EXHIBIT 10.4
 
EXECUTION VERSION

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SECURITIES PURCHASE AGREEMENT
 
among
 
CINEDIGM CORP.
 
and
 
THE PURCHASERS REFERRED TO HEREIN
 
 
 
October 17, 2013

 
 

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TABLE OF CONTENTS

Page

ARTICLE I
DEFINITIONS 
1

 
 
1.1
Definitions 
1

 
ARTICLE II
PURCHASE AND SALE 
4

 
 
2.1
Agreement to Sell and Purchase 
4

 
 
2.2
Early Investment Bonus 
4

 
 
2.3
Closing 
4

 
 
2.4
Deliveries 
4

 
 
2.5
Closing Conditions 
5

 
ARTICLE III 
REPRESENTATIONS AND WARRANTIES
6

 
 
3.1
Representations and Warranties of the Company 
6

 
 
3.2
Representations and Warranties of the Purchasers 
16

 
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
19

 
 
4.1
Transfer Restrictions 
19

 
 
4.2
Furnishing of Information 
20

 
 
4.3
Integration 
20

 
 
4.4
Securities Laws Disclosure; Publicity; Confidentiality 
20

 
 
4.5
Form D; Blue Sky Filings 
21

 
 
4.6
Shareholder Rights Plan 
21

 
 
4.7
Use of Proceeds 
21

 
 
4.8
Indemnification of Purchasers 
21

 
 
4.9
Reservation of Common Stock 
22

 
 
4.10
Listing of Common Stock 
22

 
 
4.11
Equal Treatment of Purchasers 
23

 
 
4.12
Short Sales and Confidentiality After the Date Hereof 
23

 
 
4.13
Reasonable Best Efforts 
23

 
 
4.14
Registration Rights 
23

 
ARTICLE V
MISCELLANEOUS 
28

 
 
5.1
Termination 
28

 
 
5.2
Fees and Expenses 
28

 
 
5.3
Entire Agreement 
28

 

 
 

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TABLE OF CONTENTS
(continued)

Page

 
5.4
Notices 
28

 
 
5.5
Amendments; Waivers 
29

 
 
5.6
Headings 
29

 
 
5.7
Successors and Assigns 
29

 
 
5.8
No Third-Party Beneficiaries 
30

 
 
5.9
Governing Law 
30

 
 
5.10
Survival 
30

 
 
5.11
Execution 
30

 
 
5.12
Severability 
31

 
 
5.13
Replacement of Securities 
31

 
 
5.14
Remedies 
31

 
 
5.15
Independent Nature of Purchasers’ Obligations and Rights
31

 
 
5.16
Liquidated Damages 
32

 
 
5.17
Construction 
32

 

SCHEDULE 1              Purchasers
SCHEDULE 2              Subsidiaries
SCHEDULE 3              Capitalization
EXHIBIT A                  Form of Note
EXHIBIT B                  Form of Warrant

 
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SECURITIES PURCHASE AGREEMENT
 
This Securities Purchase Agreement (this “Agreement”) is dated as of October 17,
2013, by and among Cinedigm Corp., a Delaware corporation (the “Company”), and
each purchaser listed on Schedule 1 attached hereto (each, including its
successors and assigns, a “Purchaser” and collectively the “Purchasers”).
 
WHEREAS, the Company has authorized the sale and issuance of up to $5,000,000 in
principal of notes substantially in the form attached here to as Exhibit A
(individually, a “Note” and collectively, the “Notes”), and warrants to
purchase, per $1,000,000 of Notes issued, 262,500 shares of Class A common stock
of the Company, $0.001 par value per share (the “Common Stock”) for an exercise
price of $1.85 per share, for a period of five (5) years, substantially in the
form attached hereto as Exhibit B (the “Warrants” and together with the Notes,
the “Securities”)  in a private placement (the “Offering”); and
 
WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities Act”) and Rule 506(b) promulgated thereunder, the Company desires to
issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, an aggregate principal amount of Notes set
forth opposite such Purchaser’s name on Schedule 1, and Warrants to purchase the
aggregate number of shares of Common Stock set forth opposite such Purchaser’s
name on Schedule 1, as more fully described in this Agreement.
 
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree
as follows:
 
ARTICLE I    DEFINITIONS
 
1.1           Definitions.  In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:
 
“Action” shall have the meaning ascribed to such term in Section 3.1(k).
 
“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person as such terms are used in and construed under Rule 144 under the
Securities Act.  With respect to a Purchaser, any investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as such Purchaser will be deemed to be an Affiliate of such Purchaser.
 
“Claims” shall have the meaning ascribed to such term in Section 4.14(f)(i).
 
“Closing” means the closing of the purchase and sale of the Securities pursuant
to Section 2.1.
 
“Closing Date” means the Trading Day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all
conditions
 

 
 

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precedent to (i) the Purchasers’ obligations to pay the Purchase Price and
(ii) the Company’s obligations to deliver the Securities have been satisfied or
waived.
 
“Commission” means the Securities and Exchange Commission.
 
“Common Stock” shall have the meaning ascribed to such term in the Recitals.
 
“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.
 
“Company Counsel” means Kelley Drye & Warren LLP.
 
“Contemplated Transactions” means (i) the purchase and sale of 1,398,601 shares
of Common Stock to private purchasers, (ii) the issuance of 666,978 shares of
Common Stock as partial payment of the purchase price for the acquisition by the
Company of certain content and distribution assets, together with a entering
into a credit facility, and (iii) the issuance of 9,089,990 shares of Common
Stock (assuming full exercise of the underwriters’ over-allotment) in an
underwritten offering of Common Stock to the public, each to be consummated on
the Closing Date.

“Company Indemnified Parties” shall have the meaning ascribed to such term in
Section 4.14(f)(ii).
 
“Evaluation Date” shall have the meaning ascribed to such term in
Section 3.1(s).
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
 
“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).
 
“Intellectual Property Rights” shall have the meaning ascribed to such term in
Section 3.1(p).
 
“Knowledge” means the knowledge of the Company following reasonable inquiry of
the officers of the Company or the Subsidiaries reasonably expected to have
knowledge of the matter in question.
 
“Liens” means a lien, charge, security interest, encumbrance, right of first
refusal, or preemptive right.
 
“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b).
 
“Material Permits” shall have the meaning ascribed to such term in
Section 3.1(n).
 

 
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“Offering” shall have the meaning ascribed to such term in the Recitals.
 
“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
 
“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
 
“Purchase Price” shall have the meaning ascribed to such term in Section 2.1.
 
“Purchaser Party” shall have the meaning ascribed to such term in Section 4.9.
 
“Required Approvals” shall have the meaning ascribed to such term in
Section 3.1(e).
 
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
 
“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).
 
“Securities” shall have the meaning ascribed to such term in the Recitals.
 
“Securities Act” shall have the meaning ascribed to such term in the Recitals.
 
“Short Sales” shall include all “short sales” as defined in Rule 200 of
Regulation SHO under the Exchange Act.
 
“Subsidiary” means any direct or indirect subsidiary of the Company as set forth
on Schedule 2.
 
“Trading Day” means a day on which the Common Stock is traded on a Trading
Market.
 
“Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the New York
Stock Exchange, NYSE MKT, the Nasdaq Global Market, the Nasdaq Capital Market,
or any other recognized exchange or automated quotation system.
 
“Transaction Documents” means this Agreement, the Notes, the Warrants and any
other documents or agreements executed in connection with the transactions
contemplated hereunder.
 
“Warrants” shall have the meaning ascribed to such term in the Recitals.
 

 
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“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants.
 
ARTICLE II    PURCHASE AND SALE
 
2.1           Agreement to Sell and Purchase.  At the Closing, the Company will
issue and sell to each of the Purchasers, and each Purchaser will, severally and
not jointly, purchase from the Company, the Notes in the principal amount set
forth opposite such Purchaser’s name on Schedule 1 and Warrants to purchase such
amount of Common Stock of the Company as set forth opposite such Purchaser’s
name on Schedule 1 for an aggregate purchase price set forth opposite such
Purchaser’s name on Schedule 1 (the “Purchase Price”). The Notes shall be in the
form set forth as Exhibit A and the Warrants shall be in the form set forth
hereto as Exhibit B. The parties (a) agree that the amount of consideration paid
under and in connection with this Agreement by the Purchasers in exchange for
the Warrants is de minimis (and the amount of such consideration fairly reflects
the fair market value of the Warrants) and (b) intend that there will be no
“original issue discount” on the Notes, as determined pursuant to Sections 127
1-1275 of the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations promulgated thereunder, by reason of the Purchasers’ acquisition of
the Warrants.
 
2.2           Early Investment Bonus. The Company agrees, and the Purchasers
acknowledge such agreement, that any Purchaser so identified on Schedule 1, in
exchange for its early commitment to purchase Securities hereunder, shall
receive Warrants to purchase 187,500 additional shares of Common Stock at no
additional consideration.
 
2.3           Closing.  On the Closing Date, upon the terms and subject to the
conditions set forth herein, the Company agrees to issue and sell to the
Purchasers, and each Purchaser agrees to purchase, severally and not jointly,
the number of Notes and Warrants, in such denominations and registered in such
names as such Purchaser may designate by notice to the Company, representing the
Securities, dated as of the Closing Date. Each Purchaser shall deliver to the
Company via wire transfer to the account as specified in writing by the Company
immediately available funds equal to his or its Purchase Price set forth on
Schedule 1 and the Company shall deliver to each Purchaser his or its respective
Notes and Warrants as determined pursuant to Section 2.4(a) and the other items
set forth in Section 2.4 issuable at the Closing.  Upon satisfaction of the
conditions set forth in Sections 2.4 and 2.5, the Closing shall occur at the
offices of Kelley Drye & Warren LLP, 101 Park Avenue, New York, NY 10178, or
such other location as the parties shall mutually agree.
 
2.4           Deliveries.
 
(a)           On the Closing Date, the Company shall deliver or cause to be
delivered to each Purchaser the following:
 
(i)           a Note evidencing the Company’s indebtedness to such Purchaser in
the amount next to such Purchaser’s name and registered in the name of such
Purchaser, as set forth on Schedule 1;
 

 
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(ii)         Warrants to purchase such number of shares of Common Stock in the
number next to such Purchaser’s name, as is set forth on Schedule 1;
 
(iii)         a secretary’s certificate, dated as of the Closing Date,
certifying as to (A) the incorporation and good standing of the Company in the
State of Delaware based upon a certificate issued by the Secretary of State of
the State of Delaware as of a date within thirty (30) days of the Closing Date,
(B) the Resolutions (as defined in Section 2.5(b)(iv) below), (C) the Fourth
Amended and Restated Certificate of Incorporation of the Company, as amended,
certified as of a date within ten (10) days of the Closing Date, and (D) the
bylaws of the Company, each as in effect as of the Closing Date; and
 
(iv)        such other documents relating to the transactions contemplated by
the Transaction Documents as such Purchaser or its counsel may reasonably
request.
 
(b)           On the Closing Date, each Purchaser shall deliver or cause to be
delivered to the Company the following:
 
(i)          such Purchaser’s Purchase Price by wire transfer to the account as
specified in writing by the Company; and
 
(ii)         such other documents relating to the transactions contemplated by
the Transaction Documents as the Company or its counsel may reasonably request.
 
2.5           Closing Conditions.
 
(a)           The obligations of the Company hereunder in connection with the
Closing are subject to the following conditions being met:
 
(i)          the accuracy in all material respects when made and on the Closing
Date of the representations and warranties of the Purchasers contained herein;
 
(ii)         all obligations, covenants and agreements of the Purchasers
required to be performed at or prior to the Closing Date shall have been
performed;
 
(iii)        the delivery by the Purchasers of the items set forth in
Section 2.4(b) of this Agreement; and
 
(iv)        the consummation of the Contemplated Transactions shall be in
effect.
 
(b)           The respective obligations of the Purchasers hereunder in
connection with the Closing are subject to the following conditions being met:
 

 
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(i)     the accuracy in all material respects on the Closing Date of the
representations and warranties of the Company contained herein;         
 
(ii)            all obligations, covenants and agreements of the Company
required to be performed at or prior to the Closing Date shall have been
performed;
 
(iii)          the delivery by the Company of the items set forth in
Section 2.4(a) of this Agreement;
 
(iv)          the board of directors of the Company shall have approved the
transactions contemplated hereby and shall have adopted resolutions consistent
with Section 3.1(c) below (the “Resolutions”);
 
(v)           there shall have been no Material Adverse Effect with respect to
the Company since the date hereof; and
 
(vi)          the consummation of the Contemplated Transactions shall be in
effect.

ARTICLE III    REPRESENTATIONS AND WARRANTIES
 
3.1           Representations and Warranties of the Company.  The Company hereby
represents and warrants as of the date hereof and as of the Closing Date to each
Purchaser as follows:
 
(a)           Subsidiaries.  All of the direct and indirect Subsidiaries of the
Company are set forth on Schedule 2.  Except as indicated on Schedule 2, the
Company owns, directly or indirectly, all of the capital stock or other equity
interests of each Subsidiary free and clear of any Liens, and all the issued and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.
 
(b)           Organization and Qualification.  The Company and each of the
Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted.  Neither the Company nor any Subsidiary is in violation
or default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents.  Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result
in (i) a material adverse effect on the legality, validity or enforceability of
any Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
 

 
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basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a “Material Adverse Effect”) and to the Company’s Knowledge no Proceeding has
been instituted in any such jurisdiction revoking, limiting or curtailing or
seeking to revoke, limit or curtail such power and authority or qualification.
 
