**Exhibit 14**

 

**MOVIE GALLERY, INC.CODE OF BUSINESS CONDUCT AND ETHICS**

 

**Introduction****.**

 

Movie Gallery, Inc. (the “Company”) will conduct its businesshonestly and ethically wherever we operate. We will constantly attempt to improve the quality of our services,products and operations and will maintain a reputation for honesty, fairness,respect, responsibility, integrity, trust and sound business judgment.  No illegal or unethical conduct on the partof our directors, officers or employees or their affiliates is in the Company’sbest interest.  The Company will notcompromise its principles for short-term advantage.  The honest and ethical performance of the Company is the sum ofthe ethics of the men and women who work here. Therefore, we are all expected to adhere to high standards of personalintegrity.

 

This Code of Business Conduct and Ethics (this “Code”) covers awide range of business practices and procedures.  It does not cover every issue that may arise, but it sets outbasic principles to guide all directors, officers and employees of theCompany.  All of our directors, officersand employees must conduct themselves accordingly and seek to avoid even theappearance of improper behavior.  ThisCode should also be provided to and followed by the Company’s other agents andrepresentatives, including consultants.

 

In accordance with applicable law and Nasdaq regulations, this Codewill be filed with the Securities and Exchange Commission (the “SEC”),posted on the Company’s website and/or otherwise made available for examinationby our stockholders.

 

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

 

Obeying the law, both in letter and in spirit, is the foundation onwhich the Company’s ethical standards are built.  All directors, officers and employees must respect and obey thelaws of the United States and of the cities, states and countries in which weoperate.  In particular, all directors,officers and employees must comply with federal securities laws, rules andregulations that govern the Company.

 

**2.****                                     ****Avoidance of Conflictsof Interest****.**

 

The Company’s directors, officers and employees must never permit theirpersonal interests to conflict, or even appear to conflict, with the interestsof the Company.  A “conflict ofinterest” exists when a person’s private interests interfere in any way, oreven appear to interfere, with the Company’s interests.  A conflict situation can arise when adirector, officer or employee takes actions, or has interests, that may make itdifficult to perform his or her Company work objectively and effectively.  Conflicts of interest may also arise when adirector, officer or employee, or a member of his or her family, receivesimproper personal benefits as a result of his or her position with theCompany.  Loans to, or guarantees of theobligations of, directors, officers and employees and their family members maycreate conflicts of interest.

 

For example, it is a conflict of interest for a director, officer oremployee to work simultaneously for a competitor or customer, even as aconsultant or board member.  Eachdirector, officer and employee must be particularly careful to avoidrepresenting the Company in any transaction with a third party with whom thedirector, officer or employee has any outside business affiliation orrelationship.   The best policy is toavoid any direct or indirect business connection with our customers andcompetitors, except on our behalf.

 

Conflicts of interest (including both actual and apparent conflicts ofinterest) are prohibited under this Code except in limited cases underguidelines or exceptions specifically approved in advance by the Board ofDirectors.

 

Conflicts of interest may not always be clear-cut, so if you have aquestion, you should consult with your supervisor or with Page Todd, ourGeneral Counsel.  Mr. Todd’s telephonenumber and address are set forth in Section 15 below.  Any director, officer or employee whobecomes aware of any transaction or relationship that is a conflict of interestor a potential conflict of interest should bring it to the attention of ourGeneral Counsel.

 

 

**3.****                                     ****Bribes, Kickbacks andGifts****.**

 

No bribes, kickbacks or other similar remuneration or consideration maybe given to any person or organization in order to attract or influencebusiness activity.  The United StatesForeign Corrupt Practices Act prohibits giving anything of

 

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value, directly orindirectly, to officials of foreign governments or foreign political candidatesin order to obtain or retain business. Therefore, this Code strictly prohibits making illegal payments togovernment officials of any country.

