<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 2000 or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _____________ to ______________
Commission file number: 0-18613
TRIMARK HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4272695
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4553 GLENCOE AVE., SUITE 200
MARINA DEL REY, CALIFORNIA 90292
(Address of principal executive offices) (Zip code)
(310) 314-2000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
As of May 8, 2000, 4,657,527 shares of Trimark Holdings, Inc. common stock were
outstanding, excluding shares held by Trimark Holdings, Inc. as treasury stock.
<PAGE>
TRIMARK HOLDINGS, INC.
INDEX
<TABLE>
<CAPTION>
<S> <C> <C>
Part I. Financial Information Page No.
Item 1. Financial Statements:
Consolidated Balance Sheets at March 31, 2000 and June 30, 1999 3
Consolidated Statements of Operations - Nine months and three months ended 4
March 31, 2000 and 1999
Consolidated Statements of Cash Flows - Nine months ended March 31, 2000 5
and 1999
Notes to Consolidated Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial Condition and 8-14
Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk 15
Part II. Other Information
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 17-18
</TABLE>
2
<PAGE>
TRIMARK HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
------------------------------------------
(Dollars in Thousands, Except Share Data)
<TABLE>
<CAPTION>
March 31, June 30,
2000 1999
-------------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
------
Cash and cash equivalents $ 3,444 $ 2,121
Accounts receivable, less allowances of
$8,310 and $5,352, respectively 20,799 20,231
Film costs, net (Note 2) 40,579 49,230
Deferred marketing costs 880 1,518
Inventories, net 2,551 1,552
Equity investments 1,028 6,036
Property and equipment at cost, less accumulated
depreciation of $3,202 and $2,872,respectively 774 565
Due from officers 795 792
Other assets 955 1,233
--------------------- ------------
$ 71,805 $ 83,278
===================== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Revolving line of credit $ 34,000 $ 48,330
Accounts payable and accrued expenses 7,010 5,710
Minimum guarantees and royalties payable 9,733 12,204
Deferred income 324 889
Income taxes payable 44 64
--------------------- ------------
Total liabilities 51,111 67,197
--------------------- ------------
Minority interest (Note 7) 2,009 --
--------------------- ------------
Stockholders' equity:
Common stock, $.001 par value. Authorized
20,000,000 shares; 5,657,000, 5,570,000 shares
issued at March 31, 2000 and June 30, 1999, respectively 6 6
Additional paid in capital 18,699 18,617
Preferred stock, $.01 par value. Authorized
2,000,000 shares; no shares issued and
outstanding -- --
Retained earnings 3,664 (1,180)
Accumulated comprehensive income 779 3,101
Less treasury shares, at cost - 965,000 shares (4,463) (4,463)
--------------------- ------------
Stockholders' equity 18,685 16,081
--------------------- ------------
$ 71,805 $ 83,278
===================== ============
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
TRIMARK HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Earnings Per Share)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
March 31, March 31,
-------------------------- ---------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C>
Net revenues $ 67,044 $ 66,270 $ 25,763 $ 19,989
Film costs and distribution expenses 53,644 56,611 21,179 19,323
----------- ----------- ----------- -----------
Gross profit 13,400 9,659 4,584 666
----------- ----------- ----------- -----------
Operating expenses:
Selling 5,029 5,555 1,661 1,867
General and administrative 4,374 4,106 1,610 1,434
Bad debt 357 (162) 2 179
----------- ----------- ----------- -----------
9,760 9,499 3,273 3,480
----------- ----------- ----------- -----------
Operating earnings 3,640 160 1,311 (2,814)
Other (income) expenses:
Interest expense 1,925 3,023 280 871
Interest and investment income (2,969) (57) (44) (40)
Minority interest (121) -- (102) --
----------- ----------- ----------- -----------
(1,165) 2,966 134 831
----------- ----------- ----------- -----------
Earnings before income taxes 4,805 (2,806) 1,177 (3,645)
Income taxes (Note 5) (38) (240) -- --
----------- ----------- ----------- -----------
Net earnings $ 4,843 $ (2,566) $ 1,177 $ (3,645)
----------- ----------- ----------- -----------
Other comprehensive income, net of tax (2,321) 2,485 (270) 2,485
----------- ----------- ----------- -----------
Comprehensive income 2,522 (81) 907 (1,160)
=========== =========== =========== ===========
Weighted average number of common shares
basic and fully diluted (Note 6) 4,634 4,341 4,634 4,341
=========== =========== =========== ===========
Net earnings per common share
basic and fully diluted (Note 6) $ 1.05 $ (0.59) $ 0.25 $ (0.84)
=========== =========== =========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE>
TRIMARK HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
2000 1999
--------- -----------
(Unaudited)
<S> <C> <C>
Operating activities:
Net earnings $ 4,843 $ (2,566)
Adjustments to reconcile net earnings to
Net cash used by operating activities:
Film amortization 31,605 35,231
Depreciation and other amortization 330 326
Provision for returns and bad debt 2,959 (67)
Provision for inventory obsolescence 557 (268)
Change in operating assets and liabilities:
Increase in accounts receivable (3,527) (2,137)
Additions to film costs (22,954) (32,658)
Decrease in deferred marketing costs 638 834
Increase in inventories (1,556) (63)
Increase in notes receivable
from officers (3) (13)
Decrease in other assets 278 295
Increase (decrease) in accounts payable and
accrued expenses 1,300 (2,400)
(Decrease) increase in minimum guarantees and
royalties payable (2,471) 5,684
(Decrease) increase in income taxes payable (20) 6
(Decrease) increase in deferred income (565) 2,140
Decrease in minority interest 121 --
------------- -------------
Net cash provided by operating activities 11,535 4,344
------------- -------------
Investing activities:
Acquisition of property and equipment (539) (187)
Sale of equity investments at cost 2,687 --
------------- -------------
Net cash provided (used) by investing activities 2,148 (187)
------------- -------------
Financing activities:
Net decrease in revolving line of credit (14,330) (3,920)
Exercise of stock options 82 79
Purchase of treasury stock -- (33)
Funds provided by minority shareholders in CinemaNow, Inc. 2,130 --
------------- -------------
Net cash provided by financing activities (12,118) (3,874)
------------- -------------
Increase in cash and cash equivalents 1,323 283
Cash and cash equivalents at beginning of period 2,121 1,159
------------- -------------
Cash and cash equivalents at end of period $ 3,444 $ 1,442
============= =============
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
TRIMARK HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - THE COMPANY:
The consolidated financial statements of Trimark Holdings, Inc. and subsidiaries
(the "Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. The accompanying
financial statements should be read in conjunction with the more detailed
financial statements and related footnotes filed with the Form 10-K for the year
ended June 30, 1999. Significant accounting policies used by the Company are
summarized in Note 2 to the June 30, 1999 financial statements.
In the opinion of management, all adjustments required for a fair presentation
of the financial position as of March 31, 2000 and the results of operations and
cash flows for the periods ended March 31, 2000 and March 31, 1999 have been
made and all adjustments were of a normal and recurring nature. Operating
results for the nine and three month periods are not necessarily indicative of
the operating results for the fiscal year.
During the nine month period ended March 31, 2000, Trimark Holdings, Inc.
organized a majority owned subsidiary named CinemaNow, Inc. CinemaNow, Inc.
connects independent film watchers with independent filmmakers through the
business of streaming theatrical and short films over the internet while
providing comprehensive virtual studio resources to independent filmmakers.
6
<PAGE>
NOTE 2 - FILM COSTS:
Film costs, net of amortization, consist of the following:
<TABLE>
<CAPTION>
March 31, June 30,
2000 1999
------------------------- ------------------------
(in thousands)
<S> <C> <C>
Released $ 27,105 $ 36,352
Completed not released 3,678 3,938
In process and development 9,796 8,940
------------------------- -------------------------
$ 40,579 $ 49,230
------------------------- -------------------------
</TABLE>
NOTE 3 - COMMITMENTS & CONTINGENCIES:
The Company has entered into certain agreements, which provide for royalty
advances and promotional and advertising commitments totaling $18 million. If
the conditions to these agreements are not met by the licensors, the Company may
withdraw from the arrangements. These commitments extend to December 2000.
NOTE 4 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the nine month period for:
<TABLE>
<CAPTION>
March 31,
2000 1999
-------------------- ------------------
(in thousands)
<S> <C> <C>
Interest $2,554 $3,438
Income taxes 50 155
</TABLE>
NOTE 5 - INCOME TAXES:
The $240,000 tax benefit represents a tax receivable from a prior year return
recognized in the fiscal year ended June 30, 1999.
7
<PAGE>
NOTE 6 - NET EARNINGS PER COMMON SHARE:
Basic earnings per common share amounts are based on the weighted average number
of common shares outstanding during the respective periods. Diluted earnings per
common share amounts are based on the weighted average common shares outstanding
during the period and shares assumed issued upon conversion of stock options
when the effect of such conversions would have been dilutive to net earnings.
NOTE 7 - MINORITY INTEREST:
In the first quarter of calendar year 2000, pursuant to the terms of a
Securities Purchase Agreement dated as of January 6, 2000, as amended, the
Company's majority-owned subsidiary, CinemaNow, Inc. ("CinemaNow"), completed
a private placement financing to accredited investors of 3,155,552 shares of
CinemaNow Series A Convertible Preferred Stock, yielding proceeds of
approximately $2,130,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
NET REVENUES:
Nine months ended Three months ended
March 31, March 31,
----------------------------------- -----------------------------------
2000 1999 2000 1999
--------------- --------------- ---------------- ---------------
(in thousands)
<S> <C> <C> <C> <C>
Domestic:
Home video distribution $47,820 $42,256 $19,299 $13,232
Theatrical distribution 1,118 857 319 136
Television distribution 6,301 10,397 1,381 3,665
Foreign:
All media 11,805 12,760 4,764 2,956
--------------- --------------- ---------------- ---------------
$67,044 $66,270 $25,763 $19,989
--------------- --------------- ---------------- ---------------
</TABLE>
Net revenue for the nine month and three month period ended March 31, 2000
increased $774,000 or 1.2% and $5.8 million or 29%, respectively, compared with
the same periods in fiscal year 1999. The increase for the nine month period was
primarily due to increases in net revenue from the home video market of $5.6
million offset by a $955,000 decrease in foreign revenue and by a $4.1 million
decrease in television distribution. The increase in home video revenue was
largely due to the distribution of Saturday Night Live "BEST OF" compilations
into the sell-through market as well as the highly successful DVD release of
"NATURAL BORN KILLERS, DIRECTOR'S CUT." The decrease in television revenue was
due to the availability of the wide theatrical release "STAR KID" and the highly
successful theatrical release "EVE'S BAYOU" during the nine month period ended
March 31, 1999. In contrast, "MEET WALLY SPARKS" was the only wide theatrical
release film available in the television market during the same period in fiscal
year 2000. The decrease in foreign revenue resulted from the initial release of
seven films in the foreign market along with the initial release of "EVE'S
BAYOU" in major international territories during the nine months ended March 31,
1999. In contrast, during the same period in fiscal year 2000, only five films
were initially released into the international market.
8
<PAGE>
ITEM 2: (CONTINUED)
The increase in net revenue for the quarter ended March 31, 2000 was due
primarily to increases in net revenue from the home video and foreign markets
of $6.1 million and $1.8 million, respectively, partly offset by a $2.3
million decrease in the domestic television market. The increase in the home
video revenue was primarily a result of the release of the Saturday Night
Live titles into the sell-through and DVD market as well as the successful
release of "NATURAL BORN KILLERS, DIRECTOR'S CUT" into the DVD market. The
increase in foreign distribution revenue was primarily due to the release of
four titles in major foreign territories during the quarter ended March 31,
2000; in contrast, there was only one comparable release during the same
period in fiscal year 1999. The decrease in television revenue was primarily
due to the cable premier of "CHAIRMAN OF THE BOARD", the availability of
"GROUND CONTROL" in the domestic television market and the availability of
numerous titles in television syndication during the quarter ended March 31,
1999. There were no comparable releases during the same period in fiscal year
2000.
The Company continues to focus its resources on producing and acquiring films
with specialized theatrical potential, the made for television market and the
home video sell through market. See "Liquidity and Capital Resources."
The Company anticipates that the domestic home video rental market will continue
to be extremely competitive.
GROSS PROFIT: Gross profit as a percentage of net revenues for the nine month
period ended March 31, 2000 and 1999 was 20% and 14.6%, respectively, and for
the quarters ended March 31, 2000 and 1999 was 17.8% and 3.3%, respectively.
The increase in gross profit for the nine month period was primarily due to
the sale of product which require less capital expenditure and carry higher
profit margins. In contrast, during the same period in fiscal year 1999, two
films with no profit margins, "STAR KID" and "CHAIRMAN OF THE BOARD", were
released in the video market. The increase in gross profit during the third
quarter of fiscal year 2000 resulted from the increase in sales of the direct
to sell-through product and DVD product. In contrast, lower sales and a $4.9
million write down to net realizable value of film inventory contributed to
the lower profit margin during the quarter ended March 31, 1999.
SELLING EXPENSES: Selling expenses as a percentage of net revenues for the nine
months ended March 31, 2000 and 1999 were 7.5% and 8.4%, respectively. For the
nine and three months ended March 31, 2000 selling expenses decreased $526,000
or 9.5% and $206,000 or 11% compared with the same period in fiscal 1999. The
decrease in selling expenses resulted from a reduction in travel and
9
<PAGE>
ITEM 2: (CONTINUED)
entertainment costs and consulting expenses. The nine month and three month
reductions were partly offset by $287,000 and $126,000, respectively in costs
associated with CinemaNow, Inc.
GENERAL AND ADMINISTRATIVE EXPENSES: For the nine months ended March 31, 2000
general and administrative expenses increased $268,000 or 6.5% compared with the
same period in fiscal 1999. The difference is primarily due to the payment of
corporate bonuses in December 1999 along with administrative costs associated
with CinemaNow, Inc. The $176,000 increase in general and administrative costs
during the three month period ended March 31, 2000 was primarily due to costs
associated with CinemaNow, Inc.
BAD DEBT EXPENSE: Bad debt expense for the nine months ended March 31, 2000
increased $519,000 or 320% compared with the same period in fiscal 1999. Bad
debt expense primarily represents reserves taken against domestic video and
foreign sales. The increase was partially due to $355,000 in collections during
fiscal 1999 on past due video receipts which were previously reserved for during
the prior year. In addition, the reserve was increased due to a number of
international customers' accounts going into arbitration.
INTEREST EXPENSE: Interest expense for the nine month period ended March 31,
2000 decreased $1.1 million or 36%. Interest expense for the quarter ended March
31, 2000 decreased $591,000 or 68% compared with the same period in fiscal 1999.
The decrease in interest expense during fiscal 2000 was primarily due to a lower
average borrowing level from the same period in fiscal 1999. As of March 31,
2000, there was $34 million outstanding under the credit facility as opposed to
$53.3 million on March 31, 1999. The Company has used excess cash flow generated
by theatrical and library product to decrease debt levels. See "Liquidity and
Capital Resources." Furthermore, during the second and third quarter of fiscal
2000, four films were produced by the Company as opposed to only one during the
same period in fiscal 1999 causing increased capitalization of interest costs
during fiscal 2000 as opposed to fiscal 1999.
INTEREST AND INVESTMENT INCOME: Interest and investment income for the nine
months ended March 31, 2000 increased $2.9 million as a result of the sale of
32,411 shares of Yahoo!, Inc.
NET EARNINGS: The Company's net earnings for the nine months ended March 31,
2000 increased $7.4 million or 289% compared with the same period in fiscal
1999. The net earnings for the three months ended March 31, 2000 increased $4.8
million or 132% compared with the same period in fiscal 1999. The increase for
the three month period was primarily attributable to the successful home video
releases of the "SATURDAY NIGHT LIVE" titles and "NATURAL BORN KILLER'S,
DIRECTOR'S CUT" along with the reduction in interest expense. The increase for
the nine month period included the gain on the sale of Yahoo!, Inc. shares.
10
<PAGE>
ITEM 2: (CONTINUED)
OTHER COMPREHENSIVE INCOME: The comprehensive income reported during the nine
month period ending March 31, 2000 is a result of the realized and unrealized
gain in Yahoo!, Inc. shares resulting from the sale of the stock during the
period. The comprehensive income reported at March 31, 2000 resulted from the
change in per share price at March 31, 2000.
<TABLE>
<CAPTION>
Nine Months Ended
March 31, 2000
--------------------------------
<S> <C>
Unrealized holding gains arising during period $ 541,000
Less: Reclassification adjustment for gains included in net income (2,439,000)
Reversal of unrealized gain (424,000)
--------------------------------
Other comprehensive income, net of tax (2,322,000)
Accumulated comprehensive income @ 6/30/99 3,101,000
================================
Accumulated comprehensive income @ 3/31/00 $ 779,000
================================
</TABLE>
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company relies on cash generated by operations and borrowings under its
credit facility to finance its operations. The Company's cash flows from
operating, investing and financing activities for the nine months ended March
31, 2000 and 1999 were as follows:
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
------------------------------------------
2000 1999
------------------- ------------------
(in thousands)
<S> <C> <C>
Net cash provided by operating activities $ 11,535 $ 4,344
Net cash provided (used) by investing activities 2,148 (187)
Net cash used by financing activities (12,118) (3,874)
</TABLE>
Cash provided by operations increased by $7.2 million for the nine month period
ended March 31, 2000 compared to the same period in fiscal 1999 principally as
the result of a $7.4 million increase in net earnings, a $9.7 million decrease
in additions to film costs, and a $3.0 million increase in the provisions for
returns and bad debt. The increase was partially offset by an $8.2 million
decrease in the change in minimum guarantees and royalties payable. The $23
million addition to film costs was primarily used for the production and
acquisition of new product with approximately $3.5 million used for prints and
advertising costs on the specialized theatrical releases of "TWICE UPON A
YESTERDAY," "BETTER THAN CHOCOLATE," "ROMANCE," "JOE THE KING," and "BEAUTIFUL
PEOPLE."
Investing activities for the nine months ended March 31, 2000 consisted of the
sale of some Yahoo!, Inc. stock, as well as expenditures associated with the
development of the CinemaNow, Inc. web site.
Financing activities, consisting primarily of repayments under the Company's
credit facility, decreased $10.4 million in the nine months ended March 31,
2000 as compared to the nine months ended March 31, 1999. The decrease was
primarily the result of the increase in operating cash flows and investing
activities. The Company's cash requirements vary in part with the size and
timing of production advances and minimum guarantee payments along with the
timing of its theatrical, home video, television and international releases.
The combination of steady sales growth in sell through video and DVD product
along with lower investments in prints and advertising costs and the sale of
equity investments has led to the continued reduction in the overall debt
balance.