(c)           Authorization; Enforcement.  The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder.  The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company, its board of directors or its stockholders in connection therewith
other than in connection with the Required Approvals.  Each Transaction Document
has been (or upon delivery will have been) duly executed by the Company and,
when delivered in accordance with the terms hereof and thereof, will constitute
the valid and binding obligation of the Company enforceable against the Company
in accordance with its terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally and (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies.
 
(d)           No Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Company, the issuance and sale of the Securities
and the Warrant Shares and the consummation by the Company of the other
transactions contemplated hereby and thereby do not and will not (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter
documents, or (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the Company or any
Subsidiary, or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing a Company or
Subsidiary debt or otherwise) or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not have or reasonably be expected to
result in a Material Adverse Effect.
 
(e)           Filings, Consents and Approvals.  The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
other than (i) filings required pursuant to
 

 
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Section 4.5 of this Agreement, (ii) application(s), if applicable, to each
applicable Trading Market for the issuance and listing of the Warrant Shares for
trading thereon in the time and manner required thereby, and (iii) the filing of
Form D with the Commission and such filings as are required to be made under
applicable state securities laws (collectively, the “Required Approvals”).
 
(f)           Issuance of the Securities and Warrant Shares.  The Securities and
the Warrant Shares, when issued in accordance with the terms of the Transaction
Documents, will be validly issued, fully paid and nonassessable, free and clear
of all Liens imposed by the Company.  The Company has reserved from its duly
authorized capital stock a number of shares of Common Stock for issuance of the
Warrant Shares.
 
(g)           Capitalization.  The capitalization of the Company is as set forth
on Schedule 3.  Except as set forth on Schedule 3, the Company has not issued
any capital stock since its most recently filed periodic report under the
Exchange Act, other than pursuant to (i) the exercise of employee stock options
under the Company’s stock option plans, (ii) the issuance of shares of Common
Stock to employees pursuant to the Company’s employee stock purchase plan, (iii)
the issuance of 121,924 shares of Common Stock as payment of dividends to
holders of the Company’s Series A 10% Non-Voting Cumulative Preferred Stock, and
(iv) pursuant to the conversion or exercise of outstanding Common Stock
Equivalents.  No Person has any right of first refusal, preemptive right, right
of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents.  Except set forth on Schedule 3,
there are no outstanding options, warrants, script rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire, any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of Common Stock
or Common Stock Equivalents.  Except as set forth on Schedule 3, the issuance
and sale of the Securities and the Warrant Shares hereunder or the Common Stock
with respect to the Contemplated Transactions will not obligate the Company to
issue shares of Common Stock or other securities to any Person (other than the
Purchasers) and will not result in a right of any holder of Company securities
to adjust the exercise, conversion, exchange or reset price under such
securities.  All of the outstanding shares of capital stock of the Company are
validly issued, fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, and none of such outstanding shares
was issued in violation of any preemptive rights or similar rights to subscribe
for or purchase securities nor will it give rise to participation or preemptive
rights to any Person.  Except as otherwise provided in this Agreement, no
further approval or authorization of any stockholder, the Board of Directors of
the Company or others is required for the issuance and sale of the Securities
and the Warrant Shares.  There are no stockholders agreements, voting agreements
or other similar agreements with respect to the Company’s capital stock to which
the Company is a party or, to the Knowledge of the Company, between or among any
of the Company’s stockholders.
 

 
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(h)           SEC Reports; Financial Statements.  The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by it under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (the
foregoing materials, including the exhibits thereto and documents incorporated
by reference therein, being collectively referred to herein as the “SEC
Reports”) on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such
extension.  As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the Commission promulgated thereunder, and
none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.  The financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing.  Such
financial statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during
the periods involved (“GAAP”), except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial
statements may not contain all footnotes required by GAAP, and fairly present in
all material respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.
 
(i)           No Undisclosed Events, Liabilities or Developments.  Except for
the issuance of the Securities and the Warrant Shares contemplated by this
Agreement and the Contemplated Transactions, no event, liability or development
has occurred or exists with respect to the Company or its Subsidiaries or their
respective business, properties, operations or financial condition, that would
be required to be disclosed by the Company under applicable securities laws at
the time this representation is made that has not been publicly disclosed before
one (1) Trading Day prior to the date that this representation is made.
 
(j)           Material Changes.  Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
the SEC Reports and in connection with the Contemplated Transactions, (i) there
has been no event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect, (ii) the Company
has not incurred any liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice, (B) liabilities not required to be reflected in
the Company’s financial statements pursuant to GAAP or required to be disclosed
in filings made with the Commission and (C) expenses incurred in connection with
the transactions contemplated hereunder, (iii) the Company has not altered its
method of accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has
 

 
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not issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock option plans.  The Company does not have
pending before the Commission any request for confidential treatment of
information.
 
(k)           Litigation.  Except as set forth in the SEC Reports, there is no
action, suit, inquiry, notice of violation, proceeding or investigation pending
or, to the Knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which
(i) adversely affects or challenges the legality, validity or enforceability of
any of the Transaction Documents or the Securities or (ii) could, if there were
an unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect.  Neither the Company nor any Subsidiary, nor any director or
officer of the Company nor any director or officer of any Subsidiary that served
as a director or officer of such Subsidiary following the formation or
acquisition of such Subsidiary by the Company, is or has been the subject of any
Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty.  There has not been, and
to the Knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company.  The Commission has not issued any stop
order or other order suspending the effectiveness of any registration statement
filed by the Company or any Subsidiary under the Exchange Act or the Securities
Act.
 
(l)           Labor Relations.  Except as set forth in the SEC Reports, no
material labor dispute exists or, to the Knowledge of the Company, is imminent
with respect to any of the employees of the Company which could reasonably be
expected to result in a Material Adverse Effect.  None of the Company’s or its
Subsidiaries’ employees is a member of a union that relates to such employee’s
relationship with the Company, and neither the Company nor any of its
Subsidiaries is a party to a collective bargaining agreement, and the Company
and its Subsidiaries believe that their relationships with their employees are
good.  No executive officer, to the Knowledge of the Company, is, or is now
expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability with respect to
any of the foregoing matters.  The Company and its Subsidiaries are in
compliance with all U.S.  federal, state, local and foreign laws and regulations
relating to employment and employment practices, terms and conditions of
employment and wages and hours, except where the failure to be in compliance
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
 
(m)           Compliance.  Neither the Company nor any Subsidiary (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or
 

 
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any other agreement or instrument to which it is a party or by which it or any
of its properties is bound (whether or not such default or violation has been
waived), (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is or has been in violation of any statute, rule or
regulation of any governmental authority, including without limitation all
foreign, federal, state and local laws applicable to its business and all such
laws that affect the environment; except in each case as could not have a
Material Adverse Effect.
 
(n)           Regulatory Permits.  The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not have or reasonably be expected to result in a
Material Adverse Effect (“Material Permits”), and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any Material Permit.
 
(o)           Title to Assets.  Except as set forth in the SEC Reports, the
Company and the Subsidiaries have good and marketable title in fee simple to all
real property owned by them that is material to the business of the Company and
the Subsidiaries and good and marketable title in all personal property owned by
them that is material to the business of the Company and the Subsidiaries, in
each case free and clear of all Liens, except for Liens as do not materially
affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and the
Subsidiaries and Liens for the payment of federal, state or other taxes, the
payment of which is neither delinquent nor subject to penalties.  Any real
property and facilities held under lease by the Company and the Subsidiaries are
held by them under valid, subsisting and enforceable leases of which the Company
and the Subsidiaries are in compliance.
 
(p)           Intellectual Property Rights.  The Company and the Subsidiaries
have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, trade secrets, inventions,
copyrights, licenses and other similar intellectual property rights necessary or
material for use in connection with their respective businesses as described in
the SEC Reports and which the failure to so have could have a Material Adverse
Effect (collectively, the “Intellectual Property Rights”).  Neither the Company
nor any Subsidiary has received a notice (written or otherwise) that the
Intellectual Property Rights used by the Company or any Subsidiary violates or
infringes upon the rights of any Person.  To the Knowledge of the Company, all
such Intellectual Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property Rights of
others.  The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
intellectual properties, except where failure to do so could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
 
(q)           Insurance.  The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as
 

 
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are prudent and customary in the businesses in which the Company and the
Subsidiaries are engaged, including, but not limited to, directors and officers
insurance coverage.  To the best Knowledge of the Company, such insurance
contracts and policies are accurate and complete.  Neither the Company nor any
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business without a significant increase in cost.
 
(r)           Transactions with Affiliates and Employees.  Except as set forth
in the SEC Reports and relating to the Contemplated Transactions, none of the
officers or directors of the Company and, to the Knowledge of the Company, none
of the employees of the Company is presently a party to any transaction with the
Company or any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the Knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, in each case in excess of $60,000
other than (i) for payment of salary or consulting fees for services rendered,
(ii) reimbursement for expenses incurred on behalf of the Company and (iii) for
other employee benefits, including stock option agreements under any stock
option plan of the Company.
 
(s)           Sarbanes-Oxley.  The Company is in material compliance with all
provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of
the Closing Date.  The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
Company and designed such disclosure controls and procedures to ensure that
material information relating to the Company, including its Subsidiaries, is
made known to the certifying officers by others within those entities,
particularly during the period in which the Company’s most recently filed
periodic report under the Exchange Act, as the case may be, is being
prepared.  The Company’s certifying officers have evaluated the effectiveness of
the Company’s controls and procedures as of the date prior to the filing date of
the most recently filed periodic report under the Exchange Act (such date, the
“Evaluation Date”).  The Company presented in its most recently filed periodic
report under the Exchange Act the conclusions of the certifying officers about
the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date.  Since the Evaluation Date, there have
been no significant changes in the Company’s internal controls (as such term is
defined under the Exchange Act and applicable to the Company) or, to the
Knowledge of the Company, in other factors that could significantly affect the
Company’s internal controls.
 
(t)           Certain Fees.  The Purchasers shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other
Persons for any brokerage or finder’s fees or commissions payable to any broker,
financial advisor or consultant, finder, placement agent, investment banker,
bank or other Person in connection with the transactions contemplated by the
Transaction Documents.
 

 
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(u)           Private Placement.  Assuming the accuracy of the Purchasers
representations and warranties set forth in Section 3.2, no registration under
the Securities Act is required for the offer and sale of the Securities by the
Company to the Purchasers as contemplated hereby.  The issuance and sale of the
Securities hereunder does not contravene the rules and regulations of the
Trading Market.
 
(v)           Investment Company.  The Company is not, and is not an Affiliate
of, and immediately after receipt of payment for the Securities, will not be or
be an Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.  The Company shall conduct its business in a
manner so that it will not become subject to the Investment Company Act.
 
(w)           Registration Rights.  Other than each of the Purchasers or as
disclosed in the Company’s SEC Reports or in connection with the Contemplated
Transactions, no Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company.
 
(x)           Listing and Maintenance Requirements.  The Company’s Common Stock
is registered pursuant to Section 12(b) of the Exchange Act, and the Company has
taken no action designed to, or which to its Knowledge is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act nor has the Company received any notification that the Commission is
contemplating terminating such registration.  The Company has not, in the 12
months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such Trading Market.  The Company is, and has no reason to believe that it will
not in the foreseeable future continue to be, in compliance with all such
listing and maintenance requirements.  The Company is eligible to register the
Warrant Shares for resale by the Purchasers on Form S-3 promulgated under the
Securities Act.
 
(y)           Application of Takeover Protections.  The Company and its Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s certificate of incorporation (or
similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation as a result of the Company’s
issuance of the Securities and the Purchasers’ ownership of the Securities.
 
(z)           Disclosure.  The Company confirms that, neither it nor any other
Person acting on its behalf has provided any of the Purchasers or their agents
or counsel with any information that constitutes or might constitute material,
non-public information.  The Company understands and confirms that the
Purchasers will rely on the foregoing representations and covenants in effecting
transactions in securities of the Company.  All disclosure provided to the
Purchasers regarding the Company, its business and the
 

 
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transactions contemplated hereby furnished by or on behalf of the Company with
respect to the representations and warranties made herein are true and correct
in all material respects with respect to such representations and warranties and
do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, and when taken as a whole, not
misleading.  The Company acknowledges and agrees that no Purchaser makes or has
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2.
 
(aa)           No Integrated Offering.  Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2 and other than with
respect to the Contemplated Transactions, neither the Company, nor any of its
affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of the
Securities to be integrated with prior offerings by the Company for purposes of
the Securities Act or any applicable shareholder approval provisions, including,
without limitation, under the rules and regulations of any Trading Market on
which any of the securities of the Company are listed or designated.
 
(bb)           Solvency.  Based on the financial condition of the Company as of
the Closing Date after giving effect to the receipt by the Company of the
proceeds from the sale of the Securities hereunder and to the Company’s
Knowledge, (i) the Company’s fair saleable value of its assets exceeds the
amount that will be required to be paid on or in respect of the Company’s
existing debts and other liabilities (including known contingent liabilities) as
they mature; (ii) the Company’s assets do not constitute unreasonably small
capital to carry on its business for the current fiscal year as now conducted
and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability thereof; and
(iii) the current cash flow of the Company, together with the proceeds the
Company would receive, were it to liquidate all of its assets, after taking into
account all anticipated uses of the cash, would be sufficient to pay all amounts
on or in respect of its debt when such amounts are required to be paid for the
foreseeable future.  The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).  The Company has no
Knowledge of any facts or circumstances which lead it to reasonably believe that
it will file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the Closing
Date.  Other than with respect to the Contemplated Transactions, the SEC Reports
set forth as of the dates thereof all outstanding secured and unsecured
Indebtedness of the Company or any Subsidiary, or for which the Company or any
Subsidiary has commitments.  For the purposes of this Agreement, “Indebtedness”
shall mean (a) any liabilities for borrowed money or amounts owed in excess of
$50,000 (other than trade accounts payable incurred in the ordinary course of
business), (b) all guaranties, endorsements and other contingent obligations in
respect of Indebtedness of others, whether or not the same are or should be
reflected in the Company’s balance sheet (or the notes thereto), except
guaranties by endorsement of negotiable instruments for
 

 
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deposit or collection or similar transactions in the ordinary course of
business; and (c) the present value of any lease payments in excess of $50,000
due under leases required to be capitalized in accordance with GAAP.  Neither
the Company nor any Subsidiary is in default with respect to any Indebtedness.
 
