UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

 
FORM 8-K

 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 

April 19, 2012
(Date of earliest event reported)

Cinedigm Digital Cinema Corp.
(Exact name of registrant as specified in its charter)


Delaware
001-31810
22-3720962
(State or other jurisdiction
of incorporation)
(Commission File Number)
(IRS Employer
Identification No.)


55 Madison Avenue, Suite 300, Morristown, New Jersey
07960
(Address of principal executive offices)
(Zip Code)


973-290-0080
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

¨          Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨          Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨          Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨          Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 


 
 
 

 


Item 1.01
Entry into a Material Definitive Agreement

On April 19, 2012, Cinedigm Digital Cinema Corp. (the “Company”) entered into an underwriting agreement (the “First Underwriting Agreement”) with B. Riley & Co., LLC (“B. Riley”) pursuant to which B. Riley  agreed to act as underwriter of 3,885,004 shares of the Company’s Class A common stock being offered, and on April 20, 2012, the Company entered into an underwriting agreement (the “Second Underwriting Agreement” and, together with the First Underwriting Agreement, the “Underwriting Agreements”) with B. Riley as Representative of the several underwriters named in Schedule I thereto (the “Underwriters”), pursuant to which the Underwriters agreed to act as underwriters of an additional 3,257,853 shares of the Company’s Class A common stock being offered.  The securities, consisting of a total of 7,142,857 shares, are being offered by the Company pursuant to a shelf registration statement on Form S-3 declared effective by the Securities and Exchange Commission on April 9, 2012 (File No. 333-179970) and an applicable prospectus supplement  (the “Offering”).  Pursuant to the Underwriting Agreements and subject to the terms and conditions expressed therein (i) the Underwriters will offer such securities to the public at the public offering price of $1.40 and (ii) the Company agreed to sell these securities to the Underwriters at a purchase price equal to $1.316 per share, representing a per security discount equal to 6 percent of the public offering price per security, provided that, with respect to the shares sold pursuant to the First Underwriting Agreement, the discount will also include an aggregate amount equal to $100,000.  At the Underwriters’ discretion, the Underwriters have a 30 day option to buy up to an additional 714,286 shares from the Company at the public offering price less the underwriting discounts and commissions to cover these sales.  On April 23, 2012, the Underwriters advised the Company that they were exercising the entire over-allotment option. The Company also agreed to bear the expenses of the Offering.  The Underwriting Agreement contains customary representations and warranties and covenants as are customary for transactions of this type and nature.  The Company anticipates that the closing of this offering will take place on or before April 25, 2012.
 
Pursuant to the Underwriting Agreement, the Company agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments which the Underwriter or such other indemnified parties may be required to make in respect of any such liabilities.

The opinion of Kelley Drye & Warren LLP regarding the validity of the shares sold in the Offering is attached hereto as Exhibit 5.1.

The foregoing description of the Underwriting Agreements does not purport to be complete and is qualified in its entirety by reference to and incorporates herein by reference the full text of the Underwriting Agreements, which are attached hereto as Exhibits 1.1 and 1.2.

On April 19, 2012, the Company issued a press release announcing the Offering, a copy of which is attached hereto as Exhibit 99.1.

On April 20, 2012, the Company issued a press release announcing the pricing of the Offering, a copy of which is attached hereto as Exhibit 99.2.

On April 19, 2012, the Company entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") with Steve Savage, Susan Margolin and Aimee Connolly for the purchase of all of the issued and outstanding capital stock of New Video Group, Inc. (“New Video”), an independent home entertainment distributor of quality packaged and digital content that provides distribution services in the DVD, BD, Digital and VOD channels for more than 500 independent rights holders (the “Acquisition”).  The Company agreed to pay $10 million in cash and 2,525,417 shares of Class A common stock, subject to certain transfer restrictions,   plus up to an additional $6 million in cash or Class A common stock, at the Company’s discretion, if certain business unit financial performance targets are met in 2013, 2014 and 2015.  In addition, the Company has agreed to register the resale of the shares of Class A common stock paid as part of the purchase price.  The Stock Purchase Agreement contains representations and warranties and covenants as are customary for transactions of this type and nature.  The Acquisition was consummated on April 20, 2012.

On April 19, 2012, the Company issued a press release announcing the Acquisition, a copy of which is attached hereto as Exhibit 99.3.
 
 
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The foregoing description of the Stock Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to and incorporates herein by reference the full text of the Stock Purchase Agreement, which is attached hereto as Exhibit 2.1.

Item 3.02
Unregistered Sales of Equity Securities.

On April 20, 2012, the Company issued 2,525,417 shares of Class A Common Stock to the existing holders of capital stock of New Video pursuant to the Stock Purchase Agreement, as described more fully under Item 1.01 above and incorporated by reference herein.  Such shares were issued in reliance upon applicable exemptions from registration under Section 4(2) and Regulation D of the Securities Act of 1933, as amended.


Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e)           On April 20, 2012, the Company approved an amendment (the “Plan Amendment”) to the Company's Second Amended and Restated 2000 Equity Incentive Plan (the “Plan”) to decrease the total number of shares of the Company's Class A Common Stock available for issuance thereunder from 7,000,000 to 6,300,000 shares.
 
The foregoing description is qualified in its entirety by reference to the Plan and the Plan Amendment, which is filed as Exhibit 10.1 to this Form 8-K and is hereby incorporated by reference.


Item 9.01
Financial Statements and Exhibits

Exhibit No.
 
Description
1.1
 
Underwriting Agreement, dated as of April 19, 2012, between the Company and B. Riley & Co., LLC.
1.2
 
Underwriting Agreement, dated as of April 20, 2012, between the Company and B. Riley & Co., LLC, as Representative of the several underwriters.
2.1
 
Stock Purchase Agreement, dated as of April 19, 2012, by and among the Company, Steve Savage, Susan Margolin and Aimee Connolly.*
5.1
 
Opinion of Kelley Drye & Warren LLP.
10.1
 
Amendment No. 5 to the Company’s Second Restated and Amended 2000 Equity Incentive Plan.
99.1
 
Press Release dated April 19, 2012 announcing the Offering.
99.2
 
Press Release dated April 20, 2012 announcing the pricing of the Offering.
99.3
 
Press Release dated April 19, 2012 announcing the Acquisition.
*      Specific portions of this agreement have been omitted and have been filed separately  with the  Securities  and Exchange  Commission  pursuant to a request for  confidential  treatment in accordance  with Rule 24B-2 under the Securities Exchange Act of 1934.


 
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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

     
CINEDIGM DIGITAL CINEMA CORP.
 
Dated: April 24, 2012
 
 
 
By: 
  /s/ Gary S. Loffredo
       
Gary S. Loffredo
President of Digital Cinema, General Counsel and Secretary



 
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EXHIBIT INDEX

Exhibit No.
 
Description
1.1
 
Underwriting Agreement, dated as of April 19, 2012, between the Company and B. Riley & Co., LLC.
1.2
 
Underwriting Agreement, dated as of April 20, 2012, between the Company and B. Riley & Co., LLC, as Representative of the several underwriters.
2.1
 
Stock Purchase Agreement, dated as of April 19, 2012, by and among the Company, Steve Savage, Susan Margolin and Aimee Connolly.*
5.1
 
Opinion of Kelley Drye & Warren LLP.
10.1
 
Amendment No. 5 to the Company’s Second Restated and Amended 2000 Equity Incentive Plan.
99.1
 
Press Release dated April 19, 2012 announcing the Offering.
99.2
 
Press Release dated April 20, 2012 announcing the pricing of the Offering.
99.3
 
Press Release dated April 19, 2012 announcing the Acquisition.
*      Specific portions of this agreement have been omitted and have been filed separately  with the  Securities  and Exchange  Commission  pursuant to a request for  confidential  treatment in accordance  with Rule 24B-2 under the Securities Exchange Act of 1934.
 
 
 
 

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EXHIBIT 1.1
 
3,885,004 SHARES
 
CINEDIGM DIGITAL CINEMA CORP.
 
CLASS A COMMON STOCK
 
UNDERWRITING AGREEMENT
 
April 19, 2012
 
B. Riley & Co., LLC
11100 Santa Monica Boulevard
Suite 800
Los Angeles, CA 90025

Ladies and Gentlemen:
 
Cinedigm Digital Cinema Corp., a Delaware  corporation (the “ Company ”) proposes, subject to the terms and conditions stated herein, to issue and sell to B. Riley & Co., LLC (the “ Underwriter ”), an aggregate of 3,885,004 authorized but unissued shares (the “ Firm Shares ”) and, at the election of the Underwriter, up to 388,500 additional shares (the “ Additional Shares ”) of Class A Common Stock, $.001 par value per share (the “ Common Stock ”), of the Company (the Firm Shares and the Additional Shares that the Underwriter elects to purchase pursuant to Section 3 hereof being collectively called the “ Securities ”).
 
As part of the transactions described under the heading “Pending Acquisition” in the Time of Sale Disclosure Package (as defined below), pursuant to a Stock Purchase Agreement (the “ SPA ”) dated as of April 19, 2012, among the Company and the shareholders of Target (“ Tg ”), the Company intends to acquire all of the issued and outstanding shares of common stock of Tg (the “ Acquisition ”).
 
The Company and the Underwriter hereby confirm their agreement with respect to the purchase and sale of the Securities as follows:
 
1.           REGISTRATION STATEMENT AND PROSPECTUS.  The Company has prepared and filed with the Securities and Exchange  Commission (the “ Commission ”) a registration statement on Form S-3 (File No. 333-179970) under the Securities Act of 1933, as amended (the “ Securities Act ”) and the rules and regulations (the “ Rules and Regulations ”) of the Commission thereunder, and such amendments to such registration statement as may have been required to the date of this Agreement.  Such registration statement has been declared effective by the Commission.  Such registration statement, at any given time, including amendments thereto to such time, the exhibits and any schedules thereto at such time, the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act at such time and the documents and information otherwise deemed to be a part thereof or included therein by Rule 430B under the Securities Act or otherwise pursuant to the Rules and Regulations at such time, is herein called the “ Registration Statement .” The
 

 
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Registration Statement at the time it originally became effective is herein called the “ Original Registration Statement .”
 
The Company proposes to file with the Commission pursuant to Rule 424 under the Securities Act a final prospectus supplement relating to the Securities to a form of prospectus included in the Registration Statement relating to the Securities in the form heretofore delivered to the Underwriter.  Such prospectus in the form in which it appears in the Registration Statement is hereinafter called the “ Base Prospectus .”  Such supplemental form of prospectus, in the form in which it shall be filed with the Commission pursuant to Rule 424(b) (including the Base Prospectus as so supplemented) is hereinafter called the “ Prospectus .”  Any preliminary form of Prospectus which is filed or used prior to filing of the Prospectus is hereinafter called a “ Preliminary Prospectus .”  Any reference herein to the Base Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act as of the date of such prospectus.
 
For purposes of this Agreement, all references to the Registration Statement, the Base Prospectus, any Preliminary Prospectus, the Prospectus or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval System (“ EDGAR ”).  All references in this Agreement to amendments or supplements to the Registration Statement, the Base Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to mean and include the subsequent filing of any document under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) which is deemed to be incorporated by reference therein or otherwise deemed by the Rules and Regulations to be a part thereof.
 
2.           REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
 
(a)           The Company   represents   and   warrants   to, and agrees   with,   the Underwriter as follows:
 
(i)           No order preventing or suspending the use of any Preliminary Prospectus has been issued by the Commission and each Preliminary Prospectus, at the time of filing or the time of first use within the meaning of the Rules and Regulations, complied in all material respects with the requirements of the Securities Act and the Rules and Regulations and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; except that the foregoing shall not apply to statements in or omissions from any Preliminary Prospectus in reliance upon, and in conformity with, written information furnished to the Company by the Underwriter specifically for use in the preparation thereof.
 
(ii)           The Company has complied to the Commission’s satisfaction with all requests of the Commission for additional or supplemental information.  No stop order suspending the effectiveness of the Registration Statement is in effect and no proceedings
 

 
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for such purpose have been instituted or are pending or, to the best knowledge of the Company, are contemplated or threatened by the Commission.
 
 
(iii)           Each part of the  Registration  Statement  and any post-effective amendment thereto, at the time such part became effective (including each deemed effective date with respect to the Underwriter pursuant to Rule 430B under the Securities Act), at all other subsequent times until the expiration of the Prospectus Delivery Period (as defined below), and at the Closing Date (as hereinafter defined), and the Prospectus (or any amendment or supplement to the Prospectus), at the time of filing or the time of first use within the meaning of the Rules and Regulations, at all subsequent times until expiration of the Prospectus Delivery Period, and at the Closing Date complied and will comply in all material respects with the applicable requirements and provisions of the Securities Act, the Rules and Regulations and the Exchange Act and did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus, as amended or supplemented, as of its date, or the time of first use within the meaning of the Rules and Regulations, at all subsequent times until the expiration of the Prospectus Delivery Period, and at the Closing Date, did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The interactive data in eXtensible Business Reporting Language included or incorporated by reference in the Registration Statement and the Prospectus fairly presents the information called for in all material respects and is prepared in accordance with the rules and regulations of the Commission applicable thereto. The representations and warranties set forth in the two immediately preceding sentences do not apply to statements in or omissions from the Registration Statement or any post-effective amendment thereto, or the Prospectus, or any amendments or supplements thereto, made in reliance upon and in conformity with written information relating to the Underwriter furnished to the Company by the Underwriter, specifically for use in the preparation thereof.
 
(iv)           Neither (A) the Issuer General Free Writing Prospectus(es) issued at or prior to the Time of Sale, the Statutory Prospectus and the information set forth in Schedule I to this Agreement, all considered together (collectively, the “ Time of Sale Disclosure Package ”), nor (B) any individual Issuer Limited-Use Free Writing Prospectus, when considered together with the Time of Sale Disclosure Package, includes or included as of the Time of Sale any untrue statement of a material fact or omits or omitted as of the Time of Sale to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from any Statutory Prospectus included in the Registration Statement or any Issuer Free Writing Prospectus based upon and in conformity with written information furnished to the Company by the Underwriter specifically for use therein.  As used in this paragraph and elsewhere in this Agreement:
 
(1)           “ Time of Sale ” means 4:00 p.m. (Eastern time) on the date of this
 

 
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Agreement.
 
(2)           “ Statutory Prospectus ” as of any time means the Preliminary Prospectus that is included in the Registration Statement immediately prior to that time.  For purposes of this definition, information contained in a form of prospectus that is deemed retroactively to be a part of the Registration Statement pursuant to Rule 430B under the  Securities Act shall be considered to be included in the Statutory Prospectus as of the actual time that form of prospectus is filed with the Commission pursuant to Rule 424(b) under the Securities Act.
 
(3)           “ Issuer Free Writing Prospectus ” means any “issuer free writing prospectus,” as defined in Rule 433 under the Securities Act, relating to the Securities that (A) is required to be filed with the Commission by the Company, or (B) is exempt from filing pursuant to Rule 433(d)(5)(i) under the Securities Act because it contains a description of the Securities or of the offering that does not reflect the final terms, in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g) under the Securities Act.
 
(4)           “ Issuer General Free Writing Prospectus ” means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors, as evidenced by its being specified in Schedule II to this Agreement.
 
(5)           “ Issuer Limited-Use Free Writing Prospectus ” means any Issuer Free Writing Prospectus that is not an Issuer General Free Writing Prospectus.
 
(v)           (A)  Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the Prospectus Delivery Period or until any earlier date that the Company notified or notifies the Underwriter as described in Section 4(a)(iii)(B), did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement, any Statutory Prospectus or the Prospectus.  The foregoing sentence does not apply to statements in or omissions from any Issuer Free Writing Prospectus based upon and in conformity with written information furnished to the Company by the Underwriter specifically for use therein.
 
(B)           (1)  At the earliest time after the filing of the Registration Statement that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the Securities Act) of the Securities and (2) at the date hereof, the Company was not and is not an “ineligible issuer,” as defined in Rule 405 under the Securities Act, including the Company or any subsidiary in the preceding three years not having been convicted of a felony or misdemeanor or having been made the subject of a judicial or administrative decree or order as described in Rule 405 (without taking account of any determination by the Commission pursuant to Rule 405 that it is not necessary that the Company be considered an ineligible issuer), nor an “excluded issuer” as defined in Rule 164 under the Securities Act.
 

 
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(C)           Each Issuer Free Writing Prospectus satisfied, as of its issue date and at all subsequent times through the Prospectus Delivery Period, all other conditions to use thereof as set forth in Rules 164 and 433 under the Securities Act.
 
(vi)           The financial statements of the Company, together with the related notes, included or  incorporated  by reference in the Registration Statement, the Time of Sale Disclosure Package and the Prospectus comply in all material respects with the requirements of the Securities Act and the Exchange Act and fairly present the consolidated financial condition of the Company and its subsidiaries as of the dates indicated and the consolidated results of operations and changes in cash flows for the periods therein specified in conformity with generally accepted accounting principles consistently applied throughout the periods involved; and the supporting schedules included in the Registration Statement present fairly the information required to be stated therein. No other financial statements or schedules are required to be included in the Registration Statement, the Time of Sale Disclosure Package or the Prospectus.  There is no pro forma or as adjusted financial information which is required to be included in the Registration Statement, the Time of Sale Disclosure Package, or the Prospectus or a document incorporated by reference therein in accordance with the Securities Act and the Rules and Regulations which has not been included or incorporated as so required.  To the Company’s knowledge, EisnerAmper LLP, which has expressed its opinion with respect to the audited financial statements and schedules filed as a part of the Registration Statement and included in the Registration Statement, the Time of Sale Disclosure Package and the Prospectus, is an independent  public  accounting firm within the meaning of the Securities Act and the Rules and Regulations and such accountant is not in violation of the auditor independence requirements of the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”).
 
(vii)           Each of the Company and its subsidiaries has been duly organized and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation.  Each of the Company and its subsidiaries has the corporate power and authority to own its properties and conduct its business as currently being carried on and as described in the Registration Statement, the Time of Sale Disclosure Package and the Prospectus, and is duly qualified to do business as a foreign  corporation  in good  standing in each jurisdiction in which it owns or leases real property or in which the conduct of its business makes such qualification necessary and in which the failure to so qualify would have a material adverse effect upon the business, prospects, properties, operations, condition (financial or otherwise) or results of operations of the Company and its subsidiaries, taken as a whole, or in its ability to perform its obligations under this Agreement or the SPA (“ Material Adverse Effect ”).
 
(viii)           Except as contemplated in the Time of Sale Disclosure Package and in the Prospectus, subsequent to the respective dates as of which information is given in the Time of Sale Disclosure Package, neither the Company nor any of its subsidiaries has incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions, or declared or paid any dividends or made any distribution of any kind with respect to its capital stock; and there has not been any change in the capital
 

 
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stock (other than a change in the number of outstanding shares of Common Stock due to the issuance of shares upon the exercise of outstanding options or warrants), or any material change in the short-term or long-term debt, or any issuance of options, warrants, convertible securities or other rights to purchase the capital stock, of the Company or any of its subsidiaries, or any material adverse change in the financial condition, business, prospects, property, operations or results of operations of the Company and its subsidiaries, taken as a whole (“ Material Adverse Change ”).
 
(ix)           Except as set forth in the Time of Sale Disclosure Package and the Prospectus, there is not pending or, to the knowledge of the Company, threatened or contemplated, any action, suit or proceeding to which the Company or any of its subsidiaries is a party or of which any property or assets of the Company or any of its subsidiaries is the subject before or by any court or governmental agency, authority or body, or any arbitrator, which, individually or in the aggregate, might result in any Material Adverse Change.
 
(x)           This Agreement has been duly authorized, executed and delivered by the Company, and constitutes a valid, legal and binding obligation of the Company, enforceable in accordance with its terms, except as rights to indemnity hereunder may be limited by federal or state securities laws and except as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity.  The execution, delivery and performance of this Agreement and the SPA and the consummation of the transactions herein and therein contemplated will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any statute, any agreement or instrument to which the Company is a party or by which it is bound or to which any of its property is subject, or any order, rule, regulation or decree of any court or governmental agency or body having jurisdiction over the Company or any of its properties except for violations and defaults which individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. The execution, delivery and performance of this Agreement and the SPA and the consummation of the transactions herein and therein contemplated will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, the Company’s charter or by-laws.  No consent, approval, authorization or order of, or filing with, any court or governmental agency or body is required for the execution, delivery and performance of this Agreement or the SPA or for the consummation of the transactions contemplated hereby or thereby, including the issuance or sale of the Securities by the Company, except such as may be required under the Securities Act, state securities or blue sky laws, or the NASDAQ Listing Rules; and the Company has the power and authority to enter into this Agreement and to authorize, issue and sell the Securities as contemplated by this Agreement.
 
 
(xi)           All of the issued and outstanding shares of capital stock of the Company, including the outstanding shares of Common Stock, are duly authorized and validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities that have not been
 

 
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waived in writing (a copy of which has been delivered to counsel to the Underwriter); the Securities which may be sold hereunder by the Company have been duly authorized and, when issued, delivered and paid for in accordance with the terms of this Agreement, will have been validly issued and will be fully paid and nonassessable; and the capital stock of the Company, including the Common Stock, conforms to the description thereof in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus. Except as otherwise stated in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus, there are no preemptive rights or other rights to subscribe for or to purchase, or any restriction upon the voting or transfer of, any shares of Common Stock pursuant to the Company’s charter, by-laws or any agreement or other instrument to which the Company is a party or by which the Company is bound.  Neither the filing of the Registration Statement nor the offering or sale of the Securities as contemplated by this Agreement gives rise to any rights for or relating to the registration of any shares of Common Stock or other securities of the Company that have not been waived.  All of the issued and outstanding shares of capital stock of each of the Company’s subsidiaries have been duly and validly authorized and issued and are fully paid and nonassessable, and, except as otherwise described in the Registration  Statement, in the Time of Sale Disclosure Package and in the Prospectus and except for any directors’ qualifying shares, the Company owns of record and beneficially, free and clear of any security interests, claims, liens, proxies, equities or other encumbrances, all of the issued and outstanding shares of such stock. Except as described in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus, there are no options, warrants, agreements, contracts or other rights in existence to purchase or acquire from the Company or any subsidiary of the Company any shares of the capital stock of the Company or any subsidiary of the Company.  The Company has an authorized and outstanding capitalization as set forth in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus.
 
(xii)           The Company and each of its subsidiaries holds, and is operating in compliance in all material respects with, all franchises, grants, authorizations, licenses, permits, easements, consents, certificates and orders of any governmental or self-regulatory body required for the conduct of its business and all such franchises, grants, authorizations, licenses, permits, easements, consents, certifications and orders are valid and in full force and effect in all material respects; and the Company and each of its subsidiaries is in compliance in all material respects with all applicable federal, state, local and foreign laws, regulations, orders and decrees.
 
(xiii)           The Company and its subsidiaries have good and marketable title to all property (whether real or personal) described in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus as being owned by them which are material to the business of the Company, in each case free and clear of all liens, claims, security interests, other encumbrances or defects except such as are described in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus. The property held under lease by the Company and its subsidiaries is held by them under valid, subsisting and enforceable leases with only such exceptions with respect to any
 

 
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particular lease as do not interfere in any material respect with the conduct of the business of the Company or its subsidiaries.
 
(xiv)           The Company and each of its subsidiaries owns or possesses all patents, patent applications, trademarks, service marks, tradenames, trademark registrations, service mark registrations, copyrights, licenses, inventions, trade secrets and rights necessary for the conduct of the business of the Company and its subsidiaries as currently carried on and as described in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus; except as stated in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus, to the knowledge of the Company, no name which the Company or any of its subsidiaries uses and no other aspect of the business of the Company or any of its subsidiaries will involve or give rise to any infringement of, or license or similar fees for, any patents, patent applications, trademarks, service marks, tradenames, trademark registrations, service mark registrations, copyrights, licenses, inventions, trade secrets or other similar rights of others material to the business or prospects of the Company and its subsidiaries and neither the Company nor any of its subsidiaries has received any notice alleging any such infringement or fee.
 
(xv)           Neither the Company nor any of its subsidiaries is in violation of its respective charter or by-laws or in breach of or otherwise in default, and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the performance of any material obligation, agreement or condition contained in any bond, debenture, note, indenture, loan agreement or any other material contract, lease or other instrument to which it is subject or by which any of them may be bound, or to which any of the material property or assets of the Company or any of its subsidiaries is subject.
 
(xvi)           The Company and its subsidiaries have timely filed all federal, state and local income tax returns required to be filed and are not in default in the payment of any taxes which were payable pursuant to said returns or any assessments with respect thereto, other than any which the Company or any of its subsidiaries is contesting in good faith.
 
(xvii)           The Company has not distributed and will not distribute any prospectus or other offering material in connection with the offering and sale of the Securities other than any Preliminary Prospectus, the Time of Sale Disclosure Package or the Prospectus or other materials permitted by the Securities Act to be distributed by the Company; provided , however , that, except as set forth on Schedule II , the Company has not made and will not make any offer relating to the Securities that would constitute a “free writing prospectus” as defined in Rule 405 under the Securities Act, except in accordance with the provisions of Section 4(a)(xiv) of this Agreement.
 
 
(xviii)            The Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is listed on the NASDAQ Global Market and the Company has taken no action designed to, or likely to have the effect of, terminating the registration of the
 

 
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Common Stock under the Exchange Act or delisting the Common Stock from the NASDAQ Global Market nor has the Company received any notification that the Commission or the NASDAQ Global Market is contemplating terminating such registration or listing. The Company has complied in all material respects with the applicable requirements of the NASDAQ Global Market for maintenance of inclusion of the Common Stock on the NASDAQ Global Market.
 
(xix)           Other than the subsidiaries of the Company listed on Schedule III hereto, the Company, directly or indirectly, owns no capital stock or other equity or ownership or proprietary interest in any corporation, partnership, association, trust or other entity.
 
(xx)           The Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management’s general or specific authorization; (B) transactions are recorded as necessary to permit  preparation of financial  statements in conformity with generally accepted accounting  principles and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management’s general or specific authorization; and (D) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as described in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus, since March 31, 2011, there has been (i) no material weakness or significant deficiencies in the Company’s internal control over financial reporting (whether or not remediated), (ii) no change in the Company’s  internal  control over financial  reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting and (iii) no fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
 
(xxi)           Other than as contemplated by this Agreement, the Company has not incurred any liability for any finder’s or broker’s fee or agent’s commission in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.
 
(xxii)           The Company carries, or is covered by, insurance in such amounts and covering such risks as is adequate for the conduct of its business and the value of its properties and as is customary for companies engaged in similar businesses in similar industries.
 
(xxiii)           The Company is not and, after giving effect to the offering and sale of the Securities, will not be an “investment company,” as such term is defined in the Investment Company Act of 1940, as amended.
 
(xxiv)           As of the filing date of the Registration Statement and as of any update of the Registration Statement pursuant to Section 10(a)(3) of the Securities Act
 

 
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(including the filing of any Annual Report on Form 10-K), the Company was eligible to file a “shelf” Registration Statement on Form S-3 with the Commission.  
 
(xxv)           The documents incorporated by reference in the Time of Sale Disclosure Package, the Registration Statement and in the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and were filed on a timely basis with the Commission and none of such documents contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; any further documents so filed and incorporated by reference in the Time of Sale Disclosure Package, the Registration Statement or in the Prospectus, when such documents are filed with the Commission, will conform in all material respects to the requirements of the Exchange Act, and will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
 
(xxvi)           The  Company  is  in  substantial compliance with  all applicable provisions of the Sarbanes-Oxley Act and the rules and regulations of the Commission thereunder that are effective with respect to the Company and its subsidiaries on the date of this Agreement, except  where  such  noncompliance  would not have, individually or in the aggregate, a Material Adverse Effect.
 
(xxvii)                       The Company has established and maintains disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under the Exchange Act) and such controls and procedures are effective in ensuring that material information relating to the Company, including its subsidiaries, is made known to the principal executive officer and the principal financial officer.  The Company has utilized such controls and procedures in preparing and evaluating the disclosures in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus.
 
(xxviii)                        The Company has no knowledge of any fact or condition regarding Tg and its subsidiaries that is not disclosed in the Time of Sale Disclosure Package that would reasonably be expected to have, singularly or in the aggregate, a material adverse effect on the condition (financial or otherwise), results of operations, assets, business or prospects of Tg and its subsidiaries, taken as a whole.
 
(xxix)           Neither the Company nor any of its subsidiaries, nor, to the knowledge of the Company, any of its directors, officers, agents, employees, affiliates or other person acting on their behalf is aware of or has taken any action, directly or indirectly, that has violated or would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “ FCPA ”), including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift,
 

 
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promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA.  The Company and its subsidiaries have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.
 
(xxx)           The operations of the Company and its subsidiaries are and have been conducted at all times, in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar applicable rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “ Money Laundering Laws ”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
 
(xxxi)           Neither the Company nor any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“ OFAC ”); and the Company will not directly or indirectly use the proceeds of this offering of the Securities contemplated hereby, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.
 
(xxxii)                      No approval of the stockholders of the Company under the rules and regulations of NASDAQ (including Rule 5635 of the NASDAQ Listing Rules) is required for the Company to issue and deliver the Securities to the Underwriter.
 
(b)           Any certificate signed by any officer of the Company and delivered to the Underwriter or to the Underwriter’s Counsel shall be deemed a representation and warranty by the Company to the Underwriter as to the matters covered thereby.
 
3.           PURCHASE, SALE AND DELIVERY OF SECURITIES.
 
(a)           On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, (i) the Company agrees to issue and sell to the Underwriter, and the Underwriter agrees, to purchase from the Company, at a purchase price equal to $1.287 per share or such higher price so that the underwriting discount, following the offering of the shares and the price to public as contemplated by the Prospectus, with respect to each such share is 6% (the “ Per Share Price ”) plus in any event an aggregate amount equal to $100,000, the Firm Shares and (ii) in the event and to the extent that the Underwriter shall exercise the election to purchase Additional Shares as provided below, the Company agrees to issue and sell to the Underwriter, and the Underwriter agrees, to purchase
 

 
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from the Company, at the purchase price per share set forth in clause (a)(i) of this Section 3, the number of Additional Shares as to which such election shall have been exercised.
 
As referenced in Section 3(a)(ii) above,  the Company hereby grants to the Underwriter the option to purchase from the Company an aggregate of up to 388,500 Additional Shares, at the Per Share Price.  This option may be exercised by the Underwriter at any time (but not more than once) on or before the thirtieth day following the date hereof,  by written  notice to the Company.  Such notice  shall set forth the  aggregate  number of  Additional Shares as to which the option is being exercised, and the date and time when the Additional  Shares are to be delivered (such date and time being herein referred to as the " Option Closing  Date ");   provided ,   however ,  that the Option Closing Date shall not be earlier than the Closing  Date nor earlier than the second  business day after the date on which the option shall have been exercised  nor  later  than the fifth  business  day after the date on which the option  shall  have been  exercised  unless  the  Company  and the Underwriter otherwise agree.
 
Payment of the purchase  price and delivery for the  Additional  Shares shall be made at the  Option  Closing  Date in the same  manner  and at the same office as the payment for the Firm Shares as set forth in subparagraph (b) below.
 
(b)           The Securities will be delivered by the Company to the Underwriter for the Underwriter’s account against payment of the purchase price therefor by wire transfer of same day funds payable to the order of the Company, as appropriate, at the offices of B. Riley & Co., LLC, 11100 Santa Monica Boulevard, Suite 800, Los Angeles, California 90025, or such other location as may be mutually acceptable, (A) with respect to the Firm Shares, at 8:00 a.m. Pacific time on the third (or if the Firm Shares are priced, as contemplated by Rule 15c6-1(c) under the Exchange Act, after 4:30 p.m. Eastern time, the fourth) full business day following the date hereof, or at such other time and date as the Underwriter and the Company determine pursuant to Rule 15c6-1(a) under the Exchange Act (such time and date of delivery being herein referred to as the “ Closing Date ”) and (b) with respect to the Additional Shares, at 8:00 a.m. Pacific time on the Option Closing  Date. If the Underwriter so elects, delivery of the Securities may be made by credit through full fast transfer to the account at The Depository Trust Company designated by the Underwriter.  Certificates representing the Securities, in definitive form and in such denominations and registered in such names as the Underwriter may request upon at least two business days’ prior notice to the Company, will be made available for checking and packaging not later than 10:30 a.m., Pacific time, on the business day next preceding the applicable closing date at the offices of B. Riley & Co., LLC, 11100 Santa Monica Boulevard, Suite 800, Los Angeles, California 90025, or such other location as may be mutually acceptable.
 
4.           COVENANTS.
 
(a)           The Company covenants and agrees with the Underwriter as follows:
 
(i)           During the period   beginning   on the date   hereof and ending on the later of the Closing Date or such date, as in the opinion of counsel for the Underwriter, the Prospectus is no longer required by law to be delivered (or in lieu thereof the notice referred to in Rule 173(a) under the Securities Act is no longer required
 

 
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to be provided), in connection with sales by an underwriter or dealer (the “ Prospectus Delivery Period ”), prior to amending or supplementing the Registration Statement, the Time of Sale Disclosure Package or the Prospectus, the Company shall furnish to the Underwriter for review a copy of each such proposed amendment or supplement, and the Company shall not file any such proposed amendment or supplement to which the Underwriter reasonably objects.
 
(ii)           During the Prospectus Delivery Period, the Company shall promptly advise the Underwriter in writing (i) of the receipt of any comments of, or requests for additional or supplemental information from, the Commission, (ii) of the time and date of any filing of any post-effective amendment to the Registration Statement or any amendment or supplement to any Preliminary Prospectus, the Time of Sale Disclosure Package or the Prospectus, (iii) of the time and date that any post-effective amendment to the Registration Statement becomes effective and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective  amendment thereto or of any order preventing or suspending its use or the use of any Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus, or of any proceedings to remove, suspend or terminate from listing or quotation the Common Stock from any securities exchange upon which it is listed for trading or included or designated for quotation, or of the threatening or initiation of any proceedings for any of such purposes. If the Commission shall enter any such stop order at any time, the Company will use its reasonable efforts to obtain the lifting of such order at the earliest possible moment.  Additionally, the Company agrees that it shall comply with the provisions of Rules 424(b), 430A and 430B, as applicable, under the Securities Act and will use its reasonable efforts to confirm that any filings made by the Company under Rule 424(b) or Rule 433 were received in a timely manner by the Commission (without reliance on Rule 424(b)(8) or Rule 164(b)).
 
(iii)           (A)  During the Prospectus Delivery Period, the Company will comply as far as it is able with all requirements imposed upon it by the Securities Act, as now and hereafter amended, and by the Rules and Regulations, as from time to time in force, and by the Exchange Act so far as necessary to permit the continuance of sales of or dealings in the Securities as contemplated by the provisions hereof, the Time of Sale Disclosure Package, and the Registration Statement and the Prospectus.  If during such period any event occurs as a result of which the Prospectus (or if the Prospectus is not yet available to prospective purchasers, the Time of Sale Disclosure Package ) would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances then existing, not misleading, or if during such period it is necessary or appropriate in the opinion of the Company or its counsel or the Underwriter or counsel to the Underwriter to amend the Registration Statement or supplement the Prospectus (or if the Prospectus is not yet available to prospective purchasers, the Time of Sale Disclosure Package ) to comply with the Securities Act or to file under the Exchange Act any document which would be deemed to be incorporated by reference in the Prospectus in order to comply with the Securities Act or the Exchange Act, the Company will promptly notify the Underwriter and will
 

 
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amend the Registration Statement or supplement the Prospectus (or if the Prospectus is not yet available to prospective purchasers, the Time of Sale Disclosure Package) or file such document (at the expense of the Company) so as to correct such statement or omission or effect such compliance.
 