On December 20, 1996, the Company's principal operating subsidiaries, Trimark
Pictures, Inc. and Trimark Television, Inc., entered into a $75 million
revolving credit facility with a consortium of banks agented and arranged by The
Chase Manhattan Bank
12
<PAGE>
ITEM 2: (CONTINUED)
which replaced a $25 million revolving credit facility with
Bank of America NT & SA and Westdeustche Landesbank. The credit facility expires
December 19, 2000. Under the credit agreement, the Company may borrow for
various corporate purposes provided that the aggregate borrowings do not exceed
the Borrowing Base which is derived from specified percentages of approved
accounts receivable and film library. The credit agreement is guaranteed by the
Company and certain of its subsidiaries and is secured by substantially all of
the assets of the Company and its significant subsidiaries. Loans outstanding
under the credit facility bear interest at the rate of 1.5% above Chase
Manhattan's prime rate or 2.5% above Chase Manhattan's London Interbank Market
for Eurodollars for the loan term specified. An unused commitment fee is payable
on the average unused availability under the credit facility, at the rate of
0.3725% per annum. As of March 31, 2000 there was $34 million outstanding under
the credit facility. The Company expects to use excess cash flow generated by
theatrical and library product to decrease current borrowing levels. The credit
agreement contains various financial and other covenants to which the Company
must adhere. These covenants, among other things, require the maintenance of
minimum net worth and various financial ratios which are reported to the bank on
a quarterly basis and include limitations on additional indebtedness, liens,
investments, disposition of assets, guarantees, affiliate transactions and the
use of proceeds. In relation to the release schedule described below, the
Company amended the current credit agreement as of December 31, 1998 and
September 27, 1999. The amended agreement provides for less stringent minimum
net worth ratios and minimum equity requirements. In consideration for the
adjustment of these ratios and minimum equity requirement, the amended credit
facility reduces the borrowing limits over the remaining life of the credit
facility. For the year ended June 30, 1999, the amended borrowing limit was
reduced to $60 million. By January 31, 2000, the borrowing limit was reduced to
$50 million and by June 30, 2000 is reduced to $40 million. The amendments to
the debt covenants and borrowing limits were structured to incorporate the
Company's overall strategy and presently planned productions, acquisitions,
distribution and overhead expenditures. The Company is in compliance with all
debt covenants as of March 31, 2000.
The Company's ability to maintain availability under its Credit Facility is
primarily dependent upon the timing of collections on existing sales during the
next three fiscal quarters and the amount and timing of collection on
anticipated sales of the Company's current library and films which the Company
plans to release or make available during the next three fiscal quarters.
Management believes the existing capital, cash flow from operations and
availability under the Company's amended Credit Facility will be sufficient to
enable the Company to fund its planned productions,
13
<PAGE>
ITEM 2: (CONTINUED)
acquisitions, distribution and overhead expenditures for the next three fiscal
quarters.
In the domestic specialized theatrical market the Company plans to release five
motion pictures in fiscal 2000 (of which four were released in the first nine
months of fiscal 2000). Furthermore, the Company plans to release approximately
thirty-six motion pictures into the domestic home video rental market (of which
twenty-eight were released in the first nine months of fiscal 2000) and to
continue to expand distribution in the sell through market. The Company intends
to sell three to four films and "movies of the week" which will premier on major
cable networks or broadcast stations. Also in fiscal 2000, the Company plans to
release approximately ten motion pictures initially into international
distribution (of which seven were released in the first nine months of the
fiscal year).
Technicolor Videocassette, Inc. currently serves as the Company's video cassette
duplicator and fulfillment contractor. Technicolor Videocassette, Inc. has a
general lien on all of the Company's materials and products in its possession.
The Company is currently authorized to spend up to $750,000 to purchase shares
of its outstanding common stock in the open market or otherwise.
The Financial Accounting Standards Board (known as FASB) recently adopted
certain changes that will alter reporting by motion picture companies. FASB
Statement No. 53, which previously allowed wide latitudes for booking movie
revenues and amortization has been rescinded. The new regulations will impose
numerous changes to reporting, and many motion picture companies will take a
one-time, non-cash charge of significant proportions to conform to the new
rules. The Company is currently calculating the financial impact of these new
rules.
IMPACT OF YEAR 2000. No material financial losses were attributed or are
expected in relation to the year 2000 processing issues of time sensitive
information by computerized information systems.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
Except for the historical information contained herein, the matters discussed in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievement of the Company, or
14
<PAGE>
ITEM 2: (CONTINUED)
industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the following: Changes in public
tastes, industry trends and demographic changes, which may influence the
distribution and exhibition of films in certain areas; public reaction to and
acceptance of the Company's video, theatrical and television product, which will
impact the Company's revenues; competition, including competition from major
motion picture studios, which may affect the Company's ability to generate
revenues; reliance on management and key personnel; consolidation in the retail
video industry; whether the Company's current strategy which includes theatrical
releases of only specialized films and production and acquisition of made for
television product is successful; new methods of distributing motion pictures;
the impact of new accounting rules on the Company's results of operations; and
other factors referenced in this Form 10-Q and the Company's other filings with
the Securities and Exchange Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not consider that the potential loss of future earnings which
could be caused by interest rate volatility would have a material impact on its
financial position.
15
<PAGE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
In the first quarter of calendar year 2000, pursuant to the terms of a
Securities Purchase Agreement dated as of January 6, 2000, as amended, the
Company's majority-owned subsidiary, CinemaNow, Inc. ("CinemaNow"), completed a
private placement financing to accredited investors of 3,155,552 shares of
CinemaNow Series A Convertible Preferred Stock, yielding proceeds of
approximately $2,130,000. CinemaNow connects independent film watchers with
independent filmmakers through the business of streaming theatrical and short
films over the Internet while providing comprehensive virtual studio resources
to independent filmmakers. The investors, CinemaNow and the Company are parties
to an Investors Rights Agreement and to a Co-Sale Agreement pursuant to which
the investors are granted certain registration rights, board representation
rights and rights of first opportunity relating to CinemaNow and future equity
offerings by it, and the founders of CinemaNow (who include the Company) grant
the investors, subject to certain exceptions, the right to participate in sales
by the founders and a right of first opportunity with respect to future sales of
CinemaNow stock held by the founders. In connection with the foregoing
transactions, CinemaNow has issued to the Company's wholly-owned subsidiary,
Trimark Pictures, Inc. ("Trimark Pictures") a $215,000 convertible subordinated
debenture due June 30, 2001 relating to debt CinemaNow owes Trimark Pictures.
CinemaNow and Trimark Pictures are also parties to a five-year exclusive output
agreement (except with respect to an existing agreement between Trimark Pictures
and a third party) with respect to the Internet rights to all of Trimark
Pictures' motion pictures in the U.S. and Canada to the extent Trimark Pictures
controls such rights.
Under CinemaNow's stock option plan, Mark Amin, Chairman of the Board and Chief
Executive Officer of the Company and Chairman of the Board of CinemaNow, was
granted stock options at varying exercise prices (each in excess of current fair
market value) and vesting over a three-year term, to acquire up to 2,100,000
shares of CinemaNow common stock, or 8.9% of such common stock on a
fully-diluted basis. On a fully diluted basis, the Company as of March 31, 2000
owns approximately 78% of the common stock of CinemaNow.
16
<PAGE>
PART II. OTHER INFORMATION (CONTINUED)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
EXHIBIT NO DESCRIPTION
- ---------- -------------------------------------------------------
10.112 Non-Qualified Stock Option Certificate dated January 8,
2000 by and between the Registrant and Gordon Stulberg.
10.113 Non-Qualified Stock Option Certificate dated January 8,
2000 by and between the Registrant and Matthew H. Saver.
10.114 Non-Qualified Stock Option Certificate dated January 8,
2000 by and between the Registrant and Tofigh Shirazi.
10.115 Non-Qualified Stock Option Certificate dated January 8,
2000 by and between the Registrant and Peter Dekom.
10.116 Securities Purchase Agreement dated as of January 6,
2000 among CinemaNow, Inc. and the investors names
therein (the schedules are omitted and the Registrant
agrees to furnish supplementally a copy to the
Commission upon request)
10.117 Co-Sale Agreement dated as of January 6, 2000 among
CinemaNow, Inc., the investors named therein and the
founders named therein (including the Registrant)
10.118 Investors' Rights Agreement dated as of January 6, 2000
among CinemaNow, Inc., the investors named therein and
the founders named therein (including the Registrant)
10.119 Convertible Subordinated Debenture dated February 2,
2000 issued by CinemaNow, Inc. to Trimark Pictures, Inc.
10.120 Agreement dated as of December 10, 1999 between Trimark
Pictures, Inc. and CinemaNow, Inc.
10.121 Stock Option Agreement (#1) dated March 1, 2000 between
CinemaNow, Inc. and Mark Amin.
17
<PAGE>
PART II. OTHER INFORMATION (CONTINUED)
10.122 Stock Option Agreement (#2) dated March 1, 2000 between
CinemaNow, Inc. and Mark Amin.
10.123 Stock Option Agreement (#3) dated March 1, 2000 between
CinemaNow, Inc. and Mark Amin.
10.124 Amendment of Employment Agreement, dated as of March 23, 2000,
by and between Trimark Pictures, Inc., a California
corporation and Cami Winikoff.
27 Financial Data Schedule.
(b) Reports on Form 8-K:
None.
18
<PAGE>
SIGNATURES
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.
TRIMARK HOLDINGS, INC.
By: /s/ JEFF GONZALEZ
------------------------------------
Jeff Gonzalez
Chief Financial Officer
(PRINCIPAL FINANCIAL
OFFICER AND AUTHORIZED TO SIGN
ON BEHALF OF THE REGISTRANT)
Date: MAY 15, 2000
------------
19
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO DESCRIPTION METHOD OF FILING
- ---------- ------------------------------------------------------ ----------------
<S> <C> <C>
10.112 Non-Qualified Stock Option Certificate dated January 8, filed herewith electronically
2000 by and between the Registrant and Gordon Stulberg.
10.113 Non-Qualified Stock Option Certificate dated January 8, filed herewith electronically
2000 by and between the Registrant and Matthew H. Saver.
10.114 Non-Qualified Stock Option Certificate dated January 8, filed herewith electronically
2000 by and between the Registrant and Tofigh Shirazi.
10.115 Non-Qualified Stock Option Certificate dated January 8, filed herewith electronically
2000 by and between the Registrant and Peter Dekom.
10.116 Securities Purchase Agreement dated as of January 6, 2000 filed herewith electronically
among CinemaNow, Inc. and the investors names therein (the
schedules are omitted and the Registrant agrees to furnish
supplementally a copy to the Commission upon request)
10.117 Co-Sale Agreement dated as of January 6, 2000 among filed herewith electronically
CinemaNow, Inc., the investors named therein and the
founders named therein (including the Registrant)
10.118 Investors' Rights Agreement dated as of January 6, 2000 filed herewith electronically
among CinemaNow, Inc., the investors named therein and the
founders named therein (including the Registrant)
10.119 Convertible Subordinated Debenture dated February 2, 2000 filed herewith electronically
issued by CinemaNow, Inc. to Trimark Pictures, Inc.
</TABLE>
20
<PAGE>
INDEX TO EXHIBITS (CONTINUED)
<TABLE>
<CAPTION>
EXHIBIT NO DESCRIPTION METHOD OF FILING
- ---------- ------------------------------------------------------ ----------------
<S> <C> <C>
10.120 Agreement dated as of December 10, 1999 between Trimark filed herewith electronically
Pictures, Inc. and CinemaNow, Inc.
10.121 Stock Option Agreement (#1) dated March 1, 2000 between filed herewith electronically
CinemaNow, Inc. and Mark Amin.
10.122 Stock Option Agreement (#2) dated March 1, 2000 between filed herewith electronically
CinemaNow, Inc. and Mark Amin.
10.123 Stock Option Agreement (#3) dated March 1, 2000 between filed herewith electronically
CinemaNow, Inc. and Mark Amin.
10.124 Amendment of Employment Agreement, dated as of March 23, filed herewith electronically
2000, by and between Trimark Pictures, Inc., a California
corporation and Cami Winikoff.
27 Financial Data Schedule. filed herewith electronically
</TABLE>
21
<PAGE>
EXHIBIT 10.112
TRIMARK HOLDINGS, INC.
Non-qualified Stock Option Granted Under
The Trimark Holdings, Inc. 1999 Directors' Option Plan
Certificate No. 5
Option granted on January 8, 2000 (the "Date of Grant") by
Trimark Holdings, Inc., a Delaware corporation (the "Company"), to Gordon
Stulberg (the "Optionee"):
SECTION 1. GRANT OF OPTION. The Company grants to the Optionee
a non-qualified option to purchase, on the terms and conditions hereinafter set
forth, 2,000 shares (the "Shares") of the Company's Common Stock, par value
$0.001 per share (the "Stock"), at the option price of $3.5625 per share. This
Option is granted pursuant to the Company's 1999 Directors' Option Plan (the
"Plan"), a copy of which is attached hereto as Annex I. This Option is subject
in its entirety to the provisions of the Plan, all of which are incorporated by
reference herein.
SECTION 2. PERIOD OF OPTION. This Option will expire at the
close of business on JANUARY 8, 2010, ten years from the Date of Grant (the
"Expiration Date"), unless earlier terminated pursuant to Section 5 below.
SECTION 3. RIGHT OF EXERCISE. The Option granted to the
Optionee shall become exercisable in full on the Date of Grant. Once
exercisable, the Option may be exercised at any time prior to its expiration,
cancellation or termination as provided in the Plan. Partial exercise is
permitted from time to time provided that no partial exercise of the Option
shall be for a number of Shares having a purchase price of less than $1,000 or
for a fractional number of Shares.
SECTION 4. EXERCISE OF OPTION.
(a) METHOD OF EXERCISE. This Option shall be exercised by the
delivery to the Company of a written notice signed by the Optionee, which
specifies the number of Shares with respect to which the Option is being
exercised and the date of the proposed exercise. Such notice shall be delivered
to the Company's office as set forth in Section 8, no less than three business
days in advance of the date of the proposed exercise and shall be accompanied by
this Option Certificate. The Optionee may withdraw such notice at any time prior
to the close of business on the proposed date of exercise, in which case this
Option Certificate shall be returned to him or her.
Payment for Shares purchased upon exercise of the Option shall
be made at the time of exercise either in cash, by certified check or bank
cashier's check or, at the option of the Board of Directors of the Company, in
Stock owned by the Optionee and valued at its Fair Market Value (as defined in
the Plan) on the date of exercise, or partly in Stock with the balance in cash
or by
1
<PAGE>
EXHIBIT 10.112 (CONTINUED)
certified check or bank cashier's check. Any payment in Stock shall be
effected by its delivery to the Secretary of the Company, endorsed in blank or
accompanied by stock powers executed in blank.
(b) DELIVERY OF STOCK CERTIFICATES UPON EXERCISE. Upon each
exercise of this Option, the Company shall mail or deliver to the Optionee, as
soon as practicable, a stock certificate or certificates representing the Shares
then purchased. Notwithstanding the foregoing, no Option granted under the Plan
may be exercised unless and until the Shares to be issued upon the exercise
thereof have been registered under the Securities Act of 1933 and applicable
state securities laws, or are, in the opinion of counsel to the Company, exempt
from such registration. The Company shall not be under any obligation to
register under applicable federal or state securities laws any Shares to be
issued upon the exercise of an Option granted under the Plan, or to comply with
an appropriate exemption from registration under such laws in order to permit
the exercise of an Option and the issuance and sale of the Shares subject to
such Option. If the Company chooses to comply with such an exemption from
registration, the Shares issued under the Plan may bear an appropriate
restrictive legend restricting the transfer or pledge of the Shares represented
thereby, and the Company may also give appropriate stop-transfer instructions to
the transfer agent to the Company.
Further, the Company (or any subsidiary of the Company) may
take such provisions as it may deem appropriate for the withholding of any taxes
or payment of any taxes which it determines it may be required to withhold or
pay in connection with any Option or the payment of Stock pursuant to an Option.
The obligation of the Company to issue and deliver Shares pursuant to the Option
is conditioned upon the satisfaction of the provisions set forth in this
Section.
SECTION 5. TERMINATION OF OPTION. Except as herein otherwise
stated, the Option, to the extent not theretofore exercised, shall terminate
upon the first to occur of the following:
(a) the expiration of one year after the date on which the
Optionee ceases to be a director of the Company by reason of the Optionee's
death or disability; or
(b) the Expiration Date. Notwithstanding anything in this
Option Certificate to the contrary, in the event that the Optionee ceases to be
a director of the Company prior to the exercise of the Option, otherwise than as
described in (a) above, the Option shall automatically terminate.
SECTION 6. RECLASSIFICATION, CONSOLIDATION OR MERGER.
(a) If the capital stock of the Company shall be subdivided or
combined, whether by reclassification, stock dividend, stock split, reverse
stock split or other similar transaction, then the number of Shares and the
exercise price per Share will be adjusted proportionately.
2
<PAGE>
EXHIBIT 10.112 (CONTINUED)
(b) In the case of any capital reorganization or any
reclassification of the capital stock of the Company (except pursuant to a
transaction described in paragraph (a) above (a "Reorganization"), appropriate
adjustment may be made by the Company in the number and class of shares subject
to or relating to Options awarded under the Plan and outstanding at the time of
such Reorganization.
SECTION 7. RIGHTS PRIOR TO EXERCISE OF OPTION. The Option is
non-transferable by the Optionee, except that in the event of the Optionee's
death the Option may be transferred by the Optionee's will or by the laws of
descent and distribution. During the Optionee's lifetime, the Option shall be
exercisable only by the Optionee. The Optionee shall have no rights as a
stockholder with respect to the Shares until exercise of the Option and delivery
to him or her of shares of Stock.
SECTION 8. NOTICES, ETC. Any notice hereunder by the Optionee
shall be given to the Company in writing, and such notice and any payment by the
Optionee hereunder shall be deemed duly given or made only upon receipt thereof
at the Company's office at 4553 Glencoe Avenue, Suite 200, Marina del Rey,
California 90292, or at such other address as the Company may designate by
notice to the Optionee.
Any notice or other communication to the Optionee hereunder
shall be in writing and any such communication and any delivery to the Optionee
hereunder shall be deemed duly given or made if mailed or delivered to the
Optionee at such address as the Optionee may have on file with the Company.
SECTION 9. CONSTRUCTION. The interpretation and construction
of this Option is vested in the Company's Board of Directors, and such
construction thereby shall be final and conclusive.
IN WITNESS WHEREOF, the Company has caused this Option
Certificate to be executed by its proper corporate officer thereunto duly
authorized.
TRIMARK HOLDINGS, INC.
By ________________________________
Name: Jeff Gonzalez
Title: Chief Financial Officer
3
<PAGE>
EXHIBIT 10.113
TRIMARK HOLDINGS, INC.
Non-qualified Stock Option Granted Under
The Trimark Holdings, Inc. 1999 Directors' Option Plan
Certificate No. 6
Option granted on January 8, 2000 (the "Date of Grant") by
Trimark Holdings, Inc., a Delaware corporation (the "Company"), to Matthew H.