(cc)           Tax Status.  Except for matters that would not, individually or
in the aggregate, have a Material Adverse Effect, the Company and each
Subsidiary has filed all necessary federal, state and foreign income and
franchise tax returns and has paid or accrued all taxes shown as due thereon,
and the Company has no Knowledge of a tax deficiency which has been asserted or
threatened against the Company or any Subsidiary.
 
(dd)           No General Solicitation.  Neither the Company nor any person
acting on behalf of the Company has offered or sold any of the Securities by any
form of general solicitation or general advertising.  The Company has offered
the Securities for sale only to the Purchasers and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act.
 
(ee)           Foreign Corrupt Practices.  Neither the Company, nor to the
Knowledge of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.
 
(ff)           Acknowledgment Regarding Purchasers’ Purchase of Securities.  The
Company acknowledges and agrees that each of the Purchasers is acting solely in
the capacity of an arm’s length purchaser with respect to the Transaction
Documents and the transactions contemplated hereby.  The Company further
acknowledges that no Purchaser is acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to this Agreement and the
transactions contemplated hereby and any advice given by any Purchaser or any of
their respective representatives or agents in connection with this Agreement and
the transactions contemplated hereby is merely incidental to the Purchasers’
purchase of the Securities.  The Company further represents to each Purchaser
that the Company’s decision to enter into this Agreement has been based solely
on the independent evaluation of the transactions contemplated hereby by the
Company and its representatives.
 
(gg)           Manipulation of Price.  Other than in relation to the
Contemplated Transactions, the Company has not, and to its Knowledge no one
acting on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to
 

 
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pay to any person any compensation for soliciting another to purchase any other
securities of the Company.
 
Each of the Purchasers acknowledges and agrees that the Company has not made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.1.
 
3.2           Representations and Warranties of the Purchasers.  Each Purchaser
hereby, for itself and for no other Purchaser, severally represents and warrants
as of the date hereof and as of the Closing Date to the Company as follows:
 
(a)           Organization; Authority.  Such Purchaser, if an entity, is an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization with full right, corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder.  The execution, delivery and performance
by such Purchaser of the transactions contemplated by this Agreement have been
duly authorized by all necessary corporate or similar action on the part of such
Purchaser.  Each Transaction Document to which it is a party has been duly
executed by such Purchaser, and when delivered by such Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation
of such Purchaser, enforceable against it in accordance with its terms, except
(i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.
 
(b)           Own Account.  Such Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities for its own
account and not with a view to or for distributing or reselling such Securities
or any part thereof in violation of the Securities Act or any applicable state
securities law, has no present intention of distributing any of such Securities
in violation of the Securities Act or any applicable state securities law and
has no arrangement or understanding with any other persons regarding the
distribution of such Securities (this representation and warranty not limiting
such Purchaser’s right to sell the Securities in compliance with applicable
federal and state securities laws) in violation of the Securities Act or any
applicable state securities law.  Such Purchaser is acquiring the Securities
hereunder in the ordinary course of its business.  Such Purchaser does not have
any agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities.
 
(c)           Purchaser Status.  At the time such Purchaser was offered the
Securities, it was, and at the date hereof it is, and on each date on which it
receives the Warrant Shares it will be, either:  (i) an “accredited investor” as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities
Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under
the Securities Act.  Such Purchaser was not organized for the
 

 
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purpose of acquiring the Securities and is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act.
 
(d)           Experience of Such Purchaser.  Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Securities, and has so
evaluated the merits and risks of such investment.  Such Purchaser is able to
bear the economic risk of an investment in the Securities and, at the present
time, is able to afford a complete loss of such investment.
 
(e)           General Solicitation.  Such Purchaser is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement. Such Purchaser
further acknowledges that he or it, or his or its Affiliate, has a pre-existing
relationship with the Company such as (i) as a holder of currently outstanding
securities of the Company or (ii) another affiliation with the Company.
 
(f)           Certain Trading Activities.  Such Purchaser has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Purchaser, engaged in any direct or indirect purchases
or sales in the securities of the Company (including, without limitation, any
Short Sales involving the Company’s securities) since the time that such
Purchaser was first contacted by the Company or any other Person regarding the
investment in the Company contemplated by this Agreement.  Such Purchaser
covenants that neither it nor any Person acting on its behalf or pursuant to any
understanding with it will engage in any direct or indirect purchases or sales
in the securities of the Company (including Short Sales) prior to the time that
the transactions contemplated by this Agreement are publicly disclosed by the
Company in the manner set forth in Section 4.4.  Such Purchaser has maintained,
and covenants that until such time as the transactions contemplated by this
Agreement are publicly disclosed by the Company in the manner set forth in
Section 4.4 such Purchaser will maintain, the confidentiality of all disclosures
made to it in connection with this transaction (including the existence and
terms of this transaction).  Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser’s assets, the
representation set forth above shall only apply with respect to the portion of
assets managed by the portfolio manager that made the investment decision to
purchase the Securities covered by this Agreement.  Other than to other Persons
party to this Agreement, such Purchaser has maintained the confidentiality of
all disclosures made to it in connection with this transaction (including the
existence and terms of this transaction).
 
(g)           Access to Information.  Such Purchaser acknowledges that it has
reviewed the SEC Reports and the Transaction Documents and has been afforded
(i) the opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms and
conditions of the offering
 

 
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of the Securities and the merits and risks of investing in the Securities;
(ii) access to information about the Company and the Subsidiaries and their
respective financial condition, results of operations, business, properties,
management and prospectus sufficient to enable it to evaluate its investment;
and (iii) the opportunity to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
Securities.  Neither such inquiries nor any other investigation conducted by or
on behalf of such Purchaser or its representatives or counsel shall modify,
amend or affect such Purchaser’s right to rely on the truth, accuracy and
completeness of the SEC Reports and the Transaction Documents, and the Company’s
representations and warranties contained in the Transaction Documents.
 
(h)           Fees and Commissions.  Such Purchaser has not retained any
intermediary with respect to the transactions contemplated by this Agreement and
agrees to indemnify and hold harmless the Company from any liability for any
compensation to any intermediary retained by such Purchaser and the fees and
expenses of defending against such liability or alleged liability.
 
(i)           No Conflicts.  The execution, delivery and performance of the
Transaction Documents by such Purchaser, the purchase of the Securities and the
consummation by such Purchaser of the other transactions contemplated hereby and
thereby do not and will not (i) if applicable, conflict with or violate any
provision of such Purchaser’s certificate or articles of incorporation, bylaws
or other organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, result in the creation of any Lien upon any of
the properties or assets of such Purchaser, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a debt of such Purchaser or otherwise) or other
understanding to which such Purchaser is a party or by which any property or
asset of such Purchaser is bound or affected, or (iii) subject to the Required
Approvals, conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or
governmental authority to which such Purchaser is subject (including federal and
state securities laws and regulations), or by which any property or asset of
such Purchaser is bound or affected; except in the case of each of clauses
(ii) and (iii), such as could not have or reasonably be expected to result in a
Material Adverse Effect.
 
(j)           Consents.  All consents, approvals, orders and authorizations
required on the part of such Purchaser in connection with the execution,
delivery or performance of this Agreement and the consummation of the
transactions contemplated therein have been obtained and are effective as of the
date hereof.
 
The Company acknowledges and agrees that each Purchaser does not make or has not
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.
 

 
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ARTICLE IV  OTHER AGREEMENTS OF THE PARTIES
 
4.1           Transfer Restrictions.  The Securities may not be assigned,
conveyed or transferred, in whole or in part, by any of the Purchasers without
the prior written consent of the Company, which consent shall not be reasonably
withheld. Each Purchaser acknowledges and understands, severally and not
jointly, that (i) the Securities and the Warrant Shares may only be disposed of
in compliance with state and federal securities laws and (ii) in connection with
any transfer of Securities or Warrant Shares other than pursuant to an effective
registration statement or Rule 144, to the Company or to an Affiliate of a
Purchaser or in connection with a pledge as contemplated in this Section 4.1,
the Company may require the transferor thereof to provide to the Company an
opinion of counsel selected by the transferor and reasonably acceptable to the
Company, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities or Warrant Shares under the
Securities Act.  As a condition of transfer, any such transferee shall agree in
writing to be bound by the terms of this Agreement and shall have the rights of
a Purchaser under this Agreement.  Any transfer or purported transfer of the
Securities or the Warrant Shares in violation of this Section 4.1 shall be void.
 
The Purchasers agree to the imprinting, so long as is required by this
Section 4.1, of a legend on any of the Securities or the Warrant Shares (and any
certificates or instruments representing the Securities or the Warrant Shares)
in substantially the following form:
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.
 
The Company acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a security interest in some or all of the Securities and the Warrant
Shares to a financial institution that is an “accredited investor” as defined in
Rule 501(a) under the Securities Act and who agrees to be bound by the
provisions of this Agreement and, if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured Securities or
Warrant Shares to the pledgees or secured parties.  Such a pledge or transfer
would not be subject to approval of the Company and no legal opinion of legal
counsel of the pledgee, secured party or pledgor shall be required in connection
therewith.  Further, no notice shall be required of such pledge.  At the
appropriate Purchaser’s expense, the Company will execute and deliver such
reasonable documentation as a
 

 
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pledgee or secured party of Securities or Warrant Shares may reasonably request
in connection with a pledge or transfer of the Securities and the Warrant
Shares, if registered pursuant to Section 4.15 below, the preparation and filing
of any required prospectus supplement under Rule 424(b)(3) under the Securities
Act or other applicable provision of the Securities Act to appropriately amend
the list of selling stockholders thereunder.
 
4.2           Furnishing of Information.  As long as any Purchaser owns
Securities, the Company covenants to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act.  As long as any Purchaser owns Warrants or Warrant Shares, but
only until such holder’s Warrant Shares may be sold under Rule 144(b)(i) without
regard to meeting the requirements of Rule 144(c), if the Company is not
required to file reports pursuant to the Exchange Act, it will prepare and
furnish to the Purchasers and make publicly available in accordance with
Rule 144(c) such information as is required for the Purchasers to sell the
Securities under Rule 144.  The Company further covenants that it will take such
further action as any holder of Securities may reasonably request, all to the
extent required from time to time to enable such Person to sell such Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144.
 
4.3           Integration.  The Company shall not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Purchasers or that
would be integrated with the offer or sale of the Securities for purposes of the
rules and regulations of any Trading Market such that it would require
shareholder approval prior to the closing of such other transaction unless
shareholder approval is obtained before the closing of such subsequent
transaction.
 
4.4           Securities Laws Disclosure; Publicity; Confidentiality.  In
accordance with the requirement of the Exchange Act, the Company shall cause a
Current Report on Form 8-K relating to the sale of the Securities under this
Agreement to be transmitted to the Commission for filing, which Form 8-K shall
be reasonably acceptable to each Purchaser, disclose the material terms of the
transactions contemplated hereby, and attach forms of the Transaction Documents
thereto.  The Company and each Purchaser shall consult with each other in
issuing any other press releases with respect to the transactions contemplated
hereby, and no Purchaser shall issue any such press release or otherwise make
any such public statement without the prior consent of the Company, which
consent shall not unreasonably be withheld, except if such disclosure is
required by law, in which case the disclosing party shall promptly provide the
Company with prior notice of such public statement or
communication.  Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the Commission or any regulatory agency or Trading Market, without
the prior written consent of such Purchaser, except (i) as required by federal
securities law in connection with a registration statement that includes the
resale of Warrant Shares under Section 4.15 below and (ii) to the extent such
disclosure is required by law or Trading Market regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure
permitted under subclause (i) or (ii).  In the event of a breach of the
foregoing covenant by the Company, any of its Subsidiaries, or any of its or
their respective
 

 
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officers, directors, employees and agents, in addition to any other remedy
provided herein or in the Transaction Documents, a Purchaser shall have the
right to make public disclosure in the form of a press release, public
advertisement or otherwise, of such material nonpublic information without the
prior approval by the Company, its Subsidiaries, or any of its or their
respective officers, directors, employees or agents, provided that such
Purchaser gives the Company at least two (2) Trading Days’ notice of its
intention to make such public disclosure and provides such intended disclosure
to the Company.  No Purchaser shall have any liability to the Company, its
Subsidiaries, or any of its or their respective officers, directors, employees,
shareholders or agents for any such disclosure.
 
4.5           Form D; Blue Sky Filings.  The Company agrees to timely file a
Form D with respect to the Securities as required under Regulation D.  The
Company shall, on or before the Closing Date, take such action as the Company
shall reasonably determine is necessary in order to obtain an exemption for, or
to qualify the Securities for, sale to the Purchasers at the Closing and
issuance to the Purchasers pursuant to this Agreement under applicable
securities or “Blue Sky” laws of the states of the United States, and shall
provide evidence of any such action so taken to the Purchasers on or prior to
the Closing Date.  The Company shall make all filings and reports relating to
the offer and sale of the Securities required under applicable securities or
“Blue Sky” laws of the states of the United States following the Closing Date.
 