 

The Company’s directors, officers and employees are also prohibitedfrom receiving or providing gifts, gratuities, fees or bonuses as an inducementto attract or influence business activity (except as permitted by the Company’spersonnel policy regarding the acceptance of gifts and gratuities.  See Section 105 of the Company’sAssociate Handbook).  No entertainmentshould ever be offered, given or accepted by any director, officer or employee(or any family member of any such person) in connection with our businessactivities unless it:  (a) complieswith the Company’s personnel policy regarding the acceptance of gifts andgratuities (See Section 105 of the Company’s Associate Handbook) (b) cannotbe construed as a bribe or payoff; and (c) does not violate any laws orregulations.  Please discuss with yoursupervisor or our General Counsel any entertainment that you are not certain isappropriate.

 

**4.****                                     ****Confidential Information****.**

 

Our directors, officers and employees will often come into contactwith, or have possession of, confidential information about the Company or oursuppliers, customers or affiliates, and they must take all appropriate steps toassure that the confidentiality of such information is maintained.  Confidential information includes allnonpublic information that might be of use to competitors or harmful to theCompany if disclosed.  It also includesnonpublic information that our suppliers, customers or affiliates have entrustedto us.

 

Confidential information, whether it belongs to the Company or any ofour suppliers, customers or affiliates, may include, among other things,strategic business plans, actual operating results, projections of futureoperating results, marketing strategies, customer lists, personnel records,proposed acquisitions and divestitures, new investments, changes in dividendpolicies, the proposed issuance of additional securities, management changes,processes and/or methods.  Confidentialinformation about our Company and other companies, individuals and entitiesmust be treated with sensitivity and discretion and only be disclosed topersons within the Company whose positions require use of that information orif disclosure is required by applicable laws, rules and regulations.  To this end, all of our officers andemployees are required to execute the Company’s standard employeeConfidentiality Agreement, as a condition of employment.

 

**5.****                                     ****Insider Trading****.**

 

Trading in the Company’s securities is covered by the Company’s InsiderTrading Policy previously distributed to all employees, which Policy is herebyincorporated in its entirety in this Code. If you would like to receive another copy of the Insider Trading Policyor have any questions regarding such Policy, please contact our GeneralCounsel.

 

**6.****                                     ****Public Disclosure ofInformation Required by the Securities Laws****.**

 

The Company is a public company that is required to file variousreports and other documents with the SEC. An objective of this Code is to ensure full, fair, accurate, timely andunderstandable disclosure in the reports and other documents that we file with,or otherwise submit to, the SEC and in the press releases and other publiccommunications that we distribute.

 

The federal securities laws, rules and regulations require the Companyto maintain “disclosure controls and procedures,” which are controls and otherprocedures that are designed to ensure that financial information andnon-financial information that is required to be disclosed by us in the reportsthat we file with or otherwise submit to the SEC (i) is recorded, processed,summarized and reported within the time periods required by applicable federalsecurities laws, rules and regulations and (ii) is accumulated and communicatedto our management, including our Chief Executive Officer and Chief FinancialOfficer, in a manner allowing timely decisions by them regarding requireddisclosure in the reports.

 

Some of our directors, officers and employees will be asked to assistmanagement in the preparation and review of the reports that we file with theSEC, including recording, processing, summarizing and reporting to managementinformation for inclusion in these reports. If you are asked to assist in this process, you must comply with alldisclosure controls and procedures that are communicated to you by managementregarding the preparation of these reports. You must also perform with diligence any responsibilities that areassigned to you by management in connection with the preparation and review ofthese reports, and you may be asked to sign a certification to the effect thatyou have performed your assigned responsibilities.

 

SEC regulations impose upon our Chief Executive Officer and ChiefFinancial Officer various obligations in connection with annual and quarterlyreports that we file with the SEC, including responsibility for:

 

•                  Establishing and maintaining disclosurecontrols and procedures and internal control over financial reporting that,among other things, ensure that material information relating to the Company ismade known to them on a timely basis;

 

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•                  Designing the Company’s internal controlover financial reporting to provide reasonable assurances that the Company’sfinancial statements are fairly presented in conformity with generally acceptedaccounting principles;

 

•                  Evaluating the effectiveness of theCompany’s disclosure controls and procedures and internal control overfinancial reporting;

 

•                  Disclosing (i) specified deficiencies andweaknesses in the design or operation of the Company’s internal control overfinancial reporting, (ii) fraud that involves management or other employees whohave a significant role in the Company’s internal control over financialreporting, and (iii) specified changes relating to the Company’s internalcontrol over financial reporting; and

 

•                  Providing certifications in the Company’sannual and quarterly reports regarding the above items and other specifiedmatters.

