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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

 

September 13, 2021

(Date of earliest event reported)

 

Cinedigm 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.)

 

237 West 35th Street, Suite 605, New York, New York   10001
(Address of principal executive offices)   (Zip Code)

 

212-206-8600

(Registrant’s telephone number, including area code)

 

 

(Former name or former address, if changed since last report)

 

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))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transmission period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Class A Common Stock   CIDM   Nasdaq Global Market

 

 

 

 

 

 

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

 

(c) As of September 13, 2021, Cinedigm Corp. (the “Company”) entered into an employment agreement with John Canning (the “Canning Employment Agreement”), pursuant to which Mr. Canning will serve as Chief Financial Officer of the Company. The term of the Employment Agreement will commence on September 13, 2021 and will end on September 13, 2023.  Pursuant to the Employment Agreement, Mr. Canning will receive an annual base salary of $350,000. In addition, Mr. Canning will be eligible for bonuses, with a target bonus of $175,000, which bonuses shall be based on Company performance with goals to be established annually by the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”). Mr. Canning is also entitled to a sign-on bonus of $50,000, which must be repaid to the Company if, September 13, 2022, Mr. Canning is terminated for Cause (as defined in the Canning Employment Agreement) or voluntarily resigns without Good Reason (as defined in the Canning Employment Agreement).

 

Also pursuant to the Canning Employment Agreement, Mr. Canning received a grant of (i) stock appreciation rights (the “SARs”) for 600,000 shares of the Company’s Class A common stock par value $0.001 per share (the “Common Stock”), which SARs have an exercise price of $2.10 per share, vest one-half (1/2) on September 13, 2022 and one-half (1/2) on September 13, 2023, and have a term of ten (10) years and (ii) performance stock units (the “PSUs”) for 150,000 shares of Common Stock, with 25% of the PSUs to be earned and vested on March 31, 2022 and 75% of the PSUs to be earned and vested on March 31, 2023 and metrics to be determined by Compensation Committee.

 

The Canning Employment Agreement further provides that Mr. Canning is entitled to participate in all benefit plans provided to senior executives of the Company.  The Canning Employment Agreement provides that, in the event of a termination without Cause (as defined in the Canning Employment Agreement) or a resignation for Good Reason (as defined in the Canning Employment Agreement), Mr. Canning shall be entitled to payment of twelve (12) months’ base salary at the time of termination. In the event, within two (2) years after a Change in Control (as defined in the Canning Employment Agreement), of a termination without Cause (other than due to Mr. Canning’s death or disability), a resignation for Good Reason, or upon notice by the Company that it does not wish to renew the Term (as defined in the Canning Employment Agreement), then in lieu of receiving the amounts described above, Mr. Canning would be entitled to receive a lump sum payment equal to two (2) times the sum of (a) his then-current annual base salary and (b) Mr. Canning’s target bonus for the year of termination.

 

Prior to Cinedigm, Mr. Canning was the CFO of Firefly Systems Inc., an ad-tech startup in Silicon Valley, from 2019 to August 2021. From 2018-2019, he was the interim CFO at Tapjoy, Inc., also an ad-tech company. From 2016-2018, Mr. Canning was Group Vice President, Finance, Discovery Channel Portfolio. Prior to that, Mr. Canning served in various finance leadership roles at various companies including Clear Channel Outdoor and The Walt Disney Company for a combined total of nearly 10 years. Prior to Disney, Canning enjoyed a successful management consulting career, spending more than a dozen years at prominent firms including Deloitte and KPMG, after earning his MBA with honors from the Marshall School of Business at USC.

 

The foregoing descriptions of the Employment Agreement, the SARs and the PSUs are qualified in their entirety by reference to such agreements, which are filed herewith as Exhibits 10.1, 10.2 and 10.3.

 

On September 14, 2021, the Company issued the press release attached hereto as Exhibit 99.1 and incorporated by reference herein.

 

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Item 9.01 Financial Statements and Exhibits

 

EXHIBIT INDEX

 

Exhibit No.   Description
     
10.1   Employment Agreement dated as of September 13, 2021 between Cinedigm Corp. and John Canning.
10.2   Form of Stock Appreciation Rights Agreement – Canning.
10.3   Form of Performance Stock Unit Agreement – Canning.
99.1   Press Release, dated September 14, 2021.
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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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 CORP.
   
Dated:  September 17, 2021 By:  /s/ Gary S. Loffredo
    Gary S. Loffredo
President, Chief Operating Officer,
President of Digital Cinema,
General Counsel and Secretary

 

 

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Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of the 13th day of September, 2021, by and between CINEDIGM CORP., a Delaware Corporation, 237 West 35th Street, Suite 605, New York, New York 10001 (the “Company”), and JOHN K. CANNING, having an address at 32194 Cedar Crest Court, Temecula, California, 92592 (the “Employee”).

 

WITNESSETH:

 

WHEREAS, effective as of September 13, 2021 (the “Effective Date”), the Company wishes to employ the Employee, and the Employee desires to accept such employment with the Company, upon the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereby agree as follows:

 

1. Employment.

 

(a) The Company agrees to employ the Employee, and the Employee agrees to be employed by the Company under the terms and conditions set forth in this Agreement, for the period stated in Paragraph 3 hereof and upon the other terms and conditions herein provided.

 

(b) The Employee affirms and represents that, other than as provided herein, the Employee is under no obligation to any party that is in any way inconsistent with, or that imposes material restrictions upon, the Employee’s employment by the Company or the Employee’s responsibilities or undertakings under this Agreement.

 

2. Position and Responsibilities. The Employee shall serve as Chief Financial Officer. The Employee’s principal place of employment will be located in metropolitan Los Angeles, California. Employee will initially work remotely, until such time as the Company informs Employee of the Company’s determination that Employee be required to work primarily in the Company’s metropolitan Los Angeles, California office or partially remotely and partially in-office. The Employee shall be responsible for such duties as are commensurate with this office and shall report to the Chief Executive Officer (“CEO”) of the Company, who shall have the power to expand the Employee’s duties, responsibilities and authority beyond those commensurate with this office (only in a temporary or immaterial manner unless the Employee consents to such expansion) and, when considered necessary or in the best interests of the Company, the CEO may override the Employee’s decisions and actions. Except as otherwise provided herein, the Employee will devote substantial full business time throughout the Term (defined below) to the services required hereunder. The Employee will render business services to the Company and its affiliates during the Term, and will use best efforts, judgment, and energy to improve and advance the operations, programs, services and interests of the Company and its affiliates in a manner consistent with the duties of this position. Notwithstanding the foregoing, as long as it does not materially interfere with the Employee’s employment hereunder, the Employee may participate in educational, welfare, social, religious and civic organizations.

 

 

 

 

3. Term. Except as otherwise provided for herein, the term of this Agreement shall be from September 13, 2021 (the “Effective Date”) through September 13, 2023 (the “Term”). This Agreement shall automatically renew for another one (1) year term, unless either party provides written notice to the other party no later than ninety (90) days before the expiration of the Term that the party does not wish to renew the Term of this Agreement. Upon the expiration of the Term, this Agreement, except for the provisions that survive pursuant to this paragraph 3 and paragraphs 8 and 6(c), will have no further force or effect.

 

4. Compensation, Reimbursement of Expenses.

 

(a) Salary. For all services rendered by the Employee in any capacity during employment under this Agreement, including, without limitation, service as an executive, officer, director, manager or member of any committee of the Company or of any subsidiary, affiliate, or division thereof, the Company shall pay the Employee, in accordance with the Company’s normal payroll practices, a salary (“Base Salary”) at the rate of $350,000 per year, subject to annual reviews and increases for subsequent years in the sole discretion of the Compensation Committee (the “Committee”) of the board of directors of Cinedigm Corp. (the “Board”).

 

(b) Bonus. The Employee shall be eligible to participate in the Company’s Management Annual Incentive Plan or any amended or successor plan thereto (“MAIP”). The target bonus shall be $175,000 (each such target bonus for the applicable fiscal year, the “Target Bonus”). The Employee’s Target Bonus shall be based on Company performance with goals to be established annually by the Committee and shall be subject to adjustment at the sole discretion of the Committee. Bonuses shall be paid at the same time bonuses are paid to other executives of the Company, which payment shall be made during the calendar year that includes the close of such fiscal year, but no later than August 31st following the fiscal year for which the bonus is earned, and shall be subject to the terms of the MAIP.