4.6           Shareholder Rights Plan.  No claim will be made or enforced by the
Company or, to the knowledge of the Company, any other Person that any Purchaser
is an “Acquiring Person” under any shareholder rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that any Purchaser
could be deemed to trigger the provisions of any such plan or arrangement, by
virtue of receiving Securities under the Transaction Documents or under any
other agreement between the Company and the Purchasers.
 
4.7           Use of Proceeds.  The Company shall use the net proceeds from the
sale of the Securities hereunder for working capital and general corporate
purposes, including acquisitions, which may include the acquisition referred to
as a Concurrent Event.
 
4.8           Indemnification of Purchasers.  Subject to the provisions of this
Section 4.8, the Company will indemnify and hold the Purchasers and their
directors, officers, shareholders, members, partners, employees and agents
(each, a “Purchaser Party”) harmless from any and all losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses, including all
judgments, amounts paid in settlements, court costs and reasonable attorneys’
fees and costs of investigation that any such Purchaser Party may suffer or
incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the Company in this
Agreement or in the other Transaction Documents or (b) any action instituted
against a Purchaser, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such Purchaser, with
respect to any of the transactions contemplated by the Transaction Documents
(unless such action is based upon a breach of such Purchaser’s representations,
warranties or covenants under the Transaction Documents or any agreements or
understandings such Purchaser may have with any such stockholder or any
violations by the Purchaser of state or federal securities laws or any conduct
by such Purchaser which constitutes fraud, gross negligence, willful misconduct
or malfeasance).  If any action shall be brought against any Purchaser Party in
respect of which indemnity may be sought pursuant to this
 

 
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Agreement, such Purchaser Party shall promptly notify the Company in writing,
and the Company shall have the right to assume the defense thereof with counsel
of its own choosing.  Any Purchaser Party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Purchaser
Party except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time to assume such defense and to employ counsel or
(iii) in such action there is, in the reasonable opinion of such separate
counsel, a material conflict on any material issue between the position of the
Company and the position of such Purchaser Party.  The Company will not be
liable to any Purchaser Party under this Agreement (i) for any settlement by a
Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld, conditioned or delayed; or (ii) to the
extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Purchaser Party’s breach of any of the representations,
warranties, covenants or agreements made by the Purchasers in this Agreement or
in the other Transaction Documents.
 
4.9           Reservation of Common Stock.
 
(a)           As of the date hereof, the Company has reserved and the Company
shall continue to reserve and keep available at all times, free of preemptive
rights, a sufficient number of shares of Common Stock for the purpose of
enabling the Company to issue Warrant Shares pursuant to the Transaction
Documents.
 
(b)           If, on any date, the number of authorized but unissued (and
otherwise unreserved) shares of Common Stock is less than maximum number of
issuable Warrant Shares, then the Board of Directors of the Company shall use
commercially reasonable efforts to promptly amend the Company’s certificate of
incorporation to increase the number of authorized but unissued shares of Common
Stock to at least the maximum number of issuable Warrant Shares.
 
(c)           The Company shall, if applicable:  (i) in the time and manner
required by the Trading Market, prepare and file with such Trading Market an
additional shares listing application covering a number of shares of Common
Stock at least equal to the maximum number of issuable Warrant Shares, (ii) take
all steps necessary to cause such shares of Common Stock to be approved for
listing on the Trading Market promptly thereafter, (iii) provide to the
Purchasers evidence of such listing, and (iv) maintain the listing of such
Common Stock on any date at least equal to the maximum number of issuable
Warrant Shares on such Trading Market or another Trading Market.
 
4.10           Listing of Common Stock.  The Company hereby agrees to use
commercially reasonable efforts to maintain the listing of the Common Stock on a
Trading Market, and as soon as reasonably practicable following the Closing, to
list, if applicable, all of the Warrant Shares on such Trading Market.  The
Company further agrees, if the Company applies to have the Common Stock traded
on any other Trading Market, it will include in such application all of the
Warrant Shares, and will take such other action as is necessary to cause all of
the Warrant Shares to be listed on such other Trading Market as promptly as
possible.  The Company will take all action reasonably necessary to continue the
listing and trading of its Common Stock on a
 

 
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Trading Market and will comply in all respects with the Company’s reporting,
filing and other obligations under the bylaws or rules of the Trading Market.
 
4.11           Equal Treatment of Purchasers.  No consideration shall be offered
or paid to any person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration is
also offered to all of the parties to the Transaction Documents.  Further, the
Company shall not make any payment of dividends on any Shares or redeem any
Shares other than in a manner pro rata to all outstanding Shares.  For
clarification purposes, this provision constitutes a separate right granted to
each Purchaser by the Company and negotiated separately by each Purchaser, and
is intended to treat for the Company the Purchasers as a class and shall not in
any way be construed as the Purchasers acting in concert or as a group with
respect to the purchase, disposition or voting of Securities or otherwise.
 
4.12           Short Sales and Confidentiality After the Date Hereof.  Each
Purchaser severally and not jointly with the other Purchasers covenants that
neither it nor any Affiliates acting on its behalf or pursuant to any
understanding with it will execute any Short Sales during the period after the
time such Purchaser and/or the Company started discussing the transactions
contemplated in this Agreement and ending at the time that the transactions
contemplated by this Agreement are first publicly announced as described in
Section 4.4.  Each Purchaser, severally and not jointly with the other
Purchasers, covenants that until such time as the transactions contemplated by
this Agreement are publicly disclosed by the Company as described in
Section 4.4, such Purchaser will maintain, the confidentiality of all
disclosures made to it in connection with this transaction (including the
existence and terms of this transaction).  Notwithstanding the foregoing, no
Purchaser makes any representation, warranty or covenant hereby that it will not
engage in Short Sales in the securities of the Company after the time that the
transactions contemplated by this Agreement are first publicly announced as
described in Section 4.4.  Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser’s assets, the
covenant set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement.
 
4.13           Reasonable Best Efforts.  Each party shall use its reasonable
best efforts to timely satisfy each of the conditions to be satisfied by it as
provided in Section 2.5 of this Agreement.
 
4.14           Registration Rights.
 
(a)           Registration of Shares.  The Company will use commercially
reasonable efforts to:  (i) prepare and file with the SEC, within thirty (30)
days after the Closing Date, a Form S-3 (or, if such form is not available to
the Company, a Form S-1) to register under the Securities Act, the resale of the
Warrant Shares (the “Shelf Registration Statement”); (ii) in the case of any
registration other than pursuant to Form S-3ASR, use its commercially reasonable
efforts to cause the Shelf Registration Statement to become effective as soon as
reasonably practicable after such filing; (iii) use its commercially
 

 
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reasonable efforts to cause the Shelf Registration Statement to remain effective
at all times thereafter until the earlier of (x) the date as of which Purchasers
may sell all of the Warrant Shares without restriction pursuant to Rule 144
promulgated under the Securities Act or (y) the date when all of the Warrant
Shares registered thereunder have been disposed of by the Purchasers; and (iv)
prepare and file with the SEC such amendments and supplements to the Shelf
Registration Statement (including documents filed pursuant to the Exchange Act,
and incorporated by reference into the Shelf Registration Statement) and the
prospectus used in connection therewith  as may be necessary to keep such
registration statement effective for the period specified in this sentence
above; provided that, before filing the Shelf Registration Statement or
prospectus or any amendments or supplements thereto (including documents filed
pursuant to the Exchange Act), the Company will furnish to the counsel to
Purchasers copies of all such documents proposed to be filed reasonably in
advance of such filing, which documents will be subject to review of such
counsel.
 
(b)            Registration Procedures.  With respect to the registration of the
resale of Warrant Shares under this Section 4.14 the Company will:
 
(i)           furnish to each Purchaser such number of copies of the
Shelf  Registration Statement, each amendment and supplement thereto, the
prospectus included therein (including any preliminary prospectus) and such
other documents as such Purchaser may reasonably request in order to facilitate
the disposition of the Warrant Shares owned by the Purchasers;
 
(ii)           use its commercially reasonable efforts to comply with all
applicable securities laws in the U.S. and to register or qualify all Warrant
Shares covered by the Shelf Registration Statement under such other securities
or blue sky laws of such jurisdictions as any Purchaser reasonably requests and
do any and all other acts and things which may be reasonably necessary or
advisable to enable such Purchaser to consummate the disposition in such
jurisdictions of the Warrant Shares to be sold by such Purchaser; provided that
the Company will not be required to (x) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
subparagraph, (y) subject itself to taxation in any such jurisdiction or (z)
consent to general service of process in any such jurisdiction);
 
(iii)           notify each seller of such Warrant Shares covered by such
registration statement, at any time when a prospectus relating to the resale of
the Warrant Shares is required to be delivered under the Securities Act, upon
discovery that, or upon the discovery of the happening of any event as a result
of which, the prospectus included in the Shelf Registration Statement contains
an untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made, and the Company will promptly prepare and file with the SEC and
furnish to such seller a reasonable number of copies of, a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Warrant Shares, such prospectus will not contain an untrue statement of
a
 

 
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material fact or omit to state any material fact necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made;
 
(iv)          use commercially reasonable best efforts to cause all Warrant
Shares to be sold in such offering to be listed on each Trading Market on which
the Common Stock is then listed;
 
(v)           otherwise use its commercially reasonable best efforts to comply
with all applicable rules and regulations of the SEC; and
 
(vi)          in the event of the issuance of any stop order suspending the
effectiveness of the Shelf Registration Statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any securities included therein for sale in any jurisdiction, use commercially
reasonable best efforts to obtain the prompt withdrawal of such order.
 
(c)           Information Supplied.  It shall be a condition precedent to the
obligations of the Company to take any action to register the resale of the
Warrant Shares that each of the Purchasers shall furnish the Company with such
information regarding such Purchaser that is pertinent to the disclosure
requirements relating to the registration and the distribution of the Warrant
Shares as the Company may from time to time reasonably request.  Each Purchaser
agrees to promptly furnish to the Company all information required to be
disclosed in order to make the information previously furnished to the Company
by such Purchaser not misleading.
 
(d)           Registration Expenses.
 
(i)           Except as expressly provided in this Section 4.14(d), the Company
shall pay all Registration Expenses relating to the Shelf Registration
Statement.  “Registration Expenses” shall mean any and all fees and expenses
incident to the Company’s performance of or compliance with this Section 4.14,
including (i) SEC, Trading Market or Financial Industry Regulatory Authority,
Inc. registration and filing fees and all related listing fees, (ii) fees and
expenses of compliance with state securities or “blue sky” laws and in
connection with the preparation of a “blue sky” survey, including reasonable
fees and expenses of blue sky counsel, (iii) printing expenses, (iv) messenger
and delivery expenses, (v) fees and disbursements of counsel for the Company and
reasonable fees for one counsel for the Purchasers, and (vi) fees and
disbursements of all independent public accountants and fees and expenses of
other Persons, including special experts, retained by the Company.
 
(ii)           Notwithstanding the foregoing, the provisions of this Section
4.14(d) shall be deemed amended to the extent necessary to cause these expense
provisions to comply with “blue sky” laws of each state in which the offering is
made.
 

 
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(e)           Restrictions on Disposition.  Each Purchaser agrees that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 4.14(b)(iii) such Purchaser will forthwith discontinue
disposition of Warrant Shares pursuant to the Shelf Registration Statement until
such Purchaser’s receipt of the copies of the supplemental or amended prospectus
contemplated by Section 4.14(b)(iii) or written notice from the Company that the
Shelf Registration Statement is effective again and no amendment or supplement
is needed.
 
(f)           Indemnification.
 
(i)           To the fullest extent permitted by law, the Company will indemnify
and hold harmless each Purchaser against any losses, claims, damages and
liabilities, joint or several, to which such Purchaser may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities, joint or several, actions or proceedings (whether commenced or
threatened in writing in respect thereof (“Claims”) arise out of or are based
upon:  (i) any untrue or alleged untrue statement of a material fact contained
in the Shelf Registration Statement, or any prospectus or preliminary prospectus
or any amendment thereof or supplement thereto (including all documents
incorporated by reference therein) or any omission or alleged omission of a
material fact required to be stated therein or necessary to made the statements
therein not misleading in light of the circumstances under which they were made;
or (ii) any untrue or alleged untrue statement of a material fact contained in
any free writing prospectus prepared by the Company or authorized by it in
writing for use by any Purchaser or any amendment thereof or supplement thereto
(including all documents incorporated by reference therein) or any omission or
alleged omission of a material fact required to be stated therein or necessary
to made the statements therein not misleading in light of the circumstances
under which they were made; provided, that the Company shall not be liable in
any such case to the extent that any such Claim or expense arises out of or is
based upon any such untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information prepared and furnished to the Company by any Purchaser expressly for
use therein or by any Purchaser’s failure to deliver a copy of the prospectus or
any amendments or supplements thereto after the Company has furnished Purchaser
with a sufficient number of copies of the same; and provided, further, that the
indemnity agreement contained in this Section 4.14(f) shall not apply to amounts
paid in settlement of any such Claim if such settlement is effected without the
consent of the Company, which consent shall not be unreasonably withheld or
delayed; and provided, further, that the Company will not be liable to any
Purchaser pursuant to this Section 4.14(f) to the extent that any Claim for
which such Purchaser seeking indemnification relates to a sale of Warrant Shares
in violation of Section 4.14(e).
 