 

This Code requires our Chief Executive Officer and Chief FinancialOfficer to carry out their designated responsibilities in connection with ourannual and quarterly reports, and this Code requires you, if asked, to assistour executive officers in performing their responsibilities under these SECregulations.

 

**7.****                                     ****Record-Keeping****.**

 

The Company requires honest and accurate recording and reporting ofinformation in order to make responsible business decisions.  For example, only the true and actual numberof hours worked should be reported. Also, business expense accounts must be documented and recordedaccurately.  If you are not sure whethera certain expense is legitimate, ask your supervisor or our General Counsel.

 

All of the Company’s books, records, accounts and financial statementsmust be maintained in reasonable detail, must accurately and appropriatelyreflect the Company’s transactions and must conform both to applicable legalrequirements and to the Company’s internal control over financial reporting anddisclosure controls and procedures.  Alltransactions must be recorded in a manner that will present accurately andfairly our financial condition, results of operations and cash flows and thatwill permit us to prepare financial statements that are accurate, complete andin full compliance with applicable laws, rules and regulations.  Unrecorded or “off the books” funds orassets should not be maintained unless expressly permitted by applicable laws,rules and regulations.

 

Business records and communications often become public, and we shouldavoid exaggeration, derogatory remarks, guesswork or inappropriatecharacterizations of people and companies that can be misunderstood.  This applies equally to e-mail, internalmemoranda and formal reports.

 

Our business records should be retained in accordance with theCompany’s normal business practices and should be destroyed only in accordancewith the Company’s record retention policy, as in effect from time to time andas permitted by applicable laws, rules and regulations.  If you become the subject of a subpoena,lawsuit or governmental investigation relating to your work at the Company,please contact our General Counsel immediately.

 

**8.****                                     ****Corporate Opportunities****.**

 

Directors, officers and employees are prohibited from taking forthemselves personally opportunities that are discovered through the use of theCompany’s property or confidential information or as a result of their positionwith the Company, except upon the prior written consent of the Board ofDirectors.  No director, officer oremployee may use corporate property, information or position for improperpersonal gain; no director, officer or employee may use Company contacts toadvance his or her private business or personal interests at the expense of theCompany or its customers, suppliers or affiliates; and no director, officer oremployee may directly or indirectly compete with the Company.  Directors, officers and employees owe a dutyto the Company to advance its legitimate interests when the opportunity to doso arises.

 

**9.****                                     ****Competition and FairDealing****.**

 

We seek to outperform our competition fairly and honestly.  We seek competitive advantages throughsuperior performance, never through unethical or illegal businesspractices.  Stealing proprietaryinformation, possessing trade secret information that was obtained without theowner’s consent, or inducing such disclosures by past or present employees ofother companies is prohibited.  Eachdirector, officer and employee should endeavor to respect the rights of anddeal fairly with the Company’s customers, suppliers, competitors andaffiliates.  No director, officer oremployee should take unfair advantage of anyone through manipulation,concealment, abuse of privileged information, misrepresentation of material factsor any other intentional unfair-dealing practice.

 

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

 

Directors, officers and employees should endeavor to protect theCompany’s assets and ensure their efficient use.  Theft, carelessness and waste have a direct impact on theCompany’s profitability.  Any suspectedincident of fraud or theft should be immediately reported forinvestigation.  Company equipment shouldnot be used for non-Company business, though incidental personal use of itemssuch as telephones and computers may be permitted pursuant to written policiesapproved by the Board of Directors.

 

The obligation of directors, officers and employees to protect theCompany’s assets includes its proprietary information.  Proprietary information includesintellectual property such as trade secrets, patents, trademarks andcopyrights, as well as business, marketing and service plans, engineering andmanufacturing ideas, designs, databases, records, salary information and anyunpublished financial data and reports. Unauthorized use or distribution of this information would violateCompany policy.  It could also beillegal and result in civil or even criminal penalties.