 

(c) Reimbursement of Expenses. In accordance with Company policies then in effect, the Company shall pay directly, or reimburse the Employee for, reasonable travel, entertainment and other business-related expenses incurred by the Employee in the performance of his duties under this Agreement.

 

(d) Performance Share Units. The Employee shall receive an award of 150,000 performance share units (“PSUs”) as approved by the Board of Directors. Subject to EBITDA targets to be determined in the sole and absolute discretion of the Compensation Committee and the Board of Directors, the Employee will be eligible to receive shares of Company common stock (“PSU Shares”), subject to the Company’s discretion to pay such award in cash or in stock. The award described in this paragraph will be subject to the specific terms of separate Notice of Award that will be provided to the Employee and shall be structured such that, subject to satisfaction of the specified performance metrics, twenty-five percent (25%) of the PSU Award shall be earned and vested on March 31, 2022, and the remaining seventy-five percent (75%) of the PSU Award shall be earned and vested on March 31, 2023. The PSU Award is a material inducement for the Employee to join the Company.

 

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(e) Long-Term Incentive Award. The Employee shall receive an award of 600,000 stock appreciation rights (“SARs”) effective September 13, 2021 (the “SAR Grant Date”). The award described in this paragraph will be subject to the specific terms of a separate Notice of Award that will be provided to the Employee and subject to mutual execution of this Agreement. The SARs will have an exercise/strike price equal to the fair market value of the Company’s common stock on the SAR Grant Date. One-half of the SARs shall vest on September 13, 2022, and the remaining one-half of the SARs shall vest on September 13, 2023. SARs may be settled by the Company in cash or shares at the sole and absolute discretion of the Compensation Committee. Other SARs features such as length of term, and termination provisions shall be consistent with prior option grants, subject to the sole and absolute discretion of the Compensation Committee. The SARs are a material inducement for the Employee to join the Company.

 

(f) Paid Time Off. Pursuant to the Company’s Paid Time Off Policy, you will accrue paid time off at the rate of 6.67 hours per pay period, up to twenty (20) days per year. Paid time off is subject to maximum accrual caps and other rules set forth in accordance with the Company’s policies and procedures.

 

(g) Sign-on Bonus. The Employee shall be entitled to a sign-on bonus in the amount of $50,000 which shall be payable as soon as administratively feasible following the later of the Effective Date or the date this Agreement is fully executed by both parties. If the Employee is terminated for Cause (as defined below) or voluntarily resigns without Good Reason (as defined below), in either case before the first anniversary of his start date, the Employee shall repay to the Company the full amount of the sign-on bonus.

 

(h) Equity Incentive Plan. The Employee shall be a participant in the Company’s 2017 Equity Incentive Plan (“EIP”) and may be granted awards under the EIP from time to time as approved by the Compensation Committee.

 

5. Participation in Benefit Plans. The Employee will be eligible to participate in all benefit plans and programs that the Company provides to its senior executives in line with the Company’s current practices, including medical, dental, vision, disability, life insurance and paid time off plans, all in accordance with the terms and conditions of such benefit plans and programs as may be modified by the Company in its sole discretion or as required by law from time to time.

 

6. Termination.

 

(a) The Company shall have the right to terminate this Agreement and the Employee’s employment prior to the expiration of the Term for Cause (as defined below). The Employee has the right to resign and terminate this Agreement at any time without “Good Reason” (as defined below) upon thirty (30) days’ written notice, which notice period may be waived at the discretion of the Company. The Company shall have no obligations to the Employee for any period subsequent to the effective date of any termination of this Agreement pursuant to this Paragraph 6(a), except any and all obligations provided by applicable law and the payment of Base Salary (pursuant to Paragraph 4(a)) up to and including the termination date, bonus earned and approved by the Committee (pursuant to Paragraph 4(b)), reimbursement of expenses incurred prior to the termination date (pursuant to Paragraph 4(c)), and benefits accrued prior to the termination date (pursuant to Paragraph 5).

 

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(b) The Company shall also have the right to terminate this Agreement and the Employee’s employment prior to the expiration of the Term other than for Cause upon thirty (30) days’ notice and the Employee has the right to resign and terminate this Agreement at any time for Good Reason (each such termination shall not include a termination of employee’s employment with the Company due to the Employee’s death or Disability). If, prior to the end of the Term, the Company terminates this Agreement and the Employee’s employment for reason(s) other than Cause hereof (and other than due to the Employee’s death or Disability) or if the Employee resigns for Good Reason (as defined below), the Employee shall be entitled to receive the following:

 

(i) the amounts payable under Paragraph 6(a); and

 

(ii) the Base Salary for the twelve (12) month period following termination of employment (the “Severance Period”), subject to Paragraphs 6(f) below, to be paid in equal monthly installments, as of the first day of each month following the date of termination; provided that the first of such payments shall be made in the month following sixty (60) days after such termination; provided that the first of such payments would include any amounts that would have been payable absent the 60-day delay in commencement date, and such payments shall continue for the duration of the Term or such twelve-month period, as applicable; and provided further that the Company may elect in its sole discretion to pay any amounts due under this Paragraph 6(b)(ii) as a one-time, lump-sum amount, less applicable statutory deductions and authorized withholdings, in the month following sixty (60) days after such termination. The Company shall be entitled to reduce the amounts paid under this Paragraph 6(b) by the amounts paid to the Employee in the same period by any other entity that employs the Employee after the Employee’s termination date with the Company.

 

(c) If, prior to the expiration of the Term, and within two (2) years after a Change in Control (as defined in the EIP), the Employee’s employment is terminated (i) by the Company without Cause (and other than due to the Employee’s death or Disability), (ii) or by the Employee for Good Reason, or (iii) upon notice by the Company under paragraph 3 of this Agreement that the Company does not wish to renew the Term of this Agreement, then in lieu of the amount payable under paragraph 6(b), Employee will receive a lump sum payment equal to two (2) times the sum of (a) Employee’s then-current annual Base Salary, and (b) Employee’s Target Bonus for the year of termination; provided, however, that such payment shall be limited to an amount which would not result in an “excess parachute payment” as that term is defined in Internal Revenue Code section 280G, as determined in the sole good faith discretion of the Company. Subject to paragraph 6(f) below, payment of the amount due under this paragraph 6(c) shall be made as soon as practicable following the date on which the termination occurs; but in no event later than sixty (60) days following the date of such termination and the Employee will not have the right to designate the taxable year of the payment.

 

(d) For purposes of this Agreement, “Cause” means any of the following: (i) the Employee’s conviction of or plea of nolo contendere to a felony or other crime involving moral turpitude; (ii) the Employee’s material breach of a material provision of this Agreement that is not corrected within thirty (30) days following written notice of such breach sent by the Company to the Employee; (iii) the Employee’s willful misconduct in the performance of Employee’s material duties under this Agreement; (iv) the Employee’s performance of material duties in a manner that is grossly negligent; (v) the Employee’s failure to attempt to fully comply with any lawful directive of the Chief Executive Officer of the Company which is not corrected within thirty (30) days following written notice of such breach sent by the Company to the Employee; and (vi) the Employee’s non-compliance with a material term of a Company policy. Whether or not “Cause” exists shall be determined solely by the Company in its reasonable, good faith discretion.

 

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(e) For purposes of this Agreement, “Good Reason” means, without the Employee’s written consent, (i) a material and substantially adverse reduction in title or job responsibilities compared with title or job responsibilities on the Effective Date; (ii) relocation of the Company’s Los Angeles, California office such that Employee’s commute to the office from his then current residence is increased by at least 50 miles; or (iii) any material breach of the Agreement by the Company. Notwithstanding the foregoing, Good Reason will be deemed to exist only in the event that: (x) the Employee gives written notice to the Company of Employee’s claim of Good Reason and the specific grounds for Employee’s claim within ninety (90) days following the occurrence of the event upon which Employee’s claim rests, (y) the Company fails to cure such breach within thirty days (30) of receiving such notice (“Cure Period”), and (z) the Employee gives written notice to the Company to terminate Employee’s employment within fifteen (15) days following the Cure Period.