(B)           If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information contained in the Registration Statement, the Statutory Prospectus or the Prospectus or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, the Company has promptly notified or promptly will notify the Underwriter and has promptly amended or will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.
 
(iv)           The Company shall take or cause to be taken all necessary action to qualify the Securities for sale under the securities laws of such jurisdictions as the Underwriter reasonably designates and to continue such qualifications in effect so long as required for the distribution of the Securities, except that the Company shall not be required in connection therewith to qualify as a foreign corporation or to execute a general consent to service of process in any state.
 
(v)           The Company will furnish to the Underwriter and counsel for the Underwriter copies of the Registration Statement, each Preliminary Prospectus, the Prospectus, any Issuer Free Writing Prospectus, and all amendments and supplements to such documents, in each case as soon as available and in such quantities as the Underwriter may from time to time reasonably request.
 
(vi)           The Company will make generally available to its security holders as soon as practicable, but in any event not later than 15 months after the end of the Company’s current fiscal quarter, an earnings statement (which need not be audited) covering a 12-month period that shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 of the Rules and Regulations.
 
(vii)           The Company, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated, will pay or cause to be paid (A) all expenses (including transfer taxes allocated to the respective transferees) incurred in connection with the delivery to the Underwriter of the Securities, (B) all expenses and fees of the Company in connection with the preparation, printing, filing, delivery, and shipping of the Registration Statement (including the financial statements therein and all amendments, schedules, and exhibits thereto), the Securities, each Preliminary Prospectus, the Prospectus, any Issuer Free Writing Prospectus and any amendment thereof or supplement thereto, and the printing, delivery, and shipping of this Agreement and other underwriting documents, including Blue Sky Memoranda (covering the states and other applicable jurisdictions), (C) all filing fees in connection with the qualification
 

 
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of the Securities for offering and sale by the Underwriter or by dealers under the securities or blue sky laws of the states and other jurisdictions which the Underwriter shall designate, (D) the fees and expenses of any transfer agent or registrar, (E) the filing fees incident to any required review and approval by the Financial Industry Regulatory Authority (“ FINRA ”) of the terms of the sale of the Securities, (F) listing fees, if any, and (G) all other costs and expenses incident to the performance of its obligations hereunder that are not otherwise specifically provided for herein. If this Agreement is terminated by the Underwriter pursuant to Section 8 hereof or if the sale of the Securities provided for herein is not consummated by reason of any failure, refusal or inability on the part of the Company to perform any agreement on its part to be performed, or because any other condition of the Underwriter’s obligations hereunder required to be fulfilled by the Company is not fulfilled, the Company will reimburse the Underwriter for all out-of-pocket disbursements (including but not limited to reasonable fees and disbursements of counsel, printing expenses, travel expenses, postage, facsimile and telephone charges) incurred by the Underwriter in connection with their  investigation, preparing to market and marketing the Securities or in contemplation of performing their obligations hereunder. Notwithstanding anything contained herein, the maximum amount payable by the Company for Underwriter’s counsel fees, disbursements and expenses pursuant to the preceding sentence of this Section 4(a)(vii) shall be $40,000.
 
(viii)           The Company will apply the net proceeds from the sale of the Securities to be sold by it hereunder for the purposes set forth in the Time of Sale Disclosure Package and in the Prospectus.
 
(ix)           The Company has not taken and will not take, directly or indirectly, any action designed to or which might reasonably be expected to cause or result in, or which has constituted, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities.
 
(x)           The Company will not incur any liability for any finder’s or broker’s fee or agent’s commission in connection with the execution and delivery of this Agreement or the  consummation of the transactions contemplated hereby.
 
(xi)           During the Prospectus Delivery Period, the Company will file on a timely basis with the Commission such periodic and special reports as required by the Rules and Regulations.
 
(xii)           The Company and its subsidiaries will maintain such controls and other procedures, including without limitation those applicable to the Company and required by Sections 302 and 906 of the Sarbanes-Oxley Act and the applicable regulations thereunder, that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, including without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated
 

 
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to the Company’s management, including its principal executive officer and its principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure, to ensure that material information relating to Company, including its subsidiaries, is made known to them by others within those entities.
 
(xiii)           The Company and its subsidiaries will substantially comply with all effective applicable provisions of the Sarbanes-Oxley Act.
 
(xiv)           The Company represents and agrees that, unless it obtains the prior written consent of the Underwriter, and the Underwriter represents and agrees that, unless it obtains the prior written consent of the Company, it has not made and will not make any offer relating to the Securities that would constitute an “issuer free writing prospectus,” as defined in Rule 433 under the Securities Act, or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405 under the Securities Act, required to be filed with the Commission; provided that the prior written consent of the parties hereto shall be deemed to have been given in respect of the free writing prospectuses  included in Schedule II .  Any such free writing prospectus consented to by the Company and the Underwriter is hereinafter referred to as a “ Permitted Free Writing Prospectus .”  The Company represents that it has treated or agrees that it will treat each Permitted Free Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and has complied and will comply with the requirements of Rule 433 applicable to any Permitted Free Writing Prospectus, including timely Commission filing where required, legending and record keeping.
 
(xv)           The Company will not, for a period of ninety (90) days from the date of the Prospectus (the “ Lock-Up Period ”), without the prior written consent of the Underwriter, directly or indirectly offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, other than (i) the Company’s sale of the Securities hereunder, (ii) the issuance of Common Stock or any equity awards (including the issuance of Common Stock upon exercise or settlement of such equity awards) pursuant to the Company’s employee benefit plans, stock option and employee stock purchase plans or other employee compensation plans as such plans are in existence on the date hereof and described in the Prospectus, (iii) the issuance of Common Stock pursuant to the vesting or exercises of options, restricted stock units, warrants or rights outstanding on the date hereof, and (iv) the issuance of Common Stock or securities convertible into or exercisable or exchangeable for Common Stock (and the issuance of Common Stock pursuant to the terms of such securities convertible into or exercisable or exchangeable for Common Stock) in connection with the SPA.  The Company will cause each director and executive officer listed on Schedule V to furnish to the Underwriter, prior to the Closing Date, a letter, substantially in the form of Schedule IV hereto, pursuant to which each such person shall agree, among other things, subject to the terms and conditions set forth in each such letter, not to directly or indirectly offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, not to
 

 
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engage in any swap or other agreement or arrangement that transfers, in whole or in part, directly or indirectly, the economic risk of ownership of Common Stock or any such securities, during the period of ninety (90) days from the date of the Prospectus, without the prior written consent of the Underwriter.  The Company also agrees that during such ninety (90) day period, the Company will not file any registration statement, preliminary prospectus or prospectus, or any amendment or supplement thereto, under the Securities Act for any such transaction or which registers, or offers for sale, Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, except for (i) registration statements on Form S-8 relating to employee benefit plans and (ii) a registration statement relating to the resale of Common Stock issued pursuant to the SPA.  The Company hereby agrees that (A) if it issues an earnings release or material news, or if a material event relating to the Company occurs, during the last seventeen days of the Lock-Up Period, or (B) if prior to the expiration of the Lock-Up Period, the Company announces that it will release earnings results during the sixteen-day period beginning on the last day of the Lock-Up Period, the restrictions imposed by this Section 4(a)(xv) shall continue to apply until the expiration of the eighteen-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.
 
5.           CONDITIONS OF THE UNDERWRITER’S OBLIGATIONS.  The obligations of the Underwriter hereunder are subject to the accuracy, as of the date hereof and at the Closing Date (as if made at the Closing Date), of and compliance with all representations, warranties and agreements of the Company contained herein, to the performance by the Company of its obligations hereunder and to the following additional conditions:
 
(a)           If filing of the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, is required under the Securities Act or the Rules and Regulations, the Company shall have filed the Prospectus (or such amendment or supplement) or such Issuer Free Writing Prospectus with the Commission in the manner and within the time period so required (without reliance on Rule 424(b)(8) or Rule 164(b)); the Registration Statement shall remain effective; no stop order suspending the effectiveness of the Registration Statement or any part thereof, or any amendment thereof, nor suspending or preventing the use of the Time of Sale Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus shall have been issued; no proceedings for the issuance of such an order shall have been initiated or threatened; any request of the Commission for additional information (to be included in the Registration Statement, the Time of Sale Disclosure Package, the Prospectus, any Issuer Free Writing  Prospectus or otherwise) shall have been complied with to the Underwriter’s satisfaction; and FINRA shall have raised no objection to the fairness and reasonableness of the underwriting terms and arrangements.
 
(b)           The Underwriter shall not have advised the Company that the Registration Statement, the Time of Sale Disclosure Package or the Prospectus, or any amendment thereof or supplement thereto, or any Issuer Free Writing Prospectus, contains an untrue statement of fact which, in the Underwriter’s opinion, is material, or omits to state a fact which, in the Underwriter’s opinion, is material and is required to be stated therein or necessary to make the statements therein not misleading.
 

 
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(c)           Except as contemplated in the Time of Sale Disclosure Package and in the Prospectus, subsequent to the respective dates as of which information is given in the Time of Sale Disclosure Package, neither the Company nor any of its subsidiaries, nor Tg, shall have incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions, or declared or paid any dividends or made any distribution of any kind with respect to its capital stock; and there shall not have been any change in the capital stock (other than a change in the number of outstanding shares of Common Stock due to the issuance of shares upon the exercise of outstanding options or warrants), or any material change in the short-term or long-term debt of the Company or Tg except for the extinguishment thereof, or any issuance of options, warrants, convertible securities or other rights to purchase the capital stock of the Company or Tg or any of the Company’s subsidiaries, or any Material Adverse Change or any development involving a prospective Material Adverse Change (whether or not arising in the ordinary course of business), or any loss by strike, fire, flood, earthquake, accident or other calamity, whether or not covered by insurance, incurred by the Company or Tg or any of the Company’s subsidiaries, the effect of which, in any such case described above, in the Underwriter’s judgment, makes it impractical or inadvisable to offer or deliver the Securities on the terms and in the manner contemplated in the Time of Sale Disclosure Package, the Registration Statement and in the Prospectus.
 
(d)           On or after the Time of Sale (i) no downgrading shall have occurred in the rating accorded any of the Company’s securities by any “nationally recognized statistical organization,” as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Securities Act, and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company’s securities.
 
(e)           On the Closing Date, there shall have been furnished to the Underwriter the opinion of Kelley Drye & Warren LLP, counsel for the Company, dated the Closing Date and addressed to the Underwriter, in form and substance reasonably satisfactory to the Underwriter, to the effect set forth in Schedule VI .
 
In rendering such opinion, such counsel may rely (i) as to matters of law other than New York, Delaware and federal law, upon the opinion or opinions of local counsel provided that the extent of such reliance is specified in such opinion and that such counsel shall state that such opinion or opinions of local counsel are satisfactory to them and that they believe they and the Underwriter are justified in relying thereon and (ii) as to matters of fact, to the extent such counsel deems reasonable upon certificates of officers of the Company and its subsidiaries provided that the extent of such reliance is specified in such opinion.
 
(f)           On the date of the Prospectus at a time prior to the execution of this Agreement, on the effective date of any post-effective amendment to the Registration Statement filed subsequent to the date of this Agreement and also at each of the Closing Date and the Option Closing Date, the Underwriter shall have received a letter of EisnerAmper LLP, dated the respective dates of delivery thereof, and addressed to the Underwriter, in form and substance satisfactory to the Underwriter.
 

 
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(g)           On the  Closing Date, there  shall  have been  furnished to the Underwriter a certificate, dated the Closing Date and addressed to the Underwriter, signed by the chief executive officer or the chief financial officer of the Company, to the effect that:
 
(i)           The representations and warranties of the Company in this Agreement are true and correct, in all material respects, as if made at and as of the Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date;
 
(ii)           No stop order or other order suspending the effectiveness of the Registration Statement or any part thereof or any amendment thereof or the qualification of the Securities for offering or sale nor suspending or preventing the use of the Time of Sale Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus, has been issued, and no proceeding for that purpose has been instituted or, to the best of their knowledge, is contemplated by the Commission or any state or regulatory body; and
 
(iii)           The signers of said certificate have carefully examined the Registration Statement, the Time of Sale Disclosure Package and the Prospectus, and any amendments thereof or supplements thereto (including any documents filed under the Exchange Act and deemed to be incorporated by reference into the Time of Sale Disclosure Package, the Registration Statement or the Prospectus), and
 
(A)           each part of the Registration Statement and the Prospectus, and any amendments thereof or supplements thereto (including any documents filed under the Exchange Act and deemed to be incorporated by reference into the Prospectus) contain, and contained, when such part of the Registration  Statement (or such amendment) became effective, all statements and information required to be included therein, each part of the Registration Statement, or any amendment thereof, does not contain, and did not contain, when such part of the Registration Statement (or such amendment) became effective, any untrue statement of a material fact or omit to state, and did not omit to state when such part of the Registration Statement (or such amendment) became effective, any material fact required to be stated therein or necessary to make the statements therein not misleading, and the Prospectus, as amended or supplemented, does not include and did not include as of its date, or the time of first use within the meaning of the Rules and Regulations, any untrue statement of a material fact or omit to state and did not omit to state as of its date, or the time of first use within the meaning of the Rules and Regulations, a material fact necessary to make the statements therein, in light of the circumstances under which they were made,
 
(B)           neither (1) the Time of Sale Disclosure Package nor (2) any individual Issuer Limited-Use Free Writing Prospectus, when considered together with the Time of Sale Disclosure Package, include, nor included as of the Time of Sale any untrue statement of a material fact or omits, or omitted as of the Time of Sale, to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading,
 

 
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(C)           since the Time of Sale, there has occurred no event required to be set forth in an amended or supplemented prospectus which has not been so set forth, and there has been no document required to be filed under the Exchange Act that upon such filing would be deemed to be incorporated by reference into the Time of Sale Disclosure Package, the Registration Statement or into the Prospectus that has not been so filed,
 
(D)           subsequent to the respective dates as of which information is given in the Time of Sale Disclosure Package, neither the Company nor any of its subsidiaries, nor, to the Company’s knowledge, Tg, has incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions, not in the ordinary course of business, or declared or paid any dividends or made any distribution of any kind with respect to its capital stock, and except as disclosed in the Time of Sale Disclosure Package and in the Prospectus, there has not been any change in the capital stock (other than a change in the number of outstanding shares of Common Stock due to the issuance of shares upon the exercise of outstanding options or warrants), or any material change in the short-term or long-term debt except for the extinguishment thereof, or any issuance of options, warrants, convertible securities or other rights to purchase the capital stock, of the Company or any of its subsidiaries, or, to the Company’s knowledge, of Tg, or any Material Adverse Change or any development involving a prospective Material Adverse Change (whether or not arising in the ordinary course of business), or any loss by strike, fire, flood, earthquake, accident or other calamity, whether or not covered by insurance, incurred by the Company or any of its subsidiaries, or, to the Company’s knowledge, by Tg, and
 
(E)           except as stated in the Time of Sale Disclosure Package and in the Prospectus, there is not pending, or, to the knowledge of the Company, threatened or contemplated, any action, suit or proceeding to which the Company or any of its subsidiaries is a party before or by any court or governmental  agency, authority or body, or any arbitrator, which might result in any Material Adverse Change.
 
(h)           The Company shall have furnished to the Underwriter and counsel for the Underwriter such additional documents, certificates and evidence as the Underwriter or counsel for the Underwriter may have reasonably requested.
 
(i)           The Underwriter shall have received the written agreements, substantially in the form of Schedule IV hereto, of the directors and executive officers of the Company listed on Schedule V to this Agreement.
 
All such opinions, certificates, letters and other documents will be in compliance with the provisions hereof only if they are satisfactory in form and substance to the Underwriter and counsel for the Underwriter.  The Company will furnish the Underwriter with such conformed copies of such opinions, certificates, letters and other documents as the Underwriter shall reasonably request.
 

 
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6.           INDEMNIFICATION AND CONTRIBUTION.
 
(a)           The Company agrees to indemnify and hold harmless the Underwriter against any losses, claims, damages or liabilities to which the Underwriter may become subject, under the Securities Act or otherwise (including in settlement of any litigation if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, including the information deemed to be a part of the Registration Statement at the time of effectiveness and at any subsequent time pursuant to Rules 430A and 430B of the Rules and Regulations, if applicable, any Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus, or any amendment or supplement thereto (including any documents filed under the Exchange Act and deemed to be incorporated by reference into the Prospectus), any Issuer Free Writing Prospectus or in any materials or information provided to investors by, or with the approval of, the Company in connection with the marketing of the offering of the Common Stock (“ Marketing Materials ”), including any roadshow or investor presentations made to investors by the Company (whether in person or electronically) or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Underwriter for any legal or other expenses reasonably incurred by it in connection with investigating or defending against such loss, claim, damage, liability or action; or (ii) in whole or in part upon any inaccuracy in the representations and warranties of the Company contained herein; or (iii) in whole or in part upon any failure of the Company to perform its obligations hereunder or under law; provided , however , that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus, or any such amendment or supplement, any Issuer Free Writing Prospectus or in any Marketing Materials, in reliance upon and in conformity with written information furnished to the Company by the Underwriter specifically for use in the preparation thereof.
 
In addition to their other obligations under this Section 6(a), the Company agrees that, as an interim measure during the pendency of any claim, action, investigation, inquiry or other proceeding arising out of or based upon any statement or omission, or any alleged statement or omission, described in this Section 6(a), it will reimburse the Underwriter on a monthly basis for all reasonable  legal fees or other  expenses  incurred in connection  with investigating or defending any such claim, action, investigation, inquiry or other proceeding, notwithstanding the absence of a judicial determination as to the propriety and enforceability of the Company’s obligation to reimburse the Underwriter for such expenses and the possibility that such payments might later be held to have been improper by a court of competent jurisdiction.  To the extent that any such interim reimbursement payment is so held to have been improper, the Underwriter shall promptly return it to the Company, together with interest, compounded daily, determined on the basis of the prime rate (or other commercial lending rate for borrowers of the highest credit standing) announced from time to time by Wells Fargo Bank, N.A. (the “ Prime Rate ”).  Any such interim reimbursement payments which are not made to the Underwriter within 30 days of a request for reimbursement shall bear interest at the Prime Rate from the date of such
 

 
21

 

request.  This indemnity agreement shall be in addition to any liabilities which they may otherwise have.
 
(b)           The Underwriter will indemnify and hold harmless the Company against any losses, claims, damages or liabilities to which the Company may become subject, under the Securities Act or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Underwriter), insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus, or any amendment or supplement thereto or any Issuer Free Writing Prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, any Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus in reliance upon and in conformity with written information furnished to the Company by the Underwriter specifically for use in the preparation thereof, and will reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending against any such loss, claim, damage, liability or action.
 
(c)           Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have to any indemnified party except to the extent such indemnifying party has been materially prejudiced by such failure. In case any such action shall be brought against any indemnified party, and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in, and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of the indemnifying party’s election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that if, in the sole judgment of the Underwriter, it is advisable for the Underwriter to be represented by separate counsel, the Underwriter shall have the right to employ a single counsel to represent the Underwriter in any claim in respect of which indemnity may be sought by the Underwriter under subsection (a) of this Section 6, in which event the reasonable fees and expenses of such separate counsel shall be borne by the indemnifying party or parties and reimbursed to the Underwriter as incurred (in accordance with the provisions of the second paragraph in subsection (a) above).
 
The indemnifying party under this Section 6 shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party
 

 
22

 

against any loss, claim, damage, liability or expense by reason of such settlement or judgment.  Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by this Section 6, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement.  No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any indemnified party is or could have been a party and indemnity was or could have been sought hereunder by such indemnified party, unless such settlement, compromise or consent (a) includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such action, suit or proceeding and (b) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.
 
(d)           If  the  indemnification provided for in  this  Section 6 is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriter on the other from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Underwriter on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriter on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Underwriter, in each case as set forth in the table on the cover page of the Prospectus.  The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriter and the parties’ relevant intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission.  The Company and the Underwriter agree that it would not be just and equitable if contributions pursuant to this subsection (d) were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the first sentence of this subsection (d).  The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending against any action or claim which is the subject of this subsection (d).  Notwithstanding the provisions of this subsection (d), the Underwriter shall not be required to contribute any amount in excess of the amount by which the total price at which the Securities were offered to the public exceeds the amount of any damages that the Underwriter has otherwise been required to pay by reason of
 

 
23

 

 
such untrue or alleged untrue statement or omission or alleged omission.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
 
(e)           The obligations of the Company under this Section 6 shall be in addition to any liability which the Company may otherwise have and the benefits of such obligations shall extend, upon the same terms and conditions, to each person, if any, who controls the Underwriter within the meaning of the Securities Act; and the obligations of the Underwriter under this Section 6 shall be in addition to any liability that the Underwriter may otherwise have and the benefits of such obligations shall extend, upon the same terms and conditions, to each director of the Company (including any person who, with his consent, is named in the Registration Statement as about to become a director of the Company), to each officer of the Company who has signed the Registration Statement and to each person, if any, who controls the Company within the meaning of the Securities Act.
 
(f)           The Underwriter confirms and the Company acknowledges that there is no information concerning the Underwriter furnished in writing to the Company by the Underwriter specifically for inclusion in the Registration Statement, any Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus.
 
7.           REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY.  All representations, warranties, and agreements of the Company herein or in certificates delivered pursuant hereto, including but not limited to the agreements of the Underwriter and the Company contained in Section 6 hereof, shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Underwriter or any controlling person thereof, or the Company or any of its officers, directors, or controlling persons, and shall survive delivery of, and payment for, the Securities to and by the Underwriter hereunder.
 
8.           TERMINATION OF THIS AGREEMENT.
 
(a)           The Underwriter shall have the right to terminate this Agreement by giving notice to the Company as hereinafter specified at any time at or prior to the Closing Date, if (i) the Company shall have failed, refused or been unable, at or prior to the Closing Date, to perform any material agreement on its part to be performed hereunder, (ii) any condition of the Underwriter’s obligations hereunder is not fulfilled, (iii) trading in the Company’s Common Stock shall have been suspended by the Commission or the NASDAQ Global Market or trading in securities generally on the NASDAQ Global Market shall have been suspended, (iv) minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required, on the NASDAQ Global Market, by such Exchange or by order of the Commission or any other governmental authority having jurisdiction (which includes the Company’s Common Stock), or (v) a banking moratorium shall have been declared by federal or state authorities which prevents payment by the Underwriter pursuant to Section 3.  Any such termination shall be without liability of any party to any other party except that the provisions of Section 4(a)(vii) and Section 6 hereof shall at all times be effective and shall survive such termination.
 

 
24

 

(b)           If the Underwriter elects to terminate this Agreement as provided in this Section, the Company shall be notified promptly by the Underwriter by telephone, confirmed by letter.
 
9.           DEFAULT THE COMPANY.  If the Company shall fail at the Closing Date or at the Option Closing Date to sell and deliver the Securities which it is obligated to sell hereunder, then this Agreement shall terminate without any liability on the part of the Underwriter or, except as provided in Section 4(a)(vii), any non-defaulting party.  No action taken pursuant to this Section shall relieve the Company from liability, if any, in respect of such default.
 
10.           NOTICES.  Except as otherwise provided herein, all communications hereunder shall be in writing and, if to the Underwriter, shall be mailed, delivered or telecopied to B. Riley & Co., LLC, 11100 Santa Monica Boulevard, Suite 800, Los Angeles, California 90025, (310) 966-1448, Attention: Thomas Kelleher; if to the Company, shall be mailed, delivered or telecopied to it at 55 Madison Avenue, Suite 300, Morristown, New Jersey  07960, fax (973) 290-0081, Attention: Christopher J. McGurk; or in each case to such other address as the person to be notified may have requested in writing. Any party to this Agreement may change such address for notices by sending to the parties to this Agreement written notice of a new address for such purpose.
 
11.           PERSONS ENTITLED TO BENEFIT OF AGREEMENT.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns and the controlling persons, officers and directors referred to in Section 6.  Nothing in this Agreement is intended or shall be construed to give to any other person, firm or corporation any legal or equitable remedy or claim under or in respect of this Agreement or any provision herein contained.  The term “successors and assigns” as herein used shall not include any purchaser, as such purchaser, of any of the Securities from the Underwriter.
 
12.           ABSENCE OF FIDUCIARY RELATIONSHIP.  The Company acknowledges and agrees that: (a) the Underwriter has been retained solely to act as underwriter in connection with the sale of the Securities and that no fiduciary, advisory or agency relationship between the Company and the Underwriter has been created in respect of any of the transactions contemplated by this Agreement, irrespective of whether the Underwriter has advised or is advising the Company on other matters; (b) the price and other terms of the Securities set forth in this Agreement were established by the Company following discussions and arms-length negotiations with the Underwriter and the Company is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement; (c) it has been advised that the Underwriter and its affiliates are engaged in a broad range of transactions which may involve interests that differ from those of the Company and that the Underwriter has no obligation to disclose such interest and transactions to the Company by virtue of any fiduciary, advisory or agency relationship; and (d) it has been advised that the Underwriter is acting, in respect of the transactions contemplated by this Agreement, solely for the benefit of the Underwriter, and not on behalf of the Company.
 
13.           GOVERNING LAW.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York.
 

 
25

 

14.           COUNTERPARTS.  This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original and all such counterparts shall together constitute one and the same instrument.
 
[Signature Page Follows]
 

 
26

 


Please sign and return to the Company the enclosed duplicates of this letter whereupon this letter will become a binding agreement between the Company and the Underwriter in accordance with its terms.
 
Very truly yours,
 
CINEDIGM DIGITAL CINEMA CORP.
 
By:
/s/ Christopher J. McGurk
 
Name:         Christopher J. McGurk
Title:           Chief Executive Officer



Confirmed as of the date first above mentioned by the Underwriter.
 
B. RILEY & CO., LLC
 
By:
/s/ Bryant Riley
 
Name:         Bryant Riley
 
Title:           Chairman



 
27

 

Schedule I

Time of Sale Disclosure Package

None.

 
28

 

Schedule II

Issuer General Free Writing Prospectuses

None.

 
29

 

Schedule III

Subsidiaries

 
1.
Access Digital Media, Inc., a Delaware corporation and a wholly-owned subsidiary of  the Company.

 
2.
Hollywood Software, Inc., d/b/a AccessIT Software, a California corporation and a wholly-owned subsidiary of the Company.

 
3.
FiberSat Global Services Inc., d/b/a AccessIT Satellite and Support Services, a Delaware corporation and a wholly-owned subsidiary of the Company.

 
4.
ADM Cinema Corporation d/b/a the Pavilion Theatre, a Delaware corporation and a wholly-owned subsidiary of the Company.

 
5.
Christie/AIX, Inc., a Delaware corporation and a wholly-owned subsidiary of Access Digital Media, Inc.

 
6.
Vistachiara Productions Inc., d/b/a The Bigger Picture, a Delaware corporation and a wholly-owned subsidiary of the Company.

 
7.
Access Digital Cinema Phase 2, Corp., a Delaware corporation and a wholly-owned subsidiary of the Company.

 
8.
Vistachiara Entertainment, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company.

 
9.
PLX Acquisition Corp, Inc., a Delaware corporation and a wholly-owned subsidiary of Hollywood Software, Inc.

 
10.
Access Digital Cinema Phase 2 B/AIX Corp., a Delaware corporation and a wholly-owned subsidiary of Access Digital Cinema Phase 2, Corp.
 
 
11.
Cinedigm Digital Funding I, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Christie/AIX, Inc.
 
 
12.
CDF2 Holdings, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Access Digital Cinema Phase 2 Corp.
 
 
13.
Cinedigm Digital Funding 2, LLC, a Delaware limited liability company and a wholly-owned subsidiary of CDF2 Holdings, LLC.

 
30

 

Schedule IV

Form of Lockup Agreement

B. Riley & Co., LLC
11100 Santa Monica Boulevard
Suite 800
Los Angeles, CA 90025
 
April ___, 2012

Re:  Cinedigm Digital Cinema Corp. – Public Offering of Shares

Dear Sirs:

In order to induce B. Riley & Co., LLC (the “ Underwriter ”) to enter into an underwriting agreement with Cinedigm Digital Cinema Corp., a Delaware corporation (the “ Company ”), with respect to the public offering (the “ Offering ”) of shares of the Company’s Class A Common Stock, par value $0.001 per share (“ Common Stock ”), the undersigned hereby agrees that for a period (the “ lock-up period ”) of ninety (90) days following the date of the final prospectus supplement filed by the Company with the Securities and Exchange Commission in connection with such Offering (the “ Prospectus Supplement ”), the undersigned will not, without the prior written consent of the Underwriter, directly or indirectly, (i) offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of, any shares of Common Stock or securities convertible into or exercisable or exchangeable for Common Stock (including, without limitation, shares of Common Stock or any such securities which may be deemed to be beneficially owned by the undersigned in accordance with the rules and regulations promulgated under the Securities Exchange Act of 1934, as the same may be amended or supplemented from time to time (such shares or securities, the “ Beneficially Owned Shares ”)), (ii) enter into any swap, hedge or other agreement or arrangement that transfers, in whole or in part, the economic risk of ownership of any Beneficially Owned Shares, Common Stock or securities convertible into or exercisable or exchangeable for Common Stock, or (iii) engage in any short selling of any Beneficially Owned Shares, Common Stock or securities convertible into or exercisable or exchangeable for Common Stock.  The foregoing sentence shall not apply to (a) transfers of any Beneficially Owned Shares, Common Stock or securities convertible into or exercisable or exchangeable for Common Stock as a bona fide gift, (b) in the case of a natural person, transfers of any Beneficially Owned Shares, Common Stock or securities convertible into or exercisable or exchangeable for Common Stock by will or intestate succession or to any trust or partnership for the direct or indirect benefit of the undersigned or any member of the immediate family of the undersigned or (c) the distribution of shares of Common Stock to limited partners in the ordinary course of business of a fund owned or controlled by the undersigned; provided that in the case of any transfer or distribution pursuant to clause (a) or (b), each donee shall agree to be bound by the terms of this Agreement.


 
31

 

For the purposes of the immediately preceding paragraph, “ immediate family ” shall mean spouse, domestic partner, lineal descendant (including adopted children), father, mother, brother or sister of the transferor.

If (i) the Company issues an earnings release or material news or a material event relating to the Company occurs during the last seventeen days of the lock-up period, or (ii) prior to the expiration of the lock-up period, the Company announces that it will release earnings results during the sixteen-day period beginning on the last day of the lock-up period, the restrictions imposed by this Agreement shall continue to apply until the expiration of the eighteen-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

In addition, the undersigned hereby waives, from the date hereof until the expiration of the ninety (90) day period following the date of the Prospectus Supplement, any and all rights, if any, to request or demand registration pursuant to the Securities Act of 1933, as amended, of any shares of Common Stock or securities convertible into or exercisable or exchangeable for Common Stock that are registered in the name of the undersigned or that are Beneficially Owned Shares.  In order to enable the aforesaid covenants to be enforced, the undersigned hereby consents to the placing of legends and/or stop transfer orders with the transfer agent of the Common Stock with respect to any shares of Common Stock, securities convertible into or exercisable or exchangeable for Common Stock or Beneficially Owned Shares.

If (i) the Company notifies the Underwriter in writing that it does not intend to proceed with the Offering, (ii) for any reason the Offering is terminated prior to the payment for and delivery of the Common Stock or (iii) the Offering shall not have been completed by May 31, 2012, then upon the occurrence of any such event, this Agreement shall immediately be terminated and the undersigned shall be released from its obligations hereunder.


[Signatory]
 
By:
   
     
Name:
   
     
Its:
   


 
32

 

Schedule V

Directors and Executive Officers


1.
Christopher J. McGurk
2.
Adam M. Mizel
3.
Gary S. Loffredo
4.
Bob Fiorella
5.
Wayne L. Clevenger
6.
Matthew W. Finlay
7.
Martin B. O’Connor
8.
Peter C. Brown
9.
Edward A. Gilhuly
10.
Laura Nisonger Sims
11.
John B. Brownson


 
33

 

Schedule VI

Opinion of Kelley Drye & Warren LLP

1.
Each of the Corporation and the Subsidiaries is validly existing as a corporation in good standing under the laws of its state of organization.  Each of the Corporation and its Subsidiaries has full corporate power and corporate authority required to own or lease, as the case may be, its properties and conduct its business as described in the Registration Statement and in the Prospectus.  The Corporation is duly qualified to do business as a foreign entity and is in good standing under the laws of New Jersey and California.

2.
The capital stock of the Corporation conforms as to legal matters to the description thereof contained in the Prospectus under the caption “Description of Capital Stock.”  All of the issued and outstanding shares of the capital stock of the Corporation have been duly authorized and validly issued and are fully paid and nonassessable.  The Securities to be issued and sold by the Corporation have been duly authorized and, when issued, delivered and paid for in accordance with the terms of the Underwriting Agreements, will have been validly issued and will be fully paid and nonassessable.  Except as otherwise stated in the Registration Statement or in any of the exhibits attached thereto and documents incorporated by reference therein, and in the Prospectus, to our knowledge there are no preemptive rights or other rights to subscribe for or to purchase, or any restriction upon the voting or transfer of, any Securities pursuant to the Corporation’s Certificate of Incorporation, Bylaws or any agreement or other instrument known to us to which the Corporation is a party or by which the Corporation is bound.  Except as otherwise stated in the Registration Statement or in any of the exhibits attached thereto and documents incorporated by reference therein, and in the Prospectus, to our knowledge, neither the filing of the Registration Statement nor the offering or sale of the Securities as contemplated by the Underwriting Agreements gives rise to any rights for or relating to the registration of any shares of Common Stock or other securities of the Corporation, except for those rights that have been waived.

3.
Based on advice of the SEC, the Registration Statement was declared effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement has been issued and no proceeding for that purpose has been instituted or, to our  knowledge, threatened by the SEC.

4.
The descriptions in the Registration Statement, Preliminary Prospectus and Prospectus under the captions “Description of Common Stock”, “Plan of Distribution” and “Underwriting” and in the Registration Statement in Item 15, insofar as such statements purport to summarize legal matters, agreements or documents discussed therein, fairly summarize the matters referred to therein in all material respects, subject to the qualifications and assumptions stated therein.

5.
To our knowledge and other than as set forth in the Registration Statement or in any of the exhibits attached thereto and documents incorporated by reference therein, and in the Preliminary Prospectus and the Prospectus, there are (a) no statutes or regulations currently

 
34

 

in effect required to be disclosed therein, or (b) legal or governmental proceedings pending or threatened against the Corporation, required to be disclosed therein.