(ii)           To the fullest extent permitted by law, each of the Purchasers
will indemnify and hold harmless the Company and its directors and officers and
each other Person who controls or is controlled by the Company and its
Affiliates and their respective directors, officers, members, managers and
general and limited
 

 
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partners (collectively, the “Company Indemnified Parties”) against all Claims
and expenses arising out of or based upon:  (i) any untrue or alleged untrue
statement of a material fact contained in the Shelf Registration Statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto (including all documents incorporated by reference therein) or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were  made; or (ii) any untrue or alleged untrue
statement of a material fact contained in any free writing prospectus prepared
by the Company or authorized by it in writing for use by any Purchaser or any
amendment thereof or supplement thereto (including all documents incorporated by
reference therein) or any omission or alleged omission of a material fact
required to be stated therein or necessary to made the statements therein not
misleading in light of the circumstances under which they were made; provided,
that the Purchasers shall only be liable in any such case only to the extent
that any such Claim or expense arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission is made in
reliance upon and in conformity with written information prepared and furnished
to the Company by such Purchaser or such Purchaser’s agent expressly for use
therein or by such Purchaser’s failure to deliver a copy of the prospectus or
any amendments or supplements thereto after the Company has furnished Purchaser
with a sufficient number of copies of the same; provided, that the indemnity
agreement contained in this Section 4.14(f)(ii) shall not apply to amounts paid
in settlement of any such Claim if such settlement is effected without the
consent of such Purchaser, which consent shall not be unreasonably withheld or
delayed; and provided, further, that the liability of each Purchaser hereunder
will be limited to the amount of net proceeds received by such Purchaser from
the sale of Warrant Shares pursuant to the Shelf Registration Statement.
 
(iii)           Any Person entitled to indemnification hereunder will (A) give
prompt written notice to the Company of any Claim with respect to which it seeks
indemnification and (B) unless in such indemnified party’s reasonable judgment,
based upon advice of counsel, a conflict of interest between such indemnified
party and the indemnifying party may exist with respect to such Claim, permit
the indemnifying party to assume the defense and settlement of such claim with
counsel reasonably satisfactory to the indemnified party; provided, however,
that the failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations hereunder unless the
failure to give such notice is materially prejudicial to an indemnifying party's
ability to defend such action.  If such defense is assumed, the indemnified
party will not be subject to any liability for any settlement made by the
indemnifying party without its consent (but such consent will not be
unreasonably withheld).  Anything to the contrary appearing in this Agreement
notwithstanding, the indemnifying party will not be obligated to pay the fees
and expenses of more than one counsel for all parties indemnified hereunder with
respect to such Claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such
 

 
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claim.  If the indemnifying party assumes the defense, the indemnified party may
engage its own counsel at its own sole cost and expense.  All fees and expenses
of counsel to any indemnified party required to be paid by the indemnifying
party shall be paid as incurred.
 
(iv)           The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party and will survive the transfer of Warrant Shares by any
Purchaser.  If the indemnification provided for herein is unavailable to an
indemnified party or insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such Claims in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party, on the one hand, and the indemnified party or parties, on the other hand,
in connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations; provided, that in no event shall any contribution by any
Purchaser exceed the amount of the net proceeds received by such Purchaser from
the sale of Warrant Shares pursuant to such Shelf Registration Statement.
 
ARTICLE V  MISCELLANEOUS
 
5.1           Termination.  This Agreement may be terminated by any Purchaser,
as to such Purchaser’s obligations hereunder only and without any effect
whatsoever on the obligations between the Company and the other Purchasers, by
written notice to the other parties, if the Closing has not been consummated on
or before October 25, 2013; provided, however, that no such termination will
affect the right of any party to sue for any breach by the other party (or
parties).
 
5.2           Fees and Expenses.  Except as expressly set forth in the
Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement.  The Company
shall pay all transfer agent fees, stamp taxes and other taxes and duties levied
in connection with the delivery of any Securities.
 
5.3           Entire Agreement.  The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
 
5.4           Notices.  Any and all notices, requests, consents, or other
communications or deliveries required or permitted to be provided hereunder
shall be in writing and shall be deemed given and effective on the earliest of
(a) the date of transmission, if such notice or communication is delivered by
hand or via facsimile prior to 5:30 p.m.  (New York City time) on
 

 
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a Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered by hand or via facsimile on a day that is
not a Trading Day or later than 5:30 p.m.  (New York City time) on any Trading
Day, (c) the 2nd Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (d) upon actual receipt by
the party to whom such notice is required to be given, if addressed as follows,
or to such other address or addresses as may have been furnished in writing by a
party to another party pursuant to this paragraph:
 
if to the Company, to:

Cinedigm Corp.
920 Broadway, 9th Floor
New York, NY 10010
Attention: General Counsel
Facsimile: (212) 206-9001

with a copy (which shall not constitute notice) to:

Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Attention: Jonathan K. Cooperman
Facsimile: (212) 808-7897

if to the Purchaser, at its address as set forth on Schedule 1.

5.5           Amendments; Waivers.  No provision of this Agreement may be
waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and each Purchaser who holds
Securities or, in the case of a waiver, by the party against whom enforcement of
any such waiver is sought.  No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.
 

5.6           Headings.  The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.  The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party. All
references in this Agreement to Sections, Schedules or Exhibits, unless
otherwise expressed or indicated are to the Sections, Schedules or Exhibits of
this Agreement.

5.7           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted
assigns.  Any Purchaser may assign any or all of its rights under this Agreement
to any Person to whom such Purchaser assigns or transfers any Securities,
provided such transferee agrees in writing to be bound, with respect to
 

 
29

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the transferred Securities, by the provisions hereof that apply to the
“Purchasers”.  Notwithstanding anything to the contrary contained in the
Transaction Documents, the Purchasers shall be entitled to pledge the Securities
in connection with a bona fide margin agreement in accordance with Section 4.1.
 
5.8           No Third-Party Beneficiaries.  This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.8.
 
5.9           Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents shall be
governed by and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of conflicts of law
thereof.  Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York.  Each party hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in the
City of New York, borough of Manhattan for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper or inconvenient venue for such proceeding.  Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof.  Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by law.  EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION
DOCUMENTS OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.  If either party
shall commence an action or proceeding to enforce any provisions of the
Transaction Documents, then the prevailing party in such action or proceeding
shall be reimbursed by the other party for its attorneys’ fees and other costs
and expenses incurred with the investigation, preparation and prosecution of
such action or proceeding.
 
5.10           Survival.  The representations, warranties, covenants and other
agreements contained herein shall survive the Closing and the delivery of the
Notes, Warrants and Warrant Shares as applicable for the applicable statute of
limitations.  Each Purchaser shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
 
5.11           Execution.  This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become

 
30

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effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart.  In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original thereof.

5.12           Severability.  If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
 
5.13           Replacement of Securities.  If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested.  The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.
 
5.14           Remedies.  In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents.  The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
 
5.15           Independent Nature of Purchasers’ Obligations and Rights.  The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document.  Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents.  Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose.  Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents.  The Company has
elected to provide all Purchasers with the same terms and Transaction Documents
for the convenience of the Company and not because it was required or requested
to do so by the Purchasers.
 

 
31

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5.16           Liquidated Damages.  The Company’s obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.
 
5.17           Construction.  The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.
 
(Signature Pages Follow)
 

 
32

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
 

COMPANY:
CINEDIGM CORP.
 
 
 
By:
 /s/ Adam M. Mizel  
 
Name:  Adam M. Mizel
 
 
Title:    Chief Operating Officer and
             Chief Financial Officer
           

 
                                                                                 

 
[Signature Page to Securities Purchase Agreement]
 
 

--------------------------------------------------------------------------------

 

PURCHASER:
FIFTH THIRD BANK AS CUSTODIAN
OF THE RONALD L. CHEZ IRA
 
 
 
 
By:
 /s/ Ronald L. Chez  
 
Name:  Ronald L. Chez
 
 
Title:    IRA

 

 

                

[Signature Page to Securities Purchase Agreement]
 
 

--------------------------------------------------------------------------------

 

SCHEDULE 1
PURCHASERS

 
Name and Address of
Purchasers
 
Principal Amount of
Notes Purchased at the
Closing
Number of Warrant
Shares
Aggregate Purchase
Price
Fifth Third Bank
as Custodian of the Ronald L.
Chez IRA1
 
Fifth Third Bank
Attention:  Peggy Sajdak
1701 West Golf Road
Suite 1-800
Rolling Meadows, IL  60008
$3,000,000
975,000
$3,000,000
 
Total
 
$3,000,000
975,000
$3,000,000

--------------------------------------------------------------------------------

 
1 Entitled to additional Warrants under Section 2.2.

 
 

--------------------------------------------------------------------------------

 

SCHEDULE 2
SUBSIDIARIES

PART I
     
Name of Subsidiary
Jurisdiction of
Incorporation
Percentage of
Ownership
By Cinedigm Corp.
Pledging
Arrangements
Hollywood Software, Inc., d/b/a
AccessIt Software
California
100%
100% pledged +
ADM Cinema Corporation, d/b/a
The Pavilion Theatre
Delaware
100%
 
Vistachiara Productions, Inc.,
d/b/a The Bigger Picture
Delaware
100%
100% pledged +
Vistachiara Entertainment, Inc.
Delaware
100%
 
Access Digital Cinema Phase 2
Corp. (“Phase 2 DC”)
Delaware
100%
100% pledged ***
Cinedigm Entertainment Corp.
New York
100%
100% pledged +
Cinedigm DC Holdings, LLC
(“DC Holdings LLC”)
Delaware
100%
100% pledged ***
Cinedigm Digital Cinema
Australia Pty Ltd
Australia
100%
66% pledged ****
Cinedigm Entertainment
Holdings, LLC
Delaware
100%
100% pledged +
       
PART II
     
Name of Subsidiary
Jurisdiction of
Incorporation
Percentage of
Ownership
By Cinedigm DC
Holdings, LLC
 
Access Digital Media, Inc.
(“AccessDM”)
Delaware
100%
100% pledged ***
       
PART III
     
Name of Subsidiary
Jurisdiction of
Incorporation
Percentage of
Ownership
By Hollywood
Software, Inc.
 
PLX Acquisition Corp.
Delaware
100%
         
PART IV
     
Name of Subsidiary
Jurisdiction of
Incorporation
Percentage of
Ownership
By Access Digital
Media, Inc.
 
Christie/AIX, Inc.
(“Christie/AIX”)
Delaware
100%
100% pledged *

 
 
 
 

--------------------------------------------------------------------------------

 
 

       
PART V
     
Name of Subsidiary
Jurisdiction of
Incorporation
Percentage of
Ownership
By Access Digital
Cinema Phase 2
Corp.
 
Access Digital Cinema Phase 2
B/AIX Corp., formerly Access
Digital Cinema / Barco Phase 2
Corp.
Delaware
100%
100%
pledged*******
 
CDF2 Holdings, LLC
(“Holdings”)
Delaware
100%
100% pledged
*****
       
PART VI
     
Name of Subsidiary
Jurisdiction of
Incorporation
Percentage of
Ownership
By Christie/AIX,
Inc.
 
Cinedigm Digital Funding I, LLC
(“CDF I”)
Delaware
100%
100% pledged **
       
PART VII
     
Name of Subsidiary
Jurisdiction of
Incorporation
Percentage of
Ownership
By CDF2 Holdings,
LLC.
 
Cinedigm Digital Funding 2,
LLC (“CDF II”)
Delaware
100%
100%
pledged******

*
Pledged pursuant to the Amended and Restated Pledge Agreement, dated as of
February 28, 2013, by and between AccessDM and Société Générale, New York Branch
(“SocGen”), as administrative agent and collateral agent for certain lenders
under an Amended and Restated Credit Agreement, dated as of February 28, 2013
(the “2013 Credit Agreement”), by and among CDF I , SocGen, as administrative
agent and collateral agent for the lenders party thereto and certain other
secured parties and the lenders party thereto.

**
Pledged pursuant to the Amended and Restated Pledge Agreement, dated as of
February 28, 2013, between Christie/AIX and SocGen, as administrative agent and
collateral agent for certain lenders under the 2013 Credit Agreement.

***
Pledged pursuant to the (i) Guaranty, Pledge and Security Agreement, dated as of
February 28, 2013, by and among DC Holdings LLC, AccessDM, Phase 2 DC and
Prospect Capital Corporation (“Prospect”), as collateral agent for certain
lenders under a Term Loan Agreement, dated as of February 28, 2013 (the
“Prospect Loan Agreement”), by and

 
 
 
 

--------------------------------------------------------------------------------

 
 
 
among DC Holdings LLC, AccessDM and Phase 2 DC, Prospect, as administrative
agent and collateral agent for the lenders party thereto, and the other lenders
party thereto, and (ii) with respect to Phase 2 DC and DC Holdings LLC, the
Limited Recourse Agreement (as defined below).

 
****
Pledged pursuant to the Limited Recourse Pledge Agreement (the “Limited Recourse
Agreement”), dated as of February 28, 2013, by Cinedigm Corp. (f/k/a Cinedigm
Digital Cinema Corp.) in favor of Prospect, as collateral agent for the Secured
Parties (as defined  under the Prospect Loan Agreement) under the Prospect Loan
Agreement.

 
*****
Pledged pursuant to the Pledge Agreement, dated as of October 18, 2011, by and
between Phase 2 DC and SocGen, as collateral agent for the Secured Parties (as
defined in the Phase II Credit Agreement (as defined herein)) under a
Credit Agreement, dated as of October 18, 2011, by and among CDF II, the lenders
party thereto, SocGen, as administrative agent for the lenders and the
collateral agent (the “Phase II Credit Agreement”).