 

(f) Notwithstanding any other provision of this Agreement to the contrary, the Employee shall not be entitled to any payments under Paragraph 6(b) or 6(c), and the Company shall not be obligated to make such payments, unless (i) the Employee materially complies with the restrictive covenants by which he is bound (whether pursuant to this Agreement or otherwise), including, but not limited to, any confidentiality agreement or invention assignment agreement signed by the Employee, and (ii) the Employee executes, delivers and does not revoke a commercially reasonable general release in form and substance acceptable to both the Company and Employee no later than sixty (60) days following the effective date of termination of employment. To the extent the Company makes any such payment to the Employee prior to the execution and delivery or a permissible revocation of the release described in clause (ii) and the Employee fails to execute or deliver the release or otherwise revokes the release, then the Employee will be obligated to repay to the Company the full amount of any such payment under Paragraph 6(b) or 6(c), as applicable, theretofore made to the Employee within ninety (90) days following the termination of the Employee’s employment.

 

7. Death or Disability. Upon the death or Disability (as defined below) of the Employee prior to the end of the Term, this Agreement shall terminate and no further payments shall be made other than those provided for by law and the payment of Base Salary up to and including the termination date, bonus earned and approved by the Committee (pursuant to Paragraph 4(b)), reimbursement of expenses incurred prior to such termination (pursuant to Paragraph 4(c)), and benefits (pursuant to Paragraph 5) accrued prior to the date of such death or Disability but not yet paid. For purposes of this Paragraph 7 “Disability” shall mean any physical or mental incapacity that is documented by qualified medical experts and that results in the Employee’s inability to perform Employee’s essential material duties and responsibilities for the Company, with reasonable accommodation, for a period of ninety (90) days in any consecutive twelve (12) month period, all as determined in the good faith judgment of the Board.

 

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8. Restrictive Covenants. The Employee hereby covenants, agrees and acknowledges as follows:

 

(a) Confidential Information. In the course of employment by the Company, the Employee will receive and/or be in possession of confidential information of the Company, its subsidiaries and affiliates and the predecessors and successors of any of them, including, but not limited to, information relating to: (i) operational procedures, financial statements or other financial information, contract proposals, business plans, training and operations methods and manuals, personnel records, and management systems policies or procedures; (ii) information pertaining to future plans and developments; and (iii) other tangible and intangible property that is used in the operations of the Company but not made public. The information and trade secrets relating to the business of the Company described in this Paragraph 8(a) are hereinafter referred to collectively as the “Confidential Information,” provided that the term Confidential Information will not include any information: (x) that is or becomes generally publicly available (other than as a result of violation of this Agreement by the Employee or someone under Employee’s control or direction) or (y) that the Employee receives on a non-confidential basis from a source (other than the Company or its representatives) that is not known by him to be bound by an obligation of secrecy or confidentiality to the Company. References in this Paragraph 8 to the “Company” shall include Cinedigm Corp., and its subsidiaries and affiliates and the predecessors and successors of any of them.

 

(b) Non-Disclosure. The Employee agrees that Employee will not, without the prior written consent of the Company, during the period of employment or at any time thereafter, disclose or make use of any such Confidential Information, except as may be required by law (and, in such case, he will immediately notify the Company of such disclosure request) or in the course of employment hereunder. The Employee agrees that all tangible materials containing Confidential Information, whether created by the Employee or others, that come into Employee’s custody or possession during employment, will be and are the exclusive property of the Company.

 

(c) Return of Confidential Information and Property. Upon termination of the Employee’s employment for any reason whatsoever, Employee will immediately surrender to the Company all Confidential Information and property of the Company in Employee’s possession, custody or control in whatever form maintained (including, without limitation, computer discs and other electronic media), including all copies thereof. The Employee shall be allowed to make and keep a copy of all personal information, including, but not limited to, personal information contained in Employee’s contacts directory. Any Confidential Information that cannot be returned or destroyed shall be kept confidential by the Employee at all times.

 

(d) Injunctive Relief and Other Remedies. The Employee acknowledges that the foregoing confidentiality provisions are reasonable and necessary for the protection of the Company and its subsidiaries, affiliates, and divisions, and that they will be materially and irrevocably damaged if these provisions are not specifically enforced. Accordingly, the Employee agrees that, in addition to any other relief or remedies available to the Company and its subsidiaries, affiliates and divisions, the Company will be entitled to seek an appropriate injunctive or other equitable remedy for the purposes of restraining the Employee from any actual or threatened breach of those provisions, and no bond or security will be required in connection therewith. If any of the foregoing confidentiality provisions are deemed invalid or unenforceable, these provisions will be deemed modified and limited to the extent necessary to make them valid and enforceable.

 

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9. Tax Withholding. The Company shall withhold from any compensation and benefits payable under this Agreement all federal, state, local or other taxes as shall be required pursuant to any law or governmental regulation or ruling.

 

10. Entire Agreement. This Agreement contains the entire understanding between the parties hereto and supersedes any other agreement between the Company or any predecessor of the Company or any of its affiliates and the Employee regarding the subject matter hereof.

 

11. Notices. All notices that are required or may be given pursuant to the terms of this Agreement will be in writing and will be sufficient in all respects if given in writing and (i) delivered personally, (ii) mailed by certified or registered mail, return receipt requested and postage prepaid, or (iii) sent via a responsible overnight courier, to the parties at their respective addresses set forth above, or to such other address or addresses as either party will have designated in writing to the other party hereto. The date of the giving of such notices delivered personally or by carrier will be the date of their delivery and the date of giving of such notices by certified or registered mail will be the date five days after the posting of the mail.

 

12. General Provisions.

 

(a) Nonassignability. Neither this Agreement nor any right or interest hereunder shall be assignable by the Employee or Employee’s beneficiaries or legal representatives without the Company’s prior written consent; provided, however, that nothing in this Paragraph 12 (a) shall preclude (i) the Employee from designating a beneficiary to receive any benefit payable hereunder following Employee’s death, or (ii) the executors, administrators, or other legal representatives of the Employee or Employee’s estate from assigning any rights hereunder to the person or persons entitled thereto.

 

(b) No Attachment. Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect.

 

(c) Binding Agreement. This Agreement shall be binding upon, and inure to the benefit of, the Employee and the Company and their respective permitted successors and assigns.

 

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(d) Compliance with 409A.

 

(i) Notwithstanding anything herein to the contrary, it is intended that the provisions of this Agreement satisfy the provisions of Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations issued thereunder (“Section 409A”) and this Agreement shall be interpreted and administered, as necessary, so that the payments and benefits set forth herein shall be exempt from or shall comply with the requirements of Section 409A. To the extent that the Company determines that any provision of this Agreement would cause the Employee to incur any additional tax or interest under Section 409A, the Company shall be entitled to reform such provision to attempt to comply with or be exempt from Section 409A. To the extent that any provision hereof is modified in order to comply with Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to the Employee and the Company without violating the provisions of Section 409A.

 

(ii) Notwithstanding anything in this Agreement or elsewhere to the contrary, a termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits that constitute “non-qualified deferred compensation” within the meaning of Section 409A upon or following a termination of the Employee’s employment unless such termination is also a “separation from service” within the meaning of Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service” and the date of such separation from service shall be the termination date for purposes of any such payment or benefits. In no event may the Employee, directly or indirectly, designate the calendar year of any payment to be made under this Agreement or otherwise which constitutes a “deferral of compensation” within the meaning of Section 409A.

 

(iii) All expenses or other reimbursements paid pursuant to this Agreement or other policy or program of the Company that are taxable income to the Employee shall in no event be paid later than the end of the calendar year next following the calendar year in which the Employee incurs such expense or pays such related tax. With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Section 409A, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, and (iii) such payments shall be made on or before the last day of the Employee’s taxable year following the taxable year in which the expense was incurred.

 

(iv) Nothing contained in this Agreement or any other agreement between the Employee and the Company or any policy, plan, program or arrangement of the Company shall constitute any representation or warranty by the Company regarding compliance with Section 409A.

 

13. Entire Agreement; Modification and Waiver.

 

(a) Entire Agreement. This Agreement represents the complete agreement of the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, promises or representations of the parties, including any prior employment agreement or similar agreement between the parties.

 

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(b) Amendment of Agreement. This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

 

(c) Waiver. No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

 

14. Severability. If, for any reason, any provision of this Agreement is held invalid, such invalidity shall not affect any other provision of this Agreement not held so invalid, and each such other provision shall to the full extent consistent with law continue in full force and effect. If any provision of this Agreement shall be held invalid in part, such invalidity shall in no way affect the rest of such provision not held so invalid, and the rest of such provision, together with all other provisions of this Agreement, shall to the full extent consistent with law continue in full force and effect.