6.
To our knowledge, there is no indenture, contract, lease, mortgage, deed of trust, note agreement, loan or other agreement or instrument to which the Corporation is a party of a character required to be filed as an exhibit to the Registration Statement or to the filings incorporated by reference in the Prospectus as set forth therein under the heading “Incorporation of Certain Documents by Reference”, which is not filed as required by the Securities Act or the Exchange Act and the rules and regulations thereunder.

7.
The Corporation has the corporate power and corporate authority to enter into the Underwriting Agreements, and the Underwriting Agreements have been duly authorized, executed and delivered by the Corporation.

8.
The execution, delivery and performance of the Underwriting Agreements by the Corporation and the consummation of the transactions therein contemplated by the Corporation will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any statute, rule or regulation, agreement or instrument in each case known to us to which the Corporation is a party or by which it is bound or to which any of its property is subject, the Corporation’s Certificate of Incorporation or Bylaws, or any order or decree known to us of any court or governmental agency or body having jurisdiction over the Corporation or any of its properties.

9.
No consent, approval, authorization or order of, or filing with, any court or governmental agency or body is required to be obtained or made by the Corporation or its Subsidiaries for the execution, delivery and performance by the Corporation of the Underwriting Agreements or for the consummation of the transactions contemplated by the Underwriting Agreements including the issuance or sale of the Securities by the Corporation, except (i) such as have been obtained under the Securities Act and (ii) such as may be required under state blue sky laws or the bylaws, rules and regulations of FINRA.

10.
The Registration Statement, the Preliminary Prospectus and the Prospectus, and any amendment thereof or supplement thereto, comply, and as of their respective effective or issue dates (including, without limitation, the Time of Sale) complied, as to form in all material respects with the requirements of the Securities Act and the Rules and Regulations, and to our knowledge, the conditions for use of Form S-3, set forth in the General Instructions thereto, have been satisfied.

11.
  Each document filed pursuant to the Exchange Act (other than the financial statements and supporting schedules included therein, as to which no opinion is rendered) which is incorporated or deemed to be incorporated by reference in the Prospectus complied when so filed as to form in all material respects with the Exchange Act.

12.
The Corporation is not, and, after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Preliminary Prospectus and the

 
35

 

Prospectus, will not be an “investment company” as defined in the Investment Company Act.

 
36

EXHIBIT 1.2
 
3,257,853 SHARES
 
CINEDIGM DIGITAL CINEMA CORP.
 
CLASS A COMMON STOCK
 
UNDERWRITING AGREEMENT
 
April 20, 2012
 
B. Riley & Co., LLC
As representative of the several Underwriters
named in Schedule I hereto
11100 Santa Monica Boulevard
Suite 800
Los Angeles, CA 90025

Ladies and Gentlemen:
 
Cinedigm Digital Cinema Corp., a Delaware  corporation (the “ Company ”) proposes, subject to the terms and conditions stated herein, to issue and sell to the Underwriters named in Schedule I hereto (the “ Underwriters ”), for whom B. Riley & Co., LLC is acting as representative (the “ Representative ”), an aggregate of 3,257,853 authorized but unissued shares (the “ Firm Shares ”) and, at the election of the Underwriters, up to 325,786 additional shares (the “ Additional Shares ”) of Class A Common Stock, $.001 par value per share (the “ Common Stock ”), of the Company (the Firm Shares and the Additional Shares that the Underwriters elect to purchase pursuant to Section 3 hereof being collectively called the “ Securities ”).
 
As part of the transactions described under the heading “Pending Acquisition” in the Time of Sale Disclosure Package (as defined below), pursuant to a Stock Purchase Agreement (the “ SPA ”) dated as of April 19, 2012, among the Company and the shareholders of Target (“ Tg ”), the Company intends to acquire all of the issued and outstanding shares of common stock of Tg (the “ Acquisition ”).
 
The Company and the Underwriters hereby confirm their agreement with respect to the purchase and sale of the Securities as follows:
 
1.           REGISTRATION STATEMENT AND PROSPECTUS.  The Company has prepared and filed with the Securities and Exchange  Commission (the “ Commission ”) a registration statement on Form S-3 (File No. 333-179970) under the Securities Act of 1933, as amended (the “ Securities Act ”) and the rules and regulations (the “ Rules and Regulations ”) of the Commission thereunder, and such amendments to such registration statement as may have been required to the date of this Agreement.  Such registration statement has been declared effective by the Commission.  Such registration statement, at any given time, including amendments thereto to such time, the exhibits and any schedules thereto at such time, the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act at such time and the documents and information otherwise deemed to be a part
 

 
 

 

thereof or included therein by Rule 430B under the Securities Act or otherwise pursuant to the Rules and Regulations at such time, is herein called the “ Registration Statement .” The Registration Statement at the time it originally became effective is herein called the “ Original Registration Statement .”
 
The Company proposes to file with the Commission pursuant to Rule 424 under the Securities Act a final prospectus supplement relating to the Securities to a form of prospectus included in the Registration Statement relating to the Securities in the form heretofore delivered to the Underwriters.  Such prospectus in the form in which it appears in the Registration Statement is hereinafter called the “ Base Prospectus .”  Such supplemental form of prospectus, in the form in which it shall be filed with the Commission pursuant to Rule 424(b) (including the Base Prospectus as so supplemented) is hereinafter called the “ Prospectus .”  Any preliminary form of Prospectus which is filed or used prior to filing of the Prospectus is hereinafter called a “ Preliminary Prospectus .”  Any reference herein to the Base Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act as of the date of such prospectus.
 
For purposes of this Agreement, all references to the Registration Statement, the Base Prospectus, any Preliminary Prospectus, the Prospectus or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval System (“ EDGAR ”).  All references in this Agreement to amendments or supplements to the Registration Statement, the Base Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to mean and include the subsequent filing of any document under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) which is deemed to be incorporated by reference therein or otherwise deemed by the Rules and Regulations to be a part thereof.
 
2.           REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
 
(a)           The Company   represents   and   warrants   to, and agrees   with,   the Underwriters as follows:
 
(i)           No order preventing or suspending the use of any Preliminary Prospectus has been issued by the Commission and each Preliminary Prospectus, at the time of filing or the time of first use within the meaning of the Rules and Regulations, complied in all material respects with the requirements of the Securities Act and the Rules and Regulations and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; except that the foregoing shall not apply to statements in or omissions from any Preliminary Prospectus in reliance upon, and in conformity with, written information furnished to the Company by the Representative specifically for use in the preparation thereof.
 

 
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(ii)           The Company has complied to the Commission’s satisfaction with all requests of the Commission for additional or supplemental information.  No stop order suspending the effectiveness of the Registration Statement is in effect and no proceedings for such purpose have been instituted or are pending or, to the best knowledge of the Company, are contemplated or threatened by the Commission.
 
(iii)           Each part of the  Registration  Statement  and any post-effective amendment thereto, at the time such part became effective (including each deemed effective date with respect to the Underwriters pursuant to Rule 430B under the Securities Act), at all other subsequent times until the expiration of the Prospectus Delivery Period (as defined below), and at the Closing Date (as hereinafter defined), and the Prospectus (or any amendment or supplement to the Prospectus), at the time of filing or the time of first use within the meaning of the Rules and Regulations, at all subsequent times until expiration of the Prospectus Delivery Period, and at the Closing Date complied and will comply in all material respects with the applicable requirements and provisions of the Securities Act, the Rules and Regulations and the Exchange Act and did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus, as amended or supplemented, as of its date, or the time of first use within the meaning of the Rules and Regulations, at all subsequent times until the expiration of the Prospectus Delivery Period, and at the Closing Date, did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The interactive data in eXtensible Business Reporting Language included or incorporated by reference in the Registration Statement and the Prospectus fairly presents the information called for in all material respects and is prepared in accordance with the rules and regulations of the Commission applicable thereto. The representations and warranties set forth in the two immediately preceding sentences do not apply to statements in or omissions from the Registration Statement or any post-effective amendment thereto, or the Prospectus, or any amendments or supplements thereto, made in reliance upon and in conformity with written information relating to the Underwriters furnished to the Company by the Representative, specifically for use in the preparation thereof.
 
(iv)           Neither (A) the Issuer General Free Writing Prospectus(es) issued at or prior to the Time of Sale, the Statutory Prospectus and the information set forth in Schedule II to this Agreement, all considered together (collectively, the “ Time of Sale Disclosure Package ”), nor (B) any individual Issuer Limited-Use Free Writing Prospectus, when considered together with the Time of Sale Disclosure Package, includes or included as of the Time of Sale any untrue statement of a material fact or omits or omitted as of the Time of Sale to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from any Statutory Prospectus included in the Registration Statement or any Issuer Free Writing Prospectus based upon and in conformity with written information furnished to
 

 
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the Company by the Representative specifically for use therein.  As used in this paragraph and elsewhere in this Agreement:
 
(1)           “ Time of Sale ” means 9:00 a.m. (Eastern time) on the date of this Agreement.
 
(2)           “ Statutory Prospectus ” as of any time means the Preliminary Prospectus that is included in the Registration Statement immediately prior to that time.  For purposes of this definition, information contained in a form of prospectus that is deemed retroactively to be a part of the Registration Statement pursuant to Rule 430B under the  Securities Act shall be considered to be included in the Statutory Prospectus as of the actual time that form of prospectus is filed with the Commission pursuant to Rule 424(b) under the Securities Act.
 
(3)           “ Issuer Free Writing Prospectus ” means any “issuer free writing prospectus,” as defined in Rule 433 under the Securities Act, relating to the Securities that (A) is required to be filed with the Commission by the Company, or (B) is exempt from filing pursuant to Rule 433(d)(5)(i) under the Securities Act because it contains a description of the Securities or of the offering that does not reflect the final terms, in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g) under the Securities Act.
 
(4)           “ Issuer General Free Writing Prospectus ” means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors, as evidenced by its being specified in Schedule III to this Agreement.
 
(5)           “ Issuer Limited-Use Free Writing Prospectus ” means any Issuer Free Writing Prospectus that is not an Issuer General Free Writing Prospectus.
 
(v)           (A)  Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the Prospectus Delivery Period or until any earlier date that the Company notified or notifies the Underwriters as described in Section 4(a)(iii)(B), did not, does not and will not include any information that conflicted, conflicts or will conflict with the information contained in the Registration Statement, any Statutory Prospectus or the Prospectus.  The foregoing sentence does not apply to statements in or omissions from any Issuer Free Writing Prospectus based upon and in conformity with written information furnished to the Company by the Representative specifically for use therein.
 
(B)           (1)  At the earliest time after the filing of the Registration Statement that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the Securities Act) of the Securities and (2) at the date hereof, the Company was not and is not an “ineligible issuer,” as defined in Rule 405 under the Securities Act, including the Company or any subsidiary in the preceding three years not having been convicted of a felony or misdemeanor or having been made the subject of a judicial or administrative decree or order as described in Rule
 

 
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405 (without taking account of any determination by the Commission pursuant to Rule 405 that it is not necessary that the Company be considered an ineligible issuer), nor an “excluded issuer” as defined in Rule 164 under the Securities Act.
 
(C)           Each Issuer Free Writing Prospectus satisfied, as of its issue date and at all subsequent times through the Prospectus Delivery Period, all other conditions to use thereof as set forth in Rules 164 and 433 under the Securities Act.
 
(vi)           The financial statements of the Company, together with the related notes, included or  incorporated  by reference in the Registration Statement, the Time of Sale Disclosure Package and the Prospectus comply in all material respects with the requirements of the Securities Act and the Exchange Act and fairly present the consolidated financial condition of the Company and its subsidiaries as of the dates indicated and the consolidated results of operations and changes in cash flows for the periods therein specified in conformity with generally accepted accounting principles consistently applied throughout the periods involved; and the supporting schedules included in the Registration Statement present fairly the information required to be stated therein. No other financial statements or schedules are required to be included in the Registration Statement, the Time of Sale Disclosure Package or the Prospectus.  There is no pro forma or as adjusted financial information which is required to be included in the Registration Statement, the Time of Sale Disclosure Package, or the Prospectus or a document incorporated by reference therein in accordance with the Securities Act and the Rules and Regulations which has not been included or incorporated as so required.  To the Company’s knowledge, EisnerAmper LLP, which has expressed its opinion with respect to the audited financial statements and schedules filed as a part of the Registration Statement and included in the Registration Statement, the Time of Sale Disclosure Package and the Prospectus, is an independent  public  accounting firm within the meaning of the Securities Act and the Rules and Regulations and such accountant is not in violation of the auditor independence requirements of the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”).
 
(vii)           Each of the Company and its subsidiaries has been duly organized and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation.  Each of the Company and its subsidiaries has the corporate power and authority to own its properties and conduct its business as currently being carried on and as described in the Registration Statement, the Time of Sale Disclosure Package and the Prospectus, and is duly qualified to do business as a foreign  corporation  in good  standing in each jurisdiction in which it owns or leases real property or in which the conduct of its business makes such qualification necessary and in which the failure to so qualify would have a material adverse effect upon the business, prospects, properties, operations, condition (financial or otherwise) or results of operations of the Company and its subsidiaries, taken as a whole, or in its ability to perform its obligations under this Agreement or the SPA (“ Material Adverse Effect ”).
 
(viii)           Except as contemplated in the Time of Sale Disclosure Package and in the Prospectus, subsequent to the respective dates as of which information is given
 

 
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in the Time of Sale Disclosure Package, neither the Company nor any of its subsidiaries has incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions, or declared or paid any dividends or made any distribution of any kind with respect to its capital stock; and there has not been any change in the capital stock (other than a change in the number of outstanding shares of Common Stock due to the issuance of shares upon the exercise of outstanding options or warrants), or any material change in the short-term or long-term debt, or any issuance of options, warrants, convertible securities or other rights to purchase the capital stock, of the Company or any of its subsidiaries, or any material adverse change in the financial condition, business, prospects, property, operations or results of operations of the Company and its subsidiaries, taken as a whole (“ Material Adverse Change ”).
 
(ix)           Except as set forth in the Time of Sale Disclosure Package and the Prospectus, there is not pending or, to the knowledge of the Company, threatened or contemplated, any action, suit or proceeding to which the Company or any of its subsidiaries is a party or of which any property or assets of the Company or any of its subsidiaries is the subject before or by any court or governmental agency, authority or body, or any arbitrator, which, individually or in the aggregate, might result in any Material Adverse Change.
 
(x)           This Agreement has been duly authorized, executed and delivered by the Company, and constitutes a valid, legal and binding obligation of the Company, enforceable in accordance with its terms, except as rights to indemnity hereunder may be limited by federal or state securities laws and except as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting the rights of creditors generally and subject to general principles of equity.  The execution, delivery and performance of this Agreement and the SPA and the consummation of the transactions herein and therein contemplated will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any statute, any agreement or instrument to which the Company is a party or by which it is bound or to which any of its property is subject, or any order, rule, regulation or decree of any court or governmental agency or body having jurisdiction over the Company or any of its properties except for violations and defaults which individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. The execution, delivery and performance of this Agreement and the SPA and the consummation of the transactions herein and therein contemplated will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, the Company’s charter or by-laws.  No consent, approval, authorization or order of, or filing with, any court or governmental agency or body is required for the execution, delivery and performance of this Agreement or the SPA or for the consummation of the transactions contemplated hereby or thereby, including the issuance or sale of the Securities by the Company, except such as may be required under the Securities Act, state securities or blue sky laws or the NASDAQ Listing Rules; and the Company has the power and authority to enter into this Agreement and to authorize, issue and sell the Securities as contemplated by this Agreement.
 

 
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(xi)           All of the issued and outstanding shares of capital stock of the Company, including the outstanding shares of Common Stock, are duly authorized and validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, were not issued in violation of or subject to any preemptive rights or other rights to subscribe for or purchase securities that have not been waived in writing (a copy of which has been delivered to counsel to the Underwriters); the Securities which may be sold hereunder by the Company have been duly authorized and, when issued, delivered and paid for in accordance with the terms of this Agreement, will have been validly issued and will be fully paid and nonassessable; and the capital stock of the Company, including the Common Stock, conforms to the description thereof in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus. Except as otherwise stated in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus, there are no preemptive rights or other rights to subscribe for or to purchase, or any restriction upon the voting or transfer of, any shares of Common Stock pursuant to the Company’s charter, by-laws or any agreement or other instrument to which the Company is a party or by which the Company is bound.  Neither the filing of the Registration Statement nor the offering or sale of the Securities as contemplated by this Agreement gives rise to any rights for or relating to the registration of any shares of Common Stock or other securities of the Company that have not been waived.  All of the issued and outstanding shares of capital stock of each of the Company’s subsidiaries have been duly and validly authorized and issued and are fully paid and nonassessable, and, except as otherwise described in the Registration  Statement, in the Time of Sale Disclosure Package and in the Prospectus and except for any directors’ qualifying shares, the Company owns of record and beneficially, free and clear of any security interests, claims, liens, proxies, equities or other encumbrances, all of the issued and outstanding shares of such stock. Except as described in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus, there are no options, warrants, agreements, contracts or other rights in existence to purchase or acquire from the Company or any subsidiary of the Company any shares of the capital stock of the Company or any subsidiary of the Company.  The Company has an authorized and outstanding capitalization as set forth in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus.
 
(xii)           The Company and each of its subsidiaries holds, and is operating in compliance in all material respects with, all franchises, grants, authorizations, licenses, permits, easements, consents, certificates and orders of any governmental or self-regulatory body required for the conduct of its business and all such franchises, grants, authorizations, licenses, permits, easements, consents, certifications and orders are valid and in full force and effect in all material respects; and the Company and each of its subsidiaries is in compliance in all material respects with all applicable federal, state, local and foreign laws, regulations, orders and decrees.
 
(xiii)           The Company and its subsidiaries have good and marketable title to all property (whether real or personal) described in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus as being owned by them which are material to the business of the Company, in each case free and clear of all liens,
 

 
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claims, security interests, other encumbrances or defects except such as are described in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus. The property held under lease by the Company and its subsidiaries is held by them under valid, subsisting and enforceable leases with only such exceptions with respect to any particular lease as do not interfere in any material respect with the conduct of the business of the Company or its subsidiaries.
 
(xiv)           The Company and each of its subsidiaries owns or possesses all patents, patent applications, trademarks, service marks, tradenames, trademark registrations, service mark registrations, copyrights, licenses, inventions, trade secrets and rights necessary for the conduct of the business of the Company and its subsidiaries as currently carried on and as described in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus; except as stated in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus, to the knowledge of the Company, no name which the Company or any of its subsidiaries uses and no other aspect of the business of the Company or any of its subsidiaries will involve or give rise to any infringement of, or license or similar fees for, any patents, patent applications, trademarks, service marks, tradenames, trademark registrations, service mark registrations, copyrights, licenses, inventions, trade secrets or other similar rights of others material to the business or prospects of the Company and its subsidiaries and neither the Company nor any of its subsidiaries has received any notice alleging any such infringement or fee.
 
(xv)           Neither the Company nor any of its subsidiaries is in violation of its respective charter or by-laws or in breach of or otherwise in default, and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the performance of any material obligation, agreement or condition contained in any bond, debenture, note, indenture, loan agreement or any other material contract, lease or other instrument to which it is subject or by which any of them may be bound, or to which any of the material property or assets of the Company or any of its subsidiaries is subject.
 
(xvi)           The Company and its subsidiaries have timely filed all federal, state and local income tax returns required to be filed and are not in default in the payment of any taxes which were payable pursuant to said returns or any assessments with respect thereto, other than any which the Company or any of its subsidiaries is contesting in good faith.
 
(xvii)           The Company has not distributed and will not distribute any prospectus or other offering material in connection with the offering and sale of the Securities other than any Preliminary Prospectus, the Time of Sale Disclosure Package or the Prospectus or other materials permitted by the Securities Act to be distributed by the Company; provided , however , that, except as set forth on Schedule III , the Company has not made and will not make any offer relating to the Securities that would constitute a “free writing prospectus” as defined in Rule 405 under the Securities Act, except in accordance with the provisions of Section 4(a)(xiv) of this Agreement.
 

 
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(xviii)            The Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is listed on the NASDAQ Global Market and the Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock from the NASDAQ Global Market nor has the Company received any notification that the Commission or the NASDAQ Global Market is contemplating terminating such registration or listing. The Company has complied in all material respects with the applicable requirements of the NASDAQ Global Market for maintenance of inclusion of the Common Stock on the NASDAQ Global Market.
 
(xix)           Other than the subsidiaries of the Company listed on Schedule IV hereto, the Company, directly or indirectly, owns no capital stock or other equity or ownership or proprietary interest in any corporation, partnership, association, trust or other entity.
 
(xx)           The Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management’s general or specific authorization; (B) transactions are recorded as necessary to permit  preparation of financial  statements in conformity with generally accepted accounting  principles and to maintain accountability for assets; (C) access to assets is permitted only in accordance with management’s general or specific authorization; and (D) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as described in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus, since March 31, 2011, there has been (i) no material weakness or significant deficiencies in the Company’s internal control over financial reporting (whether or not remediated), (ii) no change in the Company’s  internal  control over financial  reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting and (iii) no fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
 
(xxi)           Other than as contemplated by this Agreement, the Company has not incurred any liability for any finder’s or broker’s fee or agent’s commission in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.
 
(xxii)           The Company carries, or is covered by, insurance in such amounts and covering such risks as is adequate for the conduct of its business and the value of its properties and as is customary for companies engaged in similar businesses in similar industries.
 
(xxiii)           The Company is not and, after giving effect to the offering and sale of the Securities, will not be an “investment company,” as such term is defined in the Investment Company Act of 1940, as amended.
 

 
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(xxiv)           As of the filing date of the Registration Statement and as of any update of the Registration Statement pursuant to Section 10(a)(3) of the Securities Act (including the filing of any Annual Report on Form 10-K), the Company was eligible to file a “shelf” Registration Statement on Form S-3 with the Commission.  
 
(xxv)           The documents incorporated by reference in the Time of Sale Disclosure Package, the Registration Statement and in the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and were filed on a timely basis with the Commission and none of such documents contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; any further documents so filed and incorporated by reference in the Time of Sale Disclosure Package, the Registration Statement or in the Prospectus, when such documents are filed with the Commission, will conform in all material respects to the requirements of the Exchange Act, and will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
 
(xxvi)           The  Company  is  in  substantial compliance with  all applicable provisions of the Sarbanes-Oxley Act and the rules and regulations of the Commission thereunder that are effective with respect to the Company and its subsidiaries on the date of this Agreement, except  where  such  noncompliance  would not have, individually or in the aggregate, a Material Adverse Effect.
 
(xxvii)                       The Company has established and maintains disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under the Exchange Act) and such controls and procedures are effective in ensuring that material information relating to the Company, including its subsidiaries, is made known to the principal executive officer and the principal financial officer.  The Company has utilized such controls and procedures in preparing and evaluating the disclosures in the Registration Statement, in the Time of Sale Disclosure Package and in the Prospectus.
 
(xxviii)                        The Company has no knowledge of any fact or condition regarding Tg and its subsidiaries that is not disclosed in the Time of Sale Disclosure Package that would reasonably be expected to have, singularly or in the aggregate, a material adverse effect on the condition (financial or otherwise), results of operations, assets, business or prospects of Tg and its subsidiaries, taken as a whole.
 
(xxix)           Neither the Company nor any of its subsidiaries, nor, to the knowledge of the Company, any of its directors, officers, agents, employees, affiliates or other person acting on their behalf is aware of or has taken any action, directly or indirectly, that has violated or would result in a violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “ FCPA ”), including, without limitation, making use of the mails or any means or
 

 
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instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA.  The Company and its subsidiaries have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.
 
(xxx)           The operations of the Company and its subsidiaries are and have been conducted at all times, in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar applicable rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “ Money Laundering Laws ”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.
 
(xxxi)           Neither the Company nor any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“ OFAC ”); and the Company will not directly or indirectly use the proceeds of this offering of the Securities contemplated hereby, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.
 
(xxxii)                      No approval of the stockholders of the Company under the rules and regulations of NASDAQ (including Rule 5635 of the NASDAQ Listing Rules) is required for the Company to issue and deliver the Securities to the Underwriters.
 
(b)           Any certificate signed by any officer of the Company and delivered to the Underwriters or to the Underwriters’ Counsel shall be deemed a representation and warranty by the Company to the Underwriters as to the matters covered thereby.
 
3.           PURCHASE, SALE AND DELIVERY OF SECURITIES.
 
(a)           On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, (i) the Company agrees to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at a purchase price of $1.316 per share (the “ Per Share Price ”), the Firm Shares as set  forth  opposite  the  name  of such Underwriter on Schedule I hereto and (ii) in the event and to the extent that the Underwriters shall exercise the election to purchase Additional Shares as provided below, the Company agrees to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase
 

 
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from the Company, at the purchase price per share set forth in clause (a)(i) of this Section 3, that portion of the number of Additional Shares as to which such election shall have been exercised (to be adjusted by the Representative so as to eliminate fractional shares) determined by multiplying such number of Additional Shares by a fraction, the numerator of which is the maximum number of Additional Shares which such Underwriter is entitled to purchase as set forth opposite the name of such Underwriter in Schedule I hereto and the denominator of which is the maximum number of Additional Shares that all of the Underwriters are entitled to purchase hereunder.
 
As referenced in Section 3(a)(ii) above,  the Company hereby grants to the several Underwriters the option to purchase from the Company an aggregate of up to 325,786 Additional Shares, at the same purchase price per share to be paid by the  Underwriters to the Company for the  Firm Shares.  This option may be exercised by the Representative on behalf of the Underwriters at any time (but not more than once) on or before the thirtieth day following the date hereof,  by written  notice to the Company.  Such notice  shall set forth the  aggregate  number of  Additional Shares as to which the option is being exercised, and the date and time when the Additional  Shares are to be delivered (such date and time being herein referred to as the " Option Closing  Date ");   provided ,   however ,  that the Option Closing Date shall not be earlier than the Closing  Date nor earlier than the second  business day after the date on which the option shall have been exercised  nor  later  than the fifth  business  day after the date on which the option  shall  have been  exercised  unless  the  Company  and the  Underwriters otherwise agree.
 
Payment of the purchase  price and delivery for the  Additional  Shares shall be made at the  Option  Closing  Date in the same  manner  and at the same office as the payment for the Firm Shares as set forth in subparagraph (b) below.
 
(b)           The Securities will be delivered by the Company to the Underwriters for the Underwriters’ accounts against payment of the purchase price therefor by wire transfer of same day funds payable to the order of the Company, as appropriate, at the offices of B. Riley & Co., LLC, 11100 Santa Monica Boulevard, Suite 800, Los Angeles, California 90025, or such other location as may be mutually acceptable, (A) with respect to the Firm Shares, at 8:00 a.m. Pacific time on the third (or if the Firm Shares are priced, as contemplated by Rule 15c6-1(c) under the Exchange Act, after 4:30 p.m. Eastern time, the fourth) full business day following the date hereof, or at such other time and date as the Representative and the Company determine pursuant to Rule 15c6-1(a) under the Exchange Act (such time and date of delivery being herein referred to as the “ Closing Date ”) and (b) with respect to the Additional Shares, at 8:00 a.m. Pacific time on the Option Closing  Date. If the Representative so elects, delivery of the Securities may be made by credit through full fast transfer to the account at The Depository Trust Company designated by the Representative.  Certificates representing the Securities, in definitive form and in such denominations and registered in such names as the Representative may request upon at least two business days’ prior notice to the Company, will be made available for checking and packaging not later than 10:30 a.m., Pacific time, on the business day next preceding the applicable closing date at the offices of B. Riley & Co., LLC, 11100 Santa Monica Boulevard, Suite 800, Los Angeles, California 90025, or such other location as may be mutually acceptable.
 

 
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4.           COVENANTS.
 
(a)           The Company covenants and agrees with the Underwriters as follows:
 
(i)           During the period   beginning   on the date   hereof and ending on the later of the Closing Date or such date, as in the opinion of counsel for the Underwriters, the Prospectus is no longer required by law to be delivered (or in lieu thereof the notice referred to in Rule 173(a) under the Securities Act is no longer required to be provided), in connection with sales by an underwriter or dealer (the “ Prospectus Delivery Period ”), prior to amending or supplementing the Registration Statement, the Time of Sale Disclosure Package or the Prospectus, the Company shall furnish to the Underwriters for review a copy of each such proposed amendment or supplement, and the Company shall not file any such proposed amendment or supplement to which the Underwriters reasonably object.
 
(ii)           During the Prospectus Delivery Period, the Company shall promptly advise the Underwriters in writing (i) of the receipt of any comments of, or requests for additional or supplemental information from, the Commission, (ii) of the time and date of any filing of any post-effective amendment to the Registration Statement or any amendment or supplement to any Preliminary Prospectus, the Time of Sale Disclosure Package or the Prospectus, (iii) of the time and date that any post-effective amendment to the Registration Statement becomes effective and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective  amendment thereto or of any order preventing or suspending its use or the use of any Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus, or of any proceedings to remove, suspend or terminate from listing or quotation the Common Stock from any securities exchange upon which it is listed for trading or included or designated for quotation, or of the threatening or initiation of any proceedings for any of such purposes. If the Commission shall enter any such stop order at any time, the Company will use its reasonable efforts to obtain the lifting of such order at the earliest possible moment.  Additionally, the Company agrees that it shall comply with the provisions of Rules 424(b), 430A and 430B, as applicable, under the Securities Act and will use its reasonable efforts to confirm that any filings made by the Company under Rule 424(b) or Rule 433 were received in a timely manner by the Commission (without reliance on Rule 424(b)(8) or Rule 164(b)).
 
(iii)           (A)  During the Prospectus Delivery Period, the Company will comply as far as it is able with all requirements imposed upon it by the Securities Act, as now and hereafter amended, and by the Rules and Regulations, as from time to time in force, and by the Exchange Act so far as necessary to permit the continuance of sales of or dealings in the Securities as contemplated by the provisions hereof, the Time of Sale Disclosure Package, and the Registration Statement and the Prospectus.  If during such period any event occurs as a result of which the Prospectus (or if the Prospectus is not yet available to prospective purchasers, the Time of Sale Disclosure Package ) would include an untrue statement of a material fact or omit to state a material fact necessary to make
 

 
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the statements therein, in the light of the circumstances then existing, not misleading, or if during such period it is necessary or appropriate in the opinion of the Company or its counsel or the Underwriters or counsel to the Underwriters to amend the Registration Statement or supplement the Prospectus (or if the Prospectus is not yet available to prospective purchasers, the Time of Sale Disclosure Package ) to comply with the Securities Act or to file under the Exchange Act any document which would be deemed to be incorporated by reference in the Prospectus in order to comply with the Securities Act or the Exchange Act, the Company will promptly notify the Underwriters and will amend the Registration Statement or supplement the Prospectus (or if the Prospectus is not yet available to prospective purchasers, the Time of Sale Disclosure Package) or file such document (at the expense of the Company) so as to correct such statement or omission or effect such compliance.
 
(B)           If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information contained in the Registration Statement, the Statutory Prospectus or the Prospectus or included or would include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances prevailing at that subsequent time, not misleading, the Company has promptly notified or promptly will notify the Underwriters and has promptly amended or will promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.
 
(iv)           The Company shall take or cause to be taken all necessary action to qualify the Securities for sale under the securities laws of such jurisdictions as the Underwriters reasonably designate and to continue such qualifications in effect so long as required for the distribution of the Securities, except that the Company shall not be required in connection therewith to qualify as a foreign corporation or to execute a general consent to service of process in any state.
 
(v)           The Company will furnish to the Underwriters and counsel for the Underwriters copies of the Registration Statement, each Preliminary Prospectus, the Prospectus, any Issuer Free Writing Prospectus, and all amendments and supplements to such documents, in each case as soon as available and in such quantities as the Underwriters may from time to time reasonably request.
 
(vi)           The Company will make generally available to its security holders as soon as practicable, but in any event not later than 15 months after the end of the Company’s current fiscal quarter, an earnings statement (which need not be audited) covering a 12-month period that shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 of the Rules and Regulations.
 
(vii)           The Company, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated, will pay or cause to be paid (A) all expenses (including transfer taxes allocated to the respective transferees) incurred
 

 
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in connection with the delivery to the Underwriters of the Securities, (B) all expenses and fees (including, without limitation, fees and expenses of the Underwriters’ counsel) in connection with the preparation, printing, filing, delivery, and shipping of the Registration Statement (including the financial statements therein and all amendments, schedules, and exhibits thereto), the Securities, each Preliminary Prospectus, the Prospectus, any Issuer Free Writing Prospectus and any amendment thereof or supplement thereto, and the printing, delivery, and shipping of this Agreement and other underwriting documents, including Blue Sky Memoranda (covering the states and other applicable jurisdictions), (C) all filing fees and fees and disbursements of the Underwriters’ counsel incurred in connection with the qualification of the Securities for offering and sale by the Underwriters or by dealers under the securities or blue sky laws of the states and other jurisdictions which the Underwriters shall designate, (D) the fees and expenses of any transfer agent or registrar, (E) the filing fees and fees and disbursements of Underwriters’ counsel incident to any required review and approval by the Financial Industry Regulatory Authority (“ FINRA ”) of the terms of the sale of the Securities, (F) listing fees, if any, and (G) all other costs and expenses incident to the performance of its obligations hereunder that are not otherwise specifically provided for herein. If this Agreement is terminated by the Underwriters pursuant to Section 8 hereof or if the sale of the Securities provided for herein is not consummated by reason of any failure, refusal or inability on the part of the Company to perform any agreement on its part to be performed, or because any other condition of the Underwriters’ obligations hereunder required to be fulfilled by the Company is not fulfilled, the Company will reimburse the Underwriters for all out-of-pocket disbursements (including but not limited to reasonable fees and disbursements of counsel, printing expenses, travel expenses, postage, facsimile and telephone charges) incurred by the Underwriters in connection with their  investigation, preparing to market and marketing the Securities or in contemplation of performing their obligations hereunder. Notwithstanding anything contained herein, the maximum amount payable by the Company for Underwriters’ counsel fees, disbursements and expenses pursuant to this Section 4(a)(vii) shall be $40,000.
 
(viii)           The Company will apply the net proceeds from the sale of the Securities to be sold by it hereunder for the purposes set forth in the Time of Sale Disclosure Package and in the Prospectus.
 
(ix)           The Company has not taken and will not take, directly or indirectly, any action designed to or which might reasonably be expected to cause or result in, or which has constituted, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Securities.
 
(x)           The Company will not incur any liability for any finder’s or broker’s fee or agent’s commission in connection with the execution and delivery of this Agreement or the  consummation of the transactions contemplated hereby.
 

 
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(xi)           During the Prospectus Delivery Period, the Company will file on a timely basis with the Commission such periodic and special reports as required by the Rules and Regulations.
 
(xii)           The Company and its subsidiaries will maintain such controls and other procedures, including without limitation those applicable to the Company and required by Sections 302 and 906 of the Sarbanes-Oxley Act and the applicable regulations thereunder, that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, including without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer and its principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure, to ensure that material information relating to Company, including its subsidiaries, is made known to them by others within those entities.
 
