert, as such term is defined under the Sarbanes-Oxley Act of 2002. Messrs. Brown and Finlay and Ms. Sims are considered “independent” under the rules of the SEC and Nasdaq.
The Audit Committee is responsible for ensuring that the Company has adequate internal controls and is required to meet with the Company’s auditors to review these internal controls and to discuss other financial reporting matters. The Audit Committee is also responsible for the appointment, compensation and oversight of the auditors. Additionally, the Audit Committee is responsible for the review and oversight of all related party transactions and other potential conflict of interest situations between the Company and its officers, directors, employees and principal stockholders.
The Nominating Committee consists of Messrs. Brown, Clevenger and O’Connor and Ms. Sims. Mr. O’Connor is the Chairman of the Nominating Committee. The Nominating Committee held two meetings during the Last Fiscal Year. The Nominating Committee evaluates and approves nominations for annual election to, and to fill any vacancies in, the Board and recommends to the Board the directors to serve on committees of the Board. Messrs. Brown, Clevenger and O’Connor and Ms. Sims are considered “independent” under the rules of the SEC and Nasdaq.
The Nominating Charter sets forth the duties and responsibilities of the Nominating Committee and the general skills and characteristics that the Nominating Committee employs to determine the individuals to nominate for election to the Board.
The Nominating Committee will consider any candidates recommended by stockholders. In considering a candidate submitted by stockholders, the Nominating Committee will take into consideration the needs of the Board and the qualification of the candidate. Nevertheless, the Board may choose not to consider an unsolicited recommendation if no vacancy exists on the Board and/or the Board does not perceive a need to increase the size of the Board. Stockholders should submit any recommendations of director candidates for the Company’s 2012 Annual Meeting of Stockholders to the Company’s Secretary, Mr. Loffredo, at 55 Madison Avenue, Suite 300, Morristown, New Jersey 07960 in accordance with the procedures set forth above under the heading “Deadline for Receipt of Stockholder Proposals to be Presented at Next Annual Meeting.”
There are no specific minimum qualifications that the Nominating Committee believes must be met by a Nominating Committee-recommended director nominee. However, the Nominating Committee believes that director candidates should, among other things, possess high degrees of integrity and honesty; have literacy in financial and business matters; have no material affiliations with direct competitors, suppliers or vendors of the Company; and preferably have experience in the Company’s business and other relevant business fields (for example, finance, accounting, law and banking). Directors will not be nominated for election to the Board after their 73rd birthday. The Nominating Committee considers diversity together with the other factors considered when evaluating candidates but does not have a specific policy in place with respect to diversity.
Members of the Nominating Committee meet in advance of each of the Company’s annual meetings of stockholders to identify and evaluate the skills and characteristics of each director candidate for nomination for election as a director of the Company. The Nominating Committee reviews the candidates in accordance with the skills and qualifications set forth in the Nominating Charter and the rules of the Nasdaq. There are no differences in the manner in which the Nominating Committee evaluates director nominees based on whether or not the nominee is recommended by a stockholder.
The Compensation Committee consists of Messrs. Clevenger and Gilhuly. Mr. Clevenger is the Chairman of the Compensation Committee. The Compensation Committee met nine times during the Last Fiscal Year. The Compensation Committee approves the compensation package of the Company’s Chief Executive Officer and, based on recommendation by the Company’s Chief Executive Officer, approves the levels of compensation and benefits payable to the Company’s other executive officers, reviews general policy matters relating to employee compensation and benefits and recommends to the entire Board, for its approval, stock option and other equity-based award grants to its executive officers, employees and consultants, as well as discretionary bonuses to its executive officers and employees. The Compensation Committee approves the compensation package of the Company’s directors. The Compensation Committee has the authority to appoint and delegate to a sub-committee the authority to make grants and administer bonus and compensation plans and programs. Messrs. Clevenger and Gilhuly are considered “independent” under the rules of the SEC and Nasdaq.
The Compensation Charter sets forth the duties, authorities and responsibilities of the Compensation Committee.
During the Last Fiscal Year, the Compensation Committee engaged a compensation consultant. The consultant met with the Compensation Committee multiple times during the Last Fiscal Year and provided guidance for cash and equity bonus compensation to executive officers and directors, which the Compensation Committee considered in reaching its determinations of such compensation. In addition, the consultant was available to respond to specific inquiries throughout the process.
CODE OF ETHICS
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 Code.
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 conflict.
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 Company.
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:
i. 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.
ii. 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.
iii. 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.
iv. 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 violations.
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:
i. 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.
ii. 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.
iii. 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.
i. 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 Whistleblower Policy.
ii. 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 Company.
iii. 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.
iv. 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 Committee.
v. 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.
vi. 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.
vii. 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 adequate investigation.
viii. 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.
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