Saver (the "Optionee"):
SECTION 1. GRANT OF OPTION. The Company grants to the Optionee
a non-qualified option to purchase, on the terms and conditions hereinafter set
forth, 2,000 shares (the "Shares") of the Company's Common Stock, par value
$0.001 per share (the "Stock"), at the option price of $3.5625 per share. This
Option is granted pursuant to the Company's 1999 Directors' Option Plan (the
"Plan"), a copy of which is attached hereto as Annex I. This Option is subject
in its entirety to the provisions of the Plan, all of which are incorporated by
reference herein.
SECTION 2. PERIOD OF OPTION. This Option will expire at the
close of business on JANUARY 8, 2010, ten years from the Date of Grant (the
"Expiration Date"), unless earlier terminated pursuant to Section 5 below.
SECTION 3. RIGHT OF EXERCISE. The Option granted to the
Optionee shall become exercisable in full on the Date of Grant. Once
exercisable, the Option may be exercised at any time prior to its expiration,
cancellation or termination as provided in the Plan. Partial exercise is
permitted from time to time provided that no partial exercise of the Option
shall be for a number of Shares having a purchase price of less than $1,000 or
for a fractional number of Shares.
SECTION 4. EXERCISE OF OPTION.
(a) METHOD OF EXERCISE. This Option shall be exercised by the
delivery to the Company of a written notice signed by the Optionee, which
specifies the number of Shares with respect to which the Option is being
exercised and the date of the proposed exercise. Such notice shall be delivered
to the Company's office as set forth in Section 8, no less than three business
days in advance of the date of the proposed exercise and shall be accompanied by
this Option Certificate. The Optionee may withdraw such notice at any time prior
to the close of business on the proposed date of exercise, in which case this
Option Certificate shall be returned to him or her.
Payment for Shares purchased upon exercise of the Option shall
be made at the time of exercise either in cash, by certified check or bank
cashier's check or, at the option of the Board of Directors of the Company, in
Stock owned by the Optionee and valued at its Fair Market Value (as defined in
the Plan) on the date of
1
<PAGE>
EXHIBIT 10.113 (CONTINUED)
exercise, or partly in Stock with the balance in cash or by certified check or
bank cashier's check. Any payment in Stock shall be effected by its delivery to
the Secretary of the Company, endorsed in blank or accompanied by stock powers
executed in blank.
(b) DELIVERY OF STOCK CERTIFICATES UPON EXERCISE. Upon each
exercise of this Option, the Company shall mail or deliver to the Optionee, as
soon as practicable, a stock certificate or certificates representing the Shares
then purchased. Notwithstanding the foregoing, no Option granted under the Plan
may be exercised unless and until the Shares to be issued upon the exercise
thereof have been registered under the Securities Act of 1933 and applicable
state securities laws, or are, in the opinion of counsel to the Company, exempt
from such registration. The Company shall not be under any obligation to
register under applicable federal or state securities laws any Shares to be
issued upon the exercise of an Option granted under the Plan, or to comply with
an appropriate exemption from registration under such laws in order to permit
the exercise of an Option and the issuance and sale of the Shares subject to
such Option. If the Company chooses to comply with such an exemption from
registration, the Shares issued under the Plan may bear an appropriate
restrictive legend restricting the transfer or pledge of the Shares represented
thereby, and the Company may also give appropriate stop-transfer instructions to
the transfer agent to the Company.
Further, the Company (or any subsidiary of the Company) may
take such provisions as it may deem appropriate for the withholding of any taxes
or payment of any taxes which it determines it may be required to withhold or
pay in connection with any Option or the payment of Stock pursuant to an Option.
The obligation of the Company to issue and deliver Shares pursuant to the Option
is conditioned upon the satisfaction of the provisions set forth in this
Section.
SECTION 5. TERMINATION OF OPTION. Except as herein otherwise
stated, the Option, to the extent not theretofore exercised, shall terminate
upon the first to occur of the following:
(a) the expiration of one year after the date on which the
Optionee ceases to be a director of the Company by reason of the Optionee's
death or disability; or
(b) the Expiration Date. Notwithstanding anything in this
Option Certificate to the contrary, in the event that the Optionee ceases to be
a director of the Company prior to the exercise of the Option, otherwise than as
described in (a) above, the Option shall automatically terminate.
SECTION 6. RECLASSIFICATION, CONSOLIDATION OR MERGER.
(a) If the capital stock of the Company shall be subdivided or
combined, whether by reclassification, stock dividend, stock split, reverse
stock split or other similar
2
<PAGE>
EXHIBIT 10.113 (CONTINUED)
transaction, then the number of Shares and the exercise price per Share will be
adjusted proportionately.
(b) In the case of any capital reorganization or any
reclassification of the capital stock of the Company (except pursuant to a
transaction described in paragraph (a) above (a "Reorganization"), appropriate
adjustment may be made by the Company in the number and class of shares subject
to or relating to Options awarded under the Plan and outstanding at the time of
such Reorganization.
SECTION 7. RIGHTS PRIOR TO EXERCISE OF OPTION. The Option is
non-transferable by the Optionee, except that in the event of the Optionee's
death the Option may be transferred by the Optionee's will or by the laws of
descent and distribution. During the Optionee's lifetime, the Option shall be
exercisable only by the Optionee. The Optionee shall have no rights as a
stockholder with respect to the Shares until exercise of the Option and delivery
to him or her of shares of Stock.
SECTION 8. NOTICES, ETC. Any notice hereunder by the Optionee
shall be given to the Company in writing, and such notice and any payment by the
Optionee hereunder shall be deemed duly given or made only upon receipt thereof
at the Company's office at 2644 30th Street, Santa Monica, California 90405, or
at such other address as the Company may designate by notice to the Optionee.
Any notice or other communication to the Optionee hereunder shall be in writing
and any such communication and any delivery to the Optionee hereunder shall be
deemed duly given or made if mailed or delivered to the Optionee at such address
as the Optionee may have on file with the Company.
SECTION 9. CONSTRUCTION. The interpretation and construction
of this Option is vested in the Company's Board of Directors, and such
construction thereby shall be final and conclusive.
IN WITNESS WHEREOF, the Company has caused this Option
Certificate to be executed by its proper corporate officer thereunto duly
authorized.
TRIMARK HOLDINGS, INC.
By ________________________________
Name: Jeff Gonzalez
Title: Chief Financial Officer
3
<PAGE>
EXHIBIT 10.114
TRIMARK HOLDINGS, INC.
Non-qualified Stock Option Granted Under
The Trimark Holdings, Inc. 1999 Directors' Option Plan
Certificate No. 7
Option granted on January 8, 2000 (the "Date of Grant") by
Trimark Holdings, Inc., a Delaware corporation (the "Company"), to Tofigh
Shirazi (the "Optionee"):
SECTION 1. GRANT OF OPTION. The Company grants to the Optionee
a non-qualified option to purchase, on the terms and conditions hereinafter set
forth, 2,000 shares (the "Shares") of the Company's Common Stock, par value
$0.001 per share (the "Stock"), at the option price of $3.5625 per share. This
Option is granted pursuant to the Company's 1999 Directors' Option Plan (the
"Plan"), a copy of which is attached hereto as Annex I. This Option is subject
in its entirety to the provisions of the Plan, all of which are incorporated by
reference herein.
SECTION 2. PERIOD OF OPTION. This Option will expire at the
close of business on JANUARY 8, 2010, ten years from the Date of Grant (the
"Expiration Date"), unless earlier terminated pursuant to Section 5 below.
SECTION 3. RIGHT OF EXERCISE. The Option granted to the
Optionee shall become exercisable in full on the Date of Grant. Once
exercisable, the Option may be exercised at any time prior to its expiration,
cancellation or termination as provided in the Plan. Partial exercise is
permitted from time to time provided that no partial exercise of the Option
shall be for a number of Shares having a purchase price of less than $1,000 or
for a fractional number of Shares.
SECTION 4. EXERCISE OF OPTION.
(a) METHOD OF EXERCISE. This Option shall be exercised by the
delivery to the Company of a written notice signed by the Optionee, which
specifies the number of Shares with respect to which the Option is being
exercised and the date of the proposed exercise. Such notice shall be delivered
to the Company's office as set forth in Section 8, no less than three business
days in advance of the date of the proposed exercise and shall be accompanied by
this Option Certificate. The Optionee may withdraw such notice at any time prior
to the close of business on the proposed date of exercise, in which case this
Option Certificate shall be returned to him or her.
Payment for Shares purchased upon exercise of the Option shall
be made at the time of exercise either in cash, by certified check or bank
cashier's check or, at the option of the Board of Directors of the Company, in
Stock owned by the Optionee and valued at its Fair Market Value (as defined in
the Plan) on the date of exercise, or partly in Stock with the balance in cash
or by
1
<PAGE>
EXHIBIT 10.114 (CONTINUED)
certified check or bank cashier's check. Any payment in Stock shall be effected
by its delivery to the Secretary of the Company, endorsed in blank or
accompanied by stock powers executed in blank.
(b) DELIVERY OF STOCK CERTIFICATES UPON EXERCISE. Upon each
exercise of this Option, the Company shall mail or deliver to the Optionee, as
soon as practicable, a stock certificate or certificates representing the Shares
then purchased. Notwithstanding the foregoing, no Option granted under the Plan
may be exercised unless and until the Shares to be issued upon the exercise
thereof have been registered under the Securities Act of 1933 and applicable
state securities laws, or are, in the opinion of counsel to the Company, exempt
from such registration. The Company shall not be under any obligation to
register under applicable federal or state securities laws any Shares to be
issued upon the exercise of an Option granted under the Plan, or to comply with
an appropriate exemption from registration under such laws in order to permit
the exercise of an Option and the issuance and sale of the Shares subject to
such Option. If the Company chooses to comply with such an exemption from
registration, the Shares issued under the Plan may bear an appropriate
restrictive legend restricting the transfer or pledge of the Shares represented
thereby, and the Company may also give appropriate stop-transfer instructions to
the transfer agent to the Company.
Further, the Company (or any subsidiary of the Company) may
take such provisions as it may deem appropriate for the withholding of any taxes
or payment of any taxes which it determines it may be required to withhold or
pay in connection with any Option or the payment of Stock pursuant to an Option.
The obligation of the Company to issue and deliver Shares pursuant to the Option
is conditioned upon the satisfaction of the provisions set forth in this
Section.
SECTION 5. TERMINATION OF OPTION. Except as herein otherwise
stated, the Option, to the extent not theretofore exercised, shall terminate
upon the first to occur of the following:
(a) the expiration of one year after the date on which the
Optionee ceases to be a director of the Company by reason of the Optionee's
death or disability; or
(b) the Expiration Date. Notwithstanding anything in this
Option Certificate to the contrary, in the event that the Optionee ceases to be
a director of the Company prior to the exercise of the Option, otherwise than as
described in (a) above, the Option shall automatically terminate.
SECTION 6. RECLASSIFICATION, CONSOLIDATION OR MERGER.
(a) If the capital stock of the Company shall be subdivided or
combined, whether by reclassification, stock dividend, stock split, reverse
stock split or other similar transaction, then the number of Shares and the
exercise price per Share will be adjusted proportionately.
2
<PAGE>
EXHIBIT 10.114 (CONTINUED)
(b) In the case of any capital reorganization or any
reclassification of the capital stock of the Company (except pursuant to a
transaction described in paragraph (a) above (a "Reorganization"), appropriate
adjustment may be made by the Company in the number and class of shares subject
to or relating to Options awarded under the Plan and outstanding at the time of
such Reorganization.
SECTION 7. RIGHTS PRIOR TO EXERCISE OF OPTION. The Option is
non-transferable by the Optionee, except that in the event of the Optionee's
death the Option may be transferred by the Optionee's will or by the laws of
descent and distribution. During the Optionee's lifetime, the Option shall be
exercisable only by the Optionee. The Optionee shall have no rights as a
stockholder with respect to the Shares until exercise of the Option and delivery
to him or her of shares of Stock.
SECTION 8. NOTICES, ETC. Any notice hereunder by the Optionee
shall be given to the Company in writing, and such notice and any payment by the
Optionee hereunder shall be deemed duly given or made only upon receipt thereof
at the Company's office at 2644 30th Street, Santa Monica, California 90405, or
at such other address as the Company may designate by notice to the Optionee.
Any notice or other communication to the Optionee hereunder shall be in writing
and any such communication and any delivery to the Optionee hereunder shall be
deemed duly given or made if mailed or delivered to the Optionee at such address
as the Optionee may have on file with the Company.
SECTION 9. CONSTRUCTION. The interpretation and construction
of this Option is vested in the Company's Board of Directors, and such
construction thereby shall be final and conclusive.
IN WITNESS WHEREOF, the Company has caused this Option
Certificate to be executed by its proper corporate officer thereunto duly
authorized.
TRIMARK HOLDINGS, INC.
By ________________________________
Name: Jeff Gonzalez
Title: Chief Financial Officer
3
<PAGE>
EXHIBIT 10.115
TRIMARK HOLDINGS, INC.
Non-qualified Stock Option Granted Under
The Trimark Holdings, Inc. 1999 Directors' Option Plan
Certificate No. 8
Option granted on January 8, 2000 (the "Date of Grant") by
Trimark Holdings, Inc., a Delaware corporation (the "Company"), to Peter Dekom
(the "Optionee"):
SECTION 1. GRANT OF OPTION. The Company grants to the Optionee
a non-qualified option to purchase, on the terms and conditions hereinafter set
forth, 2,000 shares (the "Shares") of the Company's Common Stock, par value
$0.001 per share (the "Stock"), at the option price of $3.5625 per share. This
Option is granted pursuant to the Company's 1999 Directors' Option Plan (the
"Plan"), a copy of which is attached hereto as Annex I. This Option is subject
in its entirety to the provisions of the Plan, all of which are incorporated by
reference herein.
SECTION 2. PERIOD OF OPTION. This Option will expire at the
close of business on January 8, 2010, ten years from the Date of Grant (the
"Expiration Date"), unless earlier terminated pursuant to Section 5 below.
SECTION 3. RIGHT OF EXERCISE. The Option granted to the
Optionee shall become exercisable in full on the Date of Grant. Once
exercisable, the Option may be exercised at any time prior to its expiration,
cancellation or termination as provided in the Plan. Partial exercise is
permitted from time to time provided that no partial exercise of the Option
shall be for a number of Shares having a purchase price of less than $1,000 or
for a fractional number of Shares.
SECTION 4. EXERCISE OF OPTION.
(a) METHOD OF EXERCISE. This Option shall be exercised by the
delivery to the Company of a written notice signed by the Optionee, which
specifies the number of Shares with respect to which the Option is being
exercised and the date of the proposed exercise. Such notice shall be delivered
to the Company's office as set forth in Section 8, no less than three business
days in advance of the date of the proposed exercise and shall be accompanied by
this Option Certificate. The Optionee may withdraw such notice at any time prior
to the close of business on the proposed date of exercise, in which case this
Option Certificate shall be returned to him or her.
Payment for Shares purchased upon exercise of the Option shall
be made at the time of exercise either in cash, by certified check or bank
cashier's check or, at the option of the Board of
1
<PAGE>
EXHIBIT 10.115 (CONTINUED)
Directors of the Company, in Stock owned by the Optionee and valued at
its Fair Market Value (as defined in the Plan) on the date of exercise, or
partly in Stock with the balance in cash or by certified check or bank cashier's
check. Any payment in Stock shall be effected by its delivery to the Secretary
of the Company, endorsed in blank or accompanied by stock powers executed in
blank.
(b) DELIVERY OF STOCK CERTIFICATES UPON EXERCISE. Upon each
exercise of this Option, the Company shall mail or deliver to the Optionee, as
soon as practicable, a stock certificate or certificates representing the Shares
then purchased. Notwithstanding the foregoing, no Option granted under the Plan
may be exercised unless and until the Shares to be issued upon the exercise
thereof have been registered under the Securities Act of 1933 and applicable
state securities laws, or are, in the opinion of counsel to the Company, exempt
from such registration. The Company shall not be under any obligation to
register under applicable federal or state securities laws any Shares to be
issued upon the exercise of an Option granted under the Plan, or to comply with
an appropriate exemption from registration under such laws in order to permit
the exercise of an Option and the issuance and sale of the Shares subject to
such Option. If the Company chooses to comply with such an exemption from
registration, the Shares issued under the Plan may bear an appropriate
restrictive legend restricting the transfer or pledge of the Shares represented
thereby, and the Company may also give appropriate stop-transfer instructions to
the transfer agent to the Company.
Further, the Company (or any subsidiary of the Company) may
take such provisions as it may deem appropriate for the withholding of any taxes
or payment of any taxes which it determines it may be required to withhold or
pay in connection with any Option or the payment of Stock pursuant to an Option.
The obligation of the Company to issue and deliver Shares pursuant to the Option
is conditioned upon the satisfaction of the provisions set forth in this
Section.
SECTION 5. TERMINATION OF OPTION. Except as herein otherwise
stated, the Option, to the extent not theretofore exercised, shall terminate
upon the first to occur of the following:
(a) the expiration of one year after the date on which the
Optionee ceases to be a director of the Company by reason of the Optionee's
death or disability; or
(b) the Expiration Date. Notwithstanding anything in this
Option Certificate to the contrary, in the event that the Optionee ceases to be
a director of the Company prior to the exercise of the Option, otherwise than as
described in (a) above, the Option shall automatically terminate.
SECTION 6. RECLASSIFICATION, CONSOLIDATION OR MERGER.
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EXHIBIT 10.115 (CONTINUED)
(a) If the capital stock of the Company shall be subdivided or
combined, whether by reclassification, stock dividend, stock split, reverse
stock split or other similar transaction, then the number of Shares and the
exercise price per Share will be adjusted proportionately.
(b) In the case of any capital reorganization or any reclassification of the
capital stock of the Company (except pursuant to a transaction described in
paragraph (a) above (a "Reorganization"), appropriate adjustment may be made by
the Company in the number and class of shares subject to or relating to Options
awarded under the Plan and outstanding at the time of such Reorganization.
SECTION 7. RIGHTS PRIOR TO EXERCISE OF OPTION. The Option is
non-transferable by the Optionee, except that in the event of the Optionee's
death the Option may be transferred by the Optionee's will or by the laws of
descent and distribution. During the Optionee's lifetime, the Option shall be
exercisable only by the Optionee. The Optionee shall have no rights as a
stockholder with respect to the Shares until exercise of the Option and delivery
to him or her of shares of Stock.
SECTION 8. NOTICES, ETC. Any notice hereunder by the Optionee
shall be given to the Company in writing, and such notice and any payment by the
Optionee hereunder shall be deemed duly given or made only upon receipt thereof
at the Company's office at 4553 Glencoe Avenue, Suite 200, Marina del Rey,
California 90292, or at such other address as the Company may designate by
notice to the Optionee.
Any notice or other communication to the Optionee hereunder
shall be in writing and any such communication and any delivery to the Optionee
hereunder shall be deemed duly given or made if mailed or delivered to the
Optionee at such address as the Optionee may have on file with the Company.