(xiii)           The Company and its subsidiaries will substantially comply with all effective applicable provisions of the Sarbanes-Oxley Act.
 
 
(xiv)           The Company represents and agrees that, unless it obtains the prior written consent of the Representative, and the Underwriters represent and agree that, unless they obtain the prior written consent of the Company, they have not made and will not make any offer relating to the Securities that would constitute an “issuer free writing prospectus,” as defined in Rule 433 under the Securities Act, or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405 under the Securities Act, required to be filed with the Commission; provided that the prior written consent of the parties hereto shall be deemed to have been given in respect of the free writing prospectuses  included in Schedule III .  Any such free writing prospectus consented to by the Company and the Representative is hereinafter referred to as a “ Permitted Free Writing Prospectus .”  The Company represents that it has treated or agrees that it will treat each Permitted Free Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and has complied and will comply with the requirements of Rule 433 applicable to any Permitted Free Writing Prospectus, including timely Commission filing where required, legending and record keeping.
 
(xv)           The Company will not, for a period of ninety (90) days from the date of the Prospectus (the “ Lock-Up Period ”), without the prior written consent of the Representative, directly or indirectly offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, other than (i) the Company’s sale of the Securities hereunder, (ii) the issuance of Common Stock or any equity awards (including the issuance of Common Stock upon exercise or settlement of such equity awards) pursuant to the Company’s employee benefit plans, stock option and employee
 

 
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stock purchase plans or other employee compensation plans as such plans are in existence on the date hereof and described in the Prospectus, (iii) the issuance of Common Stock pursuant to the vesting or exercises of options, restricted stock units, warrants or rights outstanding on the date hereof, and (iv) the issuance of Common Stock or securities convertible into or exercisable or exchangeable for Common Stock (and the issuance of Common Stock pursuant to the terms of such securities convertible into or exercisable or exchangeable for Common Stock) in connection with the SPA.  The Company will cause each director and executive officer listed on Schedule VI to furnish to the Underwriters, prior to the Closing Date, a letter, substantially in the form of Schedule V hereto, pursuant to which each such person shall agree, among other things, subject to the terms and conditions set forth in each such letter, not to directly or indirectly offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, not to engage in any swap or other agreement or arrangement that transfers, in whole or in part, directly or indirectly, the economic risk of ownership of Common Stock or any such securities, during the period of ninety (90) days from the date of the Prospectus, without the prior written consent of the Representative.  The Company also agrees that during such ninety (90) day period, the Company will not file any registration statement, preliminary prospectus or prospectus, or any amendment or supplement thereto, under the Securities Act for any such transaction or which registers, or offers for sale, Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, except for (i) registration statements on Form S-8 relating to employee benefit plans and (ii) a registration statement relating to the resale of Common Stock issued pursuant to the SPA.  The Company hereby agrees that (A) if it issues an earnings release or material news, or if a material event relating to the Company occurs, during the last seventeen days of the Lock-Up Period, or (B) if prior to the expiration of the Lock-Up Period, the Company announces that it will release earnings results during the sixteen-day period beginning on the last day of the Lock-Up Period, the restrictions imposed by this Section 4(a)(xv) shall continue to apply until the expiration of the eighteen-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.
 
(b)           B. Riley & Co., LLC covenants and agrees with the Company that in all dealings hereunder, it shall act on behalf of each of the Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by B. Riley & Co., LLC as the representative of the Underwriters.
 
5.           CONDITIONS OF THE UNDERWRITER’S OBLIGATIONS.  The obligations of the Underwriters hereunder are subject to the accuracy, as of the date hereof and at the Closing Date (as if made at the Closing Date), of and compliance with all representations, warranties and agreements of the Company contained herein, to the performance by the Company of its obligations hereunder and to the following additional conditions:
 
(a)           If filing of the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, is required under the Securities Act or the Rules and Regulations, the Company shall have filed the Prospectus (or such amendment or supplement) or
 

 
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such Issuer Free Writing Prospectus with the Commission in the manner and within the time period so required (without reliance on Rule 424(b)(8) or Rule 164(b)); the Registration Statement shall remain effective; no stop order suspending the effectiveness of the Registration Statement or any part thereof, or any amendment thereof, nor suspending or preventing the use of the Time of Sale Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus shall have been issued; no proceedings for the issuance of such an order shall have been initiated or threatened; any request of the Commission for additional information (to be included in the Registration Statement, the Time of Sale Disclosure Package, the Prospectus, any Issuer Free Writing  Prospectus or otherwise) shall have been complied with to the Underwriters’ satisfaction; and FINRA shall have raised no objection to the fairness and reasonableness of the underwriting terms and arrangements.
 
(b)           The Underwriters shall not have advised the Company that the Registration Statement, the Time of Sale Disclosure Package or the Prospectus, or any amendment thereof or supplement thereto, or any Issuer Free Writing Prospectus, contains an untrue statement of fact which, in the Underwriters’ opinion, is material, or omits to state a fact which, in the Underwriters’ opinion, is material and is required to be stated therein or necessary to make the statements therein not misleading.
 
(c)           Except as contemplated in the Time of Sale Disclosure Package and in the Prospectus, subsequent to the respective dates as of which information is given in the Time of Sale Disclosure Package, neither the Company nor any of its subsidiaries, nor Tg, shall have incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions, or declared or paid any dividends or made any distribution of any kind with respect to its capital stock; and there shall not have been any change in the capital stock (other than a change in the number of outstanding shares of Common Stock due to the issuance of shares upon the exercise of outstanding options or warrants), or any material change in the short-term or long-term debt of the Company or Tg except for the extinguishment thereof, or any issuance of options, warrants, convertible securities or other rights to purchase the capital stock of the Company or Tg or any of the Company’s subsidiaries, or any Material Adverse Change or any development involving a prospective Material Adverse Change (whether or not arising in the ordinary course of business), or any loss by strike, fire, flood, earthquake, accident or other calamity, whether or not covered by insurance, incurred by the Company or Tg or any of the Company’s subsidiaries, the effect of which, in any such case described above, in the Representative’s judgment, makes it impractical or inadvisable to offer or deliver the Securities on the terms and in the manner contemplated in the Time of Sale Disclosure Package, the Registration Statement and in the Prospectus.
 
(d)           On or after the Time of Sale (i) no downgrading shall have occurred in the rating accorded any of the Company’s securities by any “nationally recognized statistical organization,” as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Securities Act, and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company’s securities.
 

 
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(e)           On the Closing Date, there shall have been furnished to the Underwriters the opinion of Kelley Drye & Warren LLP, counsel for the Company, dated the Closing Date and addressed to the Underwriters, in form and substance reasonably satisfactory to the Underwriters, to the effect set forth in Schedule VII .
 
In rendering such opinion, such counsel may rely (i) as to matters of law other than New York, Delaware and federal law, upon the opinion or opinions of local counsel provided that the extent of such reliance is specified in such opinion and that such counsel shall state that such opinion or opinions of local counsel are satisfactory to them and that they believe they and the Underwriters are justified in relying thereon and (ii) as to matters of fact, to the extent such counsel deems reasonable upon certificates of officers of the Company and its subsidiaries provided that the extent of such reliance is specified in such opinion.
 
(f)           On the date of the Prospectus at a time prior to the execution of this Agreement, on the effective date of any post-effective amendment to the Registration Statement filed subsequent to the date of this Agreement and also at each of the Closing Date and the Option Closing Date, the Underwriters shall have received a letter of EisnerAmper LLP, dated the respective dates of delivery thereof, and addressed to the Underwriters, in form and substance satisfactory to the Underwriters.
 
(g)           On the  Closing Date, there  shall  have been  furnished to the Underwriters a certificate, dated the Closing Date and addressed to the Underwriters, signed by the chief executive officer or the chief financial officer of the Company, to the effect that:
 
(i)           The representations and warranties of the Company in this Agreement are true and correct, in all material respects, as if made at and as of the Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date;
 
(ii)           No stop order or other order suspending the effectiveness of the Registration Statement or any part thereof or any amendment thereof or the qualification of the Securities for offering or sale nor suspending or preventing the use of the Time of Sale Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus, has been issued, and no proceeding for that purpose has been instituted or, to the best of their knowledge, is contemplated by the Commission or any state or regulatory body; and
 
(iii)           The signers of said certificate have carefully examined the Registration Statement, the Time of Sale Disclosure Package and the Prospectus, and any amendments thereof or supplements thereto (including any documents filed under the Exchange Act and deemed to be incorporated by reference into the Time of Sale Disclosure Package, the Registration Statement or the Prospectus), and
 
(A)           each part of the Registration Statement and the Prospectus, and any amendments thereof or supplements thereto (including any documents filed under the Exchange Act and deemed to be incorporated by reference into the Prospectus) contain, and contained, when such part of the Registration  Statement (or such amendment) became effective, all statements and information required to be included therein, each
 

 
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part of the Registration Statement, or any amendment thereof, does not contain, and did not contain, when such part of the Registration Statement (or such amendment) became effective, any untrue statement of a material fact or omit to state, and did not omit to state when such part of the Registration Statement (or such amendment) became effective, any material fact required to be stated therein or necessary to make the statements therein not misleading, and the Prospectus, as amended or supplemented, does not include and did not include as of its date, or the time of first use within the meaning of the Rules and Regulations, any untrue statement of a material fact or omit to state and did not omit to state as of its date, or the time of first use within the meaning of the Rules and Regulations, a material fact necessary to make the statements therein, in light of the circumstances under which they were made,
 
(B)           neither (1) the Time of Sale Disclosure Package nor (2) any individual Issuer Limited-Use Free Writing Prospectus, when considered together with the Time of Sale Disclosure Package, include, nor included as of the Time of Sale any untrue statement of a material fact or omits, or omitted as of the Time of Sale, to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading,
 
(C)           since the Time of Sale, there has occurred no event required to be set forth in an amended or supplemented prospectus which has not been so set forth, and there has been no document required to be filed under the Exchange Act that upon such filing would be deemed to be incorporated by reference into the Time of Sale Disclosure Package, the Registration Statement or into the Prospectus that has not been so filed,
 
(D)           subsequent to the respective dates as of which information is given in the Time of Sale Disclosure Package, neither the Company nor any of its subsidiaries, nor, to the Company’s knowledge, Tg, has incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions, not in the ordinary course of business, or declared or paid any dividends or made any distribution of any kind with respect to its capital stock, and except as disclosed in the Time of Sale Disclosure Package and in the Prospectus, there has not been any change in the capital stock (other than a change in the number of outstanding shares of Common Stock due to the issuance of shares upon the exercise of outstanding options or warrants), or any material change in the short-term or long-term debt except for the extinguishment thereof, or any issuance of options, warrants, convertible securities or other rights to purchase the capital stock, of the Company or any of its subsidiaries, or, to the Company’s knowledge, of Tg, or any Material Adverse Change or any development involving a prospective Material Adverse Change (whether or not arising in the ordinary course of business), or any loss by strike, fire, flood, earthquake, accident or other calamity, whether or not covered by insurance, incurred by the Company or any of its subsidiaries, or, to the Company’s knowledge, by Tg, and
 
(E)           except as stated in the Time of Sale Disclosure Package and in the Prospectus, there is not pending, or, to the knowledge of the Company, threatened or contemplated, any action, suit or proceeding to which the Company or any of its
 

 
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subsidiaries is a party before or by any court or governmental  agency, authority or body, or any arbitrator, which might result in any Material Adverse Change.
 
(h)           The Company shall have furnished to the Underwriters and counsel for the Underwriters such additional documents, certificates and evidence as the Underwriters or counsel for the Underwriters may have reasonably requested.
 
(i)           The Underwriters shall have received the written agreements, substantially in the form of Schedule V hereto, of the directors and executive officers of the Company listed on Schedule VI to this Agreement.
 
All such opinions, certificates, letters and other documents will be in compliance with the provisions hereof only if they are satisfactory in form and substance to the Underwriters and counsel for the Underwriters.  The Company will furnish the Underwriters with such conformed copies of such opinions, certificates, letters and other documents as the Underwriters shall reasonably request.
 
6.           INDEMNIFICATION AND CONTRIBUTION.
 
(a)           The Company agrees to indemnify and hold harmless the Underwriters against any losses, claims, damages or liabilities to which the Underwriters may become subject, under the Securities Act or otherwise (including in settlement of any litigation if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, including the information deemed to be a part of the Registration Statement at the time of effectiveness and at any subsequent time pursuant to Rules 430A and 430B of the Rules and Regulations, if applicable, any Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus, or any amendment or supplement thereto (including any documents filed under the Exchange Act and deemed to be incorporated by reference into the Prospectus), any Issuer Free Writing Prospectus or in any materials or information provided to investors by, or with the approval of, the Company in connection with the marketing of the offering of the Common Stock (“ Marketing Materials ”), including any roadshow or investor presentations made to investors by the Company (whether in person or electronically) or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Underwriters for any legal or other expenses reasonably incurred by it in connection with investigating or defending against such loss, claim, damage, liability or action; or (ii) in whole or in part upon any inaccuracy in the representations and warranties of the Company contained herein; or (iii) in whole or in part upon any failure of the Company to perform its obligations hereunder or under law; provided , however , that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus, or any such amendment or supplement, any Issuer Free Writing Prospectus or in any Marketing Materials, in
 

 
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reliance upon and in conformity with written information furnished to the Company by the Representative specifically for use in the preparation thereof.
 
In addition to their other obligations under this Section 6(a), the Company agrees that, as an interim measure during the pendency of any claim, action, investigation, inquiry or other proceeding arising out of or based upon any statement or omission, or any alleged statement or omission, described in this Section 6(a), it will reimburse the Underwriters on a monthly basis for all reasonable  legal fees or other  expenses  incurred in connection  with investigating or defending any such claim, action, investigation, inquiry or other proceeding, notwithstanding the absence of a judicial determination as to the propriety and enforceability of the Company’s obligation to reimburse the Underwriters for such expenses and the possibility that such payments might later be held to have been improper by a court of competent jurisdiction.  To the extent that any such interim reimbursement payment is so held to have been improper, the Underwriters shall promptly return it to the Company, together with interest, compounded daily, determined on the basis of the prime rate (or other commercial lending rate for borrowers of the highest credit standing) announced from time to time by Wells Fargo Bank, N.A. (the “ Prime Rate ”).  Any such interim reimbursement payments which are not made to the Underwriters within 30 days of a request for reimbursement shall bear interest at the Prime Rate from the date of such request.  This indemnity agreement shall be in addition to any liabilities which they may otherwise have.
 
(b)           Each of the Underwriters will severally and not jointly indemnify and hold harmless the Company against any losses, claims, damages or liabilities to which the Company may become subject, under the Securities Act or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of such Underwriter), insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus, or any amendment or supplement thereto or any Issuer Free Writing Prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, any Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus in reliance upon and in conformity with written information furnished to the Company by the Representative with respect to such Underwriter specifically for use in the preparation thereof, and will reimburse the Company for any legal or other expenses reasonably incurred by the Company in connection with investigating or defending against any such loss, claim, damage, liability or action.
 
(c)           Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have to any indemnified party except to the extent such indemnifying party has been materially
 

 
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prejudiced by such failure. In case any such action shall be brought against any indemnified party, and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in, and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of the indemnifying party’s election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that if, in the sole judgment of the Underwriters, it is advisable for the Underwriters to be represented by separate counsel, the Underwriters shall have the right to employ a single counsel to represent the Underwriters in any claim in respect of which indemnity may be sought by the Underwriters under subsection (a) of this Section 6, in which event the reasonable fees and expenses of such separate counsel shall be borne by the indemnifying party or parties and reimbursed to the Underwriters as incurred (in accordance with the provisions of the second paragraph in subsection (a) above).
 
The indemnifying party under this Section 6 shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party against any loss, claim, damage, liability or expense by reason of such settlement or judgment.  Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by this Section 6, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement.  No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any indemnified party is or could have been a party and indemnity was or could have been sought hereunder by such indemnified party, unless such settlement, compromise or consent (a) includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such action, suit or proceeding and (b) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.
 
(d)           If  the  indemnification provided for in  this  Section 6 is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the respective Underwriter on the other from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the respective Underwriter on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received
 

 
23

 

 
by the Company on the one hand and the respective Underwriter on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the respective Underwriter, in each case as set forth in the table on the cover page of the Prospectus.  The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the respective Underwriter and the parties’ relevant intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission.  The Company and the respective Underwriter agree that it would not be just and equitable if contributions pursuant to this subsection (d) were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the first sentence of this subsection (d).  The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending against any action or claim which is the subject of this subsection (d).  Notwithstanding the provisions of this subsection (d), the respective Underwriter shall not be required to contribute any amount in excess of the amount by which the total price at which the Securities were offered to the public exceeds the amount of any damages that the respective Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
 
(e)           The obligations of the Company under this Section 6 shall be in addition to any liability which the Company may otherwise have and the benefits of such obligations shall extend, upon the same terms and conditions, to each person, if any, who controls the respective Underwriter within the meaning of the Securities Act; and the obligations of the respective Underwriter under this Section 6 shall be in addition to any liability that the respective Underwriter may otherwise have and the benefits of such obligations shall extend, upon the same terms and conditions, to each director of the Company (including any person who, with his consent, is named in the Registration Statement as about to become a director of the Company), to each officer of the Company who has signed the Registration Statement and to each person, if any, who controls the Company within the meaning of the Securities Act.
 
(f)           Each Underwriter confirms severally and not jointly and the Company acknowledges that there is no information concerning the Underwriters furnished in writing to the Company by the Representative specifically for inclusion in the Registration Statement, any Preliminary Prospectus, the Time of Sale Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus.
 
7.           REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY.  All representations, warranties, and agreements of the Company herein or in certificates delivered pursuant hereto, including but not limited to the agreements of the Underwriters and the Company contained in Section 6 hereof, shall remain operative and in full force and effect
 

 
24

 

regardless of any investigation made by or on behalf of the Underwriters or any controlling person thereof, or the Company or any of its officers, directors, or controlling persons, and shall survive delivery of, and payment for, the Securities to and by the Underwriters hereunder.
 
8.           TERMINATION OF THIS AGREEMENT.
 
(a)           If any Underwriter shall default in its obligation to purchase the Securities which it has agreed to purchase hereunder at the Closing Date or the Option Closing Date, the Representative may in its discretion arrange for it or another party or other parties to purchase such Securities on the terms contained herein.  If within thirty six hours after such default by any Underwriter the Representative does not arrange for the purchase of such Securities, then the Company shall be entitled to a further period of thirty six hours within which to procure another party or other parties satisfactory to the Representative to purchase such Securities on such terms.  In the event that, within the respective prescribed periods, the Representative notifies the Company that it has so arranged for the purchase of such Securities, or the Company notifies the Representative that it has so arranged for the purchase of such Securities, the Representative or the Company shall have the right to postpone such Closing Date or Option Closing Date for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus, or in any other documents or arrangements, and the Company agrees to file promptly any amendments or supplements to the Registration Statement or the Prospectus which in the opinion of the Representative may thereby be made necessary. The term “Underwriter” as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to this Agreement with respect to such Securities.
 
(b)           If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Underwriter or Underwriters by the Representative and the Company as provided in subsection (a) above, the aggregate number of such Securities which remains unpurchased does not exceed one-eleventh of the aggregate number of all the Securities to be purchased at such Closing Date or Option Closing Date, then the Company shall have the right to require each non-defaulting Underwriter to purchase the number of shares which such Underwriter agreed to purchase hereunder at such Closing Date or Option Closing Date and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the number of Securities which such Underwriter agreed to purchase hereunder) of the Securities of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default.
 
(c)           If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Underwriter or Underwriters by the Representative and the Company as provided in subsection (a) above, the aggregate number of such Securities which remains unpurchased exceeds one-eleventh of the aggregate number of all the Securities to be purchased at such Closing Date or Option Closing Date, or if the Company shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Securities of a defaulting Underwriter or Underwriters, then this Agreement (or, with respect to the Option Closing Date, the obligations of the Underwriters to purchase and of the Company to sell the Additional Shares) shall thereupon terminate, without liability on the part of any non-defaulting
 

 
25

 

 
Underwriter or the Company, except for the expenses to be borne by the Company as provided in Section 4(a)(vii) hereof and the indemnification and contribution agreements in Section 6 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default.
 
(d)           The Representative shall have the right to terminate this Agreement by giving notice to the Company as hereinafter specified at any time at or prior to the Closing Date, if (i) the Company shall have failed, refused or been unable, at or prior to the Closing Date, to perform any material agreement on its part to be performed hereunder, (ii) any condition of the Underwriters’ obligations hereunder is not fulfilled, (iii) trading in the Company’s Common Stock shall have been suspended by the Commission or the NASDAQ Global Market or trading in securities generally on the NASDAQ Global Market or the New York Stock Exchange shall have been suspended, (iv) minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required, on the NASDAQ Global Market or the New York Stock Exchange, by such Exchange or by order of the Commission or any other governmental authority having jurisdiction, (v) a banking moratorium shall have been declared by federal or state authorities, or (vi) there shall have occurred any attack on, outbreak or escalation of hostilities or act of terrorism involving the United States, any declaration by the United States of a national emergency or war, any change in financial markets, any substantial change or development involving a prospective substantial change in United States or international political, financial or economic conditions, or any other calamity or crisis that, in the Representative’s judgment, is material and adverse and makes it impractical or inadvisable to proceed with the completion of the sale of and payment for the Securities.  Any such termination shall be without liability of any party to any other party except that the provisions of Section 4(a)(vii) and Section 6 hereof shall at all times be effective and shall survive such termination.
 
(e)           If the Representative elects to terminate this Agreement as provided in this Section, the Company shall be notified promptly by the Representative by telephone, confirmed by letter.
 
9.           DEFAULT THE COMPANY.  If the Company shall fail at the Closing Date or at the Option Closing Date to sell and deliver the Securities which it is obligated to sell hereunder, then this Agreement shall terminate without any liability on the part of the Underwriters or, except as provided in Section 4(a)(vii), any non-defaulting party.  No action taken pursuant to this Section shall relieve the Company from liability, if any, in respect of such default.
 
10.           NOTICES.  Except as otherwise provided herein, all communications hereunder shall be in writing and, if to the Underwriters, shall be mailed, delivered or telecopied to B. Riley & Co., LLC, 11100 Santa Monica Boulevard, Suite 800, Los Angeles, California 90025, (310) 966-1448, Attention: Thomas Kelleher; if to the Company, shall be mailed, delivered or telecopied to it at 55 Madison Avenue, Suite 300, Morristown, New Jersey  07960, fax (973) 290-0081, Attention: Christopher J. McGurk; or in each case to such other address as the person to be notified may have requested in writing. Any party to this Agreement may change such address for notices by sending to the parties to this Agreement written notice of a new address for such purpose.
 

 
26

 

11.           PERSONS ENTITLED TO BENEFIT OF AGREEMENT.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns and the controlling persons, officers and directors referred to in Section 6.  Nothing in this Agreement is intended or shall be construed to give to any other person, firm or corporation any legal or equitable remedy or claim under or in respect of this Agreement or any provision herein contained.  The term “successors and assigns” as herein used shall not include any purchaser, as such purchaser, of any of the Securities from the Underwriters.
 
 
12.           ABSENCE OF FIDUCIARY RELATIONSHIP.  The Company acknowledges and agrees that: (a) the Underwriters have been retained solely to act as underwriters in connection with the sale of the Securities and that no fiduciary, advisory or agency relationship between the Company and the Underwriters has been created in respect of any of the transactions contemplated by this Agreement, irrespective of whether the Underwriters have advised or are advising the Company on other matters; (b) the price and other terms of the Securities set forth in this Agreement were established by the Company following discussions and arms-length negotiations with the Underwriters and the Company is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement; (c) it has been advised that the Underwriters and their affiliates are engaged in a broad range of transactions which may involve interests that differ from those of the Company and that the Underwriters have no obligation to disclose such interest and transactions to the Company by virtue of any fiduciary, advisory or agency relationship; and (d) it has been advised that the Underwriters are acting, in respect of the transactions contemplated by this Agreement, solely for the benefit of the Underwriters, and not on behalf of the Company.
 
13.           GOVERNING LAW.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York.
 
14.           COUNTERPARTS.  This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original and all such counterparts shall together constitute one and the same instrument.
 
[Signature Page Follows]
 

 
27

 


Please sign and return to the Company the enclosed duplicates of this letter whereupon this letter will become a binding agreement between the Company and the Underwriters in accordance with its terms.
 
Very truly yours,
 
CINEDIGM DIGITAL CINEMA CORP.
 
 
By:
/s/ Christopher J. McGurk
 
Name:         Christopher J. McGurk
Title:           Chief Executive Officer



Confirmed as of the date first above mentioned by the Underwriters.
 
B. RILEY & CO., LLC
 
 
By:
/s/ Bryant Riley
 
Name:         Bryant Riley
 
Title:           Chairman



On behalf of each of the Underwriters


 
28

 

Schedule I

Underwriters



Underwriter
Firm Shares
Additional Shares
B. Riley & Co., LLC
1
0
Merriman Capital, Inc.
3,257,852 1
325,786 2




 
1    In addition to the Firm Shares indicated, Merriman Capital, Inc. will also purchase hereunder an additional 313,576 Firm Shares otherwise to be purchased by B. Riley & Co., LLC under the Underwriting Agreement, dated April 19, 2012, between the Company and B. Riley & Co., LLC (the “ First Underwriting Agreement ”) and the amount of Firm Shares to be purchased by B. Riley & Co., LLC pursuant to the First Underwriting Agreement is reduced accordingly.
 
2    In addition to the Additional Shares indicated, Merriman Capital, Inc. may also purchase 31,357 Additional Shares hereunder otherwise subject to the option in the First Underwriting Agreement and the amount of Additional Shares that may be purchased by B. Riley & Co., LLC pursuant to the First Underwriting Agreement is reduced accordingly.

 
 

 

Schedule II

Time of Sale Disclosure Package

The total number of Firm Shares to be purchased under this Agreement and the First Underwriting Agreement is 7,142,857 at a purchase price of $1.316 per share. The price to the public is $1.40 per share of Common Stock.

The total number of Additional Shares that may be purchased under this Agreement and the First Underwriting Agreement is 714,286.

 
 

 

Schedule III

Issuer General Free Writing Prospectuses

None.

 
 

 

Schedule IV

Subsidiaries

 
1.
Access Digital Media, Inc., a Delaware corporation and a wholly-owned subsidiary of  the Company.

 
2.
Hollywood Software, Inc., d/b/a AccessIT Software, a California corporation and a wholly-owned subsidiary of the Company.

 
3.
FiberSat Global Services Inc., d/b/a AccessIT Satellite and Support Services, a Delaware corporation and a wholly-owned subsidiary of the Company.

 
4.
ADM Cinema Corporation d/b/a the Pavilion Theatre, a Delaware corporation and a wholly-owned subsidiary of the Company.

 
5.
Christie/AIX, Inc., a Delaware corporation and a wholly-owned subsidiary of Access Digital Media, Inc.

 
6.
Vistachiara Productions Inc., d/b/a The Bigger Picture, a Delaware corporation and a wholly-owned subsidiary of the Company.

 
7.
Access Digital Cinema Phase 2, Corp., a Delaware corporation and a wholly-owned subsidiary of the Company.

 
8.
Vistachiara Entertainment, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company.

 
9.
PLX Acquisition Corp, Inc., a Delaware corporation and a wholly-owned subsidiary of Hollywood Software, Inc.

 
10.
Access Digital Cinema Phase 2 B/AIX Corp., a Delaware corporation and a wholly-owned subsidiary of Access Digital Cinema Phase 2, Corp.
 
 
11.
Cinedigm Digital Funding I, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Christie/AIX, Inc.
 
 
12.
CDF2 Holdings, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Access Digital Cinema Phase 2 Corp.
 
 
13.
Cinedigm Digital Funding 2, LLC, a Delaware limited liability company and a wholly-owned subsidiary of CDF2 Holdings, LLC.

 
 

 

Schedule V

Form of Lockup Agreement

B. Riley & Co., LLC
11100 Santa Monica Boulevard
Suite 800
Los Angeles, CA 90025
 
April ___, 2012

Re:  Cinedigm Digital Cinema Corp. – Public Offering of Shares

Dear Sirs:

In order to induce the Underwriters (the “ Underwriters ”), for whom B. Riley & Co., LLC is acting as representative (the “ Representative ”), to enter into an underwriting agreement with Cinedigm Digital Cinema Corp., a Delaware corporation (the “ Company ”), with respect to the public offering (the “ Offering ”) of shares of the Company’s Class A Common Stock, par value $0.001 per share (“ Common Stock ”), the undersigned hereby agrees that for a period (the “ lock-up period ”) of ninety (90) days following the date of the final prospectus supplement filed by the Company with the Securities and Exchange Commission in connection with such Offering (the “ Prospectus Supplement ”), the undersigned will not, without the prior written consent of the Representative, directly or indirectly, (i) offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of, any shares of Common Stock or securities convertible into or exercisable or exchangeable for Common Stock (including, without limitation, shares of Common Stock or any such securities which may be deemed to be beneficially owned by the undersigned in accordance with the rules and regulations promulgated under the Securities Exchange Act of 1934, as the same may be amended or supplemented from time to time (such shares or securities, the “ Beneficially Owned Shares ”)), (ii) enter into any swap, hedge or other agreement or arrangement that transfers, in whole or in part, the economic risk of ownership of any Beneficially Owned Shares, Common Stock or securities convertible into or exercisable or exchangeable for Common Stock, or (iii) engage in any short selling of any Beneficially Owned Shares, Common Stock or securities convertible into or exercisable or exchangeable for Common Stock.  The foregoing sentence shall not apply to (a) transfers of any Beneficially Owned Shares, Common Stock or securities convertible into or exercisable or exchangeable for Common Stock as a bona fide gift, (b) in the case of a natural person, transfers of any Beneficially Owned Shares, Common Stock or securities convertible into or exercisable or exchangeable for Common Stock by will or intestate succession or to any trust or partnership for the direct or indirect benefit of the undersigned or any member of the immediate family of the undersigned or (c) the distribution of shares of Common Stock to limited partners in the ordinary course of business of a fund owned or controlled by the undersigned; provided that in the case of any transfer or distribution pursuant to clause (a) or (b), each donee shall agree to be bound by the terms of this Agreement.


 
33

 

For the purposes of the immediately preceding paragraph, “ immediate family ” shall mean spouse, domestic partner, lineal descendant (including adopted children), father, mother, brother or sister of the transferor.

If (i) the Company issues an earnings release or material news or a material event relating to the Company occurs during the last seventeen days of the lock-up period, or (ii) prior to the expiration of the lock-up period, the Company announces that it will release earnings results during the sixteen-day period beginning on the last day of the lock-up period, the restrictions imposed by this Agreement shall continue to apply until the expiration of the eighteen-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

In addition, the undersigned hereby waives, from the date hereof until the expiration of the ninety (90) day period following the date of the Prospectus Supplement, any and all rights, if any, to request or demand registration pursuant to the Securities Act of 1933, as amended, of any shares of Common Stock or securities convertible into or exercisable or exchangeable for Common Stock that are registered in the name of the undersigned or that are Beneficially Owned Shares.  In order to enable the aforesaid covenants to be enforced, the undersigned hereby consents to the placing of legends and/or stop transfer orders with the transfer agent of the Common Stock with respect to any shares of Common Stock, securities convertible into or exercisable or exchangeable for Common Stock or Beneficially Owned Shares.

If (i) the Company notifies the Representative in writing that it does not intend to proceed with the Offering, (ii) for any reason the Offering is terminated prior to the payment for and delivery of the Common Stock or (iii) the Offering shall not have been completed by May 31, 2012, then upon the occurrence of any such event, this Agreement shall immediately be terminated and the undersigned shall be released from its obligations hereunder.


[Signatory]
 
By:
   
     
Name:
   
     
Its:
   



 
34

 

Schedule VI

Directors and Executive Officers


1.
Christopher J. McGurk
2.
Adam M. Mizel
3.
Gary S. Loffredo
4.
Bob Fiorella
5.
Wayne L. Clevenger
6.
Matthew W. Finlay
7.
Martin B. O’Connor
8.
Peter C. Brown
9.
Edward A. Gilhuly
10.
Laura Nisonger Sims
11.
John B. Brownson


 
 

 

Schedule VII

Opinion of Kelley Drye & Warren LLP


1.
Each of the Corporation and the Subsidiaries is validly existing as a corporation in good standing under the laws of its state of organization.  Each of the Corporation and its Subsidiaries has full corporate power and corporate authority required to own or lease, as the case may be, its properties and conduct its business as described in the Registration Statement and in the Prospectus.  The Corporation is duly qualified to do business as a foreign entity and is in good standing under the laws of New Jersey and California.

2.
The capital stock of the Corporation conforms as to legal matters to the description thereof contained in the Prospectus under the caption “Description of Capital Stock.”  All of the issued and outstanding shares of the capital stock of the Corporation have been duly authorized and validly issued and are fully paid and nonassessable.  The Securities to be issued and sold by the Corporation have been duly authorized and, when issued, delivered and paid for in accordance with the terms of the Underwriting Agreements, will have been validly issued and will be fully paid and nonassessable.  Except as otherwise stated in the Registration Statement or in any of the exhibits attached thereto and documents incorporated by reference therein, and in the Prospectus, to our knowledge there are no preemptive rights or other rights to subscribe for or to purchase, or any restriction upon the voting or transfer of, any Securities pursuant to the Corporation’s Certificate of Incorporation, Bylaws or any agreement or other instrument known to us to which the Corporation is a party or by which the Corporation is bound.  Except as otherwise stated in the Registration Statement or in any of the exhibits attached thereto and documents incorporated by reference therein, and in the Prospectus, to our knowledge, neither the filing of the Registration Statement nor the offering or sale of the Securities as contemplated by the Underwriting Agreements gives rise to any rights for or relating to the registration of any shares of Common Stock or other securities of the Corporation, except for those rights that have been waived.

3.
Based on advice of the SEC, the Registration Statement was declared effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement has been issued and no proceeding for that purpose has been instituted or, to our  knowledge, threatened by the SEC.

4.
The descriptions in the Registration Statement, Preliminary Prospectus and Prospectus under the captions “Description of Common Stock”, “Plan of Distribution” and “Underwriting” and in the Registration Statement in Item 15, insofar as such statements purport to summarize legal matters, agreements or documents discussed therein, fairly summarize the matters referred to therein in all material respects, subject to the qualifications and assumptions stated therein.

5.
To our knowledge and other than as set forth in the Registration Statement or in any of the exhibits attached thereto and documents incorporated by reference therein, and in the

 
 

 

Preliminary Prospectus and the Prospectus, there are (a) no statutes or regulations currently in effect required to be disclosed therein, or (b) legal or governmental proceedings pending or threatened against the Corporation, required to be disclosed therein.

6.
To our knowledge, there is no indenture, contract, lease, mortgage, deed of trust, note agreement, loan or other agreement or instrument to which the Corporation is a party of a character required to be filed as an exhibit to the Registration Statement or to the filings incorporated by reference in the Prospectus as set forth therein under the heading “Incorporation of Certain Documents by Reference”, which is not filed as required by the Securities Act or the Exchange Act and the rules and regulations thereunder.