 

**11.****                              ****Discrimination andHarassment****.**

 

The diversity of the Company’s directors, officers and employees is atremendous asset.  We are firmlycommitted to providing equal opportunity in all aspects of employment and willnot tolerate any illegal discrimination or harassment or any kind.  Examples include derogatory comments basedon racial or ethnic characteristics and unwelcome sexual advances.  Illegal discrimination and harassment iscovered by the Company’s Sexual and Other Unlawful Harassment Policy, whichPolicy is hereby incorporated in its entirety in this Code.

 

**12.****                              ****Health and Safety****.**

 

The Company strives to provide each director, officer and employee witha safe and healthful work environment. Each director, officer and employee has responsibility for maintaining asafe and healthy workplace for all other persons by following safety and healthrules and practices and reporting accidents, injuries and unsafe equipment,practices or conditions.

 

Violence and threatening behavior are not permitted.  Directors, officers and employees shouldreport to work in condition to perform their duties, free from the influence ofillegal drugs or alcohol.  The use ofillegal drugs or alcohol in the workplace will not be tolerated.

 

**13.****                              ****Waivers and Amendmentsof the Code of Business Conduct and Ethics****.**

 

A waiver of any provision of this Code may be granted to any director,officer or employee only by the Company’s Board of Directors, and any suchwaiver promptly will be publicly disclosed to the extent required by law orNasdaq regulations.

 

This Code can be amended only by the Board of Directors, and any suchamendment promptly will be publicly disclosed as required by law or Nasdaqregulations.

 

**14.****                              ****Enforcement of the Codeof Business Conduct and Ethics****.**

 

A violation of this Code by any director, officer or employee will besubject to disciplinary action, including possible termination ofemployment.  The degree of disciplineimposed by the Company may be influenced by whether the person who violatedthis Code voluntarily disclosed the violation to the Company and cooperatedwith the Company in any subsequent investigation.  In some cases, a violation of this Code may constitute a criminaloffense that is subject to prosecution by federal or state authorities.

 

**15.****                              ****Compliance Procedures;Reporting Misconduct or Other Ethical Violations****.**

 

Directors, officers and employees should promptly report any unethical,dishonest or illegal behavior, or any other violation of this Code or of otherCompany policies and procedures, to Mr. Todd, our General Counsel.  Mr. Todd’s telephone numberis 334-702-2431, and his address is c/o Movie Gallery, Inc., 900 West MainStreet, Dothan, Alabama 36301.  If youever have any doubt about whether your conduct or that of another personviolates this Code or compromises the Company’s reputation, please discuss theissue with your supervisor or with our General Counsel.

 

The Company’s Audit Committee has established procedures for (i) thereceipt, retention and treatment of complaints received by the Companyregarding accounting, internal accounting controls or auditing matters and (ii)the confidential, anonymous submission by employees of concerns regardingquestionable accounting or auditing matters. The Company has distributed a copy of the procedures to all directors,officers and employees.

 

The Company prohibits retaliation against any director, officer or employeewho reports unethical, dishonest or illegal behavior, or any other violation ofthis Code or other Company policies and procedures, if the report about anotherperson’s

 

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conduct is made ingood faith.  Directors, officers andemployees are expected to cooperate in internal investigations regardingpossible unethical, dishonest or illegal behavior or any other possibleviolation of this Code or of other Company policies and procedures.

 

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**ACKNOWLEDGMENTAND CERTIFICATION**

 

The undersigned hereby acknowledgesand certifies that the undersigned:

 

(a)                                  hasread and understands the Movie Gallery, Inc. Code of Business Conduct andEthics (the “Code of Ethics”);

 

(b)                                 understandsthat the General Counsel is available to answer any questions the undersignedhas regarding the Code of Ethics; and

 

(c)                                  willcontinue to comply with the Code of Ethics for as long as the undersigned issubject thereto.

 

 
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