SECTION 9. CONSTRUCTION. The interpretation and construction
of this Option is vested in the Company's Board of Directors, and such
construction thereby shall be final and conclusive.
IN WITNESS WHEREOF, the Company has caused this Option
Certificate to be executed by its proper corporate officer thereunto duly
authorized.
TRIMARK HOLDINGS, INC.
By ________________________________
Name: Jeff Gonzalez
Title: Chief Financial Officer
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EXHIBIT 10.116
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is made as of
January 6, 2000 by and among CinemaNow, Inc., a California corporation (the
"Company"), and the persons and entities (each, an "Investor" and collectively,
the "Investors") listed on the Schedule of Investors attached hereto as Exhibit
A, as such Schedule of Investors may be supplemented or amended from time to
time hereafter (the "Schedule of Investors").
1. AUTHORIZATION AND SALE OF SERIES A PREFERRED STOCK
1.1 AUTHORIZATION. The Company will authorize the sale and issuance of
up to Three Million Five Hundred Fifty-Five Thousand Five Hundred and Fifty-Six
(3,555,556) shares of its Series A Convertible Preferred Stock (the "Series A
Shares"), having the rights, privileges and preferences set forth in the
Amendment to Articles of Incorporation (the "Amendment") in the form attached
hereto as Exhibit B.
1.2 SALE OF SERIES A SHARES. Subject to the terms and conditions
hereof, at the Closing (as defined below) the Company will severally issue and
sell to each of the Investors and the Investors will severally buy from the
Company the number of Series A Shares set forth opposite such Investor's name in
the second column of the Schedule of Investors for the aggregate purchase price,
calculated on a per share purchase price of $0.675, of up to $2,400,000, set
forth in the third column opposite the Investor's name in the Schedule of
Investors. The Company's agreements with each of the Investors are separate
agreements, and the sales to each of the Investors are separate sales.
2. CLOSING DATE; DELIVERY
2.1 CLOSING DATES. The initial closing of the purchase and sale of the
Series A Shares hereunder shall be held at the offices of the Company at 10:00
a.m., local time, on or about January 6, 2000 or at such other time as the
Company and the Investors purchasing a majority of the Series A Shares may
determine; provided that a minimum of $2,000,000 shares of Series A Preferred
Stock are being purchased at the initial closing. Subsequent closings may be
held at any time after the initial closing and at such place as the Company and
the Investors participating in such closing may determine. Each closing
hereunder is referred to as the "Closing".
2.2 DELIVERY. At the Closing, the Company will deliver to each Investor
participating in the Closing a certificate, registered in such Investor's name,
representing the number of Series A Shares to be purchased by such Investor at
such Closing, against payment of the purchase price therefor by cashiers check
payable to the Company or by wire transfer in same day funds in accordance with
the Company's wiring instructions.
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EXHIBIT 10.116 (CONTINUED)
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investors as
follows:
3.1 ORGANIZATION AND STANDING; ARTICLES AND BYLAWS. The Company is a
corporation duly organized and validly existing under, and by virtue of, the
laws of the State of California and is in good standing under such laws. The
Company has requisite corporate power and authority to own and operate its
properties and assets, and to carry on its business as presently conducted and
as proposed to be conducted. The Company is duly qualified to transact business
and is in good standing in each jurisdiction in which the failure to so qualify
would have a material adverse effect on its business, assets, financial
condition, results of operation or properties (a "Material Adverse Effect").
3.2 CORPORATE POWER. The Company has and will have at the Closing all
requisite corporate power and authority to execute and deliver this Agreement
and any agreements attached as exhibits hereto (collectively, the "Agreements"),
to sell and issue the Series A Shares hereunder, to issue the Common Stock
issuable upon conversion of the Series A Shares and to carry out and perform its
obligations under the terms of the Agreements.
3.3 CAPITALIZATION. The authorized capital stock of the Company will,
upon the filing of the Amendment, consist of Forty Million (40,000,000) shares
of Common Stock, without par value (the "Common Stock"), and Ten Million
(10,000,000) shares of Preferred Stock, without par value (the "Preferred
Stock"), Four Million (4,000,000) shares of which are designated Series A
Convertible Preferred Stock ("Series A Preferred Stock"). Immediately prior to
the Closing and after filing the Amendment, Twenty Million (20,000,000) shares
of Common Stock will be outstanding, and no shares of Series A Preferred Stock
will be outstanding. All of the outstanding shares of Common Stock are duly
authorized, validly issued, fully paid and nonassessable. The Series A Shares
and the Common Stock issuable upon conversion of the Series A Shares, when
issued pursuant to the terms of this Agreement, will be duly authorized, validly
issued, fully paid and nonassessable. Except as set forth on Schedule 3.3
attached hereto, there are no options, warrants or other rights (including
conversion or preemptive rights) or agreements outstanding to purchase any of
the Company's authorized and unissued capital stock.
3.4 AUTHORIZATION. All corporate action on the part of the Company, its
officers, directors and shareholders necessary for (i) the authorization,
execution and delivery of the Agreements by the Company, (ii) the authorization,
sale, issuance and delivery of the Series A Shares (and the Common Stock
issuable upon conversion of the Series A Shares), and (iii) the performance of
all of the Company's obligations under the Agreements, has been taken or will be
taken prior to the Closing. The Agreements, when executed and delivered by the
Company, will constitute valid and binding
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EXHIBIT 10.116 (CONTINUED)
obligations of the Company, enforceable in accordance with their terms, except
as enforcement may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, or similar laws affecting the
enforcement of creditors' rights generally and as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies. The Series A Shares and the Common Stock issuable upon conversion of
the Series A Shares, when issued in compliance with the provisions of this
Agreement, will have the rights, preferences and privileges described in the
Amendment, and will be free of any liens, preemptive or similar rights or
encumbrances; provided, however, that the Series A Shares (and the Common Stock
issuable upon conversion thereof) may be subject to restrictions on transfer
under state and/or federal securities laws. Sufficient shares of authorized but
unissued Common Stock have been reserved for issuance upon conversion of the
Series A Shares. The Common Stock issuable upon conversion of the Series A
Shares has been duly and validly reserved for issuance, and upon issuance in
accordance with the terms of the Amendment, shall be duly and validly issued,
fully paid and nonassessable and free of restrictions on transfer other than
restrictions on transfer under applicable federal and state securities laws and,
based in part on the representations of the Investors, will be issued in
compliance with all applicable federal and state securities laws. The issuance
of the Series A Shares does not, and the issuance of the Common Stock issued
upon conversion of the Series A Shares will not, require any further corporate
action and, except as set forth in Schedule 3.4 attached hereto, is not and will
not be subject to any preemptive right, right of first refusal or the like.
3.5 COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery and
performance of the Agreements and compliance with their provisions (including
the issuance of the Series A Shares and the Common Stock upon conversion of the
Series A Shares) will not violate or conflict with, result in any breach of the
terms, conditions or provisions of, constitute a default under any provisions of
the Company's Articles of Incorporation or Bylaws, each as amended to date, or
in any material respect of any term or provision of any material mortgage,
indebtedness, indenture, contract, agreement, instrument, judgment, order or
decree, and to its knowledge will not violate any statute, rule or regulation
applicable to the Company.
3.6 GOVERNMENTAL CONSENT, ETC. No consent, approval or authorization of
or designation, declaration or filing with any U. S. governmental authority on
the part of the Company is required in connection with the valid execution and
delivery of the Agreements, or the offer, sale or issuance of the Series A
Shares (and the Common Stock issuable upon conversion of the Series A Shares),
or the consummation of any other transaction contemplated hereby, except (a) the
filing of the Amendment in the office of the California Secretary of State and
(b) qualification (or taking such action as may be necessary to secure an
exemption from
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EXHIBIT 10.116 (CONTINUED)
qualification or registration, if available) of the offer and sale of the Series
A Shares (and the Common Stock issuable upon conversion of the Series A Shares)
under applicable Blue Sky and federal securities laws. The Company has all
permits, licenses and other similar authority necessary for the conduct of its
business as now being conducted by it and as proposed to be conducted by it
immediately following the Closing, and is not in default under any such permit,
license or other similar authority.
3.7 BROKERS OR FINDERS; OTHER OFFERS. Except as set forth on Schedule
3.7 attached hereto and except for fees payable to Hunter Capital Group, LLC, a
Delaware limited liability company ("Hunter Capital"), the Company has not
incurred, and will not incur, directly or indirectly, as a result of any action
taken by the Company, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement.
3.8 SUBSIDIARIES. The Company does not currently own or control,
directly or indirectly, any interest in any other corporation, association,
company, partnership or other business entity.
3.9 TAX MATTERS.
3.9.1 The Company has timely and duly filed all Tax Returns
required to be filed by it, and all such Tax Returns were when filed correct and
complete in all material respects. The Company has duly paid all Taxes due and
payable, whether or not shown on any Tax Return, and has made adequate provision
on its books in accordance with generally accepted accounting principles
("GAAP") for the payment of all Taxes which have accrued but are not yet due and
payable. There are not any asserted or, to the best knowledge of the Company,
any unasserted deficiencies with regard to Taxes or Tax Returns of the Company,
and no claim has been made by any jurisdiction in which the Company does not or
has not filed Tax Returns that the Company is or may be subject to taxation by
the jurisdiction. There are no agreements, waivers or consents providing for an
extension of time with respect to the assessment of any Taxes against the
Company or any other agreements, waivers or consents agreed to by the Company
issued to, with, or for the benefit of, any taxing authority or jurisdiction.
The Company has not received any outstanding notice of audit and it is not
undergoing any audit of Tax Returns. The Company has complied in all material
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes and has withheld all amounts required by law to be
withheld from the wages or salaries of employees and independent contractors,
and is not liable for any Taxes for failure to comply with such laws, rules and
regulations.
3.9.2 For purposes of this Section:
3.9.2.1 "Tax" and "Taxes" mean any one or more federal,
state, local, or foreign income, gross receipts,
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EXHIBIT 10.116 (CONTINUED)
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Section 59A of the
Internal Revenue Code of 1986, as amended ("Code")), customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
3.9.2.2 "Tax Return" means any return, declaration, report,
claim for refund, or information return or statement, including any schedule or
attachment thereto, and also including any amendment thereof.
3.10 COMPLIANCE WITH LAWS. The Company has complied with and is not in
violation of any foreign, federal, state or local statute, law or regulation,
the violation of which would have a Material Adverse Effect on the Company.
3.11 PATENTS, TRADEMARKS, ETC.
(a) Set forth in Schedule 3.11 attached hereto is a list and brief
description of all material patents, patent rights, patent applications,
trademarks, trademark applications, service marks, service mark applications,
trade names and copyrights, Internet domain names and all applications for such
that are in the process of being prepared, owned by or registered in the name of
the Company, or of which the Company is a licensor or licensee or in which the
Company has any right, and in each case a brief description of the nature of
such right. The Company has full title and ownership of, or is duly licensed
under or otherwise authorized to use, all patents, patent rights, patent
applications, trademarks, trademark applications, service marks, service mark
applications, tradenames, copyrights, mask works, trade secrets, Internet domain
names and applications therefor, Uniform Resource Locators, licenses, formulae,
know how, designs, and all other information and proprietary rights and
processes (collectively, "Intellectual Property") necessary for its business as
now conducted without any conflict with, or infringement of, the rights of
others.
(b) Except as set forth in Schedule 3.11, no claim is pending or,
to the best of the knowledge of the Company, threatened to the effect that any
such Intellectual Property owned or licensed by the Company, or which the
Company otherwise has the right to use, is invalid or unenforceable by the
Company or infringes upon the rights of any third party, and there is no known
basis for any such claim (whether or not pending or threatened). To the best of
the knowledge of the Company, all technical information developed by and
belonging to the Company which has not been patented or copywritten has been
kept confidential. The Company has not granted or assigned to any other person
or entity any right to manufacture,
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EXHIBIT 10.116 (CONTINUED)
have manufactured, assemble, license, sell or otherwise distribute the products
or proposed products or to provide the services or proposed services of the
Company. Except as set forth in Schedule 3.11, no current or former stockholder,
employee, officer or director of the Company and no other third party have
(directly or indirectly) any right, title or interest in any of the Company's
Intellectual Property other than such right which such person or entity may
enjoy solely as a stockholder of the Company. Except as set forth in Schedule
3.11, there are no agreements, understandings, instruments, contracts, proposed
transactions, judgments, orders, writs or decrees to which the Company is a
party or by which it is bound that may involve (i) the license of any
Intellectual Property to or from the Company; (ii) provisions restricting or
affecting the development, manufacture or distribution of the Company's products
or services, (iii) indemnification by the Company with respect to infringement
of proprietary rights, or (iv) the payment of any royalties or other payments to
third parties with respect to the development, manufacture or distribution of
the Company's products or services.
(c) The Company is not aware that any of its employees is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with the use of such
employee's best efforts to promote the interest of the Company or that would
conflict with the Company's business. Neither the execution or delivery of this
Agreement, nor the carrying on of the Company's business by the employees of the
Company, nor the conduct of the Company's business as proposed, will, to the
Company's knowledge, conflict with or result in a breach of the terms,
conditions, or provisions of, or constitute a default under, any contract,
covenant or instrument under which any such employee is now obligated. The
Company does not believe it is or will be necessary to use any inventions of any
of its employees (or persons it currently intends to hire) made prior to their
employment by the Company.
3.12 EMPLOYEES. To the Company's knowledge, no employee of the Company
is in violation of any term of any material employment contract, patent
disclosure agreement or any other material contract or agreement relating to the
right of any such employee to be employed by the Company because of the nature
of the business conducted by the Company. Except as set forth in Schedule 3.12,
the Company has no employee severance agreement covering any of its employees.
There are no labor disputes or union organization activities pending or, to the
knowledge of the Company, threatened, between it and its employees. To the
Company's knowledge, the Company has complied in all material respects with all
applicable state and federal equal employment opportunity and other laws related
to employment.
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EXHIBIT 10.116 (CONTINUED)
3.13 LITIGATION, ETC. There is no action, suit, proceeding or
investigation pending or to the Company's knowledge threatened, against the
Company, its activities, properties or assets or, to the Company's knowledge,
against any officer, director, employee or shareholder of the Company in
connection with such officer's, director's, employee's or shareholder's
relationship with, or actions taken on behalf of, the Company and none which
questions the validity of this Agreement or the transactions contemplated
herein, nor is the Company aware for any basis for any of the foregoing. The
Company is not a party or subject to any material writ, order, decree or
judgment, and there is no action, suit, proceeding or investigation by the
Company currently pending or which the Company intends to initiate.
3.14 TRANSACTIONS WITH PRINCIPALS. Except as set forth in Schedule 3.14
attached hereto, no employee, shareholder, officer or director of the Company or
any member of his or her immediate family is indebted to the Company, nor is the
Company indebted (or committed to make loans or extend or guarantee credit) to
any of them other than (i) for payment of salary for services rendered, (ii)
reimbursement for reasonable expenses incurred on behalf of the Company, and
(iii) for other standard employee benefits made generally available to all
employees (including stock option agreements outstanding under any stock option
plan approved by the Board of Directors). Except as set forth in Schedule 3.14,
to the Company's knowledge, no such person is, directly or indirectly,
materially interested in any contract with the Company that is material to the
Company. To the Company's knowledge, no employee or director of the Company or
any member of his or her immediate family, has any direct or indirect ownership
interest in any firm or corporation with which the Company has a material
business relationship, or any firm or corporation that competes directly with
the Company, except that other than as set forth in Schedule 3.14 employees of
the Company may not be officers, directors, employees and/or shareholders of
Trimark Holdings, Inc. ("Trimark") and/or its Affiliates. Except as set forth in
Schedule 3.14 and as provided in the Agreements, to the Company's knowledge,
there is no voting agreement or other arrangement among its shareholders with
respect to the election of any individual or individuals to the Board of
Directors.
3.15 FINANCIAL STATEMENTS. Schedule 3.15 attached hereto includes
complete copies of the Company's balance sheets and statements of income, equity
and cash flows for the period from May 28, 1999 through October 31, 1999
(collectively, the "Company Financial Statements"). The Company Financial
Statements present fairly the financial position, results of operations and cash
flows of the Company as of the dates and for the periods indicated therein in
accordance with GAAP applied on a consistent basis throughout the periods
indicated (except as otherwise indicated therein or in the Schedules attached
hereto and subject to normal year end adjustments). Other than to the extent
disclosed or
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EXHIBIT 10.116 (CONTINUED)
accrued for in the balance sheet of the Company at October 31, 1999 (the
"Company Balance Sheet") or the notes thereto, there are no material liabilities
or obligations of the Company of any nature (whether accrued, absolute,
contingent or otherwise) except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice since the date of the
Company Balance Sheet and which are not material.
3.16 OBLIGATIONS OF THE COMPANY. Except as set forth in Schedule 3.16
attached hereto, the Company has incurred no debt, liability or obligation of
any kind or nature, whether direct or indirect, matured or unmatured, accrued,
absolute, contingent or otherwise, that, as of the date hereof, exceeds or is
reasonably anticipated to exceed $50,000 in the aggregate.
3.17 CHANGES. Except as set forth in Schedule 3.17 attached hereto,
since October 31, 1999, there has not been:
3.17.1 Any change in the assets, liabilities, financial condition
or operations of the Company from that reflected in the Company Financial
Statements, other than changes in the ordinary course of business, none of which
individually or in the aggregate has had or is currently expected to have a
Material Adverse Effect;
3.17.2 Any resignation or termination of any key officers of the
Company;
3.17.3 Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of the Company;
3.17.4 Any declaration, setting aside, or payment of any dividend
or other distribution of the assets of the Company;
3.17.5 Any debt, obligation or liability incurred, assumed or
guaranteed by the Company, except those for immaterial amounts and for current
liabilities incurred in the ordinary course of business;
3.17.6 Any sale, assignment, license or transfer of any of the
Company's Intellectual Property;
3.17.7 Any change in any material agreement to which the Company
is a party or by which it is bound which materially and adversely affects the
business, assets, liabilities, financial condition, operations or prospects of
the Company, including compensation agreements with the Company's employees;
3.17.8 Any other event or condition of any character that, either
individually or cumulatively, has materially and adversely affected the
business, assets, liabilities, financial condition, operations or prospects of
the Company or, to the
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EXHIBIT 10.116 (CONTINUED)
Company's knowledge, could reasonably be expected to materially and adversely
affect the business, assets, liabilities, financial condition, operation or
prospects of the Company; or
3.17.9 Any agreement or commitment by the Company to do any of the
things described in this Section 3.17.