 
******
Pledged pursuant to the Pledge Agreement, dated as of October 18, 2011, between
Holdings and SocGen, as collateral agent for the Secured Parties (as defined in
the Phase II Credit Agreement) under the Phase II Credit Agreement.

 
*******
Pledged pursuant to a Credit Facility Agreement, dated as of November 5, 2008,
by and between Access Digital Cinema Phase 2 B/AIX Corp. and KBC Bank NV.

 
+
Pledged pursuant to a Credit Agreement dated as of October 17, 2013 among the
Company, as Borrower, the Lenders party thereto and SocGen, as administrative
agent and collateral agent.

 
 

--------------------------------------------------------------------------------

 

SCHEDULE 3
CAPITALIZATION
 

 
Authorized    
Issued &    
Outstanding  
 
Class A Common Stock, Par Value $0.001
       118,759,000
53,084,898
(1)
Class B Common Stock, Par Value $0.001
          1,241,000
         0
(2)
       
    Total Common Stock
          120,000,000
53,084,898
         
Series A Preferred Stock, Par Value $0.001
20
7
         
Undesignated Preferred Stock, Par Value $0.001
            14,999,980
0
         
     Total Preferred Stock
          15,000,000
7
         
     Total Capital Stock
          135,000,000
53,084,905
         
Potentially Issuable :
     
Cinedigm Second Amended and Restated 2000 Equity Incentive Plan (the “Plan”)
               9,300,000
5,469,140
 
Stock Options outside of the Plan
4,500,000
4,500,000
 
Outstanding Warrants to purchase Class A Common Stock
16,525,000
16,525,000
 
    Total Potentially Issuable
30,325,000
26,494,140
 
    Total Potentially Outstanding Shares
 
79,579,045
         
(1) Net of 51,440 shares purchased by the Company and held as treasury stock.
(2) No further Class B Shares are available for issuance.
 
Shares Issuable Upon Contemplated Transactions
 
Shares
         
To Acquisition target
 
666,978
 
Shelf Public Offering
 
9,089,9902
 
Private Offering of Common Stock
 
1,398,601
 
Warrant Shares – Private Offering of Notes and Warrants
 
1,500,0003
 
Stock Options outside of the Plan
 
620,000
 
Stock Options under the Plan
 
105,000
 
    Total Potentially Issuable
 
13,380,569
 
    Total Potentially Outstanding Shares
 
92,959,614
 

--------------------------------------------------------------------------------

 
2 Assumes full exercise of the underwriters’ over-allotment.
 
3 Assumes sale of $5,000,000 in Notes and accompanying Warrants, of which
$3,000,000 in Notes and accompanying Warrants are committed as of October 17,
2013.

 
 

--------------------------------------------------------------------------------

 

EXHIBIT A
FORM OF NOTE
 
 
 
 

--------------------------------------------------------------------------------

 
 

FORM OF SUBORDINATED NOTE

THIS NOTE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
AND APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO CINEDIGM CORP. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN
RESTRICTIONS SET FORTH IN THIS NOTE.
 
THIS NOTE AND THE INDEBTEDNESS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER
AND TO THE EXTENT SET FORTH IN THAT CERTAIN INTERCREDITOR AGREEMENT (AS AMENDED,
RESTATED OR OTHERWISE MODIFIED FROM TIME TO TIME, THE “INTERCREDITOR
AGREEMENT”), DATED AS OF OCTOBER __, 2013 AMONG CINEDIGM CORP., SOCIÉTÉ
GÉNÉRALE, IN ITS CAPACITY AS ADMINISTRATIVE AGENT AND COLLATERAL AGENT FOR THE
SENIOR LENDERS FROM TIME TO TIME PARTY TO THE SENIOR CREDIT AGREEMENT (AS
THEREIN DEFINED) (INCLUDING ANY SUCCESSOR ADMINISTRATIVE AGENT AND COLLATERAL
AGENT UNDER THE SENIOR CREDIT AGREEMENT), AND THE OTHER PERSONS SIGNATORIES
HERETO AS HOLDERS OF SUBORDINATED NOTES; AND EACH HOLDER OF THIS THIS NOTE, BY
ITS ACCEPTANCE HEREOF, SHALL BE BOUND BY THE TERMS AND PROVISIONS OF THE
INTERCREDITOR AGREEMENT.
 
CINEDIGM CORP.
 

 
October [__], 2013
$[__________]

 
Cinedigm Corp., a Delaware corporation (“Payor”), for value received, promises
to pay to the order of [_____________] (“Payee”), or its assigns as permitted
hereunder, the Principal Amount (as defined below) together with accrued
interest thereon, each calculated and payable as and to the extent set forth
below in this Note.
 
This Note is made pursuant to that certain Securities Purchase Agreement, dated
as of October 17, 2013, by and between Payor and Payee (the “Purchase
Agreement”) and is one of the “Notes” referred to therein. Payee is receiving
this Note pursuant to the Purchase Agreement. All capitalized terms used herein
and not defined herein shall have the meanings assigned to such terms in the
Purchase Agreement. This Note and all Other Notes (as defined herein) are
collectively referred to in this Note as the “Notes”.
 
1.   Definitions. As used in this Note, the following terms shall have the
meanings set forth below:

 
 

--------------------------------------------------------------------------------

 

(a)    “Bankruptcy Code” means title 11 of the United States Code, as now
constituted or hereafter amended, or any other Federal, state or foreign
bankruptcy, insolvency, reorganization or similar law for the relief of debtors.
 
(b)    “Business Day” means any day other than a Saturday, a Sunday or a day on
which commercial banks in The City of New York are required or authorized by law
to be closed.
 
(c)    “Holder” means the Payee, as identified in the introduction of this Note,
and any permitted subsequent holders of this Note, and Holders means,
collectively, the Holder and the holders of the Other Notes.
 
(d)    “Intercreditor Agreement” means the Intercreditor Agreement dated as of
October __, 2013, among the Payor, Société Générale, as Administrative Agent and
Collateral Agent for the Lenders under the Senior Credit Agreement, and the
Holders, as the same may be modified, amended, extended or renewed from time to
time.
 
(e)    “Junior Creditor” means any Holder, including the Payee.
 
(f)    “Junior Debt” means the aggregate principal amount of this Note from time
to time outstanding and unpaid, together with accrued and unpaid interest
thereon and any other amounts of any kind whatsoever from time to time owing
under this Note.
 
(g)    “Obligations” means any and all loans, advances, Indebtedness,
liabilities, obligations, covenants or duties of the Payor to a Senior Creditor
of any kind or nature arising under the Senior Credit Documents, and any and all
extensions and renewals thereof, and modifications and amendments thereto,
whether now existing or hereafter arising, whether under any present or future
document, agreement or other instrument, and whether or not evidenced by a
writing and specifically including but not being limited to, unpaid principal,
plus all accrued and unpaid interest thereon (including interest accruing after
the filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Payor, whether or not a claim
for post-filing or post-petition interest is allowed in such proceeding),
together with all fees, expenses, commissions, charges, penalties and other
amounts owing by or chargeable to the Payor under the Senior Credit Documents as
and when the same shall become due and payable, whether at maturity, by
acceleration or otherwise.
 
(h)    “Other Notes” means (i) all of the notes issued pursuant to the Purchase
Agreement, other than this Note, and (ii) all notes issued in exchange therefor
or replacement thereof.
 
(i)    “Redemption Date” means the date fixed for such redemption of the Notes.
 
(j)    “Redemption Price” means the price at which the Notes are to be redeemed.
 
(k)    “Representative” means any agent or representative in respect of any
Senior Debt; provided that if, and for so long as, any Senior Debt lacks such
representative, then the Representative for such Senior Debt shall at all times
constitute the holders of a majority in outstanding principal amount of such
Senior Debt.
 
(l)    “Senior Creditor” means, at the time of determination, each and any state
or national bank, commercial bank, state or federal credit union, finance
company, insurance company, private equity firm, mezzanine lender or other
financial institution or Person or any Affiliate of any

 
 
- 2 -

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thereof providing any Indebtedness to the Payor, including without limitation
any Lender and any Agent, as such terms are defined in the Credit Agreement
dated as of October 17, 2013 among the Payor, as Borrower, the Lenders party
thereto and Société Générale, as Administrative Agent and Collateral Agent., as
the same may be modified, amended, extended or renewed from time to time (the
“Senior Credit Agreement”). For resolution of doubt, there may be, at any given
time, no Senior Creditor, a single Senior Creditor, or multiple Senior
Creditors, and each of such Senior Creditors shall have the rights of a Senior
Creditor under, and the benefits of, Section 5 and any reference to a Senior
Creditor in Section 5 shall mean each and every such Senior Creditor (but, if
the Holder is required to make a payment to more than one Senior Creditor, it
shall make such payment pro rata (based on the principal amount of Senior Debt
owed to each such Senior Creditor) to such Senior Creditors or their
Representatives.
 
(m)    “Senior Credit Documents” means the documents evidencing, securing,
guaranteeing or otherwise delivered by the Payor to any Senior Creditor in
connection with any Senior Debt, and any modification, amendment, extension or
renewal thereof, including without limitation the Senior Credit Agreement and
the Loan Documents (as defined in the Senior Credit Agreement).
 
(n)    “Senior Debt” means (i) any Indebtedness of the Payor in favor of a
Senior Creditor, including, without limitation, the principal amount of all
loans and guarantee obligations from time to time outstanding or owing under the
Senior Credit Documents, together with interest thereon (including, without
limitation, any interest subsequent to the filing by or against the Payor of any
bankruptcy, reorganization or similar proceeding, whether or not such interest
would constitute an allowed claim in any such proceeding, calculated at the rate
set forth for overdue loans in the Senior Credit Documents) and all
out-of-pocket costs or reasonable fees and expenses incurred after the date of
filing by or against the Payor of any such bankruptcy, reorganization or similar
proceeding and all fees and expenses owing under the Senior Credit Documents and
(ii) all other Obligations owing from the Payor to any Senior Creditor under the
Senior Credit Documents, including without limitation the Obligations (as
defined in the Senior Credit Agreement).
 
2.   Payment of Principal Amount and Interest.
 
(a)   Principal Amount. The principal amount due under the terms of this Note
(the “Principal Amount”) is equal to [_______] Dollars ($[_______]). Subject to
the provisions of Section 4 and Section 5 hereof and to the Intercreditor
Agreement, the Principal Amount, and any accrued and unpaid interest thereon,
shall be payable on October [__], 2018 (the “Maturity Date”).
 
(b)   Interest.
 
(i)    Prior to the Maturity Date, and subject to Section 2(b), interest shall
accrue on the outstanding Principal Amount at the rate of nine percent (9%) per
annum. Interest will be computed on the basis of a 365/6-day year and shall be
paid for the actual number of days elapsed, and shall be payable quarterly on
the last day of each calendar quarter, commencing December 31, 2013, and on the
Maturity Date.
 
(ii)    So long as an Event of Default (as defined herein) has occurred and is
continuing without being cured or waived, the Principal Amount shall bear
Interest at a rate that is two (2%) percentage points per annum above the
Interest Rate set forth in Section 2(b)(i).
 
3.   Payments. All payments of principal, interest and any amounts due under
this Note shall be paid in lawful money of the United States by inter-bank
transfer or wire transfer of immediately available funds to one or more bank
accounts in the United States of America designated by the Holder to

 
 
- 3 -

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the Payor in writing. Any payment hereunder which, but for this Section 3, would
be payable on a day that is not a Business Day shall instead be due and payable
on the Business Day next following such day for payment.
 
4.   Events of Default. Subject to Section 5 and to the Intercreditor Agreement,
if any of the following (each, an “Event of Default”) occurs:
 
(a)    Payor fails to pay any Principal Amount when due hereunder;
 
(b)    Payor fails to pay any installment of interest when due hereunder and
such failure remains uncured for a period of ten (10) Business Days;
 
(c)    The Payor shall violate Section 7(a);
 
(d)    an involuntary proceeding shall be commenced or an involuntary petition
shall be filed in a court of competent jurisdiction seeking (i) relief in
respect of Payor under the Bankruptcy Code, (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for Payor or
for a substantial part of the property or assets of Payor or (iii) the
winding-up or liquidation of Payor; and such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or ordering any
of the foregoing shall be entered; or
 
(e)    Payor shall (i) voluntarily commence any proceeding or file any petition
seeking relief under the Bankruptcy Code, (ii) consent to the institution of, or
fail to contest in a timely and appropriate manner, any proceeding or the filing
of any petition described in paragraph (d) of this Section 4, apply for or
consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for Payor or for a substantial part of the
property or assets of Payor, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors, (vi) become unable, admit in
writing its inability or fail generally to pay its debts as they become due or
(vii) take any action for the purpose of effecting any of the foregoing;
 
then, and in every such event (other than an event with respect to Payor
described in paragraph (d) or (e) of this Section 4, and at any time thereafter
during the continuance of such event, and subject to Section 4 hereof), the
Holder of this Note may declare the Principal Amount then outstanding, all
accrued interest thereon and any unpaid obligations of Payor hereunder to become
forthwith due and payable, whereupon the same shall become forthwith due and
payable without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by Payor, anything contained herein
notwithstanding; and in any event with respect to Payor described in paragraph
(d) or (e) of this Section 4, the Principal Amount then outstanding, all accrued
interest thereon and any unpaid obligations of Payor hereunder shall
automatically become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived by Payor, anything contained herein to the contrary notwithstanding.
 