 

15. Headings. The headings of paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.

 

16. Governing Law. This Agreement has been executed and delivered in the State of California, and its validity, interpretation, performance, and enforcement shall be governed by the laws of said State other than the conflict of laws provisions of such laws. The Employee and the Company hereby consent to the jurisdiction of the Federal and State courts located in Los Angeles, California, and each party waives any objection to the venue of any such suit, action or proceeding and the right to assert that any such forum is not a convenient forum, and irrevocably consents to the jurisdiction of the Federal and State courts located in Los Angeles, California in any such suit, action or proceeding.

 

17. Survival of Provisions. Neither the termination of this Agreement, nor of the Employee’s employment hereunder, will terminate or affect in any manner any provision of this Agreement that is intended by its terms to survive such termination, including without limitation, the provisions of Paragraph 8 hereof.

 

18. Authority to Enter into this Agreement. Both the Company and the Employee represent that they have the authority to enter into this Agreement and neither party is subject to any restriction or limitation that

 

19. Indemnification. The Company shall indemnify the Employee in the event the Employee is a party, or is threatened to be made a party, to any threatened, pending or contemplated action, suit, or proceeding (other than an action by or in the right of the Company) by reason of the fact that the Employee is an officer or director of the Company against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the Employee in connection with such action, suit, or proceeding if the Employee acted in good faith and in a manner the Employee reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe the Employee’s conduct was unlawful.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its officers thereunto duly authorized, and the Employee has signed this Agreement, all as of the day and year first above written.

 

  CINEDIGM CORP.
     
  By: /s/ Christopher McGurk
  Name:  Chris McGurk
  Title: Chairman & CEO

 

  Employee
     
  /s/ John Canning
  John K. Canning 

 

 

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Exhibit 10.2

 

STOCK APPRECIATION RIGHT AWARD

 

as of September 13, 2021

 

The parties to this Stock Appreciation Right Award (this “SAR” or “Award”) are Cinedigm Corp. (the “Company”), a Delaware corporation, and John K. Canning (the “Executive”), an employee of the Company.

 

Pursuant to the terms of that certain employment agreement between the Company and the Executive dated September 13, 2021 (“Agreement”), the Company desires to have the Executive serve as an employee of the Company and to provide the Executive with an incentive to put forth maximum effort for the success of the business.

 

In accordance with Section 2(e) of the Agreement, the Company has agreed to grant the Executive an aggregate of 600,000 SARs subject to the terms and conditions herein set forth.

 

This SAR Award is a material inducement for the Employee to join the Company.

 

Accordingly, intending to be legally bound hereby, the parties agree as follows:

 

ARTICLE I
Definitions

 

The following definitions shall apply for purposes of this Award:

 

1.1 “Board” shall mean the Board of Directors of the Company.

 

1.2 “Cause” shall have the meaning set forth in Section 6(d) of the Agreement.

 

1.3 Change in Control means the occurrence of any of the following events:

 

(a) Any one person, or more than one person acting as a group, acquires ownership of stock (as determined under Code Section 318(a)) of the Company that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company; provided, however, that if any one person or more than one person acting as a group, is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons is not considered to cause a Change in Control of the Company. This paragraph applies only when there is a transfer of stock of the Company (or issuance of stock of the Company) and stock in the Company remains outstanding after the transaction;

 

 

 

(b) any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock (as determined under Code Section 318(a)) of the Company possessing thirty percent (30%) or more of the total voting power of the stock of the Company; provided, however, that if any one person or more than one person acting as a group, is considered to own thirty percent (30%) or more of the total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons is not considered to cause a Change in Control of the Company;

 

(c) the consummation of a Merger (as defined below), unless, following such Merger, stock possessing at least fifty percent (50%) of the total combined voting power of the issued and outstanding shares of all classes of Company Voting Securities of the corporation resulting from such Merger is beneficially owned, directly or indirectly, by individuals and entities who were beneficial owners of the then-outstanding Company Voting Securities immediately prior to such Merger in substantially the same proportion as their ownership immediately prior to such Merger;

 

(d) individuals who are members of the Board as of the Grant Date (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the members of the Board; provided, however, that any individual becoming a director subsequent to the Grant Date whose appointment to the Board or nomination for election by the Company was approved by a vote of at least a majority of the Incumbent Directors then in office (unless such appointment or election was at the request of an unrelated third party who has taken steps reasonably calculated to result in a Change in Control as described in paragraphs (a), (b), or (c) of this Section 1.3 and who has indicated publicly an intent to seek control of the Company) shall be treated from the date of their appointment or election as an Incumbent Director;

 

(e) consummation of a complete liquidation or dissolution of the Company; or

 

(f) any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition(s); provided, however, that a transfer of assets by the Company is not treated as a Change in Control if the assets are transferred to (A) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock; (B) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company; (C) a person, or more than one person acting as a group, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all outstanding stock of the Company; or (D) an entity, at least fifty percent (50%) percent of the total value or voting power of which is owned, directly or indirectly, by a person described in the previous subsection (C). For purposes of this paragraph, (1) gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets, and (2) a person’s status is determined immediately after the transfer of the assets.

 

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For purposes of this Section 1.3, “Company Voting Securities” shall mean the combined voting power of all outstanding classes of Common Stock of the Company and all other outstanding securities of the Company entitled to vote generally in the election of directors of the Company, and “Merger” shall mean any merger, reorganization, consolidation, share exchange, transfer of assets or other transaction having similar effect involving the Company.

 

1.4 “Code” shall mean the U.S. Internal Revenue Code of 1986, as amended from time to time, and any applicable regulations thereunder and any successor or similar provision.

 

1.5 “Committee” shall mean the Compensation Committee of the Board or such other Committee appointed by the Board for the purpose of administering this SAR, comprised solely of two or more members of the Board who qualify as “non-employee” directors within the meaning of Rule 16b-3 under the Exchange Act, and as “independent” directors within the meaning of Nasdaq Rule 4200(b)(15).

 

1.6 “Common Stock” shall mean the Class A Common Stock, par value $0.001 per share, of the Company.

 

1.7 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

1.8 “Good Reason” shall have the meaning set forth in Section 6(e) of the Agreement.

 

1.9 “Grant Date” shall mean September 13, 2021.

 

1.10 “Market Price” shall mean the closing price of Common Stock as reported on the Nasdaq Global Market or such other primary market or exchange on which the Common Stock may, from time to time, trade, on the date for which a Market Price is to be determined under this Award.

 

1.11 “Merger” shall mean any merger, reorganization, consolidation, share exchange, transfer of assets or other transaction having similar effect involving the Company.

 

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ARTICLE II
Grant of SAR

 

2.1 Subject to the terms and conditions of this Award, the Company hereby grants to the Executive as of the Grant Date, an aggregate of 600,000 SARs. Each SAR entitles the Executive to receive, upon exercise, an amount (referred to herein as the “Stock Appreciation Amount”) equal to the excess of (a) the Market Price per share of the Common Stock on the exercise date, over (b) $2.10, being not less than the Market Price per share of the Common Stock on the Grant Date (the amount in (b) referred to herein as the “Exercise Price”).

 

2.2 The Expiration Date of the SARs is the date that is ten (10) years from the Grant Date. The SARs may not be exercised on or after the Expiration Date.

 

2.3 The SAR shall be subject to the terms and conditions of this Award.

 

ARTICLE III
Vesting, Exercise and Tax Withholding

 

3.1 Vesting of SARs. Except as provided in Articles IV and V, the SARs shall become vested in two installments pursuant to the following table:

 

Date of Vesting

  Number of SARs that will Vest
September 13, 2022   300,000  (“Tranche 1 SARs”)
September 13, 2023   300,000  (“Tranche 2 SARs”)

 

3.2 Exercisability of SARs Except as provided in Articles IV and V, the SARs shall become exercisable at the time they become vested pursuant to Section 3.1. Once the SARs have become exercisable in accordance with the preceding sentence, they shall continue to be exercisable until the termination of the Executive’s rights hereunder pursuant to Articles IV and V, or until the Expiration Date, if earlier. A partial exercise of this SAR shall not affect the Executive’s right to exercise the SARs with respect to the remaining shares, subject to the terms and conditions set forth herein.

 

3.3 Method of Exercising SARs and Form of Payment of Stock Appreciation Amount. The SARs shall be exercised pursuant to procedures established by the Committee for exercising the SARs. Upon exercise of the SARs, the Stock Appreciation Amount, less any amounts withheld pursuant to Section 3.4, shall be paid, as determined solely at the discretion of the Company, in (a) whole shares of Common Stock, (b) cash, or (c) a combination of both cash and Common Stock.