3.18 CONTRACTS, LEASES, AND OTHER AGREEMENTS. Except as set forth in
Schedule 3.18 attached hereto, the Company has no contract, lease, agreement,
plan, license, arrangement, obligation or commitment (collectively, "Contracts")
involving aggregate payments or delivery or licensing by or to the Company of
money, goods or other assets or services having, in each case, an aggregate
value of more than $50,000. All Contracts to which the Company is a party or by
which it or any of its assets may be bound are valid, binding and in full force
and effect, and, to the best knowledge of the Company, no material breach or
default, or event which, with notice or lapse of time or both, would constitute
any such material breach or default by the Company (or, to the best knowledge of
the Company, by any other party thereto), exists with respect thereto. The
Company has not received any notice of cancellation or non-renewal of any
Contract.
3.19 TANGIBLE ASSETS AND EQUIPMENT. The Company owns, leases, or
otherwise has the right to use as required in connection with the conduct of its
business, all of its tangible assets and equipment, and has good and marketable
title to all such assets and equipment that are owned, free and clear of any
liens or encumbrances, except for liens which are being contested in good faith
and by appropriate proceedings and for which adequate reserves have been set
aside on the books of the Company and reflected in the Company Financial
Statements.
3.20 ENVIRONMENTAL MATTERS.
3.20.1 "Environmental Laws" means all laws, statutes, ordinances,
rules, regulations, orders, guidelines, rulings, decrees, notices and
determinations of any governmental authority pertaining to health, safety,
protection of the environment, natural resources, and regulation of activities
involving a Hazardous Substance. "Hazardous Substance" means any hazardous,
toxic, radioactive or infectious substance, material or waste as defined, listed
or regulated under any Environmental Laws. "Contaminated" means the actual
existence on or under any real property of a Hazardous Substance, if the
existence of such Hazardous Substance triggers a requirement to perform any
investigatory, remedial, removal or other response action under any
Environmental Laws or if such response action legally could be required by any
governmental authority. "Facility" means any property currently owned, leased or
occupied by the Company.
3.20.2 The Company is in all material respects in compliance with
and has been since its inception in compliance with
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EXHIBIT 10.116 (CONTINUED)
all applicable Environmental Laws. The Company has no knowledge of any past,
present or, as anticipated by the Company, future events, conditions,
activities, investigation, studies, plans or proposals that (a) would interfere
with or prevent compliance with any Environmental Laws by the Company or (b)
could reasonably be expected to give rise to any common law or other liability,
or otherwise form the basis of a claim, action, suit, proceeding, hearing or
investigation involving the Company and related in any way to a Hazardous
Substance or Environmental Laws.
3.20.3 No litigation, claim, proceeding or governmental
investigation is pending regarding any environmental matter for which the
Company has been served or otherwise notified or, to the best knowledge of the
Company, threatened or asserted against Company, or the officers or directors of
the Company in their capacities as such, or any Facility or the Company's
business. There are no orders, judgments or decrees of any court or of any
governmental agency or instrumentality under any Environmental Laws which
specifically apply to the Company, any Facility or any of the Company's
operations. The Company has not received from a governmental authority or other
person (A) any notice that it is a potentially responsible person for any
Contaminated site or (B) any request for information about a site alleged to be
Contaminated or regarding the disposal of Hazardous Substances. There is no
litigation or proceeding against any other person by the Company regarding any
environmental matter.
3.21 YEAR 2000. The items, products, services and systems (1) offered
for sale by the Company and (2) to the best of the Company's knowledge, used in
connection with the Company's operations are Year 2000 Compliant, as defined
herein, except to the extent that a failure to be Year 2000 Compliant would not
have a Material Adverse Effect. For purposes of this Agreement, "Year 2000
Compliant" shall mean the ability of software, hardware and other systems to
provide all of the following functions: (a) consistently handle date information
before, during and after January 1, 2000, including but not limited to accepting
date input, providing date output, and performing calculations on dates or
portions of dates; (b) function accurately, in accordance with any and all
published documentation, and without interruption before, during and after
January 1, 2000, without any change in operations associated with the advent of
the new century; (c) respond to two-digit year-date input in a way that resolves
any ambiguity as to century in a disclosed, defined and predetermined manner;
and (d) store and provide output of date information in ways that are
unambiguous as to century.
3.22 OFFICERS AND DIRECTORS. Schedule 3.22 attached hereto sets forth
the names and titles and each of the officers and directors of the Company.
3.23 USE OF PROCEEDS. The proceeds from the sale of the Series A
Shares, net of applicable fees and expenses, will be used for general working
capital purposes.
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EXHIBIT 10.116 (CONTINUED)
3.24 DISCLOSURE. The Company and the Investors have been engaged in a
due diligence process and, in connection therewith, the Company has made
available to the Investors information reasonably available to the Company that
the Investors requested to assist them in making their decision of whether or
not to purchase the Series A Shares. To the Company's knowledge neither this
Agreement nor any other written statements or certificates made or delivered in
connection with the execution of this Agreement contains any untrue statement of
a material fact or omits to state a material fact specific to the Company
necessary to make the statements made, in light of the circumstances in which
they were made, not misleading.
4. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor hereby severally represents and warrants to the
Company with respect to the purchase of the Series A Shares as follows:
4.1 EXPERIENCE. Investor has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company so that Investor is capable of evaluating the merits and risks of
its investment in the Company and has the capacity to protect its own interests.
4.2 INVESTMENT. Investor is acquiring the Series A Shares and the
Common Stock underlying the Series A Shares for investment for Investors own
account, not as a nominee or agent, and not with the view to, or for resale in
connection with, any distribution thereof. Investor understands that the Series
A Shares to be purchased and the Common Stock underlying the Series A Shares
have not been, and will not be (except for specific registration rights granted
to the Investors), registered under the Securities Act of 1933, as amended (the
"Securities Act"), by reason of a specific exemption from the registration
provisions of the Securities Act, the availability of which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
such Investor's representations as expressed herein.
4.3 ACCREDITED INVESTORS. Investor is an "accredited investor" as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act
("Accredited Investor").
4.4 RULE 144. Investor acknowledges that the Series A Shares and the
Common Stock issuable upon conversion thereof must be held indefinitely unless
subsequently registered under the Securities Act or unless an exemption from
such registration is available. Investor is aware of the provisions of Rule 144
promulgated under the Securities Act which permit limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things, the existence of a public market for
the shares, the availability of certain current public information about the
Company, the resale occurring not less than one year after a party has purchased
and paid for the security
11
<PAGE>
EXHIBIT 10.116 (CONTINUED)
to be sold, the sale being effected through a "broker's transaction" or in
transactions directly with a "market maker" and the number of shares being sold
during any three-month period not exceeding specified limitations.
4.5 NO PUBLIC MARKET. Investor understands that no public market now
exists for any of the securities issued by the Company and that the Company has
made no assurances that a public market will ever exist for the Company's
securities.
4.6 FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting the
representations set forth above, Investor further agrees not to make any
disposition of all or any portion of the Series A Shares unless:
4.6.1 There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement;
4.6.2 Investor (i) shall have notified the Company of the
proposed disposition and shall have furnished the Company with a reasonably
detailed statement of the circumstances surrounding the proposed disposition,
and (ii) if reasonably requested by the Company, Investor shall have furnished
the Company with an opinion of counsel, reasonably satisfactory to the Company
that such disposition will not require registration of such shares under the
Act; or
4.6.3 The disposition is in accordance with the Co-Sale Agreement
by and among the Company, the Investors and certain holders of the Common Stock.
Notwithstanding the provisions of Sections 4.6.1 and 4.6.2 above,
no such registration statement or opinion of counsel shall be necessary for a
transfer by an Investor (A) that is a partnership to a partner of such
partnership or a retired partner of such partnership who retires after the date
hereof, (B) that is a limited liability company to a member of such limited
liability company, (C) to the estate of any such partner or retired partner or
member, (D) to an "affiliate" of a holder of Restricted Securities as that term
is defined in Rule 405 promulgated under the Securities Act (an "Affiliate"), or
(E) to a "family member" (as defined in Rule 701(c)(3) promulgated under the
Securities Act) of any Investor, if the transferee agrees in writing to be
subject to the terms hereof to the same extent as if he or she were an original
Investor hereunder; provided, that such transferee shall represent in writing
that it/he/she is an Accredited Investor. Notwithstanding the foregoing, no
Series A Shares may be assigned or transferred in a private transaction to a
competitor of either the Company or Trimark.
12
<PAGE>
EXHIBIT 10.116 (CONTINUED)
4.7 LEGENDS. Investor understands that the certificates evidencing the
Series A Shares (and the Common Stock issuable upon conversion thereof) may bear
the following legends and any legend required by the laws of the State of
California, including any legend required by the California Department of
Corporations and Sections 417 and 418 of the California Corporations Code:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND CERTAIN RIGHTS SPECIFIED IN THE SECURITIES
PURCHASE AGREEMENT DATED AS OF JANUARY 6, 2000, AS AMENDED FROM TIME TO
TIME, BETWEEN THE COMPANY AND THE HOLDERS OF THE SHARES OF SERIES A
PREFERRED STOCK, A COPY OF WHICH WILL BE MAILED TO ANY REQUESTING
HOLDER BY THE COMPANY UPON WRITTEN REQUEST THEREFOR.
4.8 CALIFORNIA CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES
THAT ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH
SECURITIES PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF
SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS
SO EXEMPT.
4.9 FURTHER REPRESENTATIONS BY FOREIGN INVESTORS. If an Investor is not
a United States person, such Investor hereby represents that he, she or it has
satisfied himself, herself or itself as to the full observance of the laws of
his, her or its jurisdiction in connection with any invitation to subscribe for
the Series A Preferred Stock or any use of this Agreement, including (i) the
legal requirements within his, her or its jurisdiction for the purchase of the
Series A Preferred Stock, (ii) any foreign exchange restrictions applicable to
such purchase, (iii) any governmental or other consents that may need to be
obtained, and (iv) the income tax and other tax consequences, if any, that may
be relevant to the purchase, holding, redemption, sale, or transfer of the
Series A Preferred Stock. Such Investor's subscription and payment for, and his,
her or its continued beneficial ownership of
13
<PAGE>
EXHIBIT 10.116 (CONTINUED)
the Series A Preferred Stock, will not violate any applicable securities or
other laws of his, her or its jurisdiction.
4.10 AUTHORIZATION. This Agreement when executed and delivered by
Investor will constitute a valid and legally binding obligation of the Investor,
enforceable in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and
any other laws of general application affecting enforcement of creditors rights
generally, as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
4.11 BROKERS OR FINDERS. Except for Hunter Capital, Investor has not,
and will not, incur, directly or indirectly, as a result of any action taken by
such Investor, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement and the
transactions contemplated herein.
4.12 INVESTOR QUESTIONNAIRE. The Investor has completed that certain
Investor Questionnaire (the "Questionnaire") in the form attached hereto as
Exhibit C. The Investor acknowledges that the Company will be relying on the
Investor's answers to the questions contained in the Questionnaire in
determining whether or not the Series A Preferred Stock can be sold to the
Investor without registration under the Securities Act or qualification under
applicable state securities laws. The Investor has carefully completed the
Questionnaire and all of the information furnished by the Investor in response
to the Questionnaire is true and correct.
4.13 DILIGENCE. Each Investor and the Investor's representatives have
been solely responsible for such Investor's own "due diligence" investigation of
the Company and its management and business, for such Investor's own analysis of
the merits and risks of this investment, and for such Investor's own analysis of
the fairness and desirability of the terms of the investment; in taking any
action or performing any role relative to the arranging of the proposed
investment, the Investor has acted solely in the Investor's own interest, and
acknowledges that none of the other Investors (or any of their agents or
employees) has acted as an agent of such Investor.
4.14 ACCESS TO DATA. Each Investor and its representatives and legal
counsel have been afforded full and free access to corporate books, financial
statements, records, contracts, documents, other information concerning the
Company and its offices and facilities, have been afforded an opportunity to ask
such questions of the Company's officers, employees, agents, accountants and
representatives concerning the Company's business, operations, financial
condition, assets, liabilities and other relevant matters as they have deemed
necessary or desirable, and have been given all such information as has been
requested, in order to evaluate the
14
<PAGE>
EXHIBIT 10.116 (CONTINUED)
merits and risks of the prospective investments contemplated herein.
4.15 NO CONSENT. No consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of any Investor is required in connection with the valid execution and delivery
of the Agreements and the transactions contemplated thereby, except such filings
as may be required under applicable federal securities or state Blue-Sky laws
and regulations.
5. CONDITIONS TO INVESTORS' OBLIGATIONS TO CLOSE
Each Investors obligation to purchase Series A Shares at the Closing is, at the
option of such Investor, subject to the fulfillment of the following conditions
on or before such Closing:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct in
all material respects as of such Closing.
5.2 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to such Closing shall
have been performed or complied with in all material respects.
5.3 OPINIONS OF COUNSEL.
5.3.1 At the Closing, the Company shall have delivered to the
Investors the opinion of Bryan Cave LLP, legal counsel to the Company, dated the
date of the Closing, addressed to the Investors and substantially in the form of
Exhibit D-1 attached hereto.
5.3.2 At the Closing, the Company shall have delivered to the
Investors the opinion of Wayne Levin, legal counsel to Trimark, dated the date
of the Closing, addressed to the Investors and substantially in the form of
Exhibit D-2 attached hereto.
5.3.3 At the Closing, the Company shall have delivered to the
Investors the opinion of Bruce David Eisen, legal counsel to the Company, dated
the date of the Closing, addressed to the Investors and substantially in the
form of Exhibit D-3 attached hereto.
5.4 BLUE SKY. With respect to the purchase of Series A Shares by such
Investor, the Company shall have obtained all necessary Blue Sky law permits and
qualifications, or have the availability of exemptions therefrom, required by
any state for the
15
<PAGE>
EXHIBIT 10.116 (CONTINUED)
offer and sale of the Series A Shares and the Common Stock issuable upon
conversion of the Series A Shares as contemplated herein.
5.5 AMENDMENT OF ARTICLES OF INCORPORATION. The Amendment shall have
been filed with and accepted by the California Secretary of State.
5.6 RIGHTS AGREEMENT. The Company shall have delivered to Hunter
Capital on behalf of the Investors an executed copy of the Investors' Rights
Agreement in the form attached hereto as Exhibit E (the "Rights Agreement").
5.7 CO-SALE AGREEMENT. The Company shall have delivered to Hunter
Capital on behalf of the Investors an executed copy of the Co-Sale Agreement in
the form attached hereto as Exhibit F (the "Co-Sale Agreement").
5.8 ISSUANCE OF COMMON STOCK TO HUNTER CAPITAL. At the Closing, Hunter
Capital (or the persons designated by Hunter Capital) shall have received from
the Company a certificate or certificates for the aggregate number of shares of
Common Stock of the Company issuable to Hunter Capital in connection with the
Closing pursuant to the letter agreement dated March 24, 1999, as amended on
December 20, 1999, between Hunter Capital and Trimark (the "Engagement Letter").
In addition, all amounts due and payable to Hunter Capital at that time under
the Engagement Letter shall have been paid in full.
5.9 MINIMUM COMMITMENTS. The Company shall have received commitments
from Investors to purchase at least Two Million Nine Hundred Sixty-Two Thousand
Nine Hundred and Sixty-Three (2,962,963) Series A Shares at a price of $0.675
per share, which will be issued at the initial Closing.
5.10 DUE DILIGENCE; MATERIAL ADVERSE CHANGE. The Investors shall be
satisfied with the results of their due diligence on the Company and no material
adverse change shall have occurred prior to the Closing.
5.11 CONFIRMATION BY TRIMARK. Pursuant to Section 1.1 of each of the
Employment Agreements and Sections 1.11, 1.12, 1.13 and 5 of each of the
Restricted Stock Purchase Agreements referred to in Schedule 5.11 attached
hereto, the board of directors of Trimark shall have determined that the gross
proceeds to be received by the Company at the initial Closing under this
Agreement are "sufficient" and that upon completion of the initial Closing the
"Pre-offering Period" as referred to in such Employment Agreements and
Restricted Stock Purchase Agreements will be completed.
5.12 AMOUNTS PAYABLE TO TRIMARK. Any and all amounts due and owing, or
otherwise payable, by the Company to Trimark and/or Trimark Pictures, Inc. for
services rendered, expenses incurred, costs or funds advanced, or any other
event occurring on or prior to the Closing, shall be evidenced by a promissory
note payable by
16
<PAGE>
EXHIBIT 10.116 (CONTINUED)
the Company to Trimark Pictures, Inc., which promissory note shall be
substantially in the form attached hereto as Exhibit H (the "Trimark Note") and
shall have been executed and delivered by the Company to Trimark Pictures, Inc.
The principal amount of the Trimark Note shall not exceed $250,000.
6. CONDITIONS TO CLOSING OF COMPANY
The Company's obligation to sell and issue any Series A Shares at
the Closing is, at the option of the Company, subject to the fulfillment as of
such Closing of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by each Investor in Section 4 hereof shall be true and correct
in all material respects when made, and shall be true and correct on the Closing
Date.
6.2 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by each Investor on or prior to such Closing
shall have been performed or complied with in all material respects.
6.3 BLUE SKY. The Company shall have obtained all necessary Blue Sky
law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Series A Shares
and the Common Stock issuable upon conversion of the Series A Shares as
contemplated herein.
6.4 AMENDMENT OF ARTICLES OF INCORPORATION. The Amendment shall have
been filed with and accepted by the California Secretary of State.
6.5 RIGHTS AGREEMENT. Each Investor shall have delivered an executed
copy of the Rights Agreement.
6.6 CO-SALE AGREEMENT. Each Investor shall have delivered an executed
copy of the Co-Sale Agreement.
6.7 MINIMUM COMMITMENTS. The Company shall have received commitments
from Investors to purchase at least Two Million Nine Hundred Sixty-Two Thousand
Nine Hundred and Sixty-Three (2,962,963) Series A Shares at a price of $0.675
per share, which will be issued at the initial Closing.
6.8 TRIMARK APPROVALS. Trimark's principal lender shall have consented
to the sale and issuance of Series A Shares in accordance with this Agreement.
In addition, the board of directors of Trimark shall have approved the
execution, delivery and performance by the Company of this Agreement and the
related agreements.
7. INDEMNIFICATION
7.1 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify,
reimburse and hold harmless each Investor, and such Investor's members,
partners, officers, directors, employees and agents and their respective
Affiliates (collectively called the
17
<PAGE>
EXHIBIT 10.116 (CONTINUED)
"Indemnitees"), from and against, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever including, without limitation,
the reasonable fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding, which
may be imposed on, incurred by, or asserted against such Indemnitee, as a result
of the violation or breach of any representation, warranty or covenant of the
Company under the Agreements or otherwise asserted against the Company or such
Investor in connection with the transactions contemplated by the Agreements (a
"Claim"). If any indemnity provided for in the preceding sentence is not
available solely because it is found to be contrary to public policy or
otherwise unlawful, then the Company and the Indemnities shall contribute to the
amount payable in such proportion as is appropriate to reflect the relative
faults and benefits and any other relevant equitable considerations.