5.   Subordination. The Holder, by its acceptance of this Note, agrees (a) to
execute, deliver and perform its obligations under the Intercreditor Agreement
and (b) that this Note and the Other Notes shall be subject and subordinate to
all Senior Debt other than the Obligations (as defined in the Senior Credit
Agreement) to the same extent as this Note and the Other Notes are subordinate
and subject to such Obligations pursuant to the Intercreditor Agreement, and the
terms of such Intercreditor Agreement are deemed to be incorporated herein by
reference with respect to all such other Senior Debt. As an inducement to each
Senior Creditor to extend Senior Debt, the Holder agrees that the Junior Debt
shall

 
 
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not be secured by any security interest in or other liens on any assets of the
Payor. The Payor agrees to provide the Holder with notice of any Event of
Default (as defined in the Senior Credit Agreement) under the Senior Credit
Agreement.
 
6.   Optional Redemption. Subject to Section 7(a), on or after the second
anniversary of the date of this Note, the Payor may, at its option, exercised by
giving notice to the Holder specifying the Redemption Date and the amount of the
Principal Amount to be redeemed (which notice shall be given at least three (3)
Business Days before the Redemption Date), at any time and from time to time,
redeem this Note, in whole or in part, at the following Redemption Prices
(expressed as percentages of Principal Amount being redeemed), plus accrued and
unpaid interest, if any, to the Redemption Date:
 

Redemption Date
Redemption Price
   
On or after the second anniversary,
      but prior to the third anniversary,
      of the date of this Note
 
102%
On or after the third anniversary,
      but prior to the fourth anniversary,
      of the date of this Note
101%
On or after the fourth anniversary of the
      date of this Note
100%

Any payment obligation to the Holder arising under this Section 6 shall be
subject to the provisions of Section 5.
 
7.   Miscellaneous.
 
(a)   Additional Subordinated Debt. The Payor shall not incur any additional
Indebtedness that would rank pari passu with the Junior Debt without the prior
written consent of the Holder, which consent shall not be unreasonably withheld,
conditioned or delayed. If for any reason the Holder shall not consent to the
incurrence of such additional Indebtedness by the Payor, then notwithstanding
anything in this Note to the contrary, the Payor shall have the right, upon not
less than three (3) Business Days’ notice to the Holder, to redeem this Note in
whole at a Redemption Price equal to 100% of the then outstanding Principal
Amount plus accrued and unpaid interest, if any, to the Redemption Date. For the
avoidance of doubt, this provision shall not limit the ability of the Payor to
incur additional Senior Debt.

(b)   Section Headings. The section headings contained in this Note are for
convenience of reference only and shall not be considered a part of or affect
the construction or interpretation of any provision of this Note.

(c)   Amendment and Waiver. No provision of this Note may be amended or modified
except by a written instrument signed by each of Payor and the Holder. No
provision of this Note may be waived except by a written instrument signed by
the party making such waiver. The failure of Payor or the Holder to enforce at
any time any of the provisions of this Note shall in no way be construed to be a
waiver of any such provision, nor in any way to affect the validity of this Note
or any part hereof or the right of such party thereafter to enforce each and
every such provision of this Note. No waiver of any breach of, or noncompliance
with, this Note shall be held to be a waiver of any other or subsequent breach
or noncompliance.

 
 
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(d)   Successors, Assigns and Transferors. This Note shall not be assignable or
transferable without the prior written consent of the Payor, which shall not be
unreasonably withheld, conditioned or delayed, and, in any case, shall not be
assigned or transferred in the absence of registration or qualification under
the Securities Act of 1933, as amended, and any state securities laws that may
be applicable or an exemption therefrom. Any purported assignment or transfer
not made in accordance with this Section 7(d) shall be null and void. Subject to
the foregoing, the rights and obligations of Payor and the Holder under this
Note shall be binding upon, and inure to the benefit of, and be enforceable by,
Payor and the Holder and their respective successors and permitted assigns.

(e)   Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Note shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York,
without regard to the principles of conflicts of law thereof that would require
the application of the laws of any other jurisdiction. Each party agrees that
all legal proceedings concerning the interpretations, enforcement and defense of
the transactions contemplated by this Note (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or in inconvenient venue or forum for such proceeding. The Payor and each Holder
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
via registered or certified mail, first class postage prepaid and return receipt
requested, or by U.S. nationally recognized overnight delivery service (with
evidence of delivery) to such party at the address in effect for notices to it
under this Note and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. EACH OF PAYOR AND EACH HOLDER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS NOTE OR ANY
TRANSACTION CONTEMPLATED HEREBY. If either party shall commence an action, suit
or proceeding to enforce any provisions of this Note, then the prevailing party
in such action, suit or proceeding shall be reimbursed by the other party for
its attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.

(f)   Lost, Stolen, Destroyed or Mutilated Note. Upon receipt of evidence
reasonably satisfactory to Payor of the loss, theft, destruction or mutilation
of this Note and of indemnity arrangements reasonably satisfactory to Payor from
or on behalf of Holder, and upon surrender or cancellation of this Note if
mutilated, Payor shall make and deliver a new note of like tenor in lieu of such
lost, stolen, destroyed or mutilated Note, at Holder’s expense.

(g)   Usury. Nothing contained in this Note shall be deemed to establish or
require the payment of a rate of interest in excess of the maximum rate legally
enforceable. If the rate of interest called for under this Note at any time
exceeds the maximum rate legally enforceable, the rate of interest required to
be paid hereunder shall be automatically reduced to the maximum rate legally
enforceable. If such interest rate is so reduced and thereafter the maximum rate
legally enforceable is increased, the rate

 
 
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of interest required to be paid hereunder shall be automatically increased to
the lesser of the maximum rate legally enforceable and the rate otherwise
provided for in this Note.

(h)   Notices. Any and all notices, requests, consents, or other communications
or deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered by hand or via
facsimile prior to 5:30 p.m. (New York City time) on a Business Day, (ii) the
next Business Day after the date of transmission, if such notice or
communication is delivered by hand or via facsimile on a day that is not a
Business Day or later than 5:30 p.m. (New York City time) on any Business Day,
(iii) the Business Day following the date of sending, if sent by U.S. nationally
recognized overnight courier service for next day delivery, or (iv) upon actual
receipt by the party to whom such notice is required to be given, if addressed
as follows, or to such other address or addresses as may have been furnished in
writing by a party to another party pursuant to this paragraph:

if to Payee:
 
______________________________
______________________________
______________________________
______________________________
 
if to Payor, to:
 
Cinedigm Corp.
902 Broadway, 9th Floor
New York, NY 10010
Attention: General Counsel
Facsimile: (212) 206-9001

with a copy (which shall not constitute notice) to:

Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Attention: Jonathan K. Cooperman, Esq.
Facsimile: (212) 808-7897

(i)   Certain Expenses. In the event Payor defaults on its obligations under
this Note, Payor shall pay to the Holder, upon demand but subject to Section 5
and the Intercreditor Agreement, all reasonable out-of-pocket costs and
expenses, including attorneys’ fees, if any, incurred by the Holder in enforcing
its rights hereunder.

(j)   Severability. If any provision of this Note is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Note shall not in any way be affected or impaired
thereby and the parties will attempt to agree upon a valid and enforceable
provision that is a reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Note.

 
 
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(k)   Rights of Third Parties. Nothing expressed or implied in this Note is
intended or shall be construed to confer upon or give any Person, other than the
parties hereto, the Senior Creditors and their permitted successors and assigns,
any right or remedies under or by reason of this Note.

(j)   Entire Agreement. This Note, together with the Purchase Agreement,
constitutes the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters.

(k)   Construction. Payor and the Holder agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise this Note and,
therefore, the normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation of the this Note or any modifications, amendments, extensions or
renewals hereto or hereof.

[Signature Page Follows]

 
 
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IN WITNESS WHEREOF, Payor has executed and delivered this Note as of the date
first written above.

 

 
CINEDIGM CORP.
 
By:
     
Name:
     
Title:

[Signature Page to Note]

 
 

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EXHIBIT B
FORM OF WARRANT
 
 
 
 
 
 

--------------------------------------------------------------------------------

 
 
 
Issue Date: October ___, 2013
 
NEITHER THIS SECURITY NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
 
COMMON STOCK PURCHASE WARRANT
 
To Purchase [_______] Shares of Class A Common Stock of
 
CINEDIGM CORP.
 
THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value
received, ________________________ (the “Holder”), is entitled, upon the terms
and subject to the limitations on exercise and the conditions hereinafter set
forth, at any time on or after the date hereof (the “Initial Exercise Date”) and
on or prior to the close of business on October __, 2018 (the “Termination
Date”) but not thereafter, to subscribe for and purchase from Cinedigm Corp., a
Delaware corporation (the “Company”), up to [_______] shares (the “Warrant
Shares”) of the Company’s Class A Common Stock, par value $0.001 per share, of
the Company (the “Common Stock”). The purchase price of one share of Common
Stock under this Warrant shall be equal to the Exercise Price, as defined in
Section 2(b).
 
Section 1.   Definitions. As used in this Warrant, the following terms shall
have the meanings set forth below:
 
(a)     “Person” means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
 
(b)    “Trading Day” means a day on which the Common Stock is traded on a
Trading Market.
 
(c)    “Trading Market” means the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the New
York Stock Exchange, NYSE MKT, the Nasdaq Global Market, the Nasdaq Capital
Market, or any other recognized exchange or automated quotation system.
 
Section 2.   Exercise.
 
 
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(a)    Exercise of Warrant. Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the
Initial Exercise Date and on or before the Termination Date by delivery to the
Company of a duly executed facsimile copy of the notice of exercise, in the form
annexed hereto (the “Notice of Exercise”) (or such other office or agency of the
Company as it may designate by notice in writing to the registered Holder at the
address of such Holder appearing on the books of the Company); provided,
however, within five Trading Days of the date said Notice of Exercise is
delivered to the Company, the Holder shall have surrendered this Warrant to the
Company and the Company shall have received payment of the aggregate Exercise
Price of the shares thereby purchased in the amount and manner specified in
Section 2(b).

(b)   Exercise Price. The exercise price of the Common Stock under this Warrant
shall be $1.85 (the “Exercise Price”), and is to be paid (x) in cash by wire
transfer or (y) by surrender of Warrants as set forth in Section 2(c) or by any
combination of the methods specified in clauses (x) or (y) of this sentence.
 
(c)   Cashless Exercise. In lieu of payment of the Exercise Price in cash, at
the option of the Holder, as indicated on the Notice of Exercise, the Holder may
demand that the Company reduce the number of Warrant Shares to be delivered to
such Holder upon exercise of the Warrants then being exercised so that the
Holder receives a number of Warrant Shares equal to the product of (i) the
number of Warrant Shares for which such Warrant would otherwise then be
nominally exercised if payment of the Exercise Price as of the date of exercise
were being made in cash and (ii) the Cashless Exercise Ratio (as defined below).
The Holder may use the cashless exercise option described in this Section 2(c)
whether or not this Warrant is being exercised in whole or in part and whether
or not the Holder elects to pay any portion of the aggregate Exercise Price in
cash. Cashless Exercise Ratio means a fraction, (i) the numerator of which is
the excess of the Fair Market Value (as defined below) per Warrant Share on the
date of exercise over the Exercise Price per Warrant Share as of the date of
exercise and (ii) the denominator of which is the Fair Market Value (as defined
below) per Warrant Share on the date of exercise. Fair Market Value means the
value determined (x) by the closing price of the Common Stock on the Nasdaq
Global Market, or such other national stock exchange or automated quotation
system on which the Common Stock is then listed for trading or quotation on the
trading day preceding the date of the Notice of Exercise; (y) if the
determination under (x) is unavailable, mutually by the Board of Directors of
the Company (the “Board”) and the Holder; or (z) if the determination under (y)
is unavailable, by a nationally recognized investment bank, appraisal or
accounting firm (whose fees and expenses will be paid by the Holder) selected by
mutual agreement between the Board and the Holder.
 
(d)   Mechanics of Exercise.
 
(i)   Authorization of Warrant Shares. The Company covenants that all Warrant
Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon due exercise of the purchase rights represented by
this Warrant, be duly authorized, validly issued, fully paid and nonassessable
and free from all taxes, liens and charges in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with
such issue).
 
 
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(ii)   Delivery of Certificates Upon Exercise. Certificates for shares purchased
hereunder shall be transmitted by the transfer agent of the Company to the
Holder by physical delivery to the address specified by the Holder in the Notice
of Exercise, or by electronic delivery under the Direct Registration System
operated by The Depository Trust Company, within three Trading Days from the
receipt by the Company of all of the Notices of Exercise, surrender of this
Warrant and payment of the aggregate Exercise Price as set forth above (“Warrant
Share Delivery Date”). This Warrant shall be deemed to have been exercised on
the date the Company has received all of the Notices of Exercise, this Warrant
and the full Exercise Price for the Warrant Shares being purchased upon the
exercise. The Warrant Shares shall be deemed to have been issued, and Holder or
any other Person so designated to be named therein shall be deemed to have
become a holder of record of such shares for all purposes, as of the date the
Warrant has been exercised by payment to the Company of the Exercise Price and
all taxes required to be paid by the Holder, if any, pursuant to Section
2(d)(vi) prior to the issuance of such shares, have been paid.
 
(iii)   Delivery of New Warrants Upon Exercise. If this Warrant shall have been
exercised in part, the Company shall, within five Trading Days after the time of
delivery of the certificate or certificates, or confirmation of electronic
notation, representing Warrant Shares, deliver to Holder a new Warrant
evidencing the rights of Holder to purchase the unpurchased Warrant Shares
called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant.
 