 

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3.4 Taxes. Tax withholding requirements attributable to the exercise of this SAR, including employment taxes, Federal income taxes, and state and local income taxes with respect to the state and locality where, according to the Company’s system of records, the Executive resides at the time the SAR is exercised, except as otherwise might be determined to be required by the Company, will be satisfied by the Executive as instructed in the established procedures for exercising this SAR. It is the Executive’s responsibility to properly report all income and remit all Federal, state, and local taxes that may be due to the relevant taxing authorities as the result of exercising this SAR.

 

ARTICLE IV
Termination of Employment

 

4.1 Treatment of SARs Upon a Qualifying Termination Event.

 

(a) Notwithstanding anything in this SAR to the contrary, if, prior to the forfeiture of the SARs under Section 4.4, the Executive experiences a Qualifying Termination Event (as defined below), the SARs shall become vested and exercisable as to a pro-rata number of the unvested SARs, as determined in accordance with the following sentence. The pro-rata number of the unvested SARs that shall vest and become exercisable pursuant to the preceding sentence shall be equal to a fraction of the remaining unvested SARs; the numerator of such fraction shall be “x” where x equals the number of full months of service performed by the Executive on and after (and including the month of) the Grant Date, and prior to the Qualifying Termination Event; and the denominator of the fraction shall be 12 for Tranche 1 SARs, and 24 for Tranche 2 SARs. The non-vested portion of the SARs shall be forfeited.

 

(b) The portion of the SARs vested pursuant to Section 3.1 or subsection (a) of this Section 4.1, may be exercised beginning on the date the SAR becomes vested and shall remain exercisable according to the terms provided in Section 3.2, and the Executive or his beneficiary (or estate as the case may be) may exercise this SAR during the remainder of the period preceding the Expiration Date.

 

4.2 Other Termination of Employment. Except as provided in Section 4.1 or Article V, in the event the Executive ceases to be employed by the Company or an Affiliate, the rules under this Section 4.2 shall apply. If the Executive ceases to be employed after the SARs are vested, but prior to the Expiration Date, the Executive may exercise the SARs with respect to the shares he is entitled to purchase pursuant to Sections 3.1 and 3.2 above within sixty (60) days of the date of such termination of employment (but in no event later than the Expiration Date). Any portion of the vested SARs that is not exercised within the foregoing sixty (60) day period shall be immediately forfeited.

 

4.3 Definition of Qualifying Termination Event. For purposes of this SAR, Qualifying Termination Event shall mean the Executive’s death, permanent and total disability, termination by the Company or an Affiliate other than for Cause, or voluntary termination for Good Reason.

 

4.4 Forfeiture of any Non-Vested SARs. Any non-vested portion of the SARs that does not become vested pursuant to Section 3.1, 4.1(a) or Article V, shall be forfeited if the Executive’s employment with the Company or an Affiliate terminates for any reason.

 

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ARTICLE V
Change in Control

 

5.1 In the event of a Change in Control prior to the forfeiture of the SARs under Section 4.4, the provisions of this Article V shall apply.

 

5.2 If, upon a Change in Control, the Executive receives a new award which qualifies as a “Replacement Award”, the Replacement Award shall continue subject to the terms of the Replacement Award. A new award shall be considered a Replacement Award if: (i) it has a value at least equal to the value of this Award as determined by the Committee in its sole discretion; (ii) it relates to publicly traded equity securities of the Company or its successor in the Change in Control or another entity that is affiliated with the Company or its successor following the Change in Control; and (iii) its other terms and conditions are not less favorable to the Executive than the terms and conditions of this Award (including the provisions that would apply in the event of a subsequent Change in Control). Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of this Award if the requirements of the preceding sentence are satisfied. The determination of whether the conditions of this Section 5.2 are satisfied shall be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion.

 

5.3 If, upon a Change in Control that results in the Company’s Common Stock no longer being traded on the Nasdaq Global Market or another established securities market and no Replacement Award is granted to the Executive, the unvested portion of this Award shall become immediately vested and exercisable upon the Change in Control.

 

5.4 If, following a Change in Control, the Company’s Common Stock continues to be traded on the Nasdaq Global Market or another established securities market, this Award shall continue in effect and be treated as a Replacement Award as described in Section 5.2.

 

5.5 Notwithstanding Sections 5.2, 5.3 or 5.4 hereof, the Committee may, in its sole discretion, determine that this Award, whether or not exercisable, will be canceled and terminated, and that in connection with such cancellation and termination, the Executive may receive for each share subject to the Award, a cash payment (or the delivery of shares of stock, other securities or a combination of cash, stock and securities equivalent to such cash payment) equal to the difference, if any, between the consideration received by shareholders of the Company in respect of a share in connection with such transaction and the purchase price per share, if any, under this Award multiplied by the number of shares subject to the Award; provided that if such product is zero or less or to the extent that the Award is not then exercisable, the Awards will be canceled and terminated without payment therefor.

 

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5.6 In addition to the foregoing provisions of this Article V, the provisions of this Section 5.6 shall apply to the Award in the event of a Change in Control:

 

(a) Any Replacement Award made to the Executive shall provide that if the Executive is terminated by the Company other than for Cause or voluntarily resigns for Good Reason concurrent with or within two (2) years after the date of the Change in Control, the non-vested Replacement Award shall become immediately vested and shall be exercisable as provided in paragraph 4.1(b), at the time of the termination or resignation. The Committee shall have the discretion to determine the terms of any Replacement Award in compliance with applicable law. For purposes of Sections 4.1 and 4.4, references to the Company or an Affiliate shall also include any successor entity.

 

(b) Notwithstanding the provisions of subparagraph (a) hereof, in connection with a Change in Control where the Company’s shares continue to be traded on the Nasdaq Global Market or another established securities market and this SAR remains in effect, if the Executive is terminated by the Company other than for Cause or voluntarily resigns for Good Reason concurrent with or within two (2) years after the date of the Change in Control, the non-vested SARs shall become immediately vested and shall be exercisable as provided in paragraph 4.1(b), as of the time of the termination or resignation.

 

5.7 Except as may be provided in a severance compensation agreement between the Company and the Executive, if, in connection with a Change in Control, this Award will cause the Executive to be liable for federal excise tax under Code Section 4999 levied on certain “excess parachute payments” as defined in Code Section 280G (“Excise Tax”), then the payments made pursuant to the Awards shall be reduced (or repaid to the Company, if previously paid or provided) so that no portion of any payment, as so reduced or repaid, constitutes an excess parachute payment.

 

ARTICLE VI

Miscellaneous

 

6.1 The terms of this SAR shall be adjusted as the Committee determines is equitable in the event the Company effects one or more stock dividends, stock split-ups, subdivisions or consolidations of shares or other similar changes in capitalization.

 

6.2 Whenever the term “the Executive” is used in any provision of this Award under circumstances where the provision should logically be construed to apply to the executors, the administrators, or the person or persons to whom SAR may be transferred by will or by the laws of descent and distribution, the term “the Executive” shall be deemed to include such person or persons.

 

6.3 The SARs granted hereunder are not transferable by the Executive otherwise than by will or the laws of descent and distribution and are exercisable during the Executive’s lifetime only by him or her. No assignment or transfer of the SARs granted hereunder, or of the rights represented thereby, whether voluntary or involuntary, by the operation of law or otherwise (except by will or the laws of descent and distribution), shall vest in the assignee or transferee any interest or right herein whatsoever, but immediately upon any such assignment or transfer the SARs shall terminate and become of no further effect.

 

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6.4 The Executive shall not be deemed for any purpose to be a shareholder of the Company in respect of any shares as to which the SARs shall not have been exercised as herein provided.

 

6.5 Nothing in this Award shall confer upon the Executive any right to continue in the employ of the Company or shall affect the right of the Company to terminate the employment of the Executive, with or without cause.

 

6.6 Nothing in this Award or otherwise shall obligate the Company to vest any of the SARs, to permit the SARs to be exercised other than in accordance with the terms hereof or to grant any waivers of the terms of this Award, regardless of what actions the Company, the Board or the Committee may take or waivers the Company, the Board or the Committee may grant under the terms of or with respect to any SARs now or hereafter granted to any other person or any other SARs granted to the Executive.