7.2 PROCEDURE. If any Claim or alleged Claim shall be brought against
any Indemnitee in respect of which such Indemnitee may be indemnified under this
Section 7 by the Company, such Indemnitee shall promptly notify the Company in
writing (provided, however, that the failure to give such notice shall not
relieve the Company of its obligations under this Section 7 except to the
extent, and only to the extent, that the Company is prejudiced by such failure).
The Company at its option may assume the defense of any action in respect of
which it has acknowledged its obligation to indemnify such Indemnitee under this
Section 7. If the Company assumes the defense of any action, such Indemnitee
shall not be liable for any settlement thereof without its consent (but such
consent will not be unreasonably withheld). If the Company assumes the defense
of any such action, such Indemnitee shall have the right to employ separate
counsel in such action and to participate in the defense thereof, but the fees
and expenses of such counsel shall be paid by such Indemnitee unless
representation by counsel for the Company would be inappropriate due to actual
or potential conflict between the positions of the Company and of such
Indemnitee in conducting the defense of such action, in which event the fees and
expenses of such counsel for the Indemnitee shall be paid by the Company.
8. MISCELLANEOUS
8.1 SURVIVAL OF WARRANTIES. The warranties and representations of the
Company and the Investors contained in or made pursuant to this Agreement shall
survive the execution and delivery of this Agreement and the Closing and shall
in no way be affected by any investigation of the subject matter thereof made by
or on behalf of any of the Investors, their counsel, or the Company, as the case
may be.
8.2 ENTIRE AGREEMENT. The Agreements constitute the full and entire
understandings and agreements between the parties regarding the transactions
contemplated herein and therein. Except as
18
<PAGE>
EXHIBIT 10.116 (CONTINUED)
otherwise expressly provided herein, the provisions hereof shall inure
to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties hereto.
8.3 AMENDMENT. Any provision of this Agreement may be amended, waived,
modified, discharged or terminated only with the written consent of the Company
and the holders of two-thirds (2/3rds) in interest of the Series A Shares (or
Common Stock issuable upon conversion thereof); provided, however, that with the
written consent of CinemaN Investment Company Ltd., a British Virgin Islands
company, any provision of this Agreement may be amended, waived, modified,
discharged or terminated with the written consent of the Company and the holders
of a majority in interest of the Series A Shares (or Common Stock issuable upon
conversion thereof). Any amendment or waiver effected in accordance with this
Section will be binding upon the Company and each holder of any securities
subject to this Agreement (including securities into which such securities are
convertible) and future holders of all such securities. Any Investor may waive
its, his or her rights or the Company's obligations to such Investor hereunder
without obtaining the consent of any other person.
8.4 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and deemed given on the business day
following delivery to the recipient in person or by overnight courier service,
and addressed (1) if to an Investor, to such Investor's address set forth below
on the Investor Signature Page, or at such other address as such Investor shall
have furnished to the Company in writing, or until any such Investor so
furnishes an address to the Company, then to the address of the last holder of
such securities who has so furnished an address to the Company, or (2) if to the
Company, as follows or at such other address as the Company shall have furnished
to the Investors:
CinemaNow, Inc.
4553 Glencoe Avenue
Suite 200
Marina del Rey, California 90292
Attn: Bruce David Eisen
8.5 EXPENSES. Each of the Company and the Investors shall bear their
own legal and other expenses incurred with respect to this Agreement and the
transactions contemplated hereby; provided however, that the Company shall
pay up to $15,000 for Hunter Capital's and Investors' legal counsel, as
requested by Hunter Capital.
8.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the Investors,
each of which shall be enforceable against
19
<PAGE>
EXHIBIT 10.116 (CONTINUED)
the parties actually executing such counterparts, and all of which together
shall constitute one and the same instrument.
8.7 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
8.8 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
8.9 CONFIDENTIALITY. Each Investor agrees that he or it will keep
confidential and will not disclose or divulge any confidential, proprietary or
secret information which such Investor may obtain from the Company pursuant to
financial statements, reports and other materials submitted by the Company to
such Investor pursuant to this Agreement, and the other agreements entered into
in connection with the transactions contemplated by this Agreement, or pursuant
to any visitation or inspection rights granted hereunder, unless such
information is known, or until such information becomes known, to the public.
8.10 GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement,
including the construction, validity and performance hereof and the obligations
arising hereunder and thereunder, and all amendments and supplements hereof and
thereof and all waivers and consents hereunder and thereunder, shall be
construed in accordance with and governed by the laws of the State of California
without giving effect to any choice of law or conflicts of law provision or rule
that would cause the application of the laws of any other jurisdiction. Any
legal action or proceeding with respect to this Agreement or any document
related hereto or thereto shall be brought in the courts of the State of
California sitting in the County of Los Angeles or of the United States of
America for the State of California sitting in the County of Los Angeles, and,
by execution and delivery and/or acceptance of this Agreement, the Company and
the Investors each hereby accepts the exclusive jurisdiction of the aforesaid
courts. In addition, the Company and each Investor hereby irrevocably and
unconditionally waives any objection which it may now or hereafter have to the
laying of venue of any of the aforesaid actions, suits or proceedings arising
out of or in connection with this Agreement or any document related hereto or
thereto brought in any of the aforesaid courts, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim that any such
action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.
20
<PAGE>
8.11 TERMINATION. If the closing of the minimum commitments
contemplated by Section 6.7 of this Agreement shall not have occurred by
February 1, 2000, the Company or the Investors may terminate this Agreement, in
which case this Agreement shall be void and no party hereunder (or their
officers, directors, shareholders or Affiliates) shall have any liability to the
other parties hereunder.
8.12 ASSIGNMENT AND TRANSFER. This Agreement shall not be assigned by
the Company, by operation of law or otherwise. In addition to the disposition of
Series A Shares permitted in accordance with Section 4.6, Series A Shares may be
assigned or transferred by an Investor, and this Agreement or rights held by an
Investor under this Agreement may be assigned, only (i) to an Accredited
Investor and (ii) in a transaction in which the greater of (A) not less than
one-third of the Series A Shares held by such Investor or (B) an aggregate of
74,000 Series A Shares held by such Investor, are assigned or transferred in a
private transaction to a single person or entity. Notwithstanding the foregoing,
no Series A Shares may be assigned or transferred in a private transaction to a
direct competitor of either the Company or Trimark. Any purported transfer in
violation of this Agreement is null and void and shall be of no force and effect
whatsoever.
IN WITNESS WHEREOF, the parties have executed this Stock
Purchase Agreement as of the day and year first set forth above.
CinemaNow, Inc.
By:_________________________________
Name:_______________________________
Title:______________________________
21
<PAGE>
EXHIBIT 10.116 (CONTINUED)
INVESTOR SIGNATURE PAGE
INVESTORS:
------------------------------------------
(Print Name of Investor)
------------------------------------------
(Signature)
------------------------------------------
(Title, if applicable)
Address:
---------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
(Print Name of Investor)
------------------------------------------
(Signature)
------------------------------------------
(Title, if applicable)
Address:
---------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
(Print Name of Investor)
------------------------------------------
(Signature)
------------------------------------------
(Title, if applicable)
Address:
---------------------------------
------------------------------------------
------------------------------------------
22
<PAGE>
EXHIBIT 10.116 (CONTINUED)
EXHIBIT A
SCHEDULE OF INVESTORS
<TABLE>
<CAPTION>
NAME AND ADDRESS
PURCHASE PRICE NUMBER OF SHARES TOTAL
- ---------------- ---------------- --------------------
<S> <C> <C>
CinemaN Investment Co. Ltd. 740,740 $ 500,000
c/o Hunter Capital Group, LLC
P. O. Box 682500
136 Heber Avenue, Suite 304
Park City, UT 84060
Pinnacle Venture Partners, LLC 740,740 500,000
c/o Catalyst Ventures
4370 La Jolla Village Drive
Suite 960
San Diego, CA 92122
Blockbuster, Inc. 370,370 250,000
1201 Elm Street
32nd Floor
Dallas, TX 75270
Michael Klein 148,148 100,000
Klein Capital
433 N. Camden, #500
Beverly Hills, CA 90210
Michael Burns 74,074 50,000
Prudential Securities
2425 Olympic Blvd.
Suite 6030 West
Santa Monica, CA 90404
Jon Feltheimer 74,074 50,000
Prudential Securities
2425 Olympic Blvd.
Suite 6030 West
Santa Monica, CA 90404
Walid Mansur 296,296 200,000
5602 Indian Circle
Houston, TX 77056
SRS Internet Holding, Ltd 222,222 150,000
1177 W. Loop South, #1450
Houston, TX 77024
McJill Corporation 148,148 100,000
c/o Secretan Troyan
#2 Rue Charles Bonnet
Geneva 1211 Switzerland
Doremont Investments, Ltd. 74,074 50,000
</TABLE>
23
<PAGE>
EXHIBIT 10.116 (CONTINUED)
<TABLE>
<S> <C> <C>
1506 Kearsarge Road
La Jolla, CA 92037
Wilshire 19 LLC 266,666 180,000
11943 Montana Avenue
Suite 101
Los Angeles, CA 90049
Loren H. Burlage 51,852 35,000
500 W. Highway 105
Palmer Lake, Colorado 80133
The Burlage Family Trust 51,852 35,000
Roger A. Burlage, Trustee
5451 N. Newcastle Lane
Calabasas, California 91302
Lawrence L. Delperdang 51,852 35,000
4353 Old Lakeport Road
Sioux City, Iowa 51106
Ray Manzella 74,074 50,000
17716 Castellammare Drive
Pacific Palisades, California 90272
TOTAL: 3,385,182 $2,285,000
</TABLE>
24
<PAGE>
EXHIBIT 10.117
CO-SALE AGREEMENT
THIS CO-SALE AGREEMENT (this "Agreement") is made as of
January 6, 2000 by and among CinemaNow, Inc., a California corporation (the
"Company"), the persons and entities (each, an "Investor" and collectively, the
"Investors") listed on the Schedule of Investors attached hereto as Exhibit A,
as such Schedule of Investors may be supplemented or amended from time to time
hereafter (the "Schedule of Investors"), and the persons and entities (each, a
"Founder" and collectively, the "Founders") listed on Exhibit B attached hereto.
In consideration of the mutual covenants set forth herein, the
parties agree as follows:
1. DEFINITIONS.
1.1. "Common Stock" shall mean the Common Stock, without
par value, of the Company.
1.2. "Series A Preferred Stock" shall mean the Company's
outstanding shares of Series A Convertible Preferred Stock, without par value.
1.3. "Stock" shall mean shares of the Common Stock now owned
or subsequently acquired by a Founder.
2. RIGHT TO PARTICIPATE IN SALES BY FOUNDER.
2.1. If a Founder proposes to sell or transfer (including a
pledge or the grant of a security interest) shares of Stock in one or more
related transactions, then the Founder shall promptly give written notice (the
"Notice") to the Company and the Investors at least 20 days prior to the closing
of such sale or transfer. The Notice shall describe in reasonable detail the
proposed sale or transfer including, without limitation, the number of shares of
Stock to be sold or transferred, the nature of such sale or transfer, the
consideration to be paid, and the name and address of each prospective purchaser
or transferee. In the event that the sale or transfer is being made pursuant to
the provisions of Sections 4.1 or 4.2 hereof, the Notice shall state under which
section the sale or transfer is being made.
2.2. Each Investor shall have the right, exercisable upon
written notice to the Founder within 15 days after receipt of the Notice, to
participate in such sale of Stock on the same terms and conditions. To the
extent one or more of the Investors exercises such right of participation in
accordance with the terms and conditions set forth below, the number of shares
of Stock that the Founder may sell in the transaction shall be correspondingly
reduced.
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EXHIBIT 10.117 (CONTINUED)
2.3. Each Investor may sell all or any part of that number of
shares of Common Stock equal to the product obtained by multiplying (i) the
aggregate number of shares of Stock covered by the Notice by (ii) a fraction the
numerator of which is the number of shares of Common Stock owned by such
Investor at the time of the sale or transfer and the denominator of which is the
total number of shares of Common Stock owned by the Founder and all of the
Investors at the time of the sale or transfer. For purposes of this Agreement,
the number of shares of Common Stock owned or held by an Investor shall include
the number of shares of Common Stock issuable to the Investor upon conversion of
the shares of Series A Preferred Stock owned or held by the Investor.
2.4. Each Investor who elects to participate in the sale shall
effect its participation in the sale by promptly delivering to the Founder for
transfer to the prospective purchaser one or more certificates, properly
endorsed for transfer, which represent:
2.4.1. the number of shares of Common Stock which such
Investor elects to sell; or
2.4.2. that number of shares of Series A
Preferred Stock which is at such time convertible into the number of shares of
Common Stock which such Investor elects to sell; provided, however, that such
Investor shall convert such Series A Preferred Stock into Common Stock, and the
Company agrees to make such conversion concurrently with the actual transfer of
such shares to the purchaser; provided further that such Common Stock shall upon
such transfer, cease to constitute Registrable Securities under the terms of the
Investors' Rights Agreement (the "Investors' Rights Agreement") dated as of the
date hereof between the parties.
2.5. The stock certificate or certificates that the Investor
delivers to the Founder pursuant to Section 2.4 shall be transferred to the
prospective purchaser upon consummation of the sale of the Stock pursuant to the
terms and conditions specified in the Notice, and the Founder shall concurrently
therewith remit to such Investor that portion of the sale proceeds to which such
Investor is entitled by reason of such Investor's participation in such sale. To
the extent that any prospective purchaser or purchasers prohibits such
assignment or otherwise refuses to purchase shares or other securities from an
Investor exercising its rights of co-sale hereunder, the Founder shall not sell
to such prospective purchaser or purchasers any Stock unless and until,
simultaneously with such sale, the Founder shall purchase the number of such
shares or other securities from such Investor calculated in accordance with
Section 2.3.
2.6. The exercise or non-exercise of the rights of the
Investors hereunder to participate in one or more sales of Stock
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EXHIBIT 10.117 (CONTINUED)
made by the Founder shall not adversely affect their rights to participate in
subsequent sales of Stock subject to Section 2.1.
3. RIGHT OF FIRST OPPORTUNITY.
3.1. Subject to the terms and conditions specified in this
Section 3, each Founder hereby grants to each Investor a right of first
opportunity with respect to future sales of Stock by the Founder.
3.2. Each time the Founder proposes to offer any Stock, the
Founder shall first make an offering of such Stock to the Investors in
accordance with the provisions of Section 2 above concerning participation
rights and the Investors shall exercise their right of first opportunity in
accordance with the procedures set forth below:
3.2.1. By written notice to the Founder, within fifteen
(15) calendar days after receipt of the Notice, an Investor may elect to
purchase or obtain, at the price and on the terms specified in the Notice, up to
that portion of the offered Stock which equals the proportion that the number of
shares of Common Stock owned by such Investor bears to the total number of
shares of Common Stock owned by all the Investors. The Founder shall promptly,
in writing, inform each Investor which has elected to purchase all the shares
available to it (each, a "Fully-Exercising Investor") of any other Investor's
failure to so elect. During the ten-day period commencing after such information
is given, each Fully-Exercising Investor shall be entitled to obtain that
portion of the offered Stock which Investors were entitled to purchase but which
were not purchased by the Investors which is equal to the proportion of the
unpurchased Stock that the number of shares of Common Stock owned by such
Fully-Exercising Investor bears to the total number of shares of Common Stock
owned by all Fully-Exercising Investors who wish to purchase their pro rata
share of the unpurchased Stock.
3.2.2. If all the shares of Stock referred to in the
Notice are not elected to be acquired by Investors as provided in this Section
3.2, the Founder may, during the 90-day period following the expiration of the
final period provided in Section 3.2.1, offer the remaining unpurchased portion
of such Stock to any person or persons at a price not less than, and upon terms
no more favorable to the offeree than, those specified in the Notice. If the
Founder does not enter into an agreement for the sale of the Stock within such
period, or if such agreement is not consummated within ninety (90) days of the
execution thereof, the right provided by this Section 3 shall be deemed to be
revived and such Stock shall not be offered unless first re-offered to the
Investors in accordance herewith. Stock which is sold by a Founder pursuant to
this Section 3.2 (other than Stock sold to an Investor) shall remain "Stock"
hereunder and each of the purchasers of such stock
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EXHIBIT 10.117 (CONTINUED)
(other than Investors) shall be treated as a "Founder" for purposes of this
Agreement.
4. EXEMPT TRANSFERS.
4.1. Notwithstanding anything herein to the contrary, the
provisions of Sections 2 and 3 shall not apply to any transfer to a "family
member" (as defined in Rule 701(c)(3) promulgated under the Securities Act of
1933, as amended (the "Securities Act") of a Founder and, in the case of Trimark
Holdings, Inc. or Trimark Pictures, Inc., to any of their affiliates; provided
that (A) the Founder shall inform the Investors of such transfer prior to
effecting it and (B) the transferee shall furnish the Investors with a written
agreement to be bound by and comply with all provisions of this Agreement. Such
transferred Stock shall remain "Stock" hereunder, and such transferee shall be
treated as a "Founder" for purposes of this Agreement.
4.2. Notwithstanding anything herein to the contrary, the
provisions of Sections 2 and 3 shall not apply (i) to the sale of any Stock to
the Company pursuant to a right granted to the Company prior to the date of this
Agreement, (ii) to a sale or sales by a Founder where the total consideration
received by such Founder does not exceed $50,000 in any twelve-month period, or
(iii) to a sale or transfer pursuant to a tender offer, merger, reorganization
or similar transaction in which all shareholders of the Company are entitled to
participate on an equivalent basis and which is approved by the Board of
Directors.
5. PROHIBITED TRANSFERS.
5.1. In the event a Founder should sell any Stock in
contravention of the rights of the Investors under this Agreement (a "Prohibited
Transfer"), the Investors, in addition to such other remedies as may be
available at law, in equity or hereunder, shall have the put option provided
below, and the Founder shall be bound by the applicable provisions of such
option.
5.2. In the event of a Prohibited Transfer by a Founder, each
Investor shall have the right (but not the obligation) to sell to such Founder,
and such Founder shall be obligated to purchase, the type and number of shares
of Common Stock equal to the number of shares each Investor would have been
entitled to transfer to the purchaser had the Prohibited Transfer been effected
pursuant to and in compliance with the terms of this Agreement. Such sale shall
be made on the following terms and conditions:
5.2.1. The price per share at which the shares are to be
sold by the Investor to the Founder shall be equal to the price per share paid
by the purchaser to the Founder in the Prohibited Transfer. The Founder shall
also reimburse each Investor for any and all fees and expenses, including
reasonable legal fees and expenses, incurred pursuant to the exercise or the
attempted exercise of the Investor's rights under this Agreement.
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EXHIBIT 10.117 (CONTINUED)
5.2.2. Within 90 days after the later of the dates on
which the Investor (i) received notice of the Prohibited Transfer or (ii)
otherwise actually became aware of the Prohibited Transfer, the Investor shall,
if exercising the option created hereby, deliver to the Founder the certificate
or certificates representing the shares of Common Stock to be sold, each
certificate to be properly endorsed for transfer. Series A Preferred Stock shall
be converted to Common Stock before or concurrently with such transfer. Such
Common Stock shall, upon such transfer, cease to constitute Registrable
Securities under the terms of the Investors' Rights Agreement.
