exh10-5_1962075.htm


EXHIBIT 10.5


 


EXECUTION VERSION


 













 
















 


 


 


COMMON STOCK PURCHASE AGREEMENT


 


among


 


CINEDIGM CORP.


 


and


 


THE PURCHASERS REFERRED TO HEREIN


 


October 17, 2013





















































  





  











  













TABLE OF CONTENTS







Page








	
ARTICLE I

	
DEFINITIONS 

	
1







 



	
  

	
1.1

	
Definitions 

	
1







 



	
ARTICLE II

	
PURCHASE AND SALE 

	
3







 



	
  

	
2.1

	
Agreement to Sell and Purchase 

	
3







 



	
  

	
2.2

	
Closing 

	
4







 



	
  

	
2.3

	
Deliveries 

	
4







 



	
  

	
2.4

	
Closing Conditions 

	
4







 



	
ARTICLE III

	REPRESENTATIONS AND WARRANTIES	
5







 



	
  

	
3.1

	
Representations and Warranties of the Company 

	
5







 



	
  

	
3.2

	
Representations and Warranties of the Purchasers 

	
15







 



	
ARTICLE IV

	OTHER AGREEMENTS OF THE PARTIES	
18







 



	
  

	
4.1

	
Transfer Restrictions 

	
18







 



	
  

	
4.2

	
Furnishing of Information 

	
19







 



	
  

	
4.3

	
Integration 

	
19







 



	
  

	
4.4

	
Securities Laws Disclosure; Publicity; Confidentiality 

	
19







 



	
  

	
4.5

	
Form D; Blue Sky Filings 

	
20







 



	
  

	
4.6

	
Shareholder Rights Plan 

	
20







 



	
  

	
4.7

	
Use of Proceeds 

	
20







 



	
  

	
4.8

	
Indemnification of Purchasers 

	
20







 



	
  

	
4.9

	
Listing of Common Stock 

	
21







 



	
  

	
4.10

	
Short Sales and Confidentiality After the Date Hereof 

	
21







 



	
  

	
4.11

	
Reasonable Best Efforts 

	
22







 



	
  

	
4.12

	
Registration Rights 

	
22







 



	
ARTICLE V

	
MISCELLANEOUS 

	
26







 



	
  

	
5.1

	
Termination 

	
26







 



	
  

	
5.2

	
Fees and Expenses 

	
27







 



	
  

	
5.3

	
Entire Agreement 

	
27







 



	
  

	
5.4

	
Notices 

	
27







 



	
  

	
5.5

	
Amendments; Waivers 

	
27







 



	
  

	
5.6

	
Headings 

	
28







 










  





 











  



TABLE OF CONTENTS


(continued)







Page
















	
  

	
5.7

	
Successors and Assigns 

	
28







 



	
  

	
5.8

	
No Third-Party Beneficiaries 

	
28







 



	
  

	
5.9

	
Governing Law 

	
28







 



	
  

	
5.10

	
Survival 

	
29







 



	
  

	
5.11

	
Execution 

	
29







 



	
  

	
5.12

	
Severability 

	
29







 



	
  

	
5.13

	
Replacement of Shares 

	
29







 



	
  

	
5.14

	
Remedies 

	
29







 



	
  

	
5.15

	
Independent Nature of Purchasers’ Obligations and Rights

	
29







 



	
  

	
5.16

	
Liquidated Damages 

	
30







 



	
  

	
5.17

	
Construction 

	
30







 







SCHEDULE 1             Purchasers


SCHEDULE 2             Subsidiaries


SCHEDULE 3             Capitalization




















  





ii 











  













COMMON STOCK PURCHASE AGREEMENT


 


This Common Stock 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 1,398,601 shares of Class A common stock of the Company, $0.001 par value per share (the “Common Stock”); 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, the number of shares of Common Stock set forth opposite such Purchaser’s name on Schedule 1 (the “Shares”), 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 4.12(f)(i).


 


“Closing” means the closing of the purchase and sale of the Shares pursuant to Section 2.2.


 


“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 precedent to (i) the Purchasers’ obligations to pay the Purchase Price and (ii) the Company’s obligations to deliver the Shares 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 notes and warrants to purchase up to 1,500,000 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 4.12(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).


 


“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.


 










  





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“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 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 and any other documents or agreements executed in connection with the transactions contemplated hereunder.


 


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 number of shares of Common Stock 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 per share shall be $1.43; provided, however, that, with respect to any Purchaser who is an officer or director of the Company, the purchase price per share shall not be less than the last closing price of the Common Stock on the Trading Market prior to entering into the Agreement (the “Purchase Price”).


 










  





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2.2           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 shares of Common Stock, 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 Shares as determined pursuant to Section 2.3(a) and the other items set forth in Section 2.3 issuable at the Closing.  Upon satisfaction of the conditions set forth in Sections 2.3 and 2.4, 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.


 


2.3           Deliveries.


 


(a)           On the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:


 


(i)           one or more stock certificates, representing the Shares being purchased by such Purchaser, and registered in the name of such Purchaser, as set forth on Schedule 1;


 


(ii)           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 2.4(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


 


(iii)         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.


 


2.4           Closing Conditions.


 


(a)           The obligations of the Company 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 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 2.3(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:


 


(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 2.3(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 (as defined below) 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


 










  





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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 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 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


 










  





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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 Section 4.5 of this Agreement, (ii) application(s), if applicable, to each applicable Trading Market for the issuance and listing of the 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 Shares.  The 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.