 

6.7 Notwithstanding any other provision hereof, the Executive shall not exercise the SARs granted hereunder, and the Company shall not be obligated to issue any shares to the Executive hereunder, if the exercise thereof or the issuance (or such purchase) of such shares would constitute a violation by the Executive or the Company of any provision of any law or regulation of any governmental authority. Any determination in this connection by the Company shall be final and binding. The Company shall in no event be obligated to register any securities pursuant to the Securities Act of 1933 (as the same shall be in effect from time to time) or to take any other affirmative action in order to cause the exercise of the SARs or the issuance of shares pursuant thereto to comply with any law or regulation of any governmental authority.

 

6.8 No amounts of income or other benefits received by the Executive pursuant to this Award shall be considered compensation for purposes of any pension or retirement plan, insurance plan or any other employee benefit plan of the Company unless otherwise provided in such plan.

 

6.9 If the events described in Section 4.1(a) or Article V occur after the date that the Executive is advised (upon recommendation by the Committee) that his employment is being, or will be, terminated for Cause, on account of performance or in circumstances that prevent him from being in good standing with the Company, accelerated vesting shall not occur and all rights under this SAR shall terminate, and this SAR shall expire on the date of the Executive’s termination of employment. The Committee shall have the authority to determine whether the Executive’s termination from employment is for Cause or for any reason other than Cause.

 

6.10 This Award shall be governed by the laws of the State of Delaware applicable to agreements made and performed wholly within the State of Delaware (regardless of the laws that might otherwise govern under applicable conflicts of laws principles) and applicable federal law. All disputes arising under this SAR shall be adjudicated solely within the state or Federal courts located within the State of Delaware.

 

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6.11 This Award sets forth a complete understanding between the parties with respect to its subject matter and supersedes all prior and contemporaneous agreements and understandings with respect thereto. Except as expressly set forth in this Award, the Company makes no representations, warranties or covenants to the Executive with respect to this Award or its subject matter, including with respect to (i) the current or future value of the shares subject to the SAR and (ii) whether the SAR exercise price is equal to, less than or greater than the fair market value of a share of Common Stock. Any modification, amendment or waiver to this Award will be effective only if it is in writing signed by the Company and the Executive. The failure of any party to enforce at any time any provision of this Award shall not be construed to be a waiver of that or any other provision of this Award.

 

6.12 This SAR shall be administered and interpreted solely by the Committee or its delegated agent. The interpretations and decisions of the Committee with regard to this SAR shall be final and conclusive and binding upon the Executive.

 

6.13 In the event of the Executive’s death while the SARs remain exercisable, the SARs may be exercised by the Executive’s beneficiary as designated on file with the Company, or, in the absence of such a beneficiary designation (or if the beneficiary has pre-deceased the Executive), by will or the laws of descent and distribution (in which case the Company without liability to any other person, may rely on the directions of the executor or administrator of the Executive’s estate with respect to the disposition or exercise of such SARs).

 

6.14 The Committee may require, upon exercise, payment or delivery pursuant to the SARs, that the Executive certify in a manner acceptable to the Company that he or she is in compliance with the terms and conditions of this Award.

 

6.15 It is the intent that this Award comply in all respects with Rule 16b-3 under the Exchange Act and any related regulations. If any provision of this Award is later found not to be in compliance with such Rule and regulations, the provisions shall be deemed null and void. This grants and exercises of the SARs under this Award shall be executed in accordance with the requirements of Section 16 of the Exchange Act and regulations promulgated thereunder.

 

6.16 Subject to the limitations set forth herein, this SAR shall be binding upon and inure to the benefit of the legatees, distributees, and personal representatives of the Executive and the successors of the Company.

 

6.17 This SAR is subject to the terms of any separate Clawback Policy maintained by the Company, as such Policy may be amended from time to time.

 

6.18 The Executive hereby acknowledges receipt of a copy of this Award, and that he has read and understands the terms and provisions hereof, and accepts the SARs subject to all of the terms and conditions of the Award. The Executive acknowledges that there may be adverse tax consequences upon exercise of the SARs or disposition of the underlying shares and that the Executive should consult a tax advisor prior to such exercise or disposition.

 

[SIGNATURE PAGE TO FOLLOW]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Award as of the day and year first above written.

 

  CINEDIGM CORP.
       
  By:  
    Name:  
    Title:  
       
  EXECUTIVE:
       
   
  JOHN K. CANNING

 

 

 

 

Exhibit 10.3

 

PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD

 

as of September 13, 2021

 

The parties to this Performance-Based Restricted Stock Unit Award are Cinedigm Corp. (the “Company”), a Delaware corporation, and John K. Canning (the “Executive”), an employee of the Company.

 

Pursuant to the terms of that certain employment agreement between the Company and the Executive dated September 13, 2021 (“Agreement”), the Company desires to have the Executive serve as an employee of the Company and to provide the Executive with an incentive to put forth maximum effort for the success of the business.

 

In accordance with Section 2(d) of the Agreement, the Company has agreed to grant the Executive an award (“Award”) in the form of 150,000 performance-based restricted stock units (“PSUs”) subject to the terms and conditions herein set forth.

 

This PSU Award is a material inducement for the Employee to join the Company.

 

Accordingly, intending to be legally bound hereby, the parties agree as follows:

 

ARTICLE I
Definitions

 

The following definitions shall apply for purposes of this Award:

 

1.1 “Board” shall mean the Board of Directors of the Company.

 

1.2 “Cause” shall have the meaning set forth in Section 6(d) of the Agreement.

 

1.3 Change in Control means the occurrence of any of the following events:

 

(a) Any one person, or more than one person acting as a group, acquires ownership of stock (as determined under Code Section 318(a)) of the Company that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company; provided, however, that if any one person or more than one person acting as a group, is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons is not considered to cause a Change in Control of the Company. This paragraph applies only when there is a transfer of stock of the Company (or issuance of stock of the Company) and stock in the Company remains outstanding after the transaction;

 

 

 

 

(b) any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock (as determined under Code Section 318(a)) of the Company possessing thirty percent (30%) or more of the total voting power of the stock of the Company; provided, however, that if any one person or more than one person acting as a group, is considered to own thirty percent (30%) or more of the total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons is not considered to cause a Change in Control of the Company;

 

(c) the consummation of a Merger (as defined below), unless, following such Merger, stock possessing at least fifty percent (50%) of the total combined voting power of the issued and outstanding shares of all classes of Company Voting Securities of the corporation resulting from such Merger is beneficially owned, directly or indirectly, by individuals and entities who were beneficial owners of the then-outstanding Company Voting Securities immediately prior to such Merger in substantially the same proportion as their ownership immediately prior to such Merger;

 

(d) individuals who are members of the Board as of the Grant Date (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the members of the Board; provided, however, that any individual becoming a director subsequent to the Grant Date whose appointment to the Board or nomination for election by the Company was approved by a vote of at least a majority of the Incumbent Directors then in office (unless such appointment or election was at the request of an unrelated third party who has taken steps reasonably calculated to result in a Change in Control as described in paragraphs (a), (b), or (c) of this Section 1.3 and who has indicated publicly an intent to seek control of the Company) shall be treated from the date of their appointment or election as an Incumbent Director;

 

(e) consummation of a complete liquidation or dissolution of the Company; or

 

(f) any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition(s); provided, however, that a transfer of assets by the Company is not treated as a Change in Control if the assets are transferred to (A) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock; (B) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company; (C) a person, or more than one person acting as a group, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all outstanding stock of the Company; or (D) an entity, at least fifty percent (50%) percent of the total value or voting power of which is owned, directly or indirectly, by a person described in the previous subsection (C). For purposes of this paragraph, (1) gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets, and (2) a person’s status is determined immediately after the transfer of the assets.

 

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For purposes of this Section 1.3, “Company Voting Securities” shall mean the combined voting power of all outstanding classes of Common Stock of the Company and all other outstanding securities of the Company entitled to vote generally in the election of directors of the Company, and “Merger” shall mean any merger, reorganization, consolidation, share exchange, transfer of assets or other transaction having similar effect involving the Company.

 

1.4 “Code” shall mean the U.S. Internal Revenue Code of 1986, as amended from time to time, and any applicable regulations thereunder and any successor or similar provision.

 

1.5 “Committee” shall mean the Compensation Committee of the Board or such other Committee appointed by the Board for the purpose of administering this PSU. comprised solely of two or more members of the Board who qualify as “non-employee” directors within the meaning of Rule 16b-3 under the Exchange Act, and as “independent” directors within the meaning of Nasdaq Rule 4200(b)(15).

 

1.6 “Common Stock” shall mean the Class A Common Stock, par value $0.001 per share, of the Company.