5.2.3. The Founder shall, upon receipt of the
certificate or certificates for the shares to be sold by an Investor, pursuant
to this Section 5.2, pay to the Investors the aggregate purchase price therefor
and the amount of reimbursable fees and expense, as specified in Section 5.2.1,
in cash or by other means acceptable to the Investor.
5.2.4. Notwithstanding the foregoing, any attempt by a
Founder to transfer Stock in violation of this Agreement shall be void and the
Company agrees it will not effect such a transfer nor will it treat any alleged
transferee as the holder of such shares without the written consent of
two-thirds in interest of the Investors.
6. LEGEND.
6.1. Each certificate representing shares of Stock now or
hereafter owned by a Founder or issued to any person (other than an Investor) in
connection with a transfer pursuant to this Agreement (including Section 4.1
hereof) shall be endorsed with the following legend:
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS OF A CERTAIN CO-SALE AGREEMENT BY AND BETWEEN THE
ISSUEE OF THIS CERTIFICATE, THE CORPORATION AND CERTAIN
HOLDERS OF STOCK OF THE CORPORATION. COPIES OF SUCH AGREEMENT
MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE
CORPORATION."
6.2 The Founder agrees that the Company may instruct its
transfer agent to impose transfer restrictions on the shares represented by
certificates required to bear the legend referred to in Section 6.1 above to
enforce the provisions of this Agreement, and the Company agrees to promptly do
so. The legend shall be removed upon termination of this Agreement.
7. MISCELLANEOUS.
7.1. AMENDMENT. Any provision of this Agreement may be
amended, waived, modified, discharged or terminated only with the
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EXHIBIT 10.117 (CONTINUED)
written consent of the Company, the Founders, and Investor's holding two-thirds
(2/3rds) in interest of the Series A Preferred Stock (or Common Stock issuable
upon conversion thereof); provided, however, that with the written consent of
CinemaN Investment Company Ltd., a British Virgin Islands company, any provision
of this Agreement may be amended, waived, modified, discharged or terminated
with the written consent of the Company, the Founders, and Investor's holding a
majority in interest of the Series A Preferred Stock (or Common Stock issuable
upon conversion thereof). Any amendment or waiver effected in accordance with
this Section will be binding upon the Company, the Founders, the Investors and
each Holder of any securities subject to this Agreement (including securities
into which such securities are convertible) and future Holders of all such
securities. Any Founder, Investor or Holder may waive its, his or her rights or
the Company's obligations to such person hereunder without obtaining the consent
of any other person.
7.2 ASSIGNMENT AND TRANSFER. This Agreement shall not be
assigned by the Company, by operation of law or otherwise. This Agreement or the
rights held by an Investor under this Agreement may be assigned by such Investor
only in connection with an assignment or transfer by such Investor which is made
in accordance with Sections 4.6 or 8.12 of the Purchase Agreement.
7.3 GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement,
including the construction, validity and performance hereof and the obligations
arising hereunder and thereunder, and all amendments and supplements hereof and
thereof and all waivers and consents hereunder and thereunder, shall be
construed in accordance with and governed by the laws of the State of California
without giving effect to any choice of law or conflicts of law provision or rule
that would cause the application of the laws of any other jurisdiction. Any
legal action or proceeding with respect to this Agreement or any document
related hereto or thereto shall be brought in the courts of the State of
California sitting in the County of Los Angeles or of the United States of
America for the State of California sitting in the County of Los Angeles, and,
by execution and delivery and/or acceptance of this Agreement, each Party hereto
hereby accepts the exclusive jurisdiction of the aforesaid courts. In addition,
each Party hereto hereby irrevocably and unconditionally waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions, suits or proceedings arising out of or in connection with
this Agreement or any document related hereto or thereto brought in any of the
aforesaid courts, and hereby further irrevocably and unconditionally waives and
agrees not to plead or claim that any such action, suit or proceeding brought in
any such court has been brought in an inconvenient forum.
7.4 TERM. This Agreement shall terminate (i) upon the
Company's first sale of its Common Stock in a bona fide, firm commitment
underwriting pursuant to a registration statement under the Securities Act,
which results in aggregate gross cash proceeds
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EXHIBIT 10.117 (CONTINUED)
to the Company in excess of $15,000,000 and the public offering price of which
is not less than $3.00 per share (adjusted to reflect stock dividends, stock
splits or recapitalizations after the date of this Agreement), or (ii) upon the
sale, conveyance or other disposition of all or substantially all of the
Company's property or business or the merger into or consolidation with any
other entity (other than a wholly owned subsidiary corporation) or the effecting
of any transaction or series of related transactions in which more than 50% of
the voting power of the Company is disposed of and where in connection with such
transaction the holders of shares of Series A Preferred Stock receive
consideration for each share of Series A Preferred Stock on an as-converted
basis having a fair market value equal to (i) $2.03 in the event that such
transaction occurs during the first year after the date hereof, (ii) $2.70 in
the event that such transaction occurs during the second year after the date
hereof, and (iii) $3.38 in the event that such transaction occurs thereafter (in
each case such price to be adjusted to reflect stock dividends, stock splits or
recapitalizations after the date of this Agreement).
7.5 NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and deemed given on the business day
following delivery to the recipient in person or by overnight courier service,
and addressed (i) if to an Investor or Founder, to such Investor's or Founder's
address set forth in Exhibit A or Exhibit B below, or at such other address as
such Investor or Founder shall have furnished to the Company in writing, or (ii)
if to the Company, to:
CinemaNow, Inc.
4553 Glencoe Avenue
Suite 200
Marina del Rey, California 90292
Attn: Bruce David Eisen
7.6 SEVERABILITY. In the event one or more of the provisions
of this Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
7.7 ATTORNEY FEES. In the event that any dispute among the
parties to this Agreement should result in litigation, the prevailing party in
such dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
7.8 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original,
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EXHIBIT 10.117 (CONTINUED)
but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first set forth above.
CinemaNow, Inc.
By:________________________
Title:_____________________
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EXHIBIT 10.117 (CONTINUED)
[Investors Signature Page]
INVESTORS:
-------------------------------------
(Print Name of Investor)
-------------------------------------
(Signature)
-------------------------------------
(Title, if applicable)
Address
-------------------------------
-------------------------------------
-------------------------------------
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EXHIBIT 10.117 (CONTINUED)
[Founders Signature Page]
FOUNDERS:
Trimark Holdings, Inc.
By:
----------------------------------
Title:
------------------------------
Trimark Pictures, Inc. (but only with
respect to the Common Stock to be
acquired pursuant to the Trimark
Note (as defined in the Purchase
Agreement)
By:
----------------------------------
Title:
------------------------------
-------------------------------------
Curt Marvis
-------------------------------------
Bruce Eisen
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EXHIBIT 10.117 (CONTINUED)
CONSENT OF SPOUSE
I acknowledge that I have read the foregoing Co-Sale Agreement
and that I know its contents. I am aware that by its provisions if I and/or my
spouse agree to sell all or part of the shares of the Company held of record by
either or both of us, including my community interest in such shares, if any,
co-sale rights (as described in the Agreement) must be granted to the Investors
by the seller. I hereby agree that those shares and my interest in them, if any,
are subject to the provisions of the Co-Sale Agreement and that I will take no
action at any time to hinder operation of, or violate, the Co-Sale Agreement.
-----------------------------------
(Signature)
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EXHIBIT 10.117 (CONTINUED)
EXHIBIT A
SCHEDULE OF INVESTORS
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EXHIBIT 10.117 (CONTINUED)
EXHIBIT B
FOUNDERS
Trimark Holdings, Inc.
c/o CinemaNow, Inc.
4553 Glencoe Avenue
Marina del Rey, California 90292
Trimark Pictures, Inc.
c/o CinemaNow, Inc.
4553 Glencoe Avenue
Marina del Rey, California 90292
Curt Marvis
c/o CinemaNow, Inc.
4553 Glencoe Avenue
Marina del Rey, California 90292
Bruce Eisen
c/o CinemaNow, Inc.
4553 Glencoe Avenue
Marina del Rey, California 90292
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EXHIBIT 10.118
INVESTORS' RIGHTS AGREEMENT
THIS INVESTORS' RIGHTS AGREEMENT (this "Agreement") is made and entered
into as of January 6, 2000 by and among CinemaNow, Inc., a California
corporation (the "Company"), the persons and entities (each, an "Investor" and
collectively, the "Investors") listed on the Schedule of Investors attached
hereto as Exhibit A, as such Schedule of Investors may be supplemented or
amended from time to time hereafter (the "Schedule of Investors"), and the
persons and entities (each, a "Founder" and collectively, the "Founders") listed
on Exhibit B attached hereto.
RECITALS:
A. The Company proposes to sell and issue up to Three Million Five Hundred
Fifty-Five Thousand Five Hundred and Fifty-Six (3,555,556) shares of Series A
Preferred Stock in one or more closings pursuant to that certain Securities
Purchase Agreement (the "Purchase Agreement") dated as of January 6, 2000 among
the Company and the Investors;
B. As a condition of entering into the Purchase Agreement, the Investors
have requested that the Company extend to them the voting rights, registration
rights and other rights with respect to the Series A Preferred Stock as set
forth below.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall
have the following respective meanings:
"Affiliate" means any person or entity controlled by or under common
control with another person or entity.
"Board" means the Board of Directors of the Company.
"Common Stock" means the Common Stock, without par value, of the Company
and any other securities of the Company into which such common stock may be
converted or for which it may be exchanged.
"Commission" means the Securities and Exchange Commission or any successor
agency.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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EXHIBIT 10.118 (CONTINUED)
"Holder" means any holder of outstanding Registrable Securities which have
not been sold to the public.
"Independent Directors" means independent, non-management directors with
significant "industry" experience.
"Initial Public Offering" means a public offering in which the Company
first becomes a reporting company under the Exchange Act.
"Parties" means the parties that are signatories to this Agreement. "Party"
shall refer to any one of the Parties.
"Registrable Securities" means (i) shares of the Common Stock issued or
issuable upon the conversion of the Series A Preferred Stock; and (ii) any other
shares of the Common Stock issued as (or issuable upon conversion or exercise of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to or in exchange for or replacement of the Series A
Preferred Stock or the Common Stock issued or issuable upon the conversion of
the Series A Preferred Stock.
The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" means all reasonable out-of-pocket expenses
incurred by the Company in complying with Sections 2 and 5 hereof, including,
without limitation, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company, blue
sky fees and expenses, and accounting fees of the Company.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Expenses" means all underwriting discounts, selling commissions
and stock transfer taxes applicable to the securities registered by the Holders.
"Series A Preferred Stock" means the Series A Convertible Preferred Stock,
without par value, of the Company.
"Series A Directors" means the directors elected solely by the holders of
Series A Preferred Stock.
2. COMPANY REGISTRATION.
2.1 NOTICE OF REGISTRATION. If the Company shall determine to register any
of its securities, either for its own account or the account of a security
holder, other than (i) a registration
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EXHIBIT 10.118 (CONTINUED)
relating to employee benefit plans or, (ii) a registration relating to a
Commission Rule 145 or similar transaction, the Company will:
2.1.1 promptly give to each Holder written notice thereof; and
2.1.2 include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made within fifteen (15) days after receipt of such written notice
from the Company, by any Holder, except as set forth in Section 2.2 below.
2.2 UNDERWRITING. If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company shall
so advise the Holders as a part of the written notice given pursuant to Section
2.1.1. In such event the right of any Holder to registration pursuant to Section
2 shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company and other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of this Section 2, if the managing underwriter advises the Company in
writing that marketing factors require a limitation of the number of shares to
be underwritten, then the managing underwriter may limit to whatever extent
necessary (including (i) excluding the Registrable Securities and the securities
of other stockholders of the Company exercising registration rights in
connection with the offering from the Company's initial public offering and (ii)
limiting the Registrable Securities and the securities (the "Other Securities")
of other stockholders of the Company exercising piggyback but not demand
registration rights in connection with the offering ("Other Holders") to 20% of
any other such registration), the number of Registrable Securities to be
included in the registration and underwriting by reducing the number of
Registrable Securities and Other Securities included on behalf of the Holders
and Other Holders, respectively, on a pro rata basis based on the total number
of Registrable Securities and Other Securities entitled to registration held by
each Holder and each Other Holder, respectively. The Company shall advise all
Holders of Registrable Securities which would otherwise be registered and
underwritten pursuant hereto of any such limitations. If any Holder disapproves
of the terms of any such underwriting, it may elect to withdraw therefrom by
written notice to the Company and the underwriter. Any Registrable Securities
excluded or withdrawn from such underwriting shall not be included in such
registration. To facilitate the allocation of shares in accordance with the
above provisions, the Company or the underwriters may round the number of
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EXHIBIT 10.118 (CONTINUED)
shares allocated to any Holder to the nearest one hundred (100) shares.
3. EXPENSES OF REGISTRATION. All Registration Expenses incurred in connection
with any registration, qualification or compliance pursuant to Sections 2 and 5
shall be borne by the Company; provided, that the Company shall not be required
to bear such Registration Expenses on more than two registration statements on
Form S-3 in any twelve-month period. All Selling Expenses relating to securities
registered by the Holders shall be borne severally by the Holders of such
securities pro rata on the basis of the number of shares so registered.
4. REGISTRATION PROCEDURES. In the case of each registration, qualification or
compliance effected by the Company pursuant to this Agreement, the Company will
keep each Holder advised in writing as to the initiation of each registration,
qualification and compliance and as to the completion thereof. At its expense
the Company will:
4.1 EFFECTIVENESS. Prepare and file with the Commission a registration
statement with respect to such securities and use its reasonable best efforts to
cause such registration statement to become and remain effective (a) until the
earlier of (i) at least ninety (90) days with respect to a registration
statement on Form S-1 or SB-2 or (ii) until the distribution described in the
registration statement has been completed and (b) until the earlier of (i) at
least one hundred and eighty (180) days with respect to a registration statement
on Form S-3 or (ii) until the distribution described in the registration
statement has been completed; provided, however, that such period shall be
extended for a period of time equal to the period the Holder refrains from
selling any securities included in such registration at the request of an
underwriter of Common Stock (or other securities) or the Company.
4.2 AMENDMENTS. Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
4.3 COPIES OF DOCUMENTS. Furnish to the Holders participating in such
registration and to the underwriters of the securities being registered such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such underwriters or
such Holders may reasonably request in order to facilitate the public offering
of such securities.
4.4 BLUE SKY LAWS. Use its reasonable best efforts to register and qualify
the securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as shall be reasonably
requested by the Holders; provided that the Company shall not be required in
connection
4
<PAGE>
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions,
unless the Company is already subject to service in such jurisdiction and except
as may be required by the Securities Act.
4.5 UNDERWRITING AGREEMENT. In the event of any underwritten public
offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of such
offering; provided that each Holder participating in such underwriting shall
also enter into and perform its obligations under such underwriting agreement.
4.6 NOTIFICATION. Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
4.7 LISTING. Cause such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
4.8 TRANSFER AGENT AND REGISTRAR. Provide a transfer agent and registrar
for all Registrable Securities registered pursuant to such registration
statement and a CUSIP number for all such Registrable Securities, in each case
not later than the effective date of such registration.
5. REGISTRATION ON FORM S-1, SB-2 OR S-3. If, following the earlier of (i) six
(6) months following the Company's Initial Public Offering or (ii) three (3)
years from the date hereof or (iii) upon the holder of any other registration
rights granted by the Company giving notice to the Company of the exercise of
such rights, (A) the Holders holding at least fifty percent (50%) of the total
Registrable Securities request in writing that the Company file a registration
statement on Form S-1 or Form SB-2 (or any successor form(s) thereto) for a
public offering of shares of Registrable Securities the reasonably anticipated
aggregate price to the public of which would exceed ten million dollars
($10,000,000), or (B) the Holders holding at least twenty percent (20%) of the
total Registrable Securities request in writing that the Company file a
registration statement on Form S-3 (or any successor form(s) thereto) for a
public offering of shares of Registrable Securities the reasonably anticipated
aggregate price to the public of which would exceed five hundred thousand
dollars ($500,000), the Company shall use its reasonable best efforts to cause
such shares to be registered for the offering on such form (or any successor
thereto). Notwithstanding the foregoing, the
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EXHIBIT 10.118 (CONTINUED)
Holders may only request the Company to file a registration statement on Form
S-1 or SB-2, if the Company is not entitled to register securities using Form
S-3. The Company will promptly give written notice of a request for the proposed
registration to all other Holders and include all Registrable Securities of any
Holder or Holders joining in such request as are specified in a written request
received by the Company within thirty (30) days after the date of such written
notice from the Company. The Company shall be required under this Agreement to
file and to cause to become effective (i) no more than two (2) registration
statements in the aggregate on Form S-1 or SB-2, and (ii) no more than two
registration statements in any twelve-month period on Form S-3. The Company
shall have the right to delay filing any registration statement for a period of
up to ninety (90) days based on a reasonable good faith determination by the
Board that the filing of the registration statement at the time requested is not
in the best interests of the Company.
6. TERMINATION OF REGISTRATION RIGHTS. Except as provided elsewhere in this
Agreement, the registration rights granted pursuant to this Agreement shall
terminate on December 31, 2005. Notwithstanding the foregoing, the right of any
Holder to request registration or inclusion in any registration pursuant to
Sections 2 and 5 shall terminate ninety (90) days after the satisfaction of all
the following conditions with respect to such Holder: (i) the Company has
completed its Initial Public Offering; and (ii) all shares of Registrable
Securities held or entitled to be held upon conversion by such Holder (and any
Affiliates of such Holder) may immediately be sold under Rule 144 during any
90-day period.
7. INDEMNIFICATION.
7.1 COMPANY INDEMNIFICATION. The Company will indemnify each Holder, each
of such Holder's officers, members, shareholders, directors and partners, such
Holder's legal counsel and independent accountants, and each person controlling
such Holder within the meaning of Section 15 of the Securities Act, in
connection with any offering of securities of the Company with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein, not
misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration, qualification or compliance, and will reimburse each such Holder,
each of such
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EXHIBIT 10.118 (CONTINUED)
Holder's officers, directors, members, shareholders and partners and such
Holder's legal counsel and independent accountants, and each person controlling
such Holder, each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Holder or underwriter and stated to be specifically for use therein; provided,
that the agreement of the Company to indemnify any underwriter and any person
who controls such underwriter contained herein with respect to any such
preliminary prospectus shall not inure to the benefit of any underwriter from
whom the person asserting any such claim, loss, damage, liability or action
purchased the stock which is the subject thereof, if at or prior to the written
confirmation of the sale of such stock, a copy of the prospectus (or the
prospectus as amended or supplemented) was not sent or delivered to such person,
excluding the documents incorporated therein by reference, and the untrue
statement or omission of a material fact contained in such preliminary
prospectus was corrected in the prospectus (or the prospectus as amended or
supplemented); and provided, further, that the Company will not be liable in any
such case to the extent that any such claim, loss, damage or liability arises
out of or is based on any offers to sell or sales made by such Holder during any
period when a Holder is notified by the Company to suspend or discontinue sales
pursuant to Sections 8.1 or 8.2.