7.
The Corporation has the corporate power and corporate authority to enter into the Underwriting Agreements, and the Underwriting Agreements have been duly authorized, executed and delivered by the Corporation.

8.
The execution, delivery and performance of the Underwriting Agreements by the Corporation and the consummation of the transactions therein contemplated by the Corporation will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any statute, rule or regulation, agreement or instrument in each case known to us to which the Corporation is a party or by which it is bound or to which any of its property is subject, the Corporation’s Certificate of Incorporation or Bylaws, or any order or decree known to us of any court or governmental agency or body having jurisdiction over the Corporation or any of its properties.

9.
No consent, approval, authorization or order of, or filing with, any court or governmental agency or body is required to be obtained or made by the Corporation or its Subsidiaries for the execution, delivery and performance by the Corporation of the Underwriting Agreements or for the consummation of the transactions contemplated by the Underwriting Agreements including the issuance or sale of the Securities by the Corporation, except (i) such as have been obtained under the Securities Act and (ii) such as may be required under state blue sky laws or the bylaws, rules and regulations of FINRA.

10.
The Registration Statement, the Preliminary Prospectus and the Prospectus, and any amendment thereof or supplement thereto, comply, and as of their respective effective or issue dates (including, without limitation, the Time of Sale) complied, as to form in all material respects with the requirements of the Securities Act and the Rules and Regulations, and to our knowledge, the conditions for use of Form S-3, set forth in the General Instructions thereto, have been satisfied.

11.
  Each document filed pursuant to the Exchange Act (other than the financial statements and supporting schedules included therein, as to which no opinion is rendered) which is incorporated or deemed to be incorporated by reference in the Prospectus complied when so filed as to form in all material respects with the Exchange Act.

12.
The Corporation is not, and, after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Preliminary Prospectus and the

 
37

 

Prospectus, will not be an “investment company” as defined in the Investment Company Act.
 

38
CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
 
EXHIBIT 2.1
 


 


 
 

 
 
STOCK PURCHASE AGREEMENT
 
 
AMONG
 
 
CINEDIGM DIGITAL CINEMA CORP.
 
 
AND
 
 
STEVE SAVAGE, SUSAN MARGOLIN AND AIMEE CONNOLLY,
 
 
SHAREHOLDERS
 
 
April 19, 2012
 
 

 
 



 
 

 
CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

TABLE OF CONTENTS
 
   
Page
 
Section 1
Definitions
1
Section 2
Purchase and Sale of Target Shares
8
 
Basic Transaction
8
 
Purchase Price
8
 
Closing
9
 
2.4
Deliveries at Closing.
9
 
2.5
Post-Closing Working Capital Adjustment.
10
 
2.6
Earn Out Price.
11
 
2.7
Release of Cash Escrow Amount.
15
 
No Debt
15
 
2.9
Restrictions on Stock Purchase Price Common Stock; Restricted Stock Legend.
15
 
Shareholders Agreement
16
 
Payment of Broker’s Fees
16
 
Target 2012 Employee Bonus Payments
16
Section 3
Representations and Warranties Concerning Transaction
16
 
Sellers’ Representations and Warranties
16
 
Buyer’s Representations and Warranties
17
 
Representations and Warranties Concerning Target
18
 
Organization, Qualification, and Corporate Power
18
 
Capitalization
18
 
Non-contravention
19
 
Brokers’ Fees
19
 
Title to Assets
19
 
No Subsidiaries, Voting Trust or Phantom Stock
19
 
Financial Statements
19
 
Events Subsequent to Most Recent Fiscal Year End
20
 
Undisclosed Liabilities
22
 
Legal Compliance
22
 
4.11
Tax Matters.
22
 
4.12
Real Property.
24
 
4.13
Intellectual Property.
25
 
Tangible Assets
29
 
Contracts
29
 
Accounts Receivable
30
 
Powers of Attorney
30
 
Insurance
30
 
Litigation
31
 
4.20
Employees .
31
 
4.21
Employee Benefits .
32
 
Guarantees
34
 
4.23
Environmental Laws .
34

 
i

 
CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.


 
TABLE OF CONTENTS
   
Page
 
 
Certain Business Relationships with Target
34
 
Product Warranty
35
 
Product Liability
35
 
Disclosure
35
 
Data Room Materials
35
 
Closing Working Capital Calculation
35
 
Post-Closing Covenants
35
 
General
35
 
Litigation Support
36
 
Continuing Business
36
 
Confidentiality
36
 
Covenant Not to Compete
36
Section 6
Remedies for Breaches of This Agreement
37
 
6.1
Survival of Representations and Warranties .
37
 
6.2
Indemnification Provisions for Buyer’s Benefit .
37
 
Indemnification Provisions for Sellers’ Benefit
38
 
6.4
Matters Involving Third Parties .
39
 
Other Indemnification Provisions
40
 
Special Indemnifications
40
 
Exclusive Remedy
40
 
Tax Matters
40
 
Tax Indemnification
40
 
Straddle Period
41
 
Responsibility for Filing Tax Returns
41
 
7.4
Cooperation on Tax Matters .
41
 
Tax-Sharing Agreements
42
 
Certain Taxes and Fees
42
 
Tax Refunds
42
Section 8
Registration Rights
42
 
Registration of Shares
42
 
Registration Procedures
43
 
Information Supplied
44
 
8.4
Registration Expenses.
44
 
Restrictions on Disposition
44
 
8.6
Indemnification.
45
Section 9
Miscellaneous
47
 
9.1
Nature of Sellers’ Obligations .
47
 
Press Release
47
 
No Third-Party Beneficiaries
47
 
Entire Agreement
47

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.


 
TABLE OF CONTENTS
   
Page
 
 
Succession and Assignment
47
 
Counterparts
47
 
Headings
48
 
Notices
48
 
Governing Law; Mediation; Arbitration
48
 
Amendments and Waivers
49
 
Severability
49
 
Expenses
49
 
Construction
49
 
Incorporation of Exhibits, Annexes, and Schedules
50
 
Specific Performance
50
 
Governing Language
50
 
Tax Disclosure Authorization
50

 
EXHIBIT A – Form of Employment Agreement – Savage and Margolin
EXHIBIT B – Form of Employment Agreement – Connolly
EXHIBIT C – Historical Financial Statements
EXHIBIT D – Form of Opinion of Sellers’ Counsel
EXHIBIT E – Form of Opinion of Buyer’s Counsel
EXHIBIT F – Indemnification Escrow Agreement
EXHIBIT G -- Annual Plans
EXHIBIT H – Earnout Methodology
EXHIBIT I – Closing Working Capital Definitions
EXHIBIT J – Closing Working Capital Estimate
ANNEX I - Exceptions to Seller’s Representations and Warranties Concerning Transaction
ANNEX II - Exceptions to Buyer’s Representations and Warranties Concerning Transaction
Disclosure Schedule
 
 
 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

STOCK PURCHASE AGREEMENT
 
This Stock Purchase Agreement (this “ Agreement ”) is entered into on April 19, 2012, by and among Cinedigm Digital Cinema Corp., a Delaware corporation (“ Buyer ”), and Steve Savage (“ Savage ”), Susan Margolin (“ Margolin ”) and Aimee Connolly (“ Connolly ”) (each a “ Seller ” and together, “ Sellers ”). Buyer and Sellers are referred to collectively herein as the “ Parties .”
 
Sellers in the aggregate own all of the outstanding capital stock of New Video Group, Inc., a New York corporation (“ Target ” or the “ Company ”).
 
This Agreement contemplates a transaction in which Buyer will purchase from Sellers, and Sellers will sell to Buyer, all of the outstanding capital stock of Target in return for cash, Buyer Common Stock and the right to the Earn Out Price (as defined herein).
 
Now, therefore, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows.
 
Section 1                Definitions .
 
Accredited Investor ” has the meaning set forth in Regulation D promulgated under the Securities Act.
 
Actual Investment ” means, for any Fiscal Year, the sum of cash advance payments for content acquisitions and capital expenditures of the Content Business.
 
 “ Adverse Consequences ” means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and fees, including court costs and reasonable attorneys’ fees and expenses.
 
Adjusted EBITDA ” means, for any Fiscal Year,
 
(i)           EBITDA for such Fiscal Year minus
 
(ii)          the product of (x) Excess Investment for such Fiscal Year multiplied by (y) the Capital Charge multiplied by (z) 50%, plus
 
(iii)         with respect to Fiscal Year 2014 and Fiscal Year 2015 only, the product of (x) Investment Savings multiplied by (y) the Capital Charge multiplied by (z) 50%.
 
Affiliate ” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act.
 
Affiliated Group ” means any affiliated group within the meaning of Code Section 1504(a) or any similar group defined under a similar provision of state, local, or non-U.S. law.
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

Agreement ” has the meaning set forth in the preface above.
 
Annual Plan ” means the 2013, 2014 and 2015 annual plans of Target the Content Business attached at Exhibit G .
 
Basis ” means any past or present fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction that forms or could form the basis for any specified consequence.
 
Buyer ” has the meaning set forth in the preface above.
 
Buyer Change of Control ” means the occurrence of any of the following events:  (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the properties or assets of the Buyer to any person or group of related persons; (ii) the complete liquidation or dissolution of the Buyer; (iii) any person or group of related persons shall become the direct beneficial owner (within the meaning of Section 13(d) of the Securities Exchange Act), of more than 50% of the aggregate outstanding shares of Common Stock of the Buyer; or (iv) a merger or consolidation of the Buyer with another entity in which holders of shares of Common Stock immediately prior to the consummation of the transaction hold, immediately following the consummation of the transaction, less than 50% of the common equity interests in the surviving company in such transaction.
 
Buyer Indemnified Parties ” has the meaning set forth in Section 8.6.
 
Buyer SEC Reports ” has the meaning set forth in Section 3.2.
 
Capital Charge ” means an annual rate of 15%.
 
Cash Escrow Amount ” shall mean $1,250,000 of the Cash Purchase Price.
 
Cash Purchase Price ” has the meaning set forth in Section 2.2.
 
Cause ” means a termination of a Seller’s employment with the Buyer pursuant to Section 6(a) of the Employment Agreement between Buyer and such Seller as in effect immediately following the Closing.
 
Claims ” has the meaning set forth in Section 8.6.
 
Closing ” has the meaning set forth in Section 2.3 below.
 
Closing Date ” has the meaning set forth in Section 2.3 below.
 
Cash Purchase Price ” has the meaning set forth in Section 2.2 below.
 
Closing Working Capital ” means, as of immediately prior to Closing, the difference between (i) the current assets of Target set forth on Schedule J, hereto and (ii) the current liabilities of Target set forth on Schedule J hereto, in each case calculated as set forth on Schedule J hereto.
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

COBRA ” means the requirements of Part 6 of Subtitle B of Title I of ERISA and Code Section 4980B and of any similar state law.
 
Code ” means the Internal Revenue Code of 1986, as amended.
 
Common Stock ” means Class A Common Stock, par value $0.001 per share of Buyer.
 
Company ” has the meaning set forth in the preface above.
 
Company Real Properties ” has the meaning set forth in Section 4.12.
 
Confidential Information ” means any information concerning the businesses and affairs of the Target that is not already available to the public.
 
Connolly ” has the meaning set forth in the preface above.
 
Content Business ” means the Buyer’s content business unit as constituted immediately after the Closing, which shall be comprised of the Target’s business and Buyer’s content business as in existence immediately after the Closing.  The Content Business shall also comprise those additional activities set forth on Exhibit F hereto.
 
Disclosure Schedule ” has the meaning set forth in Section 4 below.
 
Distribution Rights ” has the meaning set forth in Section 4.13.
 
Earn Out Price ” has the meaning set forth in Section 2.6.
 
Earn Out Target ” has the meaning set forth in Section 2.6.
 
EBITDA ” means net income of the Content Business for a subject period calculated in accordance with GAAP as GAAP is defined at any subject point in time plus all amounts deducted in the computation of the net income of the Content Business on account of (without duplication) (a) net interest expense, (b) indirect corporate overhead charges in excess of the indirect overhead charges set forth in the subject Annual Plan, (c) depreciation and amortization expense related solely to items classified as Property and Equipment under GAAP (and for the avoidance of doubt, excluding any amortization expense related to amortization of advances and/or minimum guarantees), (d) severance expenses, (e) Taxes, and (f) non-cash compensation expenses.
 
Employee Benefit Plan ” means any “employee benefit plan” (as such term is defined in ERISA Section 3(3)) and any other material employee benefit plan, program or arrangement of any kind in each case, that Target maintains, to which Target contributes or has any obligation to contribute on behalf of any current or former employee, officer or director, or with respect to which Target has any Liability.
 
Employee Pension Benefit Plan ” has the meaning set forth in ERISA Section 3(2).
 
Employee Welfare Benefit Plan ” has the meaning set forth in ERISA Section 3(1).
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

Employment Agreements ” has the meaning set forth in Section 2.4.
 
Environmental Laws ” means, whenever in effect, all federal, state, local, and non-U.S. statutes, regulations, ordinances, and other provisions having the force or effect of law, all judicial and administrative orders and determinations, and all common law concerning pollution or protection of the environment, including, without limitation, all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, exposure to, or cleanup of any hazardous materials, substances, wastes, chemical substances, mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise, odor, mold, or radiation.
 
ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.
 
ERISA Affiliate ” means each entity that is treated as a single employer with Target for purposes of Code Section 414(b), (c), (m) or (o).
 
Excess Investment ” means, for any Fiscal Year, the excess, if any, of Actual Investment for such Fiscal Year over the Projected Investment for such Fiscal Year.
 
Fiduciary ” has the meaning set forth in ERISA Section 3(21).
 
Financial Statements ” has the meaning set forth in Section 4.7 below.
 
GAAP ” means United States generally accepted accounting principles as in effect from time to time, consistently applied.
 
Good Reason ” has the meaning set forth in Section 2.6(e).
 
Indemnification Escrow Agreement ” means the escrow agreement by and among Sellers, Buyer and the Escrow Agent in substantially the form attached hereto as Exhibit E .
 
Indemnified Buyers ” has the meaning set forth in Section 6.2.
 
Indemnified Sellers ” has the meaning set forth in Section 6.3.
 
Indemnified Party ” has the meaning set forth in Section 6.4.
 
Indemnifying Party ” has the meaning set forth in Section 6.4 below.
 
Indemnity Cap ” has the meaning set forth in Section 6.2.
 
Independent Accountants ” has the meaning set forth in Section 2.5.
 
Intellectual Property ” means all of the following in any jurisdiction throughout the world: (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, divisions, continuations-in-part, revisions,
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade names, corporate names, Internet domain names, other source identifiers, and rights in telephone numbers, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) all trade secrets and confidential, technical, and business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all computer software (including source code, executable code, data, databases, and related documentation), (g) all advertising and promotional materials, (h) all other proprietary rights, and (i) all copies and tangible embodiments thereof (in whatever form or medium).
 
Investment Savings ” means, for any Fiscal Year, the excess, if any of Projected Investment for such Fiscal Year over the Actual Investment for such Fiscal Year.
 
 “ Knowledge ” means actual knowledge after reasonable investigation of Savage, Margolin and Connolly.
 
Lease ” has the meaning set forth in Section 4.12.
 
Liability ” means any liability or obligation of whatever kind or nature (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.
 
Lien ” means any mortgage, pledge, lien, encumbrance, charge, or other security interest.
 
Limited Survival Representations ” has the meaning set forth in Section 6.1.
 
Margolin ” has the meaning set forth in the preface above.
 
Material Adverse Effect ” or “ Material Adverse Change ” means any effect or change that would be (or could reasonably be expected to be) materially adverse to (i) the business, assets, condition (financial or otherwise), operating results, operations of Target, or (ii) Sellers’ ability to consummate the transactions contemplated hereby, except to the extent resulting from (a) changes in general local, domestic, foreign, or international economic conditions, (b) changes affecting generally the industries or markets in which Target operates, (c) acts of war, sabotage or terrorism, military acts or the escalation thereof, (d) any change in applicable laws or accounting rules or principles, including changes in GAAP, (e) any other action required by this Agreement, or (f) the announcement of the transactions contemplated by this Agreement; provided that such event, change or action does not affect Target in a substantially disproportionate manner.
 
Minimum EBITDA Requirement ” has the meaning set forth in Section 2.6 below.
 

 
5

 
CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

Most Recent Balance Sheet ” means the balance sheet contained within the Most Recent Financial Statements.
 
Most Recent Financial Statements ” has the meaning set forth in Section 4.7 below.
 
Most Recent Fiscal Month End ” has the meaning set forth in Section 4.7 below.
 
Most Recent Fiscal Year End ” has the meaning set forth in Section 4.7 below.
 
Motion Picture ” means motion pictures of every kind and character whatsoever, including all present and future technological developments, regardless of the process where pictures, images, visual and aural representations are recorded or otherwise preserved for projection, reproduction, exhibition, or transmission by any means or media now known or hereafter devised in such manner as to appear to be in motion, including computer generated pictures and graphics.  For the avoidance of doubt “Motion Picture” includes all audio-visual works made for theatrical, video, television, internet, digital device (including mobile or smart phones), or any other means of exploitation now known or hereafter devised that are used for purposes of viewing such audio-visual works, including all merchandising and licensing rights based thereon (including video games).
 
Multiemployer Plan ” has the meaning set forth in ERISA Section 3(37).
 
Objection Notice ” has the meaning set forth in Section 2.5.
 
Ordinary Course of Business ” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).
 
Party ” or “ Parties ” has the meaning set forth in the preface above.
 
Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other business entity, or a governmental entity (or any department, agency, or political subdivision thereof).
 
Prohibited Transaction ” has the meaning set forth in ERISA Section 406 and Code Section 4975.
 
Project ” has the meaning set forth in Section 2.6(c).
 
Projected Investment ” means *** for Fiscal Year 2013, *** for Fiscal Year 2014 and *** for Fiscal Year 2015 as shown on the Annual Plan set forth at Exhibit G .
 
Pre-Closing Tax Period ” has the meaning set forth in Section 7.1.
 
Projected EBITDA ” means *** for Fiscal Year 2013, *** for Fiscal Year 2014 and *** for Fiscal Year 2015 as shown on the Annual Plan set forth at Exhibit G .
 
___________________________
***     CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS.

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

Purchase Price ” has the meaning set forth in Section 2.2 below.
 
Registration Expenses ” has the meaning set forth in Section 8.4.
 
Reportable Event ” has the meaning set forth in ERISA Section 4043.
 
Required Working Capital ” has the meaning set forth in Section 2.5.
 
Savage ” has the meaning set forth in the preface above.
 
SEC ” means the Securities and Exchange Commission.
 
Securities Act ” means the Securities Act of 1933, as amended.
 
Securities Exchange Act ” means the Securities Exchange Act of 1934, as amended.
 
Seller ” has the meaning set forth in the preface above.
 
Shelf Registration Statement ” has the meaning set forth in Section 8.1.
 
Stock Purchase Price ” has the meaning set forth in Section 2.2.
 
Straddle Period ” has the meaning set forth in Section 7.2.
 
Subsidiary ” or “ Subsidiaries ” means, with respect to any Person, any corporation, limited liability company, partnership, association, or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof or (ii) if a limited liability company, partnership, association, or other business entity (other than a corporation), a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof and for this purpose, a Person or Persons own a majority ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be or control any managing director or general partner of such business entity (other than a corporation). The term “Subsidiary” shall include all Subsidiaries of such Subsidiary.
 
Survival Period ” has the meaning set forth in Section 6.1.
 
Target ” has the meaning set forth in the preface above.
 
Target Motion Pictures ” has the meaning set forth in Section 4.13.
 
Target Share ” means any share of the common stock, par value $1.00 per share, of Target.
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

Tax ” or “ Taxes ” means any federal, state, local, or non-U.S. income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not and including any obligations to indemnify or otherwise assume or succeed to the Tax liability of any other Person.
 
Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
 
Termination Earn Out Election ” has the meaning set forth in Section 2.6.
 
Third-Party Claim ” has the meaning set forth in Section 6.4.
 
VWAP ” means, as of a particular determination date, the average volume weighted Closing Prices of the Common Stock for the ten (10) trading day period immediately preceding such determination date, after removal of the highest and lowest trading days.  For purposes of this definition: (a) “ Closing Price ” means on any particular date the last sale price per share of the Common Stock on such date on the NASDAQ or another registered national stock exchange on which the Common Stock is then listed, or if there is no such price on such date, then the closing bid price or last sale price, as applicable, on such exchange or quotation system on the date nearest preceding such date; provided that all determinations of the Closing Price shall be appropriately adjusted for any stock dividends, stock splits or other similar transactions during such period and (b) “ trading day ” means day on which the Common Stock is traded on the NASDAQ or another registered national stock exchange on which the Common Stock is then listed.
 
WARN Act ” has the meaning set forth in Section 4.8 below.
 
2013 Target ” has the meaning set forth in Section 2.6.
 
2014 Target ” has the meaning set forth in Section 2.6.
 
2015 Target ” has the meaning set forth in  2.6.
 
Section 2                Purchase and Sale of Target Shares .
 
2.1           Basic Transaction .  On and subject to the terms and conditions of this Agreement, Buyer agrees to purchase from each Seller, and each Seller agrees to sell to Buyer, all of his or her or its Target Shares for the consideration specified below in this Section 2.
 
2.2           Purchase Price .  Buyer agrees to pay to Sellers at the Closing (i) $10,000,000 (Ten Million Dollars) (the “Cash Purchase Price”) in cash payable by wire transfer of immediately available funds to an account or accounts specified by the Sellers  in writing at least two Business Days prior to the Closing or delivery of other immediately available
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

funds, and (ii) 2,525,417 shares of Common Stock of Buyer (the “Stock Purchase Price” and together with the Cash Purchase Price, the “Purchase Price”); provided, however, that the Cash Escrow Amount shall be delivered to the Escrow Agent for deposit into the Indemnification Escrow Fund.  The Cash Escrow Amount plus any interest accrued thereon will be available to satisfy any amounts owed by Sellers to Buyer under this Agreement in accordance with the terms of the Indemnification Escrow Agreement attached hereto as Exhibit F .  The Purchase Price shall be allocated between Sellers in proportion to their respective holdings of Target Shares as set forth in Section 4.2 of the Disclosure Schedule.
 
2.3           Closing .  The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Glaser Weil Fink Jacobs Howard Avchen & Shapiro, LLP, at 10250 Constellation Blvd., in Los Angeles, California 90067, or such other place as Sellers and Buyer shall mutually agree, on Friday, April 20, 2012 or as soon as practicable thereafter (the “Closing Date”).
 
2.4           Deliveries at Closing .
 
(a)          At the Closing, Sellers will deliver to Buyer the following:
 
(i)          Employment Agreements executed by Savage and Margolin in the form of Exhibit A and Connolly in the form of Exhibit B (the “ Employment Agreements ”) and by Target.
 
(ii)          the Indemnification Escrow Agreement executed by the Sellers.
 
(iii)          Stock certificates representing all of the outstanding shares of Target stock, duly endorsed for transfer to Buyer.
 
(iv)          Evidence satisfactory to Buyer of the payment of all debt and debt-like instruments of Target and the termination of all Liens, including without limitation UCC statements.
 
(v)          Evidence satisfactory to Buyer that the agreement dated as of January 1, 1993 by and among Savage, Margolin and Target has been terminated and that Sellers and Target have all waived any and all rights and claims thereunder.
 
(vi)          Opinion of Proskauer Rose LLP in the form of Exhibit D hereto.
 
(vii)          Resolutions of the Board of Directors of Target: (A) ratifying the past actions of the Board of Directors; and (B) accepting an affidavit of lost share certificate from Savage and issuing a replacement share certificate to him, in each case certified in a Secretary’s Certificate of the Target’s Secretary.
 
(viii)          Consents to the transactions contemplated by this Agreement executed by the following parties to agreements with the Target under and pursuant to such agreements: (A) Scholastic Entertainment Inc. pursuant to (1) that certain agreement
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

dated as of October 1, 2011 in connection with “Stellaluna”; (2) that certain letter agreement dated as of June 27, 2002 in connection with “Scholastic Storybook Treasures”; (3) that certain agreement dated as of January 1, 2012 in connection with “The Magic School Bus,” in each case as amended; (B) 902 Associates, Target’s landlord pursuant to its office Lease; and (C) A&E Home Video Corp. pursuant to that certain agreement with the Target dated December 22, 2003, as amended.
 
(ix)          Articles of Incorporation and Bylaws of the Target, certified by the Secretary of Target.
 
(b)          At the Closing, Buyer will deliver to Sellers the following:
 
(i)          $8,750,000 in cash.
 
(ii)          Undertaking of Buyer to deliver to Sellers, as promptly as practicable after the Closing Date, certificates representing the Stock Purchase Price Common Stock.
 
(iii)          Indemnification Escrow Agreement executed by the Buyer.
 
(iv)          Resolutions of the Board of Directors of Buyer approving this Agreement, the other agreements contemplated hereby and the transactions contemplated hereby and thereby certified in a Secretary’s Certificate of the Buyer’s Secretary.
 
(v)          Opinion of Kelley, Drye & Warren in the form of Exhibit E hereto.
 
(c)          At the Closing, Buyer will deliver the Cash Escrow Amount to the Escrow Agent to be held in accordance with the Indemnification Escrow Agreement and to be released to Seller in accordance with the Indemnification Escrow Agreement and Section 2.7 of this Agreement.
 
2.5           Post-Closing Working Capital Adjustment .
 
(a)          The target amount of working capital of Target at Closing is $1,441,000 (the “ Required Working Capital ”).  Buyer shall determine the amount of the Closing Working Capital by August 15, 2012 and shall notify Sellers of such determination and the basis for such determination, including the calculations used to arrive at such amounts.  Buyer shall provide Sellers and their representatives reasonable access to all relevant working papers and other information supporting such calculation.  If within sixty (60) days following delivery of such notification, Sellers have not given Buyer written notice of  their objection (“ Objection Notice ”) to the Closing Working Capital amount (which notice shall state the basis of Sellers’ objection), then the Closing Working Capital calculated by Buyer shall be final, binding and conclusive on the parties.
 
(b)          If Sellers duly give Buyer such Objection Notice, and if Sellers and Buyer fail to resolve the issues outstanding with respect to the calculation of the Closing Working Capital within thirty (30) days of Buyer’s receipt of Sellers’s Objection Notice, Sellers
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

and Buyer shall submit the issues remaining in dispute to a mutually agreed-upon   independent public accountant (the “ Independent Accountants ”) for resolution.
 
(c)          If issues are submitted to the Independent Accountants for resolution, (i) Sellers and Buyer shall furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Sellers and Buyer within sixty (60) days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties and shall be used in the calculation of the Closing Working Capital; and (iii) the losing party will bear the fees and costs of the Independent Accountants for such determination.
 
(d)          Within five (5) business days of the Closing Working Capital becoming final, binding and conclusive on the parties: (i) if the Closing Working Capital is more than the Required Working Capital, the difference shall be paid by Buyer to Sellers via wire transfer to an account or accounts specified by Sellers; or (ii) if the Closing Working Capital is less than the Required Working Capital, the difference shall be paid by Sellers to Buyer via wire transfer to an account specified by Buyer.  Buyer shall have the right to remove from the Escrow Account an amount equal to the amount in cash owed by Sellers to make good such deficit in the event Sellers have failed to pay such amount within thirty (30) days of the date the Closing Working Capital becomes final, binding and conclusive on the parties, and (i) such amount shall not be considered to be an indemnification payment made by Sellers for any purpose and (ii) Sellers shall replenish the Escrow Account with an amount of cash equal to such amount within five Business Days.
 
2.6           Earn Out Price .
 
(a)           Earn Out Price Targets .  Sellers shall have the right to receive up to $6,000,000 (Six Million Dollars) of additional Purchase Price consideration, (the “ Earn Out Price ”), payable to Sellers in proportion to their respective holding of the Target Shares, in cash or Common Stock at Buyer’s option, provided that payment in Common Stock may only be made by Buyer if, at the time of such payment such Common Stock is listed on the NASDAQ or another registered national stock exchange; provided further , however, that the number of shares of Common Stock issued in payment of any Earn Out Price due, together with the Stock Purchase Price Common Stock, cannot exceed 7,523,031 shares of Common Stock in the aggregate unless and until the Buyer has obtained the approval of its stockholders for the issuance of a greater number of shares of Common Stock in connection herewith; provided, however, that in such event, Buyer shall pay in cash to the extent it is not able to promptly issue such Common Stock.  Payment in Common Stock, if permitted, shall be valued at the VWAP at the date of payment.  Payment of the Earn Out Price shall be made not later than 90 days following the end of the applicable Fiscal Year of Buyer.  The Earn Out shall be payable pursuant to the terms of this Agreement for Content Business financial performance against the Projected EBITDA set forth in an agreed upon annual plan for the Fiscal Years ending March 31, 2013, March 31, 2014 and March 31, 2015 set forth at Exhibit G (each an “ Annual Plan ”);
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

provided , that to the extent the definition of EBITDA shall be affected by changes in GAAP, corresponding changes in the Annual Plan shall be made in good faith by the Parties to the subject Annual Plan.  Maximum Earn Out Price payments shall be $1 million in respect of Fiscal Year 2013 (the “ 2013 Target ”), $2 million in respect of Fiscal Year 2014 (the “ 2014 Target ”) and  $3 million in respect of Fiscal Year 2015 (the “ 2015 Target ” and together with the 2013 Target and 2014 Target, each an  “ Earn Out Target ”).
 
(b)           Earn Out Price Thresholds .  Sellers’ right to receive payment of any portion of the Earn Out Price for a Fiscal Year shall be subject to the Content Business earning EBITDA for such Fiscal Year of at least 90% of the Projected EBITDA for such Fiscal Year (“ Minimum EBITDA Requirement ”).  If the Minimum EBITDA Requirement has been met, the amount of the Earn Out Price paid for any Fiscal Year shall be calculated as follows:
 
Adjusted EBITDA of 90% of Projected EBITDA results in a payment of 50% of the Earn Out Target for such Fiscal Year;
 
Adjusted EBITDA of 100% of Projected EBITDA results in a payment of 75% of the Earn Out Target for such Fiscal Year;
 
Adjusted EBITDA of 110% of Projected EBITDA results in a payment of 87.5% of the Earn Out Target for such Fiscal Year;
 
Adjusted EBITDA of 120% of Projected EBITDA results in a payment of 100% of the Earn Out Target for such Fiscal Year.
 
Adjusted EBITDA percentages between the stated percentages (i.e., 94%, 102%, etc.) shall be calculated in the corresponding range between 50% of Earn Out Target and 100% of Earn Out Target, with 100% of Earn Out Target as the maximum payment.  Attached hereto as Exhibit H is a spreadsheet setting forth the method of calculating the percentage of Earn Out Target payable to Sellers.
 
(c)           Sellers’ Opt-Out Regarding Content Business Projects .  For Fiscal Years 2013, 2014 and 2015, Buyer shall establish and maintain a “greenlight” committee tasked with approving Motion Picture distribution projects of the Content Business (each, a “ Project ”).  Sellers shall have the right to designate Savage and Margolin as members of the greenlight committee, who acting unanimously shall have a veto right over individual Projects, which veto may be overridden solely by the CEO of the Buyer.  The Sellers acting unanimously through their greenlight committee members, may elect to exclude the financial results and costs of a Project in the Earn Out Price calculation for an applicable Fiscal Year or Fiscal Years if (i) the P&A and advance budget for the Project is in excess of *** and the Seller member’s veto is overridden by the CEO of Buyer or (ii) the P&A and advance budget for the Project is in excess of *** million.
 
(d)           Earn Out Price Upon Buyer Change of Control .  Following a Buyer Change of Control closing in Fiscal Year 2013 that values the equity of Buyer at *** million or more, a Buyer Change of Control closing in Fiscal Year 2014 that values the equity of Buyer at *** million or more, or a Buyer Change of Control closing in Fiscal Year 2015 that
 
___________________________
***     CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS.

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

values the equity of Buyer at *** million or more, Sellers will be deemed to have earned (A) if the closing occurs in the Fiscal Year 2013, the greater of (i) *** million or (ii) the amount (up to *** million) implied by the then-current percentage of the Earn Out Target actually achieved by the Content Business in Fiscal Year 2013, which shall be the deemed percentage of Earn Out Target as if achieved for Fiscal Year 2014 and Fiscal Year 2015 as well (and with no further payment due or made for Fiscal Years 2014 or 2015), (B) if the closing occurs in the Fiscal Year 2014, the greater of (i) *** million or (ii) the amount (up to *** million) implied by the then-current percentage of the Earn Out Target actually achieved by the Content Business in Fiscal Year 2014, which shall be the deemed percentage of Earn Out Target as if achieved for Fiscal Year 2015 as well (and no further payment shall be due or made for Fiscal Year 2015), or (C) if the Closing occurs in Fiscal Year 2015, the amount (up to *** million) implied by the then-current percentage of the Earn Out Target actually achieved by the Content Business in Fiscal Year 2015 (and with no further payment due or made for Fiscal Year 2015); provided , that the dollar value of any equity issued by Buyer after the Closing shall be added to and any reduction of Buyer’s equity value due to dividends and equity repurchases after the Closing shall be subtracted from the threshold equity vales of the Buyer in the calculation of the equity value of Buyer for purposes of this Section 2.6.  In addition, if a Buyer Change of Control should close within 90 days of the Closing Date, Sellers shall be deemed to have earned ***.  In such events, the relevant portion of the Earn Out Price shall be paid in the same form of consideration paid by the purchaser of Buyer within 10 Business Days and the provisions of this Section 2.6 shall be of no further force and effect.
 
(e)           Earn Out Price Upon Termination Without Cause or for Good Reason .  In the event any Seller is terminated without Cause or terminates his or her Employment Agreement for Good Reason (each term as defined in his or her respective Employment Agreement), the following provisions shall apply:
 
(i)          If such termination occurs in Fiscal Year 2013, actual performance of the Content Business against the Annual Plan for Fiscal Year 2013 at the time of termination shall be measured based on Buyer’s unaudited interim financial statements as of the end of the most recent completed month and the full year Earn Out Target payout, if any, will be made at that time on the basis of performance-to-date as if performance-to-date were full-year performance.  As an illustrative example only, if termination were to occur in month 6 of Fiscal Year 2013, and Content Business performance through month 6 were to be equal to 100% of Annual Plan Projected EBITDA for the period through month 6 (which would equal a payment of 75% of Earn Out Target on an annualized basis), the terminated executive would receive his or her pro rata share of 75% of the full year Earn Out Target payment, or pro rata share of ***.  In this event, the Fiscal Year 2014 and Fiscal Year 2015 Earn Outs shall remain in-force to be measured at the end of Fiscal Years 2014 and 2015, and if the Earn Out Targets are reached, the terminated executive would be paid according to the Earn Out performance notwithstanding the termination. Alternatively, notwithstanding the foregoing, within 5 Business Days of termination, the executive shall be allowed to make a one-time only election by written notice to Buyer to either (a) elect the structure set forth in this Section 2.6(d) for the period in question or (ii) leave the Earn Out in place as if no termination had occurred and receive payments, if any, as actually earned by virtue of Content Business performance at the end of the Fiscal Year or years remaining (the “ Termination Earn Out Election ”).
 