 


(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 as 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 Shares hereunder or the Common Stock with respect to the Contemplated Transactions will not


 










  





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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 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.


 


(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 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.


 










  





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(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 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 (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


 










  





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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 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


 










  





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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 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 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”).


 










  





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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.


 


(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 Shares by the Company to the Purchasers as contemplated hereby.  The issuance and sale of the Shares 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 Shares, 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 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


 










  





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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 Shares and the Purchasers’ ownership of the Shares.


 


(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 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 Shares 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 Shares 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


 










  





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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 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 Shares by any form of general solicitation or general advertising.  The Company has offered the Shares 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 Shares.  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


 










  





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with this Agreement and the transactions contemplated hereby is merely incidental to the Purchasers’ purchase of the Shares.  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 Shares, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Shares, or (iii) paid or agreed to 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 Shares are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Shares for its own account and not with a view to or for distributing or reselling such Shares 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 Shares 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 Shares (this representation and warranty not limiting such Purchaser’s right to sell


 










  





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the Shares 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 Shares 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 Shares.


 


(c)           Purchaser Status.  At the time such Purchaser was offered the Shares, it was, and at the date hereof it is, and on each date on which it receives the 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 purpose of acquiring the Shares 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 Shares, 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 Shares and, at the present time, is able to afford a complete loss of such investment.


 


(e)           General Solicitation.  Such Purchaser is not purchasing the Shares as a result of any advertisement, article, notice or other communication regarding the Shares 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


 










  





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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 Shares 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 of the Shares and the merits and risks of investing in the Shares; (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 Shares.  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 Shares 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.


 










  





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(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.


 


ARTICLE IV   OTHER AGREEMENTS OF THE PARTIES


 


4.1           Transfer Restrictions.  Each Purchaser acknowledges and understands, severally and not jointly, that (i) the Shares may only be disposed of in compliance with state and federal securities laws and (ii) in connection with any transfer of 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 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 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 Shares (and any certificates or instruments representing the 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 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


 










  





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this Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured 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 pledgee or secured party of Shares may reasonably request in connection with a pledge or transfer of the Shares, if registered pursuant to Section 4.12 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 Shares, 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 Shares, but only until such holder’s 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 Shares under Rule 144.  The Company further covenants that it will take such further action as any holder of Shares may reasonably request, all to the extent required from time to time to enable such Person to sell such Shares 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 Shares in a manner that would require the registration under the Securities Act of the sale of the Shares to the Purchasers or that would be integrated with the offer or sale of the Shares 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 Shares 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


 










  





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law in connection with a registration statement that includes the resale of Shares under Section 4.12 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 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 Shares 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 Shares 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 Shares 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 Shares 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 Shares 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


 










  





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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 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           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 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 Shares, and will take such other action as is necessary to cause all of the 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 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.


 


4.10           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


 










  





21











  













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 Shares covered by this Agreement.


 


4.11           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 2.4 of this Agreement.


 


4.12           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 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 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 Shares without restriction pursuant to Rule 144 promulgated under the Securities Act or (y) the date when all of the 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 Shares under this Section 4.12 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 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 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


 










  





22











  













such Purchaser to consummate the disposition in such jurisdictions of the 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 Shares covered by such registration statement, at any time when a prospectus relating to the resale of the 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 Shares, such prospectus will not contain an untrue statement of a 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 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 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 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 4.12(d), the Company shall pay all Registration Expenses relating to the Shelf Registration Statement.


 










  





23











  













“Registration Expenses” shall mean any and all fees and expenses incident to the Company’s performance of or compliance with this Section 4.12, 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 4.12(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.


 


(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 4.12(b)(iii) such Purchaser will forthwith discontinue disposition of Shares pursuant to the Shelf Registration Statement until such Purchaser’s receipt of the copies of the supplemental or amended prospectus contemplated by Section 4.12(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


 










  





24











  













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 4.12(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 4.12(f) to the extent that any Claim for which such Purchaser seeking indemnification relates to a sale of Shares in violation of Section 4.12(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 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 4.12(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 Shares pursuant to the Shelf Registration Statement.


 










  





25











  













(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 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 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 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).


 










  





26











  













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 Shares.


 


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 to 5:30 p.m.  (New York City time) on 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 Shares or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought.  No waiver of any default


 










  





27











  













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 Shares, provided such transferee agrees in writing to be bound, with respect to the transferred Shares, 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 Shares 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


 










  





28











  













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 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 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 Shares.  If any certificate or instrument evidencing any Shares 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 Shares.


 


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


 










  





29











  













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.


 


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)


 










  





30











  













IN WITNESS WHEREOF, the parties hereto have caused this Common Stock 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 Common Stock 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 Common Stock Purchase Agreement]




  





  











  













SCHEDULE 1


PURCHASERS








	
 


Name and Address of


Purchasers


 

	
Number of Shares

	
Per Share Purchase


Price

	
Aggregate Purchase


Price


	
Fifth Third Bank as


Custodian of the Ronald L.


Chez IRA


 


Fifth Third Bank


Attention:  Peggy Sajdak


1701 West Golf Road


Suite 1-800


Rolling Meadows, IL  60008


 

	
1,398,601

	
$1.43

	
$2,000,000




















  





  











  














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

	 















1 Assumes full exercise of the underwriters’ over-allotment.






  

2 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.