(iv)   Right to Rescind Exercise. If the Company fails to cause its transfer
agent to transmit to the Holder a certificate or certificates, or confirmation
of electronic notation, representing the Warrant Shares pursuant to this Section
2(d) by the second Trading Day immediately following the Warrant Share Delivery
Date, then the Holder will have the right to rescind such exercise.
 
(v)   No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares of Common Stock shall be issued upon the exercise of this
Warrant. As to any fraction of a share of Common Stock which Holder would
otherwise be entitled to purchase upon such exercise, the Company shall pay a
cash adjustment in respect of such final fraction in an amount equal to such
fraction multiplied by the Exercise Price.
 
(vi)   Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares
shall be made without charge to the Holder for any issue or transfer tax or
other incidental expense in respect of the issuance of such certificate, all of
which taxes and expenses shall be paid by the Company, and such certificates
shall be issued in the name of the Holder or in such name or names as may be
directed by the Holder; provided, however, that in the event certificates for
Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the Holder; and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any expenses incidental thereto. The Holder shall be responsible for all
other tax liability that may arise as a result of holding or transferring this
Warrant or receiving Warrant Shares upon exercise thereof.
 
 
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(vii)   Closing of Books. The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.

Section 3.    Certain Adjustments.
 
(a)   Certain Adjustments. The number of Warrant Shares shall be subject to
adjustment from time to time in certain cases as follows:
 
(i)    In case the Company shall: (a) pay a dividend on the Common Stock in
shares of its capital stock; (b) subdivide its outstanding Common Stock into a
greater number of shares; (c) combine the shares of its outstanding Common Stock
into a smaller number of shares; or (d) issue by reclassification of its Common
Stock (including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation) any shares of its
capital stock, then the remaining number of Warrant Shares issuable upon
exercise of this Warrant immediately prior thereto shall be proportionately
adjusted so that the Holder of any portion of this Warrant thereafter exercised
shall be entitled to receive, to the extent permitted by applicable law, the
number and kind of shares of capital stock of the Company which such holder
would have owned or have been entitled to receive after the happening of such
event had this Warrant been exercised immediately prior to the happening of such
event. Such adjustment shall be made whenever any of such events shall occur. An
adjustment made pursuant to this Section3(a)(i) shall become effective,
retroactively, immediately after the record date, in the case of a stock
dividend, and shall become effective immediately after the effective date in the
in case of subdivision, combination or reclassification.
 
(ii)    In case the Company shall: (a) issue rights or warrants to all holders
of its Common Stock entitling them (for a period expiring within 45 days after
the record date mentioned below) to subscribe for or purchase for a
consideration per share less than the fair market value per share of the Common
Stock at the record date for such rights or warrants; or (b) issue or is deemed
to have issued additional shares Common Stock, or other securities convertible
into shares of Common Stock, for no consideration or a consideration per share
less than the fair market value per share of the Common Stock at the date of
issuance of such additional shares of Common Stock (or in the case of issuance
of Common Stock pursuant to stock options, warrants or other convertible
securities, at the date of the grant or issuance of such options, warrants or
other convertible security), then the number of Warrant Shares represented by
the Warrant on such date shall be adjusted by multiplying it by a fraction, (x)
the numerator of which shall be the sum of the number of shares of Common Stock
outstanding, on a fully diluted basis, immediately prior to the record date for
such rights or warrants or the date of issuance of such additional shares of
Common Stock, as the case may be, plus the number of additional shares of Common
Stock issuable or so issued; and (y) the denominator of which shall be the sum
of the number of shares of Common Stock outstanding, on a fully diluted basis,
immediately prior to the issuance of such rights or warrants plus the number of
shares of Common Stock which the aggregate consideration for such additional
shares of Common Stock would purchase at the current fair market value of the
Common Stock immediately prior to the record date of such rights or warrants or
the date of issuance of such additional shares of Common Stock or other
securities, as the case may be. Such adjustment shall be made whenever such
rights, warrants, shares of Common Stock or other securities are issued, and,
with respect to
 
 
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rights or warrants shall become effective, retroactively, immediately after the
record date for the determination of stockholders entitled to receive such
rights or warrants.

(iii)    All calculations hereunder shall be made to the nearest cent or to the
nearest one-hundredth (1/100) of a share, as the case may be. The number of
shares of Common Stock outstanding will be calculated on the basis of the number
of issued and outstanding shares of Common Stock on the date of measurement, not
including shares held in the treasury of the Company. The Company shall not pay
any dividend on or make any distribution to shares of Common Stock held in
treasury.
 
(iv)    Notwithstanding any other provision of this Section 3, no change in the
number of Warrant Shares shall actually be made until the cumulative effect of
the adjustments called for by this Section 3 since the date of the last change
in the number of Warrant Shares would change that number by more than 2%.
However, once the cumulative effect would result in a 2% change, then the number
of Warrant Shares shall be changed to reflect all adjustments called for by this
paragraph and not previously made.
 
(v)    In the event that at any time, as a result of an adjustment made pursuant
to Section 3(e)(i) above, the Holder of any Warrant thereafter exercised shall
become entitled to receive any shares of capital stock of the Company other than
its Common Stock, thereafter the number of such other shares so receivable upon
exercise shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions Sections 3(e)(i) to
(iv), inclusive, above.
 
(vi)    Except as otherwise provided for in this Section 3(a), no adjustment
shall be made on any conversion for share distributions, dividends, including,
without limitation, dividends in property distributions, theretofore declared
and paid or payable on the Common Stock.
 
(vii)    Whenever the number of Warrant Shares is adjusted as herein provided,
the Company shall file with its corporate records and send to the record holders
of the Warrant a statement executed by an executive officer of the Company as to
the new number of Warrant Shares, including the facts upon which such adjustment
is based.
 
(b)   Notice to Holder. If (A) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; or (B) the Company shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the
Company; then, in each case, the Company shall cause to be mailed to the Holder
at its last address as it shall appear upon the Warrant Register (as defined
herein) of the Company, at least 20 calendar days prior to the applicable record
or effective date hereinafter specified, a notice stating the date on which such
reclassification, consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their
shares of the Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger,
 
 
5

--------------------------------------------------------------------------------

 
 
sale, transfer or share exchange; provided, that the failure to mail such notice
or any defect therein or in the mailing thereof shall not affect the validity of
the corporate action required to be specified in such notice. The Holder is
entitled to exercise this Warrant during the 20-day period commencing on the
date of such notice to the effective date of the event triggering such notice.
Notwithstanding the foregoing, the delivery of the notice described in this
Section 3(c) is not intended to and shall not bestow upon the Holder any voting
rights whatsoever with respect to outstanding unexercised Warrants.

Section 4.   Transfer of Warrant.
 
(a)   Transferability. Subject to compliance with any applicable securities laws
and the conditions set forth in Sections 5(a) and 4(d) hereof, this Warrant and
all rights hereunder are transferable, in whole or in part, but only with the
prior written consent of the Company, not to be unreasonably withheld, upon
surrender of this Warrant at the principal office of the Company, together with
a written assignment of this Warrant substantially in the form attached hereto
duly executed by the Holder or its agent or attorney and funds sufficient to pay
any transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of assignment, and
shall issue to the assignor a new Warrant evidencing the portion, if any, of
this Warrant not so assigned, and this Warrant shall promptly be cancelled. A
Warrant, if properly assigned, may be exercised by a new holder for the purchase
of Warrant Shares without having a new Warrant issued.
 
(b)   New Warrants. This Warrant may be divided or combined with other Warrants
upon presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney. Subject to
compliance with Section 4(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
 
(c)   Warrant Register. The Company shall register this Warrant, upon records to
be maintained by the Company for that purpose (the “Warrant Register”), in the
name of the record Holder hereof from time to time. The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.
 
(d)   Transfer Restrictions. If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant, the transfer of this Warrant shall
not be registered pursuant to an effective registration statement under the
Securities Act and under applicable state securities or blue sky laws, the
Company may require, as a condition of allowing such transfer (i) that the
Holder or transferee of this Warrant, as the case may be, furnish to the Company
a written opinion of counsel (which opinion shall be in form, substance and
scope customary for opinions of counsel in comparable transactions) to the
effect that such transfer may be made without registration under the Securities
Act and under applicable state securities or blue sky laws, (ii) that the Holder
or transferee execute and deliver to the Company an investment letter in
 
 
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--------------------------------------------------------------------------------

 
 
form and substance acceptable to the Company and (iii) that the transferee
provide evidence satisfactory to the Company, its reasonable discretion, that
such transferee is an “accredited investor” as defined in Rule 501(a)
promulgated under the Securities Act or a qualified institutional buyer as
defined in Rule 144A(a) under the Securities Act.

Section 5.   Miscellaneous.
 
(a)   Title to Warrant. Prior to the Termination Date and subject to compliance
with applicable laws and Section 4 of this Warrant, this Warrant and all rights
hereunder are transferable, in whole or in part, at the office or agency of the
Company by the Holder in person or by duly authorized attorney, upon surrender
of this Warrant together with the Assignment Form annexed hereto properly
endorsed and the legal opinion required under Section 4(d), if required by the
Company. The transferee shall sign an investment letter in form and substance
reasonably satisfactory to the Company.
 
(b)   No Rights as Shareholder Until Exercise. This Warrant does not entitle the
Holder to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof. Upon the surrender of this Warrant and the payment
of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be
deemed to be issued to such Holder as the record owner of such shares as of the
close of business on the later of the date of such surrender or payment.
 
(c)   Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants
that upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which, in
the case of the Warrant, shall not include the posting of any bond), and upon
surrender and cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of such Warrant or stock
certificate.
 
(d)   Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday, Sunday or a legal holiday, then such action may be taken or
such right may be exercised on the next succeeding day not a Saturday, Sunday or
legal holiday.
 
(e)   Authorized Shares. The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such
Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Trading Market upon
which the Common Stock may be listed.
 
 
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Except as, and to the extent, waived or consented to by the Holder, the Company
shall not by any action, including, without limitation, amending its certificate
of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth in this
Warrant against impairment. Without limiting the generality of the foregoing,
the Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this Warrant.
 
Before taking any action which would result in an adjustment in the number of
Warrant Shares for which this Warrant is exercisable or in the Exercise Price,
the Company shall obtain all such authorizations or exemptions thereof, or
consents thereto, as may be necessary from any public regulatory body or bodies
having jurisdiction thereof.
 
(f)   Jurisdiction. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof.
 
(g)   Restrictions. The Holder acknowledges that the Warrant Shares acquired
upon the exercise of this Warrant, if not registered, will have restrictions
upon resale imposed by state and federal securities laws and will contain a
restrictive legend substantially in the following form:
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY.

(h)   Nonwaiver and Expenses. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or
 
 
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otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the
fact that all rights hereunder terminate on the Termination Date. If the Company
willfully and knowingly fails to comply with any provision of this Warrant,
which results in any material damages to the Holder, the Company shall pay to
Holder such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys’ fees, including those of
appellate proceedings, incurred by Holder in collecting any amounts due pursuant
hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
 
(i)   Notices. Any notice, request or other document required or permitted to be
given or delivered to the Holder by the Company shall be delivered to Holder at
its last address as it shall appear upon the Warrant Register of the Company.
 
(j)   Limitation of Liability. No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant or purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
 
(k)   Remedies. Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Warrant and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
 
(l)   Successors and Assigns. Subject to applicable securities laws, this
Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of Holder. The provisions of this Warrant are intended to
be for the benefit of all Holders from time to time of this Warrant and shall be
enforceable by any such Holder.
 
(m)   Amendment. This Warrant may be modified or amended or the provisions
hereof waived with the written consent of the Company and the Holder.
 
(n)   Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.
 
(o)   Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.
 

[Remainder of Page Intentionally Left Blank]
 

 
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed and
its corporate seal to be impressed hereon and attested by its Secretary or an
Assistant Secretary.

 
CINEDIGM CORP.
 
 
 
By:
     
Name:
 
   
Title:
 

 
[Signature Page to Warrant]

 
 

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NOTICE OF EXERCISE
 
TO: Cinedigm Corp.
 
(1)    The undersigned hereby elects to purchase ________ Warrant Shares of the
Company pursuant to the terms of the attached Warrant, and tenders herewith
payment of the Exercise Price in full, together with all applicable transfer
taxes, if any.
 
(2)    Payment shall take the form of either (a) lawful money of the United
States by wire transfer or cashier’s check drawn on a United States bank, (b)
surrender of Warrants as set forth in Section 2(c) of the attached Warrant or
(c) by any combination of the methods specified in clauses (a) or (b) of this
sentence.
 
(3)    Please issue a certificate or certificates representing said Warrant
Shares in the name of the undersigned or in such other name as is specified
below:
 
_______________________________
 
The Warrant Shares shall be delivered to the following:
 
_______________________________
 
_______________________________
 
_______________________________
 
[SIGNATURE OF HOLDER]

Name of Investor:
 
Signature of Authorized Signatory of Investor:
 
Name of Authorized Signatory:
 
Title of Authorized Signatory:
 
Date:  
 

 
 

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ASSIGNMENT FORM
 
(To assign the foregoing note, execute
this form and supply required information.
Do not use this form to exercise the note.)
 
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are
hereby assigned to ___________________________, whose address is
________________________________________________________________________________________________
____________________________________________.

 
 
Dated:
 
 
 
Holder’s Signature:
 
 
 
Holder’s Address:
 

Signature Guaranteed:
 
_______________________________

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

 
 

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Addendum
 
The Company has entered into another agreement, substantially identical in all
material respects to this Securities Purchase Agreement among the Company and
the purchasers thereto, dated as of October 21, 2013, for an aggregate purchse
price of $2,000.000.