___________________________
***     CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS.

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

(ii)          If such termination occurs in Fiscal Year 2014, actual performance of the Content Business against the Annual Plan for Fiscal Year 2014 at the time of termination shall be measured based on Buyer’s unaudited interim financial statements as of the end of the most recent completed month and the full year Earn Out Target payout, if any, will be made at that time on the basis of performance-to-date as if performance-to-date were full-year performance.  As an illustrative example only, if termination were to occur in month 6 of Fiscal Year 2014, and Content Business performance through month 6 were to be equal to 100% of Annual Plan Projected  EBITDA for the period through month 6 (which would equal a payment of 75% of Earn Out Target on an annualized basis), the terminated executive would receive his or her pro rata share of 75% of the full year Earn Out Target payment, or pro rata share of *** million.  In this event, the Fiscal Year 2015 Earn Out shall remain in-force to be measured at the end of Fiscal Year 2015, and if the Earn Out Target is reached, the terminated executive would be paid according to the Earn Out performance notwithstanding the termination. Alternatively, notwithstanding the foregoing, within 5 Business Days of termination, the executive shall be allowed to make the Termination Earn Out Election.
 
(iii)         If termination occurs in the first six months of Fiscal Year 2015, actual performance of the Content Business against the Annual Plan for Fiscal Year 2015 at the time of termination shall be measured and 50% the full year Earn Out Target payout, if any, will be made at that time on the basis of performance-to-date as if performance-to-date were full-year performance.   As an illustrative example only, if termination were to occur in month 5 of Fiscal Year 2015, and Content Business performance at month 5 were to be equal to 100% of Annual Plan Projected EBITDA through month 5 (which would equal a payment of 75% of Earn Out Target on an annualized basis), the terminated executive would receive his or her pro rata share of 50% of the full year payment of 75% of Earn Out Target, or pro rata share of *** million.  After payout, the provisions this Section 2.6(d) would then be of no further force and effect.  Alternatively, notwithstanding the foregoing, within 5 Business Days of termination, the executive would be allowed to make the Termination Earn Out Election on a one-time basis, in which event he or she would be entitled to 50% of the 2015 pay out, if any.
 
(iv)         If termination occurs in the second six months of Fiscal Year 2015, actual performance of the Content Business against the Annual Plan for Fiscal Year 2015 at the time of termination shall be measured and the full Fiscal Year Earn Out Target payout, if any, shall be made at that time on the basis of performance-to-date as if performance-to-date were full-year performance.  For example, if termination were to occur in month 9 of Fiscal Year 2015, and Content Business performance at month 9 were to be equal to 120% of Annual Plan Projected EBITDA through month 9 (which would equal a payment of 100% of Earn Out Target on an annualized basis), the terminated executive would receive an Earn Out Target payment at his or her pro rata share of 100% of the Earn Out Target, or pro rata share of *** million with no reduction or increase if Content Business performance for the balance of Fiscal Year 2015 were to fall above or below such level for the full Fiscal Year 2015.  Alternatively, notwithstanding the foregoing, within five Business Days of termination, the executive would be allowed to make the Termination Earn Out Election on a one-time basis.
 
(v)          Each of the Sellers shall have the right to only their pro rata share of the Earn Out Price payable, if any, and shall be free to independently make the elections
 
___________________________
***     CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS.

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

set forth in Section 2.6(e) as to himself or herself and shall not be affected by the elections, or the termination, of the others.
 
(f)           Disputes .  Any dispute under this Section 2.6 shall be determined pursuant to Section 9.9.
 
2.7           Release of Cash Escrow Amount .
 
(a)           The Cash Escrow Amount up to the maximum amount of any disputed portion of the Escrow Amount shall not be released to Sellers from the Indemnification Escrow Fund  to the extent there is an indemnification claim by an Indemnified Buyer that has not been indemnified by Sellers pursuant to Section 6 until the resolution of the claim and pursuant to the terms of the Escrow Agreement.
 
(b)           On or after the last day of the Survival Period, the cash the Escrow Fund shall be released to the Sellers; provided that there are no known and asserted claims of Buyer pursuant to Section 6 that have not been indemnified by the Sellers to Buyer’s reasonable satisfaction.  The cash in the Escrow Fund shall remain in the Escrow Fund during the pendency of any dispute pursuant to Section 6 between the Parties (up to the maximum amount of the disputed portion of the Escrow Amount) and until the resolution of any such disputes.  Upon the final resolution of all disputes pursuant to Section 6 by a court or arbitrator having proper jurisdiction, and the payment of any amount adjudged owing to an Indemnified Buyer pursuant to Section 6 by Sellers, the amounts in the Escrow Fund, if any, shall be released to the Sellers; provided that in the event Sellers fail to pay any amount adjudged owing to an Indemnified Buyer, Buyer may remove cash from the Escrow Fund up to the amount owed to the extent permitted by Section 4 of the Escrow Agreement.
 
2.8           No Debt .  Target shall have no debt, debt-like instruments (e.g., overdue payables to the extent such overdue payables are not included as liabilities in the calculation of Closing Working Capital), un-recoupable advances, minimum guarantees, vendor-related financing or the like, in each case where Target would be required to pay or repay such amount) or other liabilities at Closing other than liabilities incurred in the Ordinary Course of Business, and all such debt, debt-like instruments (except overdue payables included as liabilities in the calculation of Closing Working Capital) shall be paid off by the Sellers at or before Closing.  Operating leases, as defined under GAAP, shall not be deemed debt.
 
2.9           Restrictions on Stock Purchase Price Common Stock; Restricted Stock Legend .
 
(a)          Restrictions on Stock Purchase Price Common Stock .  The shares of Common Stock constituting the Stock Purchase Price due to each of the Sellers shall be subject to restrictions as set forth herein, and shall not be transferable by any means whatsoever (including without limitation by pledge or hypothecation) until the release of funds in the Escrow Agreement pursuant to Section 2.7 and the Escrow Agreement.
 
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
 
(b)        Restricted Stock Legend .  The Stock Purchase Price Common Stock shall bear a legend setting forth the limitations set forth in this Agreement and under applicable securities laws on the transferability of such shares.
 
2.10           Shareholders Agreement .  Sellers shall, and shall cause Target to, terminate the agreement dated as of  by and among Savage, Margolin and Target and waive any and all rights and claims thereunder.
 
2.11           Payment of Broker’s Fees .  Sellers (and not Target) shall pay any and all fees or commissions to any broker, finder or agent, including without limitation Steve Einhorn and/or his Affiliates, with respect to obligations of Target or Sellers in connection with the transactions contemplated by this Agreement.
 
2.12           Target 2012 Employee Bonus Payments .  Sellers shall cause Target to adequately reserve in the calculation of estimated closing working capital on Exhibit J an amount sufficient to pay any amounts which may become due to employees through the Closing Date pursuant to the bonus arrangements set forth on Schedule 4.21.  Buyer shall cause Target to pay amounts due to employees in good standing as of  in respect of such bonus arrangements in 2013, and remit to Sellers any amounts in excess of the reserve.
 
Section 3                Representations and Warranties Concerning Transaction .
 
3.1           Sellers’ Representations and Warranties .  Each Seller severally and not jointly represents and warrants to Buyer that the statements contained in this Section 3.1 are correct and complete as of the date of this Agreement with respect to himself or herself, except as set forth in Annex I attached hereto.
 
(a)           Authorization of Transaction .  Seller has full power and authority to execute and deliver this Agreement and to perform his or her obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Seller, enforceable in accordance with its terms and conditions. Seller need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement.
 
(b)           Non-Contravention .  Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Seller is subject, (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Seller is a party or by which he or she is bound or to which any of his or her assets are subject, or (iii) result in the imposition or creation of a Lien upon or with respect to the Target Shares.
 
(c)           Brokers’ Fees .  Seller has no Liability to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Buyer could become liable or obligated.
 
 
 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

(d)         Investment .  Seller (i) understands that the Buyer Common Stock has not been, and will not be (except as set forth in Section 8), registered under the Securities Act, or under any state securities laws, and are being offered and sold in reliance upon federal and state exemptions for transactions not involving any public offering, (ii) is acquiring the Buyer Common Stock solely for his or her own account for investment purposes, and not with a view to the distribution thereof, (iii) is a sophisticated investor with knowledge and experience in business and financial matters, (iv) has received certain information concerning the Buyer and has had the opportunity to obtain additional information as desired in order to evaluate the merits and the risks inherent in holding the Buyer Common Stock, (v) is able to bear the economic risk and lack of liquidity inherent in holding the Buyer Common Stock, and (vi) is an Accredited Investor.
 
(e)           Target Shares .   Seller holds of record and owns beneficially the number of Target Shares set forth next to his or her name in Section 4.2 of the Disclosure Schedule, free and clear of any restrictions on transfer (other than any restrictions under the Securities Act and state securities laws), Taxes, Liens, options, warrants, purchase rights, contracts, commitments, equities, claims, and demands. Seller is not a party to any option, warrant, purchase right, or other contract or commitment (other than this Agreement) that could require Seller to sell, transfer, or otherwise dispose of any capital stock of Target. Seller is not a party to any voting trust, proxy, or other agreement or understanding with respect to the voting of any capital stock of Target.
 
3.2           Buyer’s Representations and Warranties .  Buyer represents and warrants to Sellers that the statements contained in this Section 3.2 are correct and complete as of the date of this Agreement, except as set forth in Annex II attached hereto.
 
(a)           Organization of Buyer .  Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation (or other formation).
 
(b)           Authorization of Transaction .  Buyer has full power and authority (including full corporate or other entity power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Buyer, enforceable in accordance with its terms and conditions. Buyer need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement. The execution, delivery, and performance of this Agreement and all other agreements contemplated hereby have been duly authorized by Buyer.
 
(c)           Non-Contravention .  Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Buyer is subject or any provision of its charter, bylaws, or other governing documents or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract,
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

lease, license, instrument, or other arrangement to which Buyer is a party or by which it is bound or to which any of its assets are subject.
 
(d)           Brokers’ Fees .  Buyer has no Liability to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which any Seller could become liable or obligated.
 
(e)           Investment .  Buyer is not acquiring the Target Shares with a view to or for sale in connection with any distribution thereof within the meaning of the Securities Act.
 
(f)           Buyer SEC Reports .  Buyer has filed with or otherwise furnished to the SEC, all material forms, reports, schedules, statements and other documents required to be filed or furnished by it under the Securities Act or the Securities Exchange Act since December 31, 2010 (such documents, as supplemented or amended since the time of filing, and together with all information incorporated by reference therein, the “ Buyer SEC Reports ”).  As of their respective dates, the Buyer SEC Reports, including any financial statements or schedules included or incorporated by reference therein, at the time filed (or, if amended, as of the date of such amendment) (i) complied as to form in all material respects with the applicable requirements of the Securities Act, the Securities Exchange Act, and the rules and regulations promulgated thereunder applicable to such Buyer SEC Reports, and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
 
Section 4                 Representations and Warranties Concerning Target .  Sellers represent and warrant, jointly and severally, to Buyer that the statements contained in this Section 4 are correct and complete as of the date of this Agreement, except as set forth in the disclosure schedule delivered by Sellers to Buyer on the date hereof and incorporated by this reference herein (the “ Disclosure Schedule ”).  The Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this Section 4.
 
4.1           Organization, Qualification, and Corporate Power .  Target is a  corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation.  Target is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required, except where lack of such qualification would not have a Material Adverse Effect.  Target has full corporate power and authority and all licenses, permits, and authorizations necessary to carry on the businesses in which it is engaged and in which it presently proposes to engage and to own and use the properties owned and used by it. Section 4.1 of the Disclosure Schedule lists the directors and officers of Target. Sellers have delivered to Buyer correct and complete copies of the charter and bylaws for Target (as amended to date). The minute books (containing the records of meetings of the stockholders, the board of directors, and any committees of the board of directors), the stock certificate books, and the stock record books for Target are correct and complete. Target is not in default under or in violation of any provision of its charter or bylaws.
 
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
 

4.2    Capitalization .  The entire authorized capital stock of Target consists of 100 Target Shares, of which 100 Target Shares are issued and outstanding and 0 Target Shares are held in treasury.  All of the issued and outstanding Target Shares have been duly authorized, are validly issued, fully paid, and non-assessable, and are held of record by the respective Sellers as set forth in Section 4.2 of the Disclosure Schedule. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require Target to issue, sell, or otherwise cause to become outstanding any of its capital stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to Target. There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of the capital stock of Target.
 
4.3           Non-contravention .  Except as set forth in Section 4.3 of the Disclosure Schedule, neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Target is subject or any provision of the charter or bylaws of Target or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Target is a party or by which it is bound or to which any of its assets is subject (or result in the imposition of any Lien upon any of its assets), except where the violation, conflict, breach, default, attestation, termination, modification, cancellation, failure to give notice or Lien would not have a Material Adverse Effect.  Target does not need to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement.
 
4.4           Brokers’ Fees .  Target has no Liability to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.
 
4.5           Title to Assets .  Target has good and marketable title to, or a valid leasehold interest in, the properties and material assets (or in the case of agreements of the Target, good title to all such agreements) used by it, located on its premises, or shown on the Most Recent Balance Sheet or acquired after the date thereof, free and clear of all Liens, except for properties and assets disposed of in the Ordinary Course of Business since the date of the Most Recent Balance Sheet.
 
4.6           No Subsidiaries, Voting Trust or Phantom Stock . Target has no Subsidiaries.  There are no outstanding stock appreciation, phantom stock, profit participation, or similar rights with respect to Target.  There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of any capital stock of Target. Target does not control directly or indirectly or have any direct or indirect equity participation in any corporation, partnership, trust, or other business association. Target does not own or have any right to acquire, directly or indirectly, any outstanding capital stock of, or other equity interests in, any Person.
 
4.7           Financial Statements .  Attached hereto as Exhibit B are the following financial statements (collectively the “Financial Statements”):  (i) unaudited balance sheets and
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

statements of income, changes in stockholders’ equity, and cash flow as of and for the fiscal years ended December 31, 2010 and December 31, 2011 (the “Most Recent Fiscal Year End”) for Target; and (ii) unaudited balance sheets and statements of income, changes in stockholders’ equity, and cash flow (the “Most Recent Financial Statements”) as of and for the month ended February 29, 2012 (the “Most Recent Fiscal Month End”) for Target. The Financial Statements (including the notes thereto) for the fiscal year ended December 31, 2011 have been prepared in accordance with GAAP or reconciled to GAAP as set forth in Exhibit B throughout the periods covered thereby.  The Financial Statements present fairly the financial condition of Target as of such dates and the results of operations of Target for such periods, are correct and complete in all material respects, and in all material respects are consistent with the books and records of Target (which books and records are correct and complete in all material respects) except, in case of the Most Recent Financial Statements, subject to normal year-end adjustment.
 
4.8           Events Subsequent to Most Recent Fiscal Year End .  Since the Most Recent Fiscal Year End, there has not been any Material Adverse Change.  Without limiting the generality of the foregoing, since that date, except as set forth in Section 4.8 of the Disclosure Schedule:
 
(a)          Target has not sold, leased, transferred, or assigned any of its material assets, tangible or intangible, other than for a fair consideration in the Ordinary Course of Business;
 
(b)          Target has not entered into any material agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) either involving more than $50,000 or outside the Ordinary Course of Business;
 
(c)          no party (including Target) has accelerated, terminated, modified, or cancelled any material agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) to which Target is a party or by which it is bound;
 
(d)          Target has not imposed any Liens upon any of its assets, tangible or intangible;
 
(e)          Target has not made any capital expenditure (or series of related capital expenditures) either involving more than $50,000 or outside the Ordinary Course of Business;
 
(f)          Target has not made any capital investment in, any loan to, or any acquisition of the securities or assets of, any other Person (or series of related capital investments, loans, and acquisitions) either involving more than $50,000 or outside the Ordinary Course of Business;
 
(g)          Target has not issued any note, bond, or other debt security or created, incurred, assumed, or guaranteed any indebtedness for borrowed money or capitalized lease obligation either involving more than $25,000 singly or $50,000 in the aggregate;
 
 
 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

(h)         Target has not delayed or postponed the payment of accounts payable and other Liabilities outside the Ordinary Course of Business;
 
(i)          Target has not cancelled, compromised, waived, or released any right or claim (or series of related rights and claims) either involving more than $50,000 or outside the Ordinary Course of Business;
 
(j)          Target has not transferred, assigned, or granted any license or sublicense of any material rights under or with respect to any Intellectual Property other than in the Ordinary Course of Business;
 
(k)          there has been no change made or authorized in the charter or bylaws of Target;
 
(l)          Target has not issued, sold, or otherwise disposed of any of its capital stock, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any of its capital stock;
 
(m)          Target has not declared, set aside, or paid any dividend or made any distribution with respect to its capital stock (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of its capital stock;
 
(n)          Target has not experienced any material damage, destruction, or loss (whether or not covered by insurance) to its property;
 
(o)          Target has not made any loan to, or entered into any other transaction with, any of its directors, officers, and employees outside the Ordinary Course of Business;
 
(p)          Target has not entered into or terminated any employment contract or any collective bargaining agreement, written or oral, or materially modified the terms of any existing such contract or agreement outside the Ordinary Course of Business or become bound by any collective bargaining relationship;
 
(q)          Target has not granted any increase in the base compensation of any of its directors, officers, and employees outside the Ordinary Course of Business;
 
(r)          Target has not adopted, materially amended, materially modified, or terminated any bonus, profit sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any of its directors, officers, and employees (or taken any such action with respect to any other Employee Benefit Plan);
 
(s)          Target has not made any other material change in employment terms for any of its directors, officers, and employees outside the Ordinary Course of Business;
 
(t)          Target has not implemented any employee layoffs that could implicate the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

similar state, local, or non-U.S. law, regulation, or ordinance (collectively the “ WARN Act ”) in each case, without complying therewith;
 
(u)          Target has not made or pledged to make any charitable or other capital contribution outside the Ordinary Course of Business;
 
(v)          there has not been any other material occurrence, event, incident, action, failure to act, or transaction outside the Ordinary Course of Business involving Target;
 
(w)          Target has not discharged a material Liability or Lien outside the Ordinary Course of Business;
 
(x)          Target has not made (A) any loans in any amount or (B) any advances of money other than advances to employees of less than $10,000 in the Ordinary Course of Business;
 
(y)          Target has not disclosed any material Confidential Information to any party except pursuant to a valid confidentiality agreement; and
 
(z)          Target has not committed to do any of the foregoing except as expressly required by this Agreement.
 
4.9           Undisclosed Liabilities .   Except as set forth in Section 4.9 of the Disclosure Schedule, Target has no material Liability (and to the Knowledge of Sellers there is no Basis for any present or future action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against any of them giving rise to any Liability), except for (i) Liabilities set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) and (ii) Liabilities that have arisen after the Most Recent Fiscal Month End in the Ordinary Course of Business (none of which results from, arises out of, relates to, is in the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement, or violation of law).
 
4.10           Legal Compliance .  Except as set forth in Section 4.10 of the Disclosure Schedule, Target has complied with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder and including the Foreign Corrupt Practices Act, 15 U.S.C. 78dd-1 et seq.) of federal, state, local, and non-U.S. governments (and all agencies thereof), except for such non-compliance as would not result in a Material Adverse Effect, action, suit, proceeding, hearing, charge, complaint, claim, demand, or notice has been filed or commenced or to the Knowledge of Sellers, threatened against any of them alleging any failure so to comply.
 
4.11           Tax Matters .
 
(a)          Target has filed all Tax Returns that it was required to file under applicable laws and regulations. All such Tax Returns were correct and complete in all material respects.  All Taxes due and owing by Target (whether or not shown on any Tax Return) have been paid.  Except as set forth in Section 4.11 of the Disclosure Schedule, Target currently is not
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

the beneficiary of any extension of time within which to file any Tax Return. No written claim has ever been made by an authority in a jurisdiction where Target does not file Tax Returns that Target is or may be subject to taxation by that jurisdiction. There are no Liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of Target.
 
(b)          Target has withheld and paid all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party.
 
(c)          No federal, state, local, or non-U.S. tax audits or administrative or judicial Tax proceedings are pending or being conducted with respect to Target. Target has not during the past three years received from any federal, state, local, or non-U.S. taxing authority (including jurisdictions where Target has not filed Tax Returns) any written notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted, or assessed by any taxing authority against Target. Section 4.11(c) of the Disclosure Schedule lists all federal, state, local, and non-U.S. income Tax Returns filed with respect to any of Target for taxable periods ended on or after December 31, 2009,  indicates those Tax Returns that have been audited, and indicates those Tax Returns that currently are the subject of audit. No Seller or director or officer has been contacted in writing, orally or by any other means regarding the potential examination of Tax Returns or the assessment of any additional Taxes.  Sellers have delivered to Buyer correct and complete copies of all federal income Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by Target filed or received since January 1, 2009.
 
(d)          Target has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency, which waiver or extension remains in effect.
 
(e)          Target has not been a United States real property holding corporation within the meaning of Code Section 897(c)(2) during the applicable period specified in Code Section 897(c)(1)(A)(ii).  Target is not a party to or bound by any Tax allocation or sharing agreement. Target (A) has not been a member of an Affiliated Group filing a consolidated federal income Tax Return (other than a group the common parent of which was Target) or (B) has any Liability for the Taxes of any Person (other than Target) under Reg. Section 1.1502-6 (or any similar provision of state, local, or non-U.S. law), as a transferee or successor, by contract, or otherwise.  Target has not participated in a reportable transaction within the meaning of Code Section 6111 and 6662.
 
(f)          Target will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any:
 
(i)          change in method of accounting for a taxable period ending on or prior to the Closing Date;
 
 
 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

(ii)           “closing agreement” as described in Code Section 7121 (or any corresponding or similar provision of state, local, or non-U.S. income Tax law) executed on or prior to the Closing Date;
 
(iii)          intercompany transaction or excess loss account described in Treasury Regulations under Code Section 1502 (or any corresponding or similar provision of state, local, or non-U.S. income Tax law);
 
(iv)          installment sale or open transaction disposition made on or prior to the Closing Date;
 
(v)          prepaid amount received on or prior to the Closing Date; or
 
(vi)          election under Code Section 108(i).
 
(g)          Target has not distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Code Section 355 or Code Section 361.
 
(h)          Target is not or has not been a party to any “reportable transaction,” as defined in Code Section 6707A(c)(1) and Reg. Section 1.6011-4(b).
 
(i)          Except as set forth in Section 4.11(i) of the Disclosure Schedule, Target has not received any private letter ruling from the Internal Revenue Service (or any comparable ruling from any other taxing authority).
 
(j)           The Target has been a validly electing S corporation within the meaning of Code Sections 1361 and 1362 since the date of its organization and will be an S corporation on the Closing Date; the Internal Revenue Service has not challenged the status of the Target’s “S” election; the Target has taken such steps, if any, that are necessary to be treated as an "S corporation" in all state and local jurisdictions which explicitly recognize such status and has since maintained its status as an “S” corporation in all such jurisdictions (and subject to any limitations on such status imposed by any state or local jurisdiction); the Target is not subject to Tax pursuant to Code Section 1374 or 1375 of the Code or any corresponding provisions of the laws of any state or local jurisdiction; and has not (A) acquired assets from another corporation in a transaction in which such company’s tax basis for such assets was determined, in whole or in part, in reference to the tax basis of the acquired assets (or any other property) in the hands of the transferor or (B) acquired the stock of any corporation which is a qualified subchapter S subsidiary.   Any copy of the Target’s election to be taxed as an S Corporation is missing from the Target’s records.  A Target employee has contacted the Internal Revenue Service and has been assured that a copy of Target’s election shall be sent to Target by the Internal Revenue Service.
 
4.12           Real Property .
 
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

(a)          Section 4.12 of the Disclosure Schedule sets forth a complete and correct list of all real property leased by the Company or otherwise occupied by the Company and lists each lease (the “ Company Real Properties ”).
 
(b)          The Company does not own any real property.
 
(c)          All leases of Company Real Property under which the Company, as lessee, leases any material Company Real Property (each, a “ Lease ”), are valid, binding and enforceable against the Company in accordance with their respective terms, and the Company has a valid leasehold interests to all material Company Real Property leased by it, there is not under any such Lease any material existing default by the Company or, to the Seller’s Knowledge, any other party thereto, or any event which with notice or lapse of time would constitute such a material default, and all rent and other sums and charges due and payable under such lease have been paid.
 
(d)          There are no Persons in possession of any portion of any of the Company Real Property owned or leased by the Company other than the Company, and no Person other than the Company has the right to use or occupy for any purpose any portion of any of the Company Real Property owned or leased by the Company, except in each case as would not, individually or in the aggregate, impair in any material respect the Company’s use of such Company Real Property.
 
(e)          the transactions contemplated by this Agreement do not require the consent of any other party to such Lease which has not been delivered to Buyer, will not result in a breach of or default under such Lease, and will not otherwise cause such lease to cease to be legal, valid, binding, enforceable and in full force and effect on identical terms following the Closing;
 
(f)          Target’s possession and quiet enjoyment of the Company Real Property under such Lease has not been disturbed and there are no material disputes with respect to such Lease;
 
(g)          no security deposit or portion thereof deposited with respect to such Lease has been applied in respect of a breach of or default under such lease that has not been re-deposited in full;
 
(h)          Target does not owe, and will not owe in the future, any brokerage commissions or finder’s fees with respect to such Lease;
 
(i)          the other party to such Lease is not an Affiliate of, and otherwise does not have any economic interest in, Target;
 
(j)          Target has not subleased, licensed or otherwise granted any Person the right to use or occupy the Company Real Property or any portion thereof;
 
(k)          Target has not collaterally assigned or granted any other Lien in such lease or any interest therein; and
 
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

(l)           there are no Liens on the estate or interest created by such Lease and to the Knowledge of Sellers, there are no third party Liens except the Lien consented to by Target in the case of the landlord.
 
4.13           Intellectual Property .
 
(a)          Target owns and possesses or has the right to access and use pursuant to a valid and enforceable written license, sublicense, agreement, covenant not to sue, or permission all Intellectual Property necessary or desirable for the operation of the business of Target as presently conducted and as presently proposed to be conducted. Each item of Intellectual Property owned, accessed, or used by Target immediately prior to the Closing will be owned or available for access and use by Target on identical terms and conditions immediately subsequent to the Closing. Target has taken all commercially reasonable actions to maintain and protect each item of Intellectual Property that it currently owns or uses.
 
(b)          Except as set forth in Section 4.13(b) of the Disclosure Schedule, Target is not interfering with, infringing upon, diluting, misappropriating, or otherwise coming into conflict with, any Intellectual Property rights of third parties which would result in a Material Adverse Effect and none of Sellers has received any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, dilution, or conflict (including any claim that Target must license or refrain from accessing or using any Intellectual Property rights of any third party) which would have resulted in a Material Adverse Effect. To the Knowledge of any of Sellers, no third party has interfered with, infringed upon, diluted, misappropriated, or otherwise come into conflict with, any Intellectual Property rights of Target.
 
(c)          Section 4.13(c) of the Disclosure Schedule identifies each patent or registration that has been issued to Target with respect to any of its Intellectual Property, identifies each pending patent application or application for registration that Target has made with respect to any of its Intellectual Property, and identifies each license, sublicense, agreement, covenant not to sue, or other permission that Target has granted to any third party with respect to any of its Intellectual Property (together with any exceptions). Sellers have delivered to Buyer correct and complete copies of all such patents, registrations, applications, licenses, sublicenses, agreements, covenants not to sue, and permissions (as amended to date) and have made available to Buyer correct and complete copies of all other written documentation evidencing ownership and prosecution (if applicable) of each such item. Section 4.13(c) of the Disclosure Schedule also identifies each material unregistered trademark, service mark, logo, slogan, trade name, corporate name, Internet domain name, or other source identifier, computer software item (other than commercially available off-the-shelf software purchased or licensed for less than a total cost of $5,000) and each material unregistered copyright used by Target in connection with its business. With respect to each item of Intellectual Property required to be identified in Section 4.13(c) of the Disclosure Schedule:
 
(i)          Target owns and possesses all right, title, and interest in and to the item, free and clear of any Lien, license, or other restriction or limitation regarding access, use, or disclosure except for such as would not result in a Material Adverse Effect;
 
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

(ii)           the item is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge;
 
(iii)          no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or, to the Knowledge of any of Sellers is threatened that challenges the legality, validity, enforceability, access, use, or ownership of the item, and to the Knowledge of Sellers there are no grounds for the same;
 
(d)          Section 4.13(d) of the Disclosure Schedule identifies each item of Intellectual Property (other than Motion Pictures) that any third party owns and that Target accesses or uses pursuant to license, sublicense, agreement, covenant not to sue, or permission. Sellers have delivered to Buyer correct and complete copies of all such licenses, sublicenses, agreements, covenants not to sue, and permissions (each as amended to date). With respect to each item of Intellectual Property identified in Section 4.13(d) of the Disclosure Schedule:
 
(i)            the license, sublicense, agreement, covenant not to sue, or permission covering the item is legal, valid, binding, enforceable, and in full force and effect;
 
(ii)           the license, sublicense, agreement, covenant not to sue, or permission will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following consummation of the transactions contemplated hereby;
 
(iii)           no party to the license, sublicense, agreement, covenant not to sue, or permission is in material breach or default, and to the Knowledge of any of Sellers, no event has occurred that with notice or lapse of time would constitute a material breach or default or permit termination, modification, or acceleration thereunder;
 
(iv)           to the Knowledge of Sellers, no party to the license, sublicense, agreement, covenant not to sue, or permission has repudiated any provision thereof;
 
(v)            to the Knowledge of Sellers, with respect to each sublicense, the representations and warranties set forth in Subsections 4.13(a) through 4.13(d) above are true and correct with respect to the underlying license;
 
(vi)            to the Knowledge of Sellers, the underlying item of Intellectual Property is not subject to any outstanding injunction, judgment, order, decree, ruling, or charge;
 
(vii)           Except as set forth in Section 4.13(g)(ii) of the Disclosure Schedule, no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or, to the Knowledge of any of Sellers, is threatened that challenges the legality, validity, or enforceability of the underlying item of Intellectual Property, and to the Knowledge of Sellers, there are no grounds for the same; and
 
(viii)          Except as set forth in Section 4.13(d)(viii) of the Disclosure Schedule, Target has not granted any sublicense or similar right with respect to the license, sublicense, agreement, covenant not to sue, or permission.
 
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

(e)          Target has taken all commercially reasonable actions to maintain and protect all of the Intellectual Property of Target.  To the Knowledge of any of Sellers, the owners of any of the Intellectual Property licensed to, or used by, Target have taken all commercially reasonable  actions to maintain and protect the Intellectual Property.
 
(f)          Sellers and Target have complied with, and are presently in compliance with, all federal, state, local, and non-U.S. governmental (including, but not limited to, the Federal Trade Commission and State Attorneys General), administrative, or regulatory laws, regulations, guidelines, and rules applicable to any Intellectual Property or to personal information, except for such failure to comply as would not result in a Material Adverse Effect.
 
(g)          Section 4.13(g) of the Disclosure Schedule accurately identifies all of the Motion Pictures (the “ Target Motion Pictures ”) for which the Target owns or controls (i.e., by license to the Target) distribution rights (the “ Distribution Rights ”) and sets forth the Distribution Rights including identifying licensor, agreement or amendment date.
 
(i)           With respect to Target Motion Pictures, the Target holds valid title to all of the Distribution Rights, free and clear of all Liens filed against the Target.
 
(ii)           No Target Motion Pictures, nor any of the literary, dramatic or musical material contained therein or upon which any such Target Motion Pictures is based, nor the exercise by any authorized person or entity of any right granted to or by the Target in connection therewith, (A) infringes upon any patent, trademark, service mark, trade name, copyright, literary, dramatic, music, artistic, personal, private, civil, contract or property right or rights of privacy or any other right, whether tangible or intangible, of any Person or (B) contains any element or material that in any manner constitutes a libel, slander or other defamation of any Person, except for such as would not result in a Material Adverse Effect.
 
(iii)           Except as set forth in Section 4.13(g)(iii) of the Disclosure Schedule, no claim, action, suit, proceeding, hearing, mediation, audit, arbitration or investigation by or before any governmental authority is pending against Target or to the Knowledge of Sellers threatened against Target relating to one or more Target Motion Pictures.
 
(iv)           Except for talent/producer and/or co-financier/licensor participations and box office bonuses (the agreements for which have been disclosed on Section 4.13(g)(iv) of the Disclosure Schedule), customary guild residuals, performing rights society payments, any other amounts reflected on the Financial Statements, or any agreement providing for merchandising or other royalties, there are no material sums due a third party in connection with (A) the exploitation of the Target Motion Pictures, other than in each case production and/or distribution expenses due in the Ordinary Course of Business consistent with past practice, or (B) the Distribution Rights for which the Target is obligated to make payments.
 
(v)           Other than with respect to obligations incurred in the Ordinary Course of Business, since the date of the most recent Financial Statements provided to Buyer, all material sums due as of the date of the last Financial Statements provided to Buyer, including contingent compensation and residuals, in connection with the Target Motion Pictures where the Target has the obligation to make the payment of such amounts have been paid in full
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

and/or the Target has established and maintains adequate reserves for the payment of such payment obligations (which reserves are reflected in the most recent Financial Statements).
 
(vi)           The Target takes and has taken all commercially reasonable steps to protect, confirm, register, and maintain its rights in the Target Motion Pictures and the Distribution Rights.
 
(vii)           (A) Target has no obligations relating to any minimum P&A and/or marketing spend and/or release obligations (i.e., minimum number of screens, markets and/or release dates designated by third parties) for any Target Motion Picture, and (B) except as reflected in the Financial Statements or set forth in Disclosure Schedule Section 4.13(g)(vii), Target has no obligations relating to any non-contingent payment guarantee, minimum guarantee or unpaid advances relating to the Target Motion Pictures or otherwise.
 
(viii)          Target has not done, or failed to do, any act that impairs or encumbers the Target’s full enjoyment of the Target Motion Pictures or the Distribution Rights.
 
(ix)             The Agreement and the terms set forth therein will not restrict, limit, invalidate or otherwise affect or result in the termination of any right, title or interest of the Target in any of the Target Motion Pictures.
 
(x)              The Target maintains a rights management system that is sufficient in all material respects for the Target to accurately monitor all of its rights in respect of, rights licensed in and rights to license out Target Motion Pictures as the business of Target is currently being conducted.
 
4.14           Tangible Assets .  Target owns or leases all buildings, machinery, equipment, and other material tangible assets necessary for the conduct of their business as presently conducted and as presently proposed to be conducted. Each such material tangible asset is free from defects (patent and latent), has been maintained in accordance with normal industry practice, is in good operating condition and repair (subject to normal wear and tear), and is suitable for the purposes for which it presently is used and presently is proposed to be used.
 