 

1.7 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

1.8 “Good Reason” shall have the meaning set forth in Section 6(e) of the Agreement.

 

1.9 “Grant Date” shall mean September 13, 2021.

 

1.10 “Market Price” shall mean the closing price of Common Stock as reported on the Nasdaq Global Market or such other primary market or exchange on which the Common Stock may, from time to time, trade, on the date for which a Market Price is to be determined under this Award.

 

1.11 “Merger” shall mean any merger, reorganization, consolidation, share exchange, transfer of assets or other transaction having similar effect involving the Company.

 

3 

 

 

ARTICLE II
Grant of PSUs

 

2.1 On September 13, 2021 (the “Grant Date”), the Company granted to the Executive this Award in the form of 150,000 PSUs (which number of Units is also referred to as the “Target Units”). Each PSU shall have a value equal to one share of the Company’s Common Stock.

 

2.2 The PSUs shall be subject to the terms and conditions of this Award.

 

2.3 The Award shall be divided into two tranches; 25% of the Target Units shall be part of “Tranche A Units,” and the remaining 75% of the Target Units shall be part of “Tranche B Units”. Unless otherwise indicated below, the provisions of this Award shall apply to both the Tranche A Units and the Tranche B Units.

 

2.4 Except as provided in this Award, the PSUs shall remain unearned, nontransferable and are subject to a substantial risk of forfeiture. In addition, the PSUs shall not be earned, and the Executive’s interest in the PSUs granted hereunder shall be forfeited, except to the extent that the provisions of this Award are satisfied.

 

ARTICLE III

Performance Criteria for PSUs

 

3.1 The Executive’s PSUs shall be earned as soon as practicable after the end of the relevant Measurement Period based on the formula and terms below (to the nearest whole PSU). For these purposes, the Measurement Period for the Tranche A Units is the period running from April 1, 2021 to March 31, 2022, and the Measurement Period for the Tranche B Units is the period running from April 1, 2022 to March 31, 2023.

 

3.2 The Executive’s Tranche A Units shall be determined in accordance with the following provisions and the defined terms in Section 3.4 below–

 

[TBD]

 

3.3 The Executive’s Tranche B Units shall be determined in accordance with the following provisions and the defined terms in Section 3.4 below–

 

[TBD]

 

4 

 

 

3.4 For purposes of both Tranche A Units and Tranche B Units—

 

[TBD]

 

ARTICLE IV
Earning, Vesting and Payment of the PSUs

 

4.1 As soon as practicable after the end of the Tranche A Measurement Period, a determination shall be made by the Committee of the number of whole Tranche A Units that Participant has earned. The date as of which the Committee determines the number of Tranche A Units earned shall be the “Tranche A Award Date,” and all Tranche A Units that are earned shall be immediately vested as of the Tranche A Award Date.

 

4.2 As soon as practicable after the end of the Tranche B Measurement Period, a determination shall be made by the Committee of the number of whole Tranche B Units that Participant has earned. The date as of which the Committee determines the number of Tranche B Units earned shall be the “Tranche B Award Date,” and all Tranche B Units that are earned shall be immediately vested as of the Tranche B Award Date.

 

4.3 In the event that, as of the end of the Tranche A Measurement Period, _________________ ____________, with the result that less than 100% of the Tranche A Units have been earned, any unearned Tranche A Units shall be carried forward as additional Tranche B Units instead and subject to all provisions of this Award applicable to Tranche B Units.

 

4.4 Payment of the Executive’s vested PSUs shall be made as soon as practicable after the Award has become vested, but in no event later than March 15th of the calendar year after the year in which the Award becomes vested. The vested PSUs shall be paid, as determined solely at the discretion of the Company, in (a) whole shares of the Company’s Common Stock, (b) cash, or (c) a combination of both Stock and cash.

 

ARTICLE V
Termination of Employment

 

4.1 Notwithstanding anything in this PSU to the contrary, if, prior to the forfeiture of the PSUs under Section 4.4, (a) the Executive separates from service for any reason before March 31, 2022, then all of the Executive’s PSUs shall be forfeited; and (b) if, on or after April 1, 2022, but prior to March 31, 2023, the Executive experiences a Qualifying Termination Event (as defined below), then a pro-rata number of the Executive’s Tranche B Units (based on the number of days of completed employment between the first day of the Tranche B Measurement Period and the Qualifying Termination Event) shall be earned under Section 3.3 and the relevant provisions of Section 3.4 above, as of the Tranche B Award Date; and any remaining Tranche B Units as of the Tranche B Award Date shall be forfeited. The number of earned Tranche B Units shall be determined by the Committee and the earned Tranche B Units shall be fully vested as of the Award Date.

 

5 

 

 

4.2 If, after the Tranche A Measurement Period ends, but prior to the Tranche A Award Date, the Executive experiences a Qualifying Termination Event (as defined below), (i) the Executive shall earn his Tranche A Units to the extent earned pursuant to Section 3.2, and such earned Tranche A Units shall be fully vested as of the Tranche A Award Date, and (ii) Tranche B Units shall be treated in accordance with Section 4.1 hereof.

 

4.3 If, after the Tranche B Measurement Period ends, but prior to the Tranche B Award Date, Participant experiences a Qualifying Termination Event (as defined below), the Executive shall earn his Tranche B Units to the extent earned pursuant to Section 3.3, and such earned Tranche B Units shall be fully vested as of the Tranche B Award Date.

 

4.4 Except as set forth in Article V, PSUs that are forfeitable shall be forfeited if the Executive’s employment with the Company or an Affiliate terminates for any reason except a Qualifying Termination Event.

 

4.5 For purposes of this PSU, Qualifying Termination Event shall mean the Executive’s death, permanent and total disability, termination by the Company or an Affiliate other than for Cause, or voluntary termination for Good Reason.

 

4.6 If the Executive dies prior to the vesting of his PSUs, any earned PSUs shall be paid to his Beneficiary. The Executive shall have the right to designate a Beneficiary on a form filed with the Committee; if the Executive fails to designate a Beneficiary, or if at the time of the Executive’s death there is no surviving Beneficiary, any earned PSUs will go to the Executive’s estate.

 

ARTICLE V
Change in Control

 

5.1 In the event of a Change in Control prior to the forfeiture of the PSUs under Section 4.4, all of the Target Units shall be earned and non-forfeitable as of the date of the Change in Control.

 

5.2 Except as may be provided in a severance compensation agreement between the Company and the Executive, if, in connection with a Change in Control, this Award will cause the Executive to be liable for federal excise tax under Code Section 4999 levied on certain “excess parachute payments” as defined in Code Section 280G (“Excise Tax”), then the payments made pursuant to the Award shall be reduced (or repaid to the Company, if previously paid or provided) so that no portion of any payment, as so reduced or repaid, constitutes an excess parachute payment.

 

6 

 

 

ARTICLE VI

Miscellaneous

 

6.1 The terms of this PSU shall be adjusted as the Committee determines is equitable in the event the Company effects one or more stock dividends, stock split-ups, subdivisions or consolidations of shares or other similar changes in capitalization..

 

6.2 Whenever the term “the Executive” is used in any provision of this Award under circumstances where the provision should logically be construed to apply to the executors, the administrators, or the person or persons to whom PSU may be transferred by will or by the laws of descent and distribution, the term “the Executive” shall be deemed to include such person or persons.

 

6.3 The PSUs granted hereunder are not transferable by the Executive otherwise than by will or the laws of descent and distribution and are exercisable during the Executive’s lifetime only by him or her. No assignment or transfer of the PSUs granted hereunder, or of the rights represented thereby, whether voluntary or involuntary, by the operation of law or otherwise (except by will or the laws of descent and distribution), shall vest in the assignee or transferee any interest or right herein whatsoever, but immediately upon any such assignment or transfer the PSUs shall terminate and become of no further effect.

 

6.4 The Executive shall not be deemed for any purpose to be a shareholder of the Company in respect of any shares as to which the PSUs shall not have been earned and vested.

 

6.5 Nothing in this Award shall confer upon the Executive any right to continue in the employ of the Company or shall affect the right of the Company to terminate the employment of the Executive, with or without cause.

 

6.6 Nothing in this Award or otherwise shall obligate the Company to vest any of the PSUs, to permit the PSUs to be earned and vested other than in accordance with the terms hereof or to grant any waivers of the terms of this Award, regardless of what actions the Company, the Board or the Committee may take or waivers the Company, the Board or the Committee may grant under the terms of or with respect to any PSU now or hereafter granted to any other person or any other PSU granted to the Executive.