7.2 HOLDER INDEMNIFICATION. Each Holder will, if Registrable Securities
held by such Holder are included in the securities as to which registration,
qualification or compliance is being effected pursuant to this Agreement,
indemnify the Company, each of its directors and officers, each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act, and each other such Holder, each of such other
Holder's officers and directors and each person controlling such Holder within
the meaning of Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company, such Holders, such
directors, officers, underwriters or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to
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EXHIBIT 10.118 (CONTINUED)
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein or
for sales in violation of Sections 8.1 or 8.2; provided, however, that the
obligations of any such Holder hereunder shall be limited to an amount equal to
the net proceeds after expenses and commissions to such Holder of Registrable
Securities sold as contemplated herein.
7.3 NOTIFICATION OF CLAIM. Each party entitled to indemnification under
this Section 7 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense; provided, however, that the Indemnified Party
(together with all other Indemnified Parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the Indemnifying Party, if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between such Indemnified Party and any other party represented by such
counsel in such proceeding; and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement, except to the
extent, but only to the extent, that the Indemnifying Party's ability to defend
against such claim or litigation is impaired as a result of such failure to give
notice. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
7.4 CONTRIBUTION. If the indemnification provided for in Sections 7.1 and
7.2 of this Section 7 is unavailable or insufficient to hold harmless an
Indemnified Party thereunder, then each Indemnifying Party thereunder shall
contribute to the account paid or payable by such Indemnified Party as a result
of the losses, claims, damages, costs, expenses, liabilities or actions referred
to in Sections 7.1 and 7.2 in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and the Indemnified
Party on the other in
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EXHIBIT 10.118 (CONTINUED)
connection with statements or omissions which resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable considerations.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Indemnifying Party or the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statements or omission. The parties hereto agree that it
would not be just and equitable if contributions pursuant to this Section 7.4
were to be determined by pro rata or per capita allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to in the first sentence of this Section 7.4. The amount paid by an
Indemnified Party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this Section 7.4 shall be deemed to include
any legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any action or claim which is the
subject of this Section 7.4. Promptly after receipt by an Indemnified Party of
notice of the commencement of any action against such party in respect of which
a claim for contribution may be made against an Indemnifying Party under Section
7.4, such Indemnified Party shall notify the Indemnifying Party in writing of
the commencement thereof if the notice specified in Section 7.3 has not been
given with respect to such action; provided that the omission so to notify the
Indemnifying Party shall not relieve the Indemnifying Party from any liability
which it may have to any Indemnified Party otherwise under Section 7.4, except
to the extent that the Indemnifying Party is actually prejudiced by such failure
to give notice. The parties hereto agree with each other and shall agree with
the underwriters of the Common Stock of the Company pursuant to the terms
hereof, if requested by such underwriters, that (i) the underwriters' portion of
such contribution shall not exceed the underwriting discount, commission and
other compensation and (ii) except for the Company, the amount of such
contribution shall not exceed an amount equal to the net proceeds received by
such Indemnifying Party from the sale of securities in the offering to which the
losses, claims, damages or liabilities of the indemnified parties relate. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
8. OBLIGATIONS OF THE HOLDERS.
8.1 SUSPEND SALES. For a reasonable period not to exceed 90 days in any
twelve-month period, Holder will not (until further notice) effect sales of
Registrable Securities involved in any Registration Statement thereof after
receipt of telegraphic or written notice from the Company to suspend sales to
permit the Company to correct or update such Registration Statement or
Prospectus; but the obligations of the Company with respect to maintaining any
Registration Statement current and effective shall
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EXHIBIT 10.118 (CONTINUED)
be extended by a period of days equal to the period such suspension is in
effect.
8.2 DISCONTINUE SALES. At the end of any period during which the Company is
obligated to keep any Registration Statement current and effective as provided
by Section 5 hereof (and any extensions thereof required by Section 8.2), Holder
shall discontinue sales of shares pursuant to such Registration Statement on
receipt of notice from the Company of its intention to remove from registration
the shares covered by such Registration Statement which remain unsold, and
Holder shall notify the Company of the number of shares registered which remain
unsold promptly after receipt of such notice from the Company.
9. LOCK-UP AGREEMENT. In consideration for the Company agreeing to its
obligations under this Agreement, each Holder of Registrable Securities agrees,
in connection with a registered public offering by the Company on Form S-1 or
Form SB-2 (or any successor form(s) thereto), upon request of the Company or the
underwriters managing such offering, not to sell, make any short sale of, loan,
grant any option for the purchase of, or otherwise dispose of any Registrable
Securities or other securities of the Company (other than those included in the
registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed one
hundred eighty (180) days) from the effective date of such registration as the
Company or the underwriters may specify. Each Holder agrees that the Company may
instruct its transfer agent to place stop transfer notations in its records to
enforce the provisions of this Section 9.
10. INFORMATION BY HOLDER. The Holder or Holders of Registrable Securities
included in any registration shall furnish to the Company such information
regarding such Holder or Holders and the distribution proposed by such Holder or
Holders as the Company may request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Agreement.
11. RULE 144 REPORTING. With a view to making available the benefits of certain
rules and regulations of the Commission which may at any time permit the sale of
the Registrable Securities to the public without registration, after such time
as a public market exists for the Common Stock of the Company, the Company
agrees to:
11.1 PUBLIC INFORMATION. Make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities Act, at
all times from and after ninety (90) days following the effective date of the
first registration under the Securities Act filed by the Company for an offering
of its securities to the general public;
11.2 FILINGS WITH SEC. Use its best efforts to then file with the
Commission in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange
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EXHIBIT 10.118 (CONTINUED)
Act (at any time after it has become subject to such reporting requirements);
and
11.3 COMPLIANCE STATEMENT. Furnish to Holders of Registrable Securities
forthwith upon request, a written statement by the Company as to its compliance
with the reporting requirements of Rule 144 (at any time after ninety (90) days
after the effective date of the first registration statement filed by the
Company for an offering of its securities to the general public), and of the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements), a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents of the Company as a
Holder of Registrable Securities may reasonably request in availing itself of
any rule or regulation of the Commission allowing such Holder to sell any such
securities without registration.
12. INFORMATION RIGHTS. The Company shall furnish to each Investor and
permitted assignees for as long as they continue to hold shares of Series A
Preferred Stock, (i) within 100 days after the end of each fiscal year, an
audited, consolidated balance sheet of the Company and its subsidiaries, if
any, as of the end of such fiscal year, and an audited, consolidated
statement of income and cash flows of the Company and its subsidiaries, if
any, for such year and (ii) within 50 days after the end of each fiscal
quarter, an unaudited, consolidated balance sheet of the Company and its
subsidiaries, if any, as of the end of such fiscal quarter, and an unaudited,
consolidated statement of income and cash flows of the Company and its
subsidiaries, if any, for such quarter. In addition during 2000, upon the
written request of an Investor who holds at least ten percent (10% of the
outstanding shares of Series A Preferred Stock, the Company will furnish to
such Investor within 45 days after the end of each calendar month an
unaudited, consolidated balance sheet of the Company and its subsidiaries, if
any, as of the end of such month, and an unaudited, consolidated statement of
income and cash flows of the Company and its subsidiaries, if any, for such
month; provided, however, that the Company shall not be required to provide
such monthly financial information to a requesting Investor on more than one
occasion during each calendar quarter. The information rights set forth in
this Section 12 shall expire upon conversion of all of the outstanding Series
A Preferred Stock into Common Stock. The Investors acknowledge that
information furnished pursuant hereto is subject to the confidentiality
provisions in Section 8.9 of the Purchase Agreement.
13. BOARD REPRESENTATION; BOARD EXPENSES.
13.1 BOARD REPRESENTATION. For as long as shares of Series A Preferred
Stock are outstanding, the Board shall consist of seven members. As long as more
than fifty percent (50%) of the total number of shares of Series A Preferred
Stock issued by the Company are outstanding, at each election of directors of
the Company the holders of Series A Preferred Stock shall be entitled, voting as
a separate class, to elect two (2) directors of the Company. As long
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EXHIBIT 10.118 (CONTINUED)
as fifty percent (50%) or less but more than twenty percent (20%) of the total
number of shares of Series A Preferred Stock issued by the Company are
outstanding, at each election of directors of the Company the holders of Series
A Preferred Stock shall be entitled, voting as a separate class, to elect one
(1) director of the Company. Thereafter, as long as any shares of Series A
Preferred Stock are outstanding an individual designated by the holders of a
majority of the outstanding shares of Series A Preferred Stock (the "Series A
Representative") shall have the right to receive notice of and to attend and
participate (but not to vote on any matters) at any and all meetings of the
Board of Directors. Information furnished to the Series A Representative shall
be subject to the confidentiality provisions in Section 8.9 of the Purchase
Agreement or to equivalent confidentiality provisions. Each of the Investors
does hereby irrevocably authorize and appoint Hunter Capital Group, LLC, a
Delaware limited liability company ("Hunter Capital"), as its agent and
attorney, with full power of substitution, to designate the Series A
Representative (which authorization and appointment of Hunter Capital is coupled
with an interest and shall be irrevocable during the term of this Agreement).
The remainder of the directors (at least one of whom must be an Independent
Director) shall be elected by the holders of the Series A Preferred Stock and
the holders of the Common Stock voting together as a class. By executing this
Agreement, each Investor agrees that Hunter Capital is designated as its
respective proxy for purposes of designating or selecting one of the directors
to be elected by the holders of the Series A Preferred Stock.
13.2 EXPENSES OF DIRECTORS. The Company shall reimburse the Series A
Directors and the Independent Director(s) for their reasonable out-of-pocket
expenses related to attending meetings of the Board, which expenses shall be
pre-approved, in writing, by the Company.
14. SERIES A PREFERRED STOCK VOTING RIGHTS. The Parties agree that so long as
any shares of Series A Preferred Stock remain outstanding, the Company shall
not, without first obtaining the approval (by vote or written consent, as
provided by law) of the holders of a majority of the outstanding shares of
Series A Preferred Stock voting together as a single class:
14.1 Create or issue any class or series of capital stock which is senior
to or pari passu with the Series A Preferred Stock unless the consideration per
share for which such class or series of capital stock is issued exceeds by
twenty percent (20%) or more the Conversion Price which is in effect at such
time.
14.2 Authorize the payment of dividends on Common Stock, other than in
shares of Common Stock.
14.3 Authorize the redemption or repurchase of Common Stock; provided,
however, that this restriction shall not apply (i) to the repurchase of shares
of Common Stock from employees,
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EXHIBIT 10.118 (CONTINUED)
officers, directors, consultants or other persons performing services for the
Company or any subsidiary pursuant to agreements (A) outstanding on the date of
issuance of the first share of Series A Preferred Stock or (B) under which the
Company has the option to repurchase such shares upon the occurrence of certain
events, such as the termination of employment, or (ii) if fewer than ten percent
(10%) of the number of shares of Series A Preferred Stock issued on the Purchase
Date are outstanding; each holder of shares of Series A Preferred Stock shall be
deemed to have consented, for purposes of Sections 502, 503 and 506 of the
General Corporation Law of the State of California, to any such repurchase by
the Company.
14.4 Increase or decrease (other than by conversion) the authorized number
of shares of Series A Preferred Stock.
14.5 Amend, waive or repeal any provision of, or add any provision to, the
Company's Articles of Incorporation if such action would adversely alter or
change the rights, preferences or privileges of, or the restrictions provided
for the benefit of, the Series A Preferred Stock.
14.6 Change the authorized number of directors of the Company unless
approved by a majority of the directors of the Company.
14.7 Sell, convey, or otherwise dispose of or encumber all or substantially
all of its property or business or merge into or consolidate with any other
entity (other than a wholly owned subsidiary corporation) or effect any
transaction or series of related transactions in which more than 50% of the
voting power of the Company is disposed of unless in connection with such
transaction the holders of shares of Series A Preferred Stock receive
consideration for each share of Series A Preferred Stock on an as-converted
basis equal to (i) three (3) times the Series A Issue Price in the event that
said transaction occurs during the first year after the Purchase Date, (ii) four
(4) times the Series A Issue Price in the event that said transaction occurs
during the second year after the Purchase Date, and (iii) five (5) times the
Series A Issue Price in the event that said transaction occurs thereafter (in
each case such price to be adjusted to reflect stock dividends, stock splits or
recapitalizations after the Purchase Date).
14. OTHER REGISTRATION RIGHTS. The Company may not grant registration rights
senior to the rights granted hereunder except with the approval of the holders
of a majority of the shares of Series A Preferred Stock.
15. RIGHT OF FIRST OPPORTUNITY.
15.1 NOTICE OF SALE. For as long as shares of Series A Preferred Stock are
outstanding, if the Company desires to issue and sell shares of its capital
stock or rights, options or other securities exercisable for or convertible into
shares of its
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EXHIBIT 10.118 (CONTINUED)
capital stock, then the Company shall first notify each Holder of the material
terms of such proposed sale (such notice, a "Company Issuance Notice").
15.2 RIGHT OF FIRST OPPORTUNITY. The Company shall then permit each Holder
to acquire, at the time of the closing of such sale, such number of the shares
of capital stock or other securities as would enable such Holder to maintain its
percentage of equity ownership (calculated on an as-converted basis, assuming
the conversion of all series of the Company's Preferred Stock) in the Company
following such issuance at a level held by it immediately prior to such issuance
(the "Proportionate Percentage"). The Holders shall each have twenty (20) days
after the delivery of any Company Issuance Notice to elect by notice to the
Company to purchase such shares or securities at the price and upon the terms
and conditions stated in such notice at the time of the closing of such sale. If
any Holder shall subscribe for less than his Proportionate Percentage, the
Holders that subscribe for their full Proportionate Percentage (the "Subscribing
Holders") shall be entitled to purchase the balance of that non-subscribing
Holder's Proportionate Percentage in the same proportion in which the
Subscribing Holder was entitled to purchase the offered securities in the first
place (excluding for such purposes such non-subscribing Holders). The Company
shall notify each Subscribing Holder five (5) days following the expiration of
the 20-day period described above of the additional amount of the offered
securities which each Subscribing Holder may purchase pursuant to the foregoing
sentence, and each Subscribing Holder shall then have five (5) days from the
delivery of such notice to indicate such additional amount, if any, that such
Subscribing Holder wishes to purchase.
15.3 EXCEPTIONS. The rights set forth in Section 16.2 shall not apply to
the issuance of (i) shares or grant of options or warrants (including shares
issuable upon exercise of such options or warrants) to any employee, consultant,
or director of the Company, Hunter Capital or its designees, banks, commercial
lenders, strategic lenders, equipment lessors or other lenders, under any
Company stock purchase and/or stock option plans or arrangements approved by the
Board, (ii) shares of Common Stock issued upon conversion of any series of
preferred stock of the Company, (iii) shares of the Company's capital stock or
rights, options or other securities issued pursuant to a stock split of the
Common Stock or Company declared dividend, (iv) an underwritten public offering
of securities by the Company where the underwriter reasonably and in good faith
objects to the exercise of such rights, (v) shares issued in an acquisition (by
merger or otherwise) of another entity or of some or all of its assets, or (vi)
shares issued upon conversion of the Convertible Subordinated Debenture issued
to Trimark Pictures, Inc. on or about the date of this Agreement. The rights set
forth in Section 16.2 shall terminate upon completion of the Company's initial
public offering.
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EXHIBIT 10.118 (CONTINUED)
16. ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement among the Parties regarding the transactions
contemplated herein. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the Parties hereto.
17. NOTICES, ETC. All notices and other communications required or permitted
hereunder shall be in writing and deemed given on the business day following
delivery to the recipient in person or by overnight courier service, and
addressed (i) if to an Investor or Founder, to such Investor's or Founder's
address set forth on Exhibit A and B below, or at such other address as such
Investor or Founder shall have furnished to the Company in writing, (ii) if to a
Holder other than an Investor or Founder, at such address as such Holder shall
have furnished to the Company in writing or until any such Holder so furnishes
an address to the Company, then to the address of the last Holder of such
securities who has so furnished an address to the Company, or (iii) if to the
Company, to:
CinemaNow, Inc.
4553 Glencoe Avenue
Suite 200
Marina del Rey, California 90292
Attn: Bruce David Eisen
18. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which may be executed by less than all of the Parties hereto, each of
which shall be enforceable against the Parties actually executing such
counterparts, and all of which together shall constitute one and the same
instrument.
19. AMENDMENT. Any provision of this Agreement may be amended, waived,
modified, discharged or terminated only with the written consent of the Company,
the Founders, and Investor's holding two-thirds (2/3rds) in interest of the
Series A Preferred Stock (or Common Stock issuable upon conversion thereof);
provided, however, that with the written consent of CinemaN Investment Company
Ltd., a British Virgin Islands company, any provision of this Agreement may be
amended, waived, modified, discharged or terminated with the written consent of
the Company, the Founders, and Investors holding a majority in interest of the
Series A Preferred Stock (or Common Stock issuable upon conversion thereof). Any
amendment or waiver effected in accordance with this Section will be binding
upon the Company, the Founders, the Investors and each Holder of any securities
subject to this Agreement (including securities into which such securities are
convertible) and future Holders of all such securities. Any Founder, Investor or
Holder may waive its, his or her rights or the Company's obligations to such
person hereunder without obtaining the consent of any other person.
20. ASSIGNMENT AND TRANSFER. This Agreement shall not be assigned by the
Company, by operation of law or otherwise. This Agreement or the rights held by
an Investor under this Agreement may be assigned by such Investor only in
connection with an
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EXHIBIT 10.118 (CONTINUED)
assignment or transfer by such Investor which is made in accordance with
Sections 4.6 or 8.12 of the Purchase Agreement.
21. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement, including the
construction, validity and performance hereof and the obligations arising
hereunder and thereunder, and all amendments and supplements hereof and thereof
and all waivers and consents hereunder and thereunder, shall be construed in
accordance with and governed by the laws of the State of California without
giving effect to any choice of law or conflicts of law provision or rule that
would cause the application of the laws of any other jurisdiction. Any legal
action or proceeding with respect to this Agreement or any document related
hereto or thereto shall be brought in the courts of the State of California
sitting in the County of Los Angeles or of the United States of America for the
State of California sitting in the County of Los Angeles, and, by execution and
delivery and/or acceptance of this Agreement, each Party hereto hereby accepts
the exclusive jurisdiction of the aforesaid courts. In addition, each Party
hereto hereby irrevocably and unconditionally waives any objection which it may
now or hereafter have to the laying of venue of any of the aforesaid actions,
suits or proceedings arising out of or in connection with this Agreement or any
document related hereto or thereto brought in any of the aforesaid courts