4.15           Contracts .  Section 4.15 of the Disclosure Schedule lists the following contracts and other agreements to which Target is a party:
 
(a)          any agreement (or group of related agreements) for the lease of personal property to or from any Person providing for lease payments in excess of $50,000 per annum;
 
(b)          any agreement (or group of related agreements) for the purchase or sale of products, or other personal property, or for the furnishing or receipt of services, the performance of which will involve consideration in excess of $50,000;
 
(c)          any partnership or joint venture agreement;
 
(d)          any agreement (or group of related agreements) under which it has created, incurred, assumed, or guaranteed any indebtedness for borrowed money, or any
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

capitalized lease obligation, in excess of $25,000 or under which it has imposed a Lien on any of its assets, tangible or intangible;
 
(e)          any agreement concerning non-competition;
 
(f)          any agreement with any of Sellers and their Affiliates (other than Target);
 
(g)          any profit sharing, stock option, stock purchase, stock appreciation, deferred compensation, severance, or other material plan or arrangement for the benefit of its current or former directors, officers, and employees;
 
(h)          any collective bargaining agreement;
 
(i)          any agreement for the employment of any individual on a full-time, part-time, consulting, or other basis providing for annual compensation in excess of $100,000 or providing severance benefits in excess of $10,000 or contracts providing for any payments on the change of control or ownership of the Target, its Affiliates, or any employer of any employee which could reasonably be expected to trigger IRS Code Section 280G, or providing for deferred compensation.
 
(j)          any agreement under which it has advanced or loaned any amount to any of its directors, officers, and employees outside the Ordinary Course of Business;
 
(k)          any agreement under which the consequences of a default or termination could have a Material Adverse Effect;
 
(l)          any settlement, conciliation or similar agreement with any Governmental Entity or which will require satisfaction of any obligations after the execution date of this Agreement;
 
(m)          any agreement under which Target has advanced or loaned any other Person amounts in the aggregate exceeding $25,000;
 
(n)          any agreement concerning Motion Picture rights or obligations, including without limitation, Distribution Rights and including without limitation as to digital, cable television, internet, physical goods distribution or any other means of distribution; or
 
(o)          any other agreement (or group of related agreements) the performance of which involves consideration in excess of $50,000.
 
Sellers have delivered to Buyer a correct and complete copy of each written agreement (as amended to date) listed in Section 4.15 of the Disclosure Schedule.  With respect to each such agreement: (A) the agreement is legal, valid, binding, enforceable, and in full force and effect; (B) the agreement will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated hereby; (C) except as set forth in Section 4.13(g)(iii) of the Disclosure Schedule, the Company is not, and to the Knowledge of the Sellers, the other party is not in material breach or default, and
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

no event has occurred that with notice or lapse of time would constitute a material breach or default, or permit termination, modification or acceleration under the agreement; and (D) to the Knowledge of Sellers, no party has repudiated any provision of the agreement.  Target is not a party to any oral agreement.
 
4.16           Accounts Receivable .  All accounts receivable of Target are reflected properly on their books and records, are valid receivables subject to no setoffs or counterclaims, are current and collectible, and will be collected in accordance with their terms at their recorded amounts, subject only to the reserve for bad debts set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of Target.
 
4.17           Powers of Attorney .  To the Knowledge of Sellers, there are no outstanding powers of attorney executed on behalf of Target.
 
4.18           Insurance .  Section 4.18 of the Disclosure Schedule sets forth the following information with respect to each material insurance policy (including policies providing property, casualty, liability, and workers’ compensation coverage and bond and surety arrangements) to which Target has been a party, a named insured, or otherwise the beneficiary of coverage at any time within the past 3 years:
 
(a)          the name of the insurer, the name of the policyholder, and the name of each covered insured;
 
(b)          the policy number and the period of coverage;
 
(c)          a description of any retroactive premium adjustments or other loss-sharing arrangements.
 
With respect to each such insurance policy: (A) the policy is legal, valid, binding, enforceable, and in full force and effect; (B) the policy will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated hereby; (C) neither Target nor, to the Knowledge of the Sellers, any other party to the policy is in material breach or default (including with respect to the payment of premiums or the giving of notices), and no event has occurred that, with notice or the lapse of time, would constitute such a material breach or default, or permit termination, modification, or acceleration, under the policy; and (D) to the Knowledge of Sellers, no party to the policy has repudiated any provision thereof. Target has been covered during the past 3 years by insurance in scope and amount customary and reasonable for the businesses in which it has been engaged during the aforementioned period. Section 4.18 of the Disclosure Schedule describes any material self-insurance arrangements affecting Target.
 
4.19           Litigation .  Section 4.19 of the Disclosure Schedule sets forth each instance in which Target (i) is subject to any outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a party or, to the Knowledge of any of Sellers, is threatened to be made a party to any action, suit, proceeding, hearing, or investigation of, in, or before (or that could come before) any court or quasi-judicial or administrative agency of any federal, state, local, or
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

non-U.S. jurisdiction or before (or that could come before) any arbitrator, which if adversely determined, would result in a Material Adverse Effect.  None of Sellers has any reason to believe that any such action, suit, proceeding, hearing, or investigation may be brought or threatened against Target or that there is any Basis for the foregoing.
 
4.20           Employees .
 
(a)          With respect to the business of Target:
 
(i)          there is no collective bargaining agreement or relationship with any labor organization;
 
(ii)          to the Knowledge of any of Sellers no executive or manager of Target (1) has any present intention to terminate his or her employment, or (2) is a party to any confidentiality, non-competition, proprietary rights or other such agreement between such employee and any Person besides such entity that would be material to the performance of such employee’s employment duties, or the ability of such entity or Buyer to conduct the business of such entity;
 
(iii)          no labor organization or group of employees has filed any representation petition or made any written or oral demand for recognition;
 
(iv)          to the Knowledge of any of Sellers, no union organizing or decertification efforts are underway or threatened and no other question concerning representation exists;
 
(v)          no labor strike, work stoppage, slowdown, or other material labor dispute has occurred, and none is underway or, to the Knowledge of Sellers or Target, threatened;
 
(vi)          to the Knowledge of Sellers, there is no workman’s compensation liability, experience or matter outside the Ordinary Course of Business;
 
(vii)         there is no employment-related charge, filed written complaint, written grievance, investigation, inquiry or obligation of any kind, pending or to the Knowledge of Sellers, threatened in any forum, relating to an alleged violation or breach by Target (or its or their officers or directors) of any employment-related law, regulation or contract; and,
 
(viii)         to the Knowledge of Sellers, no employee or agent of Target has committed any act or omission that would give rise to material liability for any violation or breach of the type identified in subsection (vii) above.
 
(b)          Except as set forth in Section 4.20 of the Disclosure Schedule, (A) there are no employment contracts or severance agreements with any employees of Target, and (B) there are no written personnel policies, rules, or procedures applicable to employees of Target. True and complete copies of all such documents have been provided to Buyer prior to the date of this Agreement.  Target has adequately reserved an amount sufficient to pay any amounts
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

due to employees through the Closing Date pursuant to the bonus arrangements set forth on Schedule 4.21 in the Most Recent Financial Statements.
 
(c)          With respect to this transaction, any notice required under any law or collective bargaining agreement has been or prior to the Closing Date will be given, and all bargaining obligations with any employee representative have been or prior to the Closing Date will be satisfied.  Within the past 3 years, Target has not implemented any plant closing or layoff of employees that could implicate the WARN Act, and no such action will be implemented without advance notification to Buyer.
 
4.21           Employee Benefits .
 
(a)         Section 4.21 of the Disclosure Schedule lists each material Employee Benefit Plan.
 
(i)          Each such Employee Benefit Plan (and each related trust, insurance contract, or fund) has been maintained, funded and administered in all material respects in accordance with the terms of such Employee Benefit Plan and the terms of any applicable collective bargaining agreement and complies in form and in operation in all material respects with the applicable requirements of ERISA, the Code, and other applicable laws.
 
(ii)          All material contributions (including all employer contributions and employee salary reduction contributions) that are due have been made within the time periods prescribed by ERISA and the Code to each such Employee Benefit Plan that is an Employee Pension Benefit Plan. All premiums or other payments due have been paid or accrued with respect to each such Employee Benefit Plan that is an Employee Welfare Benefit Plan.
 
(iii)          Each such Employee Benefit Plan that is intended to meet the requirements of a “qualified plan” under Code Section 401(a) has received a determination from the Internal Revenue Service that such Employee Benefit Plan is so qualified, and which has not been revoked, and to the Knowledge of Sellers, nothing has occurred since the date of such determination that could adversely affect the qualified status of any such Employee Benefit Plan.
 
(iv)          To the Knowledge of Sellers, there have been no Prohibited Transactions with respect to any such Employee Benefit Plan or any Employee Benefit Plan maintained by an ERISA Affiliate which could subject any Employee Benefit Plan or any related trust, the Target or any Person that the Target has an obligation to indemnify, to any material tax or penalty under Section 4975 of the Code or Section 502 of ERISA. No Fiduciary has any Liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any such Employee Benefit Plan which could reasonably be expected to result in any material Liability to the Target. No action, suit, proceeding, hearing, or investigation with respect to the administration or the investment of the assets of any such Employee Benefit Plan (other than routine claims for benefits) is pending or, to the Knowledge of any of Sellers, threatened and none of Sellers has any Knowledge of any Basis for any such action, suit, proceeding, hearing, or investigation.
 
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

(v)           Sellers have delivered to Buyer correct and complete copies of the plan documents and summary plan descriptions, the most recent determination letter received from the Internal Revenue Service, the most recent annual report (Form 5500, with all applicable attachments), and all related trust agreements, insurance contracts, and other funding arrangements that implement each such Employee Benefit Plan in each case, as applicable.
 
(vi)          Neither Target nor any ERISA Affiliate contributes to, has any obligation to contribute to, or has any Liability under or with respect to any Employee Pension Benefit Plan that is a “defined benefit plan” (as defined in ERISA Section 3(35)).  No asset of any Employee Benefit Plan is subject to any Lien under ERISA or the Code.
 
(vii)         Neither Target nor any ERISA Affiliate contributes to, has any obligation to contribute to, or has any Liability (including withdrawal liability as defined in ERISA Section 4201) under or with respect to any Multiemployer Plan.
 
(b)         Except as set forth in Section 4.21 of the Disclosure Schedule, Target does not maintain, contribute to or have an obligation to contribute to, or have any Liability with respect to, any Employee Welfare Benefit Plan or other arrangement providing health or life insurance or other welfare-type benefits for current or future retired or terminated directors, officers or employees (or any spouse or other dependent thereof) of Target or of any other Person other than in accordance with COBRA.
 
(c)         The consummation of the transactions contemplated by this Agreement will not accelerate the time of the payment or vesting of, or increase the amount of, or result in the forfeiture of compensation or benefits under, any Employee Benefit Plan.
 
(d)         Each Employee Benefit Plan that is a “nonqualified deferred compensation plan” subject to Code Section 409A complies with the requirements of Code Section 409A and any Internal Revenue Service guidance issued thereunder. Target has no actual or potential obligation to reimburse or otherwise “gross-up” any Person for the interest or additional tax set forth under Code Section 409A(a)(1)(B).
 
4.22           Guarantees .  Target is not a guarantor or otherwise is liable for any Liability (including indebtedness) of any other Person.
 
4.23           Environmental Laws .
 
(a)          The Company and, to the Knowledge of the Sellers, the Company Real Properties are in compliance in all material respects with applicable Environmental Laws.  The Company has not received any written notice, demand, request for information, citation, summons, complaint or order, writ, judgment, injunction, subpoena indictment, decree, stipulation, determination or award entered by or with any federal, state, local or foreign governmental or regulatory authority, agency or commission, court or other legislative, executive or judicial governmental entity, including any self-regulatory organization, that remains outstanding alleging material liability against it or, to the Knowledge of Sellers, the Company Real Properties under any Environmental Laws.  To the Sellers’ Knowledge, none of the Company Real Properties has been used for the disposal of hazardous or toxic waste, petroleum
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

product, polychlorinated biphenyl, asbestos or asbestos containing material, chemical, pollutant, contaminant, pesticide, radioactive substance, or other hazardous or toxic substance regulated under any Environmental Laws in material violation of applicable Environmental Laws.
 
(b)          To the Knowledge of the Sellers, none of the Company Real Properties has had any material emissions or discharges by the Company or, to Sellers’ Knowledge, any other Person for whom the Company is legally liable, of any hazardous or toxic waste, petroleum product, polychlorinated biphenyl, asbestos or asbestos containing material, chemical, pollutant, contaminant, pesticide, radioactive substance, or other hazardous or toxic substance regulated under any Environmental Laws in violation of applicable Environmental Laws.
 
(c)          To the Sellers’ Knowledge, there are no material liabilities affecting the Company under Environmental Laws.
 
4.24           Certain Business Relationships with Target .  Except as set forth in Section 4.24 of the Disclosure Schedule, none of Sellers, their Affiliates, or Target’s directors, officers, or shareholders has been involved in any material business arrangement or relationship with Target within the past 12 months (other than as employees, directors and shareholders of Target), and none of Sellers, their Affiliates, and Target’s directors, officers or shareholders owns any material asset, tangible or intangible, that is used in the business of Target.
 
4.25           Product Warranty .  Substantially all of the products manufactured, sold, leased, and delivered by Target have conformed in all material respects with all applicable contractual commitments and all express and implied warranties, and Target has no material liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due) for replacement or repair thereof or other damages in connection therewith, subject only to the reserve for product warranty, claims set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto) as adjusted for operations and transactions through the Closing Date in accordance with the past custom and practice of Target.  Substantially all of the products manufactured, sold, leased, and delivered by Target are subject to standard terms and conditions of sale or lease.
 
4.26           Product Liability .  Target has no material liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due) arising out of any injury to individuals or property as a result of the ownership, possession, or use of any product manufactured, sold, leased, or delivered by Target.
 
4.27           Disclosure .  The representations and warranties contained in this Section 4 do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained in this Section 4 not misleading.
 
4.28           Data Room Materials .  On , Sellers made approximately 4,200 changes to the electronic data room through which Sellers made available to Buyer written due diligence materials in connection with this Agreement.  Each document in the electronic data
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

room immediately prior to the changes that was replaced was identical to the document which replaced it.
 
4.29           Closing Working Capital Calculation .  The Closing Working Capital Estimate on Exhibit J was calculated using the Closing Working Capital Definitions on Exhibit I, and the methodology of calculating Closing Working Capital is consistent with past practices other than with respect to reserve estimates related to accounts receivable and due to clients.
 
Section 5                Post-Closing Covenants .  The Parties agree as follows with respect to the period following the Closing:
 
5.1           General .  In case at any time after the Closing any further actions are necessary or desirable to carry out the purposes of this Agreement, each of the Parties will take such further actions (including the execution and delivery of such further instruments and documents) as any other Party may reasonably request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefor under Section 8 below).  Sellers acknowledge and agree that from and after the Closing Buyer will be entitled to possession of all documents, books, records (including Tax records), agreements, and financial data of any sort relating to Target, and will make them available to Sellers upon request.
 
5.2           Litigation Support .  In the event and for so long as any Party actively is contesting or defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in connection with (i) any transaction contemplated under this Agreement or (ii) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date involving Target, each of the other Parties will cooperate with him, her, or it and his, her, or its counsel in the contest or defense, make available his, her, or its personnel, and provide such testimony and access to his, her, or its books and records as shall be necessary in connection with the contest or defense, all at the sole cost and expense of the contesting or defending Party (unless the contesting or defending Party is entitled to indemnification therefor under Section 6 below).
 
5.3           Continuing Business .  For a period of two years from and after the Closing Date, neither of Savage or Margolin will take any action that is designed or intended to have the effect of discouraging any lessor, licensor, customer, supplier, or other business associate of Target from maintaining the same business relationships with Target after the Closing as it maintained with Target prior to the Closing. During such period each of Savage or Margolin will refer all customer inquiries relating to the business of Target to Target or Buyer from and after the Closing.
 
5.4           Confidentiality .  Each Seller will treat and hold as such all of the Confidential Information, refrain from using any of the Confidential Information except in connection with this Agreement, and deliver promptly to Buyer or destroy, at the request and option of Buyer, all tangible embodiments (and all copies) of the Confidential Information that are in his, her, or its possession. In the event that any Seller is requested or required pursuant to written or oral question or request for information or documents in any legal proceeding,
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

interrogatory, subpoena, civil investigative demand, or similar process to disclose any Confidential Information, such Seller will notify Buyer promptly of the request or requirement so that Buyer may seek an appropriate protective order or waive compliance with the provisions of this Section 5.4. If, in the absence of a protective order or the receipt of a waiver hereunder, any of Sellers is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal, such Seller may disclose the Confidential Information to the tribunal; provided, however, that the disclosing Seller shall use his or her reasonable best efforts to obtain, at the request and expense of Buyer, an order or other assurance that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed as Buyer shall designate. The foregoing provisions shall not apply to any Confidential Information that is generally available to the public immediately prior to the time of disclosure unless such Confidential Information is so available due to the actions of a Seller.
 
5.5           Covenant Not to Compete .  For a period of two years from and after the Closing Date, Savage and Margolin shall not engage directly or indirectly in any business that Target conducts as of the Closing Date in any geographic area in which Target conducts that business as of the Closing Date, other than as employees of Buyer; provided, however, that no owner of less than 5% of the outstanding stock of any publicly traded corporation shall be deemed to engage solely by reason thereof in its business. If the final judgment of a court of competent jurisdiction declares that any term or provision of this Section 5.5 is invalid or unenforceable, the Parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed.
 
Section 6                Remedies for Breaches of This Agreement .
 
6.1           Survival of Representations and Warranties .
 
All of the representations and warranties of Sellers contained in Section 3 and Section 4.1 (as to the second sentence only), Section 4.3, Sections 4.5 through Section 4.10 and Sections 4.12 through 4.27 (the “ Limited Survival Representations ”) shall survive the Closing hereunder (even if Buyer knew or had reason to know of any misrepresentation or breach of warranty at the time of Closing) and continue in full force and effect for the period from the Closing Date through the date of completion of the review by Buyer’s independent public accountants of Buyer’s financial statements for the fiscal year ended March 31, 2013 (the “ Survival Period ”). All of the other representations and warranties of the Parties contained in this Agreement shall survive the Closing (even if the damaged Party knew or had reason to know of any misrepresentation or breach of warranty at the time of Closing) and continue in full force and effect indefinitely.
 
 
 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
 
6.2          Indemnification Provisions for Buyer’s Benefit .
 
(a)          In the event Sellers breach (or in the event any third party alleges facts that, if true, would mean Sellers have breached) any of their representations, warranties, and covenants contained herein, determined without regard to any limitation or qualification by Knowledge or materiality or reference to Material Adverse Effect or Material Adverse Change, or commit an act of fraud, and, provided that Buyer makes a written claim for indemnification against Sellers pursuant to Section 9.8 below within the survival period (if there is an applicable survival period pursuant to Section 6.1 above), then each Seller shall be obligated jointly and severally to indemnify Buyer, and its officers, directors, shareholders, employees, representatives, agents, attorneys, Affiliates, successors and assigns (the “ Indemnified Buyers ”) from and against the entirety of any Adverse Consequences Indemnified Buyers may suffer (including any Adverse Consequences Indemnified Buyers may suffer after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by the breach (or the breach alleged by a third party); provided , however , that, except in the case of fraud, Sellers shall not have any obligation to indemnify Indemnified Buyers from and against any Adverse Consequences resulting from, arising out of, relating to, in the nature of, or caused by the breach (or breach alleged by a third party) of any of the Limited Survival Representations until Indemnified Buyers have suffered Adverse Consequences by reason of all such breaches (or breach alleged by a third party) in excess of a $350,000 aggregate threshold (at which point Sellers will be obligated to indemnify Indemnified Buyers from and against all such Adverse Consequences in excess of $175,000, (except for Section 4.3, breaches for which it shall be the obligations of Sellers from dollar one); provided , further that the maximum amount Indemnified Buyers may recover from Sellers under this Section 6.2 concerning a Limited Survival Representation shall be $2,500,000 (the “ Indemnity Cap ”).  For the avoidance of doubt, no such limitation shall apply to any breach of a covenant, representation or warranty of Sellers or any Seller that is not a Limited Survival Representation, nor shall such limit apply to the case of fraud (each, an “ Uncapped Claim ”). Sellers shall not have any obligation to indemnify Indemnified Buyers to the extent the item giving rise to the Adverse Consequences has been accounted for in the calculation of Closing Working Capital.  All such calculations of damages shall take into account any insurance proceeds received by the Buyer in connection with the matter out of which such damages shall arise.  The Buyer agrees to use commercially reasonable efforts to obtain such insurance proceeds, but in no event shall Buyer be obligated to obtain any insurance policy to insure against any such Loss.  If an indemnification payment is received by the Buyer, and the Buyer later receives insurance proceeds in respect of the related damages, the Buyer shall promptly pay to the Sellers such amount.  No Seller shall have any obligation to indemnify any Indemnified Buyer from and against consequential damages, special damages or punitive damages of Buyer; provided that no such limitation shall apply in the event such damages are ordered by an arbitrator or court to be paid by Buyer in respect of an indemnification matter.
 
(b)          Notwithstanding anything contained in this Agreement to the contrary, Buyer shall have the right, but not the obligation, to offset against amounts due from the Sellers under Section 6.2(a) amounts due from the Buyer to the Sellers under Section 2.6; provided that any amounts so offset shall reduce the amount remaining of the Indemnity Cap dollar-for-dollar.
 
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
 
6.3          Indemnification Provisions for Sellers’ Benefit .  In the event Buyer breaches (or in the event any third party alleges facts that, if true, would mean Buyer has breached) any of its representations, warranties, and covenants contained herein and, provided that a Seller makes a written claim for indemnification against Buyer pursuant to Section 9.8 below within such survival period (if there is an applicable survival period pursuant to Section 6.1 above), then Buyer shall indemnify each Seller and his or her successors and assigns (the “Indemnified Sellers”) from and against the entirety of any Adverse Consequences suffered (including any Adverse Consequences suffered after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by the breach (or the alleged breach).
 
6.4           Matters Involving Third Parties .
 
(a)          If any third party notifies any Indemnified Buyer or Indemnified Seller (the “ Indemnified Party ”) with respect to any matter (a “ Third-Party Claim ”) that may give rise to a claim for indemnification against any other Party (the “ Indemnifying Party ”) under this Section 6, then the Indemnified Party shall promptly notify the Indemnifying Party thereof in writing; provided , however , that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party is thereby prejudiced.
 
(b)          Any Indemnifying Party will have the right to defend the Indemnified Party against the Third-Party Claim with counsel of his, her, or its choice reasonably satisfactory to the Indemnified Party so long as (A) the Indemnifying Party notifies the Indemnified Party in writing within thirty (30) days after the Indemnified Party has given notice of the Third-Party Claim that the Indemnifying Party will indemnify the Indemnified Party from and against the entirety of any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third-Party Claim, (B) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the financial resources to defend against the Third-Party Claim and fulfill its indemnification obligations hereunder, (C) the Third-Party Claim involves only money damages and does not seek an injunction or other equitable relief, (D) settlement of, or an adverse judgment with respect to, the Third Party Claim is not, in the good faith judgment of the Indemnified Party, likely to establish a precedential custom or practice materially adverse to the continuing business interests or the reputation of the Indemnified Party, and (E) the Indemnifying Party conducts the defense of the Third-Party Claim actively and diligently.
 
(c)          So long as the Indemnifying Party is conducting the defense of the Third-Party Claim in accordance with Section 6.4(b) above, (A) the Indemnified Party may retain separate co-counsel at his, her, or its sole cost and expense and participate in the defense of the Third-Party Claim, (B) the Indemnified Party will not consent to the entry of any judgment on or enter into any settlement with respect to the Third-Party Claim without the prior written consent of the Indemnifying Party, and (C) the Indemnifying Party will not consent to the entry of any judgment on or enter into any settlement with respect to the Third-Party Claim without the prior written consent of the Indemnified Party.  Sellers shall be allowed to use the cash Escrow
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

Amount for reasonable out of pocket legal expenses incurred in the defense of claims based on breaches of the Limited Survival Representations.
 
(d)          In the event any of the conditions in Section 6.4(b) above is or becomes unsatisfied, however, (A) the Indemnified Party may defend against, and consent to the entry of any judgment on or enter into any settlement with respect to, the Third-Party Claim in any manner he, her, or it may deem appropriate (and the Indemnified Party need not consult with, or obtain any consent from, any Indemnifying Party in connection therewith), (B) the Indemnifying Parties will reimburse the Indemnified Party promptly and periodically for the costs of defending against the Third-Party Claim (including reasonable attorneys’ fees and expenses), and (C) the Indemnifying Parties will remain responsible for any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third-Party Claim to the fullest extent provided in this Section 6.
 
6.5           Other Indemnification Provisions .  Each Seller hereby agrees that he or she will not make any claim for indemnification against Target by reason of the fact that he or she was a director, officer, employee, or agent of any such entity or was serving at the request of any such entity as a partner, trustee, director, officer, employee, or agent of another entity (whether such claim is for judgments, damages, penalties, fines, costs, amounts paid in settlement, losses, expenses, or otherwise and whether such claim is pursuant to any statute, charter document, bylaw, agreement, or otherwise) with respect to any action, suit, proceeding, complaint, claim, or demand brought by Buyer against such Seller (whether such action, suit, proceeding, complaint, claim, or demand is pursuant to this Agreement, applicable law, or otherwise).
 
6.6           Special Indemnifications .  Notwithstanding anything contained herein to the contrary, the Sellers shall jointly and severally indemnify the Indemnified Buyers from and against the entirety of any Adverse Consequences resulting from, arising out of, relating to, in the nature of, or caused by: (i) the failure of the Target and Sellers to maintain the minute books and corporate records of Target and Sellers relating to Target, including without limitation the original stock certificates of Sellers and actions of the Board of Directors and stockholders of Target, and to observe the corporate formalities of the Target; (ii) the reversal, or the loss due to legal authority of certain aged credits to clients in the aggregate amount of $388,999; (iii) the reversal of certain aged amounts due to clients in the aggregate amount of $438,000; or (iv) failure of the Target to qualify as an S corporation.  The indemnification set forth in this Section 6.6 shall not be limited to the Indemnity Cap, the aggregate threshold set forth in Section 6.2(a) above or be subject to any time limitation whatsoever.
 
6.7           Exclusive Remedy .  The Parties agree that notwithstanding anything to the contrary set forth in this Agreement or otherwise, the indemnification provisions of this Agreement are the sole and exclusive remedies of the Buyer pursuant to this Agreement or in connection with the transactions contemplated hereby.  From and after the Closing, to the maximum extent permitted by Law, the Buyer hereby waives all other rights, claims, remedies or actions with respect to any matter in any way relating to the transactions contemplated by this Agreement or arising in connection herewith, whether under any laws, orders, requirements or otherwise.
 
 
 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
 
Section 7               Tax Matters .  The following provisions shall govern the allocation of responsibility as between Buyer and Sellers for certain tax matters following the Closing Date:
 
7.1           Tax Indemnification .  Each Seller shall jointly and severally indemnify Target, Buyer, and each Buyer Affiliate and hold them harmless from and against, any loss, claim, liability, expense, or other damage attributable to (i) all Taxes (or the non-payment thereof) of Target for all taxable periods ending on or before the Closing Date and the portion through the end of the Closing Date for any taxable period that includes (but does not end on) the Closing Date (“Pre-Closing Tax Period”), (ii) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which Target (or any predecessor of any of the foregoing) is or was a member on or prior to the Closing Date, including pursuant to Treasury Regulation Section 1.1502-6 or any analogous or similar state, local, or non-U.S. law or regulation,  and (iii) any and all Taxes of any person (other than Target) imposed on Target as a transferee or successor, by contract or pursuant to any law, rule, or regulation, which Taxes relate to an event or transaction occurring before the Closing.
 
7.2           Straddle Period .  In the case of any taxable period that includes (but does not end on) the Closing Date (a “Straddle Period”), the amount of any Taxes based on or measured by income, receipts, or payroll of Target for the Pre-Closing Tax Period shall be determined based on an interim closing of the books as of the close of business  on the Closing Date (and for such purpose, the taxable period of any partnership or other pass-through entity in which Target holds a beneficial interest shall be deemed to terminate at such time) and the amount of other Taxes of Target for a Straddle Period that relates to the Pre-Closing Tax Period shall be deemed to be the amount of such Tax for the entire taxable period multiplied by a fraction the numerator of which is the number of days in the taxable period ending on the Closing Date and the denominator of which is the number of days in such Straddle Period.
 
7.3           Responsibility for Filing Tax Returns .  Sellers shall prepare or cause to be prepared and file or cause to be filed all Tax Returns for Target that are filed after the Closing Date and relate to the Pre-Closing Tax Period (or a portion thereof).  Buyer shall make available appropriate personnel and records to assist Sellers in preparing such Tax Returns.  Buyer shall cause an officer of Target to sign these returns.  The Sellers agree to execute any and all forms or agreements required under Code Section 1377(a)(2) or otherwise to elect the closing of the books for income tax purposes.
 
7.4           Cooperation on Tax Matters .
 
(a)          The Parties shall promptly advise the other Party of the commencement of any Tax audit or proceeding that could involve the Target’s Tax liability for any period (or portion thereof) ending on or before the Closing Date.  The Sellers shall have the right (but not the obligation) to represent the Target’s interests in any such Tax audit or other Tax proceeding and to employ counsel of its choice, but reasonably satisfactory to Buyer, at Sellers’ expense, to the extent the audit or other proceeding pertains to Tax periods (or a portion thereof) ending on or before the Closing Date.  In such event, the Sellers shall consult with an keep Buyer informed regarding the status of such Tax audit or other proceeding.
 
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

(b)          Buyer, Target, and Sellers shall cooperate to the extent reasonably requested by the other Party, in connection with the filing of Tax Returns pursuant to this Section 7.4 and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other Party’s request) the provision of records and information that are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Buyer and Sellers agree (A) to retain all books and records with respect to Tax matters pertinent to Target relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by Buyer or Sellers, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority, and (B) to give the other Party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other Party so requests, Target or Sellers, as the case may be, shall allow the other Party to take possession of such books and records.
 
(c)          Buyer and Sellers further agree, upon request, to use their commercially reasonable best efforts to obtain any certificate or other document from any governmental authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the transactions contemplated hereby).
 
(d)          Buyer and Sellers further agree, upon request, to use commercially reasonable efforts provide the other Party with all information that either Party may be required to report pursuant to Code Section 6043, or Code Section 6043A, or Treasury Regulations promulgated thereunder.
 
7.5           Tax-Sharing Agreements .  All tax-sharing agreements or similar agreements with respect to or involving Target shall be terminated as of the Closing Date and, after the Closing Date, Target shall not be bound thereby or have any liability thereunder.
 
7.6           Certain Taxes and Fees .  All transfer, documentary, sales, use, stamp, registration and other such Taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with consummation of the transactions contemplated by this Agreement shall be paid one-half by Sellers and one-half by Buyer when due, and Buyer will, at their own expense, file all necessary Tax Returns and other documentation with respect to all such Taxes, fees and charges, and, if required by applicable law, Sellers will, and will cause their Affiliates to, join in the execution of any such Tax Returns and other documentation.
 
7.7           Tax Refunds .  Buyer will cause to be promptly paid to Sellers the amount of any refund of Taxes of Target for any Pre-Closing Tax Period (or portion thereof) received by Buyer, Target or any Affiliate of Target.
 
Section 8                Registration Rights .
 
8.1           Registration of Shares .  The Buyer will use commercially reasonable efforts to:  (i) prepare and file with the SEC and cause to become effective, within one year after
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

the Closing Date, a Form S-3 (or, if such form is not available to the Buyer, a Form S-1) to register under the Securities Act, sales of the Stock Purchase Price Common Stock by Sellers (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 Sellers may sell all of the Stock Purchase Price Common Stock without restriction pursuant to Rule 144 promulgated under the Securities Act or (y) the date when all of the Stock Purchase Price Common Stock registered thereunder has been disposed of by the Sellers;  and (iv) prepare and file with the SEC such amendments and supplements to the Shelf Registration Statement (including documents filed pursuant to the Securities 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 securities Exchange Act), the Buyer will furnish to the counsel to Sellers 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.
 
8.2           Registration Procedures .  With respect to the registration of the sale of Stock Purchase Price Common Stock under this Section 8 the Buyer will:
 
(e)         furnish to each Seller 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 Seller may reasonably request in order to facilitate the disposition of the Stock Purchase Price Common Stock owned by the Sellers;
 
(f)         use its commercially reasonable efforts to comply with all applicable securities laws in the U.S. and to register or qualify all Stock Purchase Price Common Stock covered by the Shelf Registration Statement under such other securities or blue sky laws of such jurisdictions as any Seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such Seller to consummate the disposition in such jurisdictions of the Stock Purchase Price Common Stock to be sold by such Seller; provided that the Buyer will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph, (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction);
 
(g)         notify each Seller, at any time when a prospectus relating to the sale of the Stock Purchase Price Common Stock 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 Buyer will promptly prepare and file with the SEC and furnish to each Seller a reasonable number of copies of, a supplement or amendment to such prospectus so that, as thereafter delivered to the
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

purchasers of such Stock Purchase Price Common Stock, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made;
 
(h)         in connection with an underwritten offering, promptly enter into an underwriting agreement in customary form, which may include indemnification provisions in favor of underwriters and other Persons in addition to, or in substitution for, the provisions of Section 8.6 below, and take such other actions as the managing underwriters reasonably request in order to expedite or facilitate the disposition of the Shares;
 
(i)         in connection with an underwritten offering, promptly obtain a “cold comfort” letter or letters from the Buyer’s independent public accountants in customary form and covering matters of the type customarily covered by “cold comfort” letters provided to sellers of securities as Purchasers may reasonably request;
 
(j)         use commercially reasonable best efforts to cause all Shares to be sold in such offering to be listed on each securities exchange on which the Common Stock is then listed;
 
(k)         otherwise use its commercially reasonable best efforts to comply with all applicable rules and regulations of the SEC; and
 
(l)         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.
 
8.3           In f ormation Supplied .  It shall be a condition precedent to the obligations of the Buyer to take any action to register the Stock Purchase Price Common Stock that each of the Sellers shall furnish the Buyer with such information regarding such Seller that is pertinent to the disclosure requirements relating to the registration and the distribution of the Stock Purchase Price Common Stock as the Buyer may from time to time reasonably request.  Each Seller agrees to promptly furnish to the Buyer all information required to be disclosed in order to make the information previously furnished to the Buyer by such Seller not misleading.
 
8.4           Registration Expenses.
 
(m)         Except as expressly provided in this Section 8.4, the Buyer shall pay all Registration Expenses relating to the Shelf Registration Statement.  “ Registration Expenses ” shall mean any and all fees and expenses incident to the Buyer's performance of or compliance with this Section 8, including (i) SEC, stock exchange 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
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

counsel for the Buyer, and (vi) fees and disbursements of all independent public accountants and fees and expenses of other Persons, including special experts, retained by the Buyer.
 
(n)         Notwithstanding the foregoing, (i) the provisions of this Section 8.4 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 and (ii) in connection with any registration hereunder, each Seller shall pay all underwriting discounts and commissions and transfer taxes, if any, attributable to the Stock Purchase Price Common Stock included in the offering by the Seller and all fees and expenses of such Seller's counsel.
 