 

6.7 Notwithstanding any other provision hereof, the Executive shall not earn or vest the PSUs granted hereunder, and the Company shall not be obligated to issue any shares to the Executive hereunder, if the earning or vesting thereof or the issuance (or such purchase) of such shares would constitute a violation by the Executive or the Company of any provision of any law or regulation of any governmental authority. Any determination in this connection by the Company shall be final and binding. The Company shall in no event be obligated to register any securities pursuant to the Securities Act of 1933 (as the same shall be in effect from time to time) or to take any other affirmative action in order to cause the exercise of the PSU or the issuance of shares pursuant thereto to comply with any law or regulation of any governmental authority.

 

7 

 

 

6.8 No amounts of income or other benefits received by the Executive pursuant to this Award shall be considered compensation for purposes of any pension or retirement plan, insurance plan or any other employee benefit plan of the Company unless otherwise provided in such plan.

 

6.9 If the events described in Section 4.1(a) or Article V occur after the date that the Executive is advised (upon recommendation by the Committee) that his employment is being, or will be, terminated for Cause, on account of performance or in circumstances that prevent him from being in good standing with the Company, accelerated vesting shall not occur and all rights under this Award shall terminate, and this Award shall expire on the date of the Executive’s termination of employment. The Committee shall have the authority to determine whether the Executive’s termination from employment is for Cause or for any reason other than Cause.

 

6.10 This Award shall be governed by the laws of the State of Delaware applicable to agreements made and performed wholly within the State of Delaware (regardless of the laws that might otherwise govern under applicable conflicts of laws principles) and applicable federal law. All disputes arising under this Award shall be adjudicated solely within the state or Federal courts located within the State of Delaware.

 

6.11 This Award sets forth a complete understanding between the parties with respect to its subject matter and supersedes all prior and contemporaneous agreements and understandings with respect thereto. Except as expressly set forth in this Award, the Company makes no representations, warranties or covenants to the Executive with respect to this Award or its subject matter, including with respect to the current or future value of the shares subject to the PSUs. Any modification, amendment or waiver to this Award will be effective only if it is in writing signed by the Company and the Executive. The failure of any party to enforce at any time any provision of this Award shall not be construed to be a waiver of that or any other provision of this Award.

 

6.12 This Award shall be administered and interpreted solely by the Committee or its delegated agent. The interpretations and decisions of the Committee with regard to this PSU shall be final and conclusive and binding upon the Executive.

 

6.13 It is the intent that this Award comply in all respects with Rule 16b-3 under the Exchange Act and any related regulations. If any provision of this Award is later found not to be in compliance with such Rule and regulations, the provisions shall be deemed null and void. The provisions of the PSUs under this Award shall be executed in accordance with the requirements of Section 16 of the Exchange Act and regulations promulgated thereunder.

 

6.14 Subject to the limitations set forth herein, this Award shall be binding upon and inure to the benefit of the legatees, distributees, and personal representatives of the Executive and the successors of the Company.

 

6.15 This Award is subject to the terms of any separate Clawback Policy maintained by the Company, as such Policy may be amended from time to time.

 

6.16 The Executive hereby acknowledges receipt of a copy of this Award, and that he has read and understands the terms and provisions hereof, and accepts the PSUs subject to all of the terms and conditions of the Award.

 

6.17 Tax withholding requirements attributable to the earning and vesting of this Award, including employment taxes, Federal income taxes, and state and local income taxes with respect to the state and locality where, according to the Company’s system of records, the Executive resides at the time the Award is earned and vested, except as otherwise might be determined to be required by the Company, will be satisfied by the Executive as instructed in the established procedures for this Award. It is the Executive’s responsibility to properly report all income and remit all Federal, state, and local taxes that may be due to the relevant taxing authorities as the result of earning and vesting this Award.

 

[SIGNATURE PAGE TO FOLLOW]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Award as of the day and year first above written.

 

  CINEDIGM CORP.
       
  By:  
    Name:  
    Title:  

 

  EXECUTIVE:
   
   
    JOHN K. CANNING

 

 

 

 

Exhibit 99.1

 

 

Cinedigm Names John Canning

Chief Financial Officer

 

LOS ANGELES, CA – September 14, 2021 – Cinedigm Corp. (NASDAQ: CIDM), the leading independent streaming company super-serving enthusiast fan bases, announced today that John Canning has joined the Company as Chief Financial Officer, effective September 13, 2021. Canning will report to Chris McGurk, Chairman & CEO, and will be responsible for all financial functions at Cinedigm to support and enhance the Company’s rapid growth trajectory.

 

Prior to Cinedigm, Canning spent two years as the CFO of Firefly Systems Inc., an Ad-Tech startup in Silicon Valley, where he worked to secure funding, working capital and equipment financing. He also served as interim CFO of the mobile advertising company, Tapjoy Inc., based in San Francisco, where he managed the short and long-term planning processes. Canning spent several years with Discovery Channel, working as the Group Vice President of Finance for the network portfolio which included the flagship network as well as Animal Planet and The Science Channel.  He held finance leadership roles at Clear Channel Outdoor and The Walt Disney Company for a combined total of nearly 10 years. Prior to Disney, Canning enjoyed a successful management consulting career, spending more than a dozen years at prominent firms including Deloitte and KPMG, after earning his MBA with honors from the Marshall School of Business at USC.

 

“We are thrilled John is joining the Cinedigm team, especially as the Company continues to experience exponential growth on the streaming side,” said McGurk. “We are confident that John’s experience will enhance the Company’s financial efforts and support our strong existing management team, as well as bolster our financial systems and processes.” 

 

“Cinedigm has shown itself to be a leader in the fastest growing segment of the entertainment industry,” said Canning. “As the business continues to evolve, I am excited to join such a talented team and help the Company continue to grow as one of the leading global independent streaming players.”

 

An innovator in the digital transformation of the entertainment industry for more than two decades, Cinedigm’s core mission is to entertain the world by building one of the world’s best portfolio of enthusiast channels and services for the streaming generation. Through a diverse mix of premium SVOD services and dedicated AVOD and FAST channels, Cinedigm’s streaming portfolio reaches indie film (Fandor), horror (Screambox & Bloody Disgusting) and family entertainment (Dove Channel), as well as dedicated channels for iconic entertainers, led by Bob Ross (The Bob Ross Channel). Cinedigm’s ultimate goal is to build destinations that immerse viewers in content they love while staying at the forefront of technology as the streaming industry continues to evolve.

 

In connection with his joining the Company, Canning received (i) stock appreciation rights (the “SARs”) for 600,000 shares of Cinedigm’s Class A Common Stock (the “Common Stock”), having a 10-year term and an exercise price equal to $2.10, and vesting one-half (1/2) on September 13 of each of 2022 and 2023, and (ii) performance stock units (the “PSUs”) for 150,000 shares of Common Stock, with 25% of the PSUs to be earned and vested on March 31, 2022 and 75% of the PSUs to be earned and vested on March 31, 2023 and metrics to be determined by Compensation Committee of the Company’s Board of Directors. The SARs and the PSUs are inducement grants pursuant to NASDAQ listing Rule 5635(c)(4).

 

###

 

ABOUT CINEDIGM 

 

For more than twenty years, Cinedigm (NASDAQ: CIDM) has led the digital transformation of the entertainment industry. Today, Cinedigm entertains hundreds of millions of consumers around the globe by providing premium content, streaming channels and technology services to the world’s largest media, technology and retail companies. For more information, visit http://www.cinedigm.com/.

 

Cinedigm uses, and will continue to use, its website, press releases, SEC filings, and various social media channels, including Twitter (https://twitter.com/cinedigm), LinkedIn https://www.linkedin.com/company/cinedigm/), Facebook (https://facebook.com/Cinedigm), StockTwits (https://stocktwits.com/CinedigmCorp) and the Company website (www.cinedigm.com) as additional means of disclosing public information to investors, the media and others interested in the Company. It is possible that certain information that the Company posts on its website, disseminated in press releases, SEC filings, and on social media could be deemed to be material information, and the Company encourages investors, the media and others interested in the Company to review the business and financial information that the Company posts on its website, disseminates in press releases, SEC filings and on the social media channels identified above, as such information could be deemed to be material information.

 

PRESS CONTACT FOR CIDM: 

 

DKC Public Relations

cinedigm@dkcnews.com

 

High Touch Investor Relations

Cinedigm@htir.net