8.5           Restrictions on Disposition .  Each Seller agrees that, upon receipt of any notice from the Buyer of the happening of any event of the kind described in Section 8.2(g) such Seller will forthwith discontinue disposition of Stock Purchase Price Common Stock pursuant to the Shelf Registration Statement until such Seller’s receipt of the copies of the supplemental or amended prospectus contemplated by Section 8.2(g) or written notice from the Buyer that the Shelf Registration Statement is effective again and no amendment or supplement is needed.
 
8.6           Indemnification.
 
(o)         To the fullest extent permitted by law, the Buyer will indemnify and hold harmless each Seller against any losses, claims, damages and liabilities, joint or several, to which such Seller 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 Buyer or authorized by it in writing for use by any Seller 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 Buyer shall not be liable in any such case to the extent that any such Claim or expense arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information prepared and furnished to the Buyer by any Seller expressly for use therein or by any Seller's failure to deliver a copy of the prospectus or any amendments or supplements thereto after the Buyer has furnished Seller with a sufficient number of copies of the same; and provided , further , that the indemnity agreement contained in this Section 8.6 shall not apply to amounts paid in settlement of any such Claim if such settlement is effected without the consent of the Buyer, which consent shall not be unreasonably withheld or delayed; and provided , further , that the Buyer will not be liable to any Seller pursuant to this Section 8.6 to the extent that any Claim for which such Seller seeking indemnification relates to a sale of Stock Purchase Price Common Stock in violation of Section 8.5.
 
 
 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
 
(p)          To the fullest extent permitted by law, each of the Sellers will indemnify and hold harmless the Buyer and it directors and officers and each other Person who controls or is controlled by the Buyer and its Affiliates and their respective directors, officers, members, managers and general and limited partners (collectively, the “ Buyer 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 Buyer or authorized by it in writing for use by any Seller 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 Sellers 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 Buyer by such Seller expressly for use therein or by such Seller's failure to deliver a copy of the prospectus or any amendments or supplements thereto after the Buyer has furnished Seller with a sufficient number of copies of the same; provided, that the indemnity agreement contained in this Section 8.6(p) shall not apply to amounts paid in settlement of any such Claim if such settlement is effected without the consent of such Seller, which consent shall not be unreasonably withheld or delayed; and provided, further, that the liability of each Seller hereunder will be limited to the amount of net proceeds received by such Seller from the sale of Stock Purchase Price Common Stock pursuant to the Shelf Registration Statement.
 
(q)         Any Person entitled to indemnification hereunder will (i) give prompt written notice to the Buyer of any Claim with respect to which it seeks indemnification and (ii) 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
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

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.
 
(r)         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 Stock Purchase Price Common Stock by any Seller.  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 Seller exceed the amount of the net proceeds received by such Seller from the sale of Stock Purchase Price Common Stock pursuant to such Shelf Registration Statement.
 
Section 9                Miscellaneous .
 
9.1           Nature of Sellers’ Obligations .
 
(a)          The covenants of each Seller in Section 2 concerning the sale of his or her Target Shares to Buyer and the representations and warranties of each Seller in Section 3.1 above concerning the transaction are individual, and not joint and several, obligations. This means that the particular Seller making the representation, warranty, or covenant shall be solely responsible to the extent provided in Section 6 for any Adverse Consequences Buyer may suffer as a result of any breach thereof.
 
(b)          The remainder of the representations, warranties, and covenants in this Agreement are joint and several obligations. This means that each Seller shall be responsible to the extent provided in Section 6 for the entirety of any Adverse Consequences Buyer may suffer as a result of any breach thereof.
 
9.2           Press Release .  Buyer and Target shall issue a press release relating to the subject matter of this Agreement and Buyer and Sellers shall mutually agree on the content thereof.
 
9.3           No Third-Party Beneficiaries .   This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns.
 
9.4           Entire Agreement .  This Agreement (including the documents referred to herein) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they relate in any way to the subject matter hereof.
 
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
 

9.5          Succession and Assignment .  This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of his, her, or its rights, interests, or obligations hereunder without the prior written approval of Buyer and Requisite Sellers; provided, however, that (i) Sellers may assign their rights to receive payments hereunder for estate planning purposes only and (ii) Buyer may (a) assign any or all of its rights and interests hereunder to one or more of its Affiliates and (b) designate one or more of its Affiliates to perform its obligations hereunder (in any or all of which cases Buyer nonetheless shall remain responsible for the performance of all of its obligations hereunder).
 
9.6           Counterparts .  This Agreement may be executed in one or more counterparts (including by means of facsimile), each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
 
9.7           Headings .  The Section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.
 
9.8           Notices .  All notices, requests, demands, claims, and other communications hereunder shall be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given (i) when delivered personally to the recipient, (ii) 1 business day after being sent to the recipient by reputable overnight courier service (charges prepaid), (iii) 1 business day after being sent to the recipient by facsimile transmission or electronic mail, or (iv) 4 business days after being mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, and addressed to the intended recipient as set forth below:
 
If to Sellers:
902 Broadway, 9 th Floor
New York, New York 10010
Email: smargolin@newvideo.com
savage@newvideo.com
aconnolly@newvideo.com
Facsimile: (212) 206-9001
 
Copy to:
Stephen W. Rubin, Esq.
Proskauer Rose LLP
Eleven Times Square
New York, New York 10036
Email: srubin@proskauer.com
Facsimile:  (212) 969-2900
If to Buyer:
Gary S. Loffredo, Esq., President
Digital Cinema Services & General Counsel
Cinedigm Digital Cinema Corp.
2049 Central Park East, Suite 1900
Los Angeles, CA 90067
Email:  gloffredo@cinedigm.com
Facsimile:  (973) 290-0081
Copy to:
Christopher O’Brien, Esq.
Glaser, Weil, Jacobs, Howard
  Avchen & Shapiro, LLP
10250 Constellation Blvd., 19th Flr.
Los Angeles, CA 90067
email:  cobrien@glaserweil.com
Facsimile:  (310) 785-3531

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth.
 
9.9           Governing Law; Mediation; Arbitration .  This Agreement shall be governed by and construed in accordance with the domestic laws of the State of  without giving effect to any choice or conflict of law provisions.  If a dispute arises out of or relates to this Agreement, or the breach hereof, and if the dispute cannot be expeditiously settled through negotiation, the parties agree to first try in good faith, for a period of 30 (thirty) days after written notice of a request for mediation to settle the dispute by mediation administered by the American Arbitration Association under its Commercial Mediation Procedures before resorting to binding arbitration; provided, however, that failure of the mediation to occur or to be completed in the 30 (thirty) days following a request for mediation shall not preclude either party from then proceeding with arbitration.  Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules before a single arbitrator in New York City, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  The prevailing party in any such arbitration shall be entitled to a payment from the other party (or in the case of Buyer, from the Sellers jointly and severally) of the reasonable attorney’s fees (excluding any in-house attorney fees and expenses) and other reasonable arbitration out-of pocket expenses of the prevailing party. The decision arrived at by the arbitrator shall be binding upon all the parties to the arbitration and no appeal shall lie therefrom, except as provided by the Federal Arbitration Act.  This arbitration procedure is intended to be the exclusive method of resolving any claim or dispute arising out of or related to this Agreement, including the applicability of this Section, other than disputes arising under Section 2.5.  The only exception to this arbitration provision, and the mediation provision included herein, shall be an action by either party seeking preliminary injunctive relief in a court of competent jurisdiction.
 
9.10           Amendments and Waivers .  No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by Buyer and Sellers. No waiver by any Party of any provision of this Agreement or any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be valid unless the same shall be in writing and signed by the Party making such waiver nor shall such waiver be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such default, misrepresentation, or breach of warranty or covenant.
 
9.11           Severability .  Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.
 
9.12           Expenses .  Buyer shall bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby.  Sellers shall bear the costs and expenses of Target (including all of their legal fees and  
 

 
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CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

expenses) and their own such costs in connection with this Agreement and the transactions contemplated hereby.
 
9.13           Construction .  The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.  Any reference to any federal, state, local, or non-U.S. statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “including” shall mean including without limitation. The Parties intend that each representation, warranty, and covenant contained herein shall have independent significance. If any Party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty, or covenant relating to the same subject matter (regardless of the relative levels of specificity) that the Party has not breached shall not detract from or mitigate the fact that the Party is in breach of the first representation, warranty, or covenant.
 
9.14           Incorporation of Exhibits, Annexes, and Schedules .   The Exhibits, Annexes, and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof.
 
9.15           Specific Performance .  Each Party acknowledges and agrees that the other Parties would be damaged irreparably in the event any provision of this Agreement is not performed in accordance with its specific terms or otherwise is breached, so that a Party shall be entitled to injunctive relief to prevent breaches of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in addition to any other remedy to which such Party may be entitled, at law or in equity.  In particular, the Parties acknowledge that the business of Target is unique and recognize and affirm that in the event Sellers breach this Agreement, money damages would be inadequate and Buyer would have no adequate remedy at law, so that Buyer shall have the right, in addition to any other rights and remedies existing in its favor, to enforce its rights and the other Parties’ obligations hereunder not only by action for damages but also by action for specific performance, injunctive, and/or other equitable relief.
 
9.16           Governing Language .  This Agreement has been negotiated and executed by the Parties in English. In the event any translation of this Agreement is prepared for convenience or any other purpose, the provisions of the English version shall prevail.
 
9.17           Tax Disclosure Authorization .  Notwithstanding anything herein to the contrary, the Parties (and each Affiliate and Person acting on behalf of any Party) agree that each Party (and each employee, representative, and other agent of such Party) may disclose to any and all Persons, without limitation of any kind, the tax treatment and tax structure (as such terms are used in regulations promulgated under Code Section 6011) of the transactions contemplated by this Agreement; provided, however, that such disclosure may not be made until public announcement of the transaction.  This authorization is not intended to permit disclosure of any other information including (without limitation) (A) any portion of any materials to the extent not related to the transaction’s tax treatment or tax structure, (B) the identities of participants or potential participants, (C) the existence or status of any negotiations, (D) any pricing or financial
 

 
50

 
CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

information (except to the extent such pricing or financial information is related to the transaction’s tax treatment or tax structure), or (E) any other term or detail not relevant to the transaction’s tax treatment or the tax structure.
 
* * * * *
 
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the date first above written.
 
 
CINEDIGM DIGITAL CINEMA CORP.
 
 
By:          /s/ Christopher J. McGurk                                                    
                                 Name:   Christopher J. McGurk
                                Title:      Chairman and Chief Executive Officer
 
 
STEVE SAVAGE
 
 
By:          /s/ Steve Savage                                                                     
                                                                                                                                                                                                                         an individual
 
 
SUSAN MARGOLIN
 
 
By:          /s/ Susan Margolin                                                                 
                                                                                             an individual
 
 
AIMEE CONNOLLY
 
 
By:          /s/ Aimee Connolly                                                                 
               an individual
 


 
51

 
CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

EXHIBIT A
 
Form of Savage and Margolin Employment Agreement
 

 

 
A-1

 
CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

EXHIBIT B
 
Form of Connolly Employment Agreement
 

 

 

 
B-1

 
CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

EXHIBIT C
 
Historical Financial Statements
 

 

 

 

 
C-1

 
CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

EXHIBIT D
 
Form of Opinion of Sellers’ Counsel
 

 

 

 
D-1

 
CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

EXHIBIT E
 
Form of Opinion of Buyer’s Counsel
 

 

 

 

 
E-1

 
CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

EXHIBIT F
 
Indemnification Escrow Agreement
 

 

 

 

 
F-1

 
CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

EXHIBIT G
 
Annual Plans
 

 

 

 

 
G-1

 
CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

EXHIBIT H
 
Earnout Methodology
 

 
H-1

 
CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

EXHIBIT I
 
Closing Working Capital Definitions
 

 
I-1

 
CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

EXHIBIT J
 
Closing Working Capital Estimate
 

 

 

 

 

 
J-1

 
CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

ANNEX I
 
Exceptions to Seller’s Representations and Warranties Concerning Transaction
 

 
None
 

 
ANNEX I - 1

 
CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

ANNEX II
 
Exceptions to Buyer’s Representations and Warranties Concerning Transaction
 

 
None
 

 
ANNEX II - 1

 
CONFIDENTIAL TREATMENT REQUESTED BY CINEDIGM DIGITAL CINEMA CORP. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.


DISCLOSURE SCHEDULE

 
The Company will furnish supplementally a copy of any omitted schedule to the Commission upon request.
 

 

 
 
 
 
 
Disclosure Agreement

 
EXHIBIT 5.1
 
April 24, 2012
 
The Board of Directors of
Cinedigm Digital Cinema Corp.
55 Madison Avenue, Suite 300
Morristown, NJ 07960

Ladies and Gentlemen:

We have acted as special counsel to Cinedigm Digital Cinema Corp., a Delaware corporation (the "Company"), in connection with the offering by the Company of 7,857,143 shares of its Class A Common Stock, par value $0.001 per share (the “Shares”), including 714,286 Shares for which the Underwriters have been granted an over-allotment option, pursuant to a Registration Statement on Form S-3 (the  "Registration Statement") filed with the Securities and Exchange Commission ( the “Commission”) pursuant to the Securities Act of 1933, as amended (the “Act”), and declared effective on April 9, 2012, as supplemented by the prospectus supplements relating to the Shares filed with the Commission pursuant to Rule 424(b) promulgated under the Act (the “Prospectus Supplements”). Each Share issued and sold under the Registration Statement will be accompanied by a right (each, a “Right”) to purchase, under certain circumstances, from the Company one one-thousandth of a share of Series B Junior Participating Preferred Stock, par value $0.001 per share, of the Company pursuant to the Tax Benefit Preservation Plan, dated as of August 10, 2009, between the Company and American Stock Transfer & Trust Company, as Rights Agent (the “Rights Plan”), until the expiration of the Rights Plan.  As such counsel, you have requested our opinion as to the matters described herein relating to the issuance of the Securities.
 
We have examined the Fourth Amended and Restated Certificate of Incorporation and By-Laws of the Company, each as amended and restated through the date hereof; records of corporate proceedings of the Company, as made available to us by officers of the Company; an executed copy of the Registration Statement and all exhibits thereto, in the form filed with the Commission; the Prospectus Supplements as filed with the Commission; the Rights Plan; and such matters of law deemed necessary by us in order to deliver this opinion.  We have assumed, without independently verifying or having any duty to verify,  that all documents mentioned

 
 

 

KELLEY DRYE & WARREN LLP
 
April 24, 2012
Page Two
 

herein have been duly authorized, executed and delivered by all parties thereto (other than the Company) and are enforceable, and that there was no misrepresentation, omission or deceit by any person in connection with the execution, delivery or performance of any of the documents referred to herein.  In the course of our examination, we have assumed the genuineness of all signatures, the authority of all signatories to sign on behalf of their principals, if any, the authenticity of all documents submitted to us as originals, the conformity to originals of all documents submitted to us as copies and the authenticity of the originals of such copies, and the legal capacity of all natural persons.  As to certain factual matters, we have relied upon information furnished to us by officers of the Company.
 
This opinion is subject to the following additional limitations and qualifications:
 
(a)           We express no opinion concerning any law of any jurisdiction other than (i) the laws of the State of New York, (ii) the federal laws of the United States of America and (iii) the General Corporation Law of the State of Delaware.
 
(b)           We express no opinion with respect to the enforceability of any agreement or instrument or any provision thereof (i) to the extent such enforceability may be subject to, or affected by, applicable bankruptcy, insolvency, moratorium or similar state or federal laws affecting the rights and remedies of creditors generally (including, without limitation,  fraudulent conveyance laws) or general principles of equity (regardless of  whether enforceability is considered in a proceeding at law or in equity),  (ii) providing for specific performance, injunctive relief or other equitable remedies (regardless of whether such enforceability is sought in a proceeding in equity or at law), (iii) providing for indemnification or contribution, which provisions may be limited by federal and state securities laws or  policies underlying such laws, (iv) requiring any waiver of stay or extension laws, diligent performance or other acts which may be unenforceable under principles of public policy or (v) providing for a choice of law, jurisdiction or venue. We have assumed that such agreements, instruments or provisions are enforceable.
 
(c)           With respect to the Rights, (i) we do not address the determination a court of competent jurisdiction may make regarding whether the Company’s board of directors (the “Board of Directors”) would be required to redeem or terminate, or take other action with respect to, the rights at some future time based on the facts and circumstances existing at that time, (ii) we assume that the members of the Board of Directors acted in a manner consistent with their fiduciary duties as required under applicable law in adopting the Rights Plan, and (iii) we address the Rights and the Rights Plan in their entirety, and it is not settled whether the invalidity of any particular provision of the Rights Plan or the Rights issued thereunder would result in invalidating such Rights in their entirety.
 
Based on the foregoing and solely in reliance thereon, it is our opinion that:
 

 
 

 

KELLEY DRYE & WARREN LLP
 
April 24, 2012
Page Three
 

1.           The Shares are duly authorized and, when the Shares are issued, paid for and delivered in accordance with the applicable underwriting agreement, the Shares will be validly issued, fully paid and non-assessable.
 
2.           The Rights attached to the Shares are binding obligations of the Company, enforceable against the Company in accordance with their terms.
 
In connection with our opinions expressed above, we have assumed that, at or prior to the time of the delivery of the Shares, (i) the Company shall not have been dissolved; (ii) the due authorization of the issuance and sale thereof shall not have been modified or rescinded; (iii) the Registration Statement shall have been declared effective and such effectiveness shall not have been suspended, terminated or rescinded; and (iv) there shall not have occurred any change in law affecting the validity or enforceability of the Rights.
 
We hereby consent to the filing of this letter as an exhibit to the Registration Statement and to the reference to it in the prospectus included therein under the caption "Legal Matters." In giving such consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Act, nor do we admit that we are experts with respect to any part of the Registration Statement or Prospectus within the meaning of the term “expert” as defined in Section 11 of the Act or the rules and regulations promulgated thereunder.
 
This opinion is furnished to you in connection with the filing of the Registration Statement and is not to be used, circulated, quoted or otherwise relied upon for any other purpose.  We have no obligation to update this opinion for events or changes in law or fact occurring after the date hereof.
 
                         Very truly yours,                              
 
                                                                                       /s/ Kelley Drye & Warren LLP
 
                         KELLEY DRYE & WARREN LLP

EXHIBIT 10.1
 
AMENDMENT NO. 5
TO
SECOND AMENDED AND RESTATED
CINEDIGM DIGITAL CINEMA CORP. 2000 EQUITY INCENTIVE PLAN

AMENDMENT NO. 5, dated as of April 20, 2012 (this “Amendment”), to the Second Amended and Restated 2000 Equity Incentive Plan (as amended, the “Plan”) of Cinedigm Digital Cinema Corp. (f/k/a Access Integrated Technologies, Inc.), a Delaware corporation (the “Corporation”).
 
WHEREAS, the Corporation maintains the Plan, effective as of June 1, 2000; and
 
WHEREAS, the Board of Directors of the Corporation deems it to be in the best interest of the Corporation and its stockholders to amend the Plan in order to decrease the maximum number of shares of the Corporation’s Class A Common Stock, par value $.001 per share, which may be issued and sold under the Plan from 7,000,000 shares to 6,300,000 shares.
 
WHEREAS, the NASDAQ Stock Market has indicated that it would not require shareholder approval of a reduction of the number of shares issuable under the Plan.
 
NOW, THEREFORE, BE IT RESOLVED the Plan is hereby amended as follows:
 
1.           The first sentence of Section 5.2 shall be revised and amended to read as follows:
 
“The total number of shares of Stock (including Restricted Stock, if any) optioned or granted under this Plan during the term of the Plan shall not exceed 6,300,000 shares.”
 
2.           This Amendment shall be effective as of the date first set forth above.
 
3.           In all respects not amended, the Plan is hereby ratified and confirmed and remains in full force and effect.

[ Signature Page Follows ]

 
 

 


 
CINEDIGM DIGITAL CINEMA CORP.
     
     
 
By:
  /s/ Adam M. Mizel
   
Adam M. Mizel
   
Chief Operating Officer
     

EXHIBIT 99.1
 
 
 
Cinedigm Announces Underwritten Public Offering

 
(Woodland Hills, CA and Morristown, NJ; April 19, 2012) Cinedigm Digital Cinema Corp. (NASDAQ: CIDM) (the “Company”), the global leader in digital cinema, announced today it intends to offer and sell in an underwritten public offering 6,000,000 registered shares of Class A common stock. Additionally, the Company intends to grant the underwriters an option for 30 days to purchase up to 900,000 additional shares of Class A common stock.
 
The Company expects to use the net proceeds of the offering for working capital, acquisitions and general corporate purposes.
 
In connection with the offering, B. Riley & Co., LLC is acting as sole book-running manager, with Merriman Capital acting as co-manager of the offering.
 
The securities described above are being offered by the Company pursuant to a shelf registration statement on Form S-3 (Registration No. 333-179970), including a base prospectus dated April 9, 2012 , previously filed with and declared effective by the Securities and Exchange Commission (the "SEC").  A preliminary prospectus supplement related to the offering has been filed with the SEC and is available on the SEC's website located at http://www.sec.gov . Copies of the preliminary prospectus supplement and the accompanying base prospectus relating to this Offering, may be obtained from B. Riley & Co., LLC 11100 Santa Monica Blvd., Suite 800, Los Angeles, California 90025, (310) 966-1444.
 
This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sales of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful.
 
ABOUT CINEDIGM:
Cinedigm is a leader in providing the services, experience, technology and content critical to transforming movie theaters into digital and networked entertainment centers. The Company partners with Hollywood movie studios, independent movie distributors, and exhibitors to bring movies in digital cinema format to audiences across the country. Cinedigm's digital cinema deployment organization, state of the art distributor and exhibition software, and marketing and distribution platform for alternative content and independent films are a cornerstone of the digital cinema transformation. Cinedigm™ and Cinedigm Digital Cinema Corp™ are trademarks of Cinedigm Digital Cinema Corp  www.cinedigm.com  
[CIDM-F]

 
Safe Harbor Statement
 
 

 
Investors and readers are cautioned that certain statements contained in this document, as well as some statements in periodic press releases and some oral statements of Cinedigm officials during presentations about Cinedigm, along with Cinedigm's filings with the Securities and Exchange Commission, including Cinedigm's registration statements, quarterly reports on Form 10-Q and annual report on Form 10-K, are "forward-looking'' statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act''). Forward-looking statements include statements that are predictive in nature, which depend upon or refer to future events or conditions, which include words such as "expects," "anticipates,'' "intends,'' "plans,'' "could," "might," "believes,'' "seeks," "estimates'' or similar expressions. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future actions, which may be provided by Cinedigm's management, are also forward-looking statements as defined by the Act. Forward-looking statements are based on current expectations and projections about future events and are subject to various risks, uncertainties and assumptions about Cinedigm, its technology, economic and market factors and the industries in which Cinedigm does business, among other things. These statements are not guarantees of future performance and Cinedigm undertakes no specific obligation or intention to update these statements after the date of this release.

 
###
Cinedigm Investor Relations:
Addo Communications
Patricia Dolmatsky/Kimberly Esterkin
patriciad@addocommunications.com
kimberlye@addocommunications.com
310-829-5400
EXHIBIT 99.2
 

 
Cinedigm Announces Pricing of Underwritten Public Offering

 
(Woodland Hills, CA and New York City, NY; April 20, 2012) – Cinedigm Digital Cinema Corp. (NASDAQ: CIDM), the global leader in digital cinema, announced today it priced an underwritten public offering of 7,142,857 shares of common stock at a price to the public of $1.40 per share. Additionally, the Company has granted the underwriters an option for 30 days to purchase up to 714,286 additional shares of Class A common stock. The Company plans to use the approximately $9.3 million in net proceeds for working capital, acquisitions and general corporate purposes.  The offering is expected to close on April 25, 2012.
 
In connection with the offering, B. Riley & Co., LLC is acting as sole book-running manager, with Merriman Capital acting as co-manager. Copies of the prospectus can be obtained from B. Riley & Co., LLC 11100 Santa Monica Blvd., Suite 800, Los Angeles, California 90025.
 
A registration statement relating to the shares of common stocks to be issued in this offering has been filed with the Securities and Exchange Commission (SEC) and is effective.  This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sales of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
 
ABOUT CINEDIGM:
Cinedigm is a leader in providing the services, experience, technology and content critical to transforming movie theaters into digital and networked entertainment centers. The Company partners with Hollywood movie studios, independent movie distributors, and exhibitors to bring movies in digital cinema format to audiences across the country. Cinedigm's digital cinema deployment organization, state of the art distributor and exhibition software, and marketing and distribution platform for alternative content and independent films are a cornerstone of the digital cinema transformation. Cinedigm™ and Cinedigm Digital Cinema Corp™ are trademarks of Cinedigm Digital Cinema Corp  www.cinedigm.com
[CIDM-E]

Safe Harbor Statement
Investors and readers are cautioned that certain statements contained in this document, as well as some statements in periodic press releases and some oral statements of Cinedigm officials during presentations about Cinedigm, along with Cinedigm's filings with the Securities and Exchange Commission, including Cinedigm's registration statements, quarterly reports on Form 10-Q and annual report on Form 10-K, are "forward-looking'' statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act''). Forward-looking statements include statements that are predictive in nature, which depend upon or refer to future events or

 
 

 

conditions, which include words such as "expects," "anticipates,'' "intends,'' "plans,'' "could," "might," "believes,'' "seeks," "estimates'' or similar expressions. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future actions, which may be provided by Cinedigm's management, are also forward-looking statements as defined by the Act. Forward-looking statements are based on current expectations and projections about future events and are subject to various risks, uncertainties and assumptions about Cinedigm, its technology, economic and market factors and the industries in which Cinedigm does business, among other things. These statements are not guarantees of future performance and Cinedigm undertakes no specific obligation or intention to update these statements after the date of this release.

###
Cinedigm Public Relations :
MBC
Maggie Begley
Maggie@mbcprinc.com
310-301-1785

Cinedigm Investor Relations:
Addo Communications
Patricia Dolmatsky/Kimberly Esterkin
patriciad@addocommunications.com
kimberlye@addocommunications.com
310-829-5400
EXHIBIT 99.3
 

CINEDIGM TO ACQUIRE LEADING ENTERTAINMENT DISTRIBUTOR
NEW VIDEO®
 
Acquisition Will Establish Cinedigm As A Full Service Entertainment Studio Providing Digital
Theatrical and Complete Platform Distribution For Independent Films And Specialty Content
 
 
(Woodland Hills, CA and New York City, NY; April 19, 2012) Cinedigm Digital Cinema Corp. (NASDAQ: CIDM) (“Cinedigm” or the “Company”), the global leader in digital cinema,  today announced it has agreed to acquire leading entertainment distributor New Video Group, Inc. (“New Video”), the largest worldwide digital aggregator of independent content and leading distributor of quality entertainment. Cinedigm’s acquisition of New Video will create a new full service end-to-end digital releasing studio, enabling the Company to acquire and distribute independent films and specialty content both theatrically and through digital, mobile and home media platforms.
 
Cinedigm has agreed to acquire New Video for $14 million in upfront consideration, plus additional earn out potential of up to $6 million over three years tied to the future financial results of the Cinedigm Entertainment Group. The upfront consideration will be paid with $10 million of cash from Cinedigm’s balance sheet and $4 million of Cinedigm stock issued at the trailing 10 day volume weighted average price.  The acquisition is expected to close April 20, 2012.  Simultaneous with this acquisition, Cinedigm has also announced an underwritten public equity offering of common stock with B. Riley & Co., LLC acting as sole book-running manager and Merriman Capital acting as co-manager of the offering.  Please see our separate press release on the offering.
 
This acquisition builds upon the strategic acquisition and distribution partnership for independent films formed in January between Cinedigm and New Video. Already, the joint venture has acquired two award-winning films at Sundance and SXSW, The Invisible War and Citadel , which are planned for release in June and September respectively and today also announced the acquisition of a third highly regarded independent film, In Our Nature .
 
“Cinedigm is now a fully integrated distributor of independent films and specialty content,” said Cinedigm Chairman and CEO Chris McGurk.  “Over the past year, we have analyzed many companies in the digital distribution space for home and mobile entertainment and determined that New Video is the best partner for us. New Video’s highly regarded management team, led by Susan Margolin and Steve Savage, is entrepreneurial, forward-looking and innovative.  Their tremendous success in the ever-evolving digital space, combined with their expertise in content acquisition, sales and marketing and distribution of traditional packaged goods, puts them clearly ahead of the pack.  Our new distribution capabilities will provide a unique, one stop end-to-end digital distribution solution for independent content providers and financiers. And for our shareholders, this accretive acquisition solidifies Cinedigm’s stated goal to expand our low risk, high reward fee-for-service content distribution business to complement our industry leading VPF servicing and software businesses.”
 
Adam Mizel, Cinedigm Chief Operating Officer and CFO, added: “Our acquisition of New Video® has met our stated criteria to make an accretive acquisition of a leading home entertainment content
 

 
 

 

 
distributor through all channels of distribution.  The $14 million upfront purchase price represents a multiple of approximately 5.6x New Video’s 2011 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).  Bringing Cinedigm and New Video together in addition to our capital raise provides the necessary ingredients to rapidly build a profitable independent film and alternative content business.”
 
“This combination creates a very powerful distribution machine at a time when the industry is at the crossroads of profound change and real strategic opportunity,” said Steve Savage, Co-President of New Video. “Cinedigm is the perfect partner for expanding the market for feature film and entertainment content, while exploiting every opportunity for innovation in VOD, digital and mobile distribution.
 
"Filmmakers and content creators will greatly benefit from our leading-edge digital distribution strategies," added Susan Margolin, Co-President of New Video.  “Steve and I and the entire New Video team look forward to expanding on what has already proven to be a fruitful and promising partnership with Cinedigm.”
 
Effective immediately Savage and Margolin will become co-Presidents of Cinedigm’s Entertainment Group, which includes New Video as well as the pre-existing theatrical marketing and booking services at Cinedigm, and will report directly to McGurk.  Aimee Connolly, New Video’s Chief Operating Officer, will assume the same position for the Cinedigm Entertainment Group.
 
New Video was represented in the transaction by Stephen Einhorn.
 
Headquartered in New York City, New Video was founded in 1991 to acquire and distribute alternative and independent film content using both fee-based and royalty-based models.  New Video has since acquired licenses for more than 4,000 feature films and 6,000 television episodes.  New Video has key relationships with platform partners including Netflix, iTunes, Amazon, Vudu, Hulu, Xbox and PlayStation, as well as leading brands A+E,  Scholastic, Tribeca Film, ZDF, Henson, Beyond International and ITV. The company has delivered strong results in DVD/Blu-ray, returning over $1.5 billion to content owners since its founding more than 20 years ago.
 
Investor Call
 
Cinedigm will host a conference call for investors tomorrow, Friday April 20, 2012, at 7:30 am PDT/10:30 am EDT.  The live call will be available by telephone by dialing 1-877-941-4774 for domestic callers or 1-480-629-9760  for international caller and entering conference call ID 4533192.  The conference call and accompanying slides will also be broadcast live over the Internet and can be accessed on the Investor Relations section of the Company's Web site at http://investor.cinedigm.com .
 
A telephonic replay of the conference will be available beginning April 20, 2012, at 10:30 a.m. PDT / 1:30 p.m. EDT, through May 4, 2012, at 8:59 p.m. PDT / 11:59 p.m. EDT. To access the replay, dial (877) 870-5176 (U.S.), and use passcode 4533192. International callers should dial (858) 384-5517 and enter the same conference ID number.
 
About Cinedigm:
 
Cinedigm Digital Cinema Corp. is a leader in providing the services, experience, technology and content critical to transforming movie theaters into digital and networked entertainment centers. The Company partners with Hollywood movie studios, independent movie distributors, and exhibitors to bring movies in digital cinema format to audiences across the country. Cinedigm's digital cinema deployment
 

 
 

 

organization, state of the art distributor and exhibition software, and marketing and distribution platform for alternative content and independent films are a cornerstone of the digital cinema transformation. Cinedigm™ and Cinedigm Digital Cinema Corp™ are trademarks of Cinedigm Digital Cinema Corp  www.cinedigm.com .  
 
About Cinedigm Entertainment Group
 
Cinedigm Entertainment Group, a division of Cinedigm Digital Cinema Corp., the worldwide leader of digital cinema installation, is a state of the art digital distributor of award-winning independent films and alternative content.  CEG has released close to 200 independent films and alternative content events over the last few years, with past releases ranging up to 1,000 screens based on content and audience footprint. Films released by Cinedigm include: “Life In A Day” directed by Kevin McDonald, produced by Ridley Scott and released in association with National Geographic Entertainment and YouTube; “The Ward” directed by John Carpenter; “Smell of Success” featuring Billy Bob Thornton, Téa Leoni and Ed Helms; “Back & Forth,” a Foo Fighters documentary directed by Oscar® winner James Moll, and Peter Bogdanovich's “Runnin' Down A Dream” with Tom Petty and the Heartbreakers.
 
Current and upcoming CEG films include filmmaker Parris Patton's "No Room For Rockstars," the much-anticipated documentary chronicling the Vans Warped Tour which premiered at Sundance in January, 2012; "Like Water" chronicling  UFC champion Anderson Silva, which premiered at the 2011 Tribeca Film Festival (winner, "Best New Documentary Director" award for first-time filmmaker Pablo Croce) and "The Invisible War," the groundbreaking documentary investigating the rape epidemic within the U.S. military from Oscar® and Emmy® Award-nominated filmmaker Kirby Dick (winner, Audience Award at the 2012 Sundance Film Festival). www.cinedigm.com
 
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About New Video®
 
New Video is a leading entertainment distributor and the largest aggregator of independent digital content worldwide. Headquartered in New York City, with an international presence in 45 territories, the company delivers feature films, TV programs and web originals via digital download, streaming, video-on-demand, Blu-ray, DVD, and theatrical release. In 2011, New Video bowed Oscar ® -nominated Hell and Back Again and Brazilian blockbuster Elite Squad: The Enemy Within in US theaters. Through a new partnership with digital exhibitor Cinedigm Entertainment Group, New Video is poised to bring more independent films to theaters nationwide. New Video streamlines distribution and marketing for filmmakers and partners, bringing a wide variety of fresh content to new audiences. The company’s library includes original TV series and movies from A+E ® Home Entertainment, HISTORY™, and Lifetime ® , unforgettable games and trophy sets from Major League Baseball ® , storybook treasures from Scholastic ® , award-winning documentaries from Docurama Films ® , next-gen indies from Flatiron Film Company ® , and acclaimed independent films and festival picks through partnerships with the Sundance Institute and Tribeca Film. New Video is proud to distribute many Oscar ® -nominated films including GasLand, Waste Land , Chico & Rita and Hell and Back Again .
 
 
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Cinedigm Public Relations :
MBC
Maggie Begley
Maggie@mbcprinc.com

 
 

 
310-301-1785

Cinedigm Investor Relations:
Addo Communications
Patricia Dolmatsky/Kimberly Esterkin
patriciad@addocommunications.com
kimberlye@addocommunications.com
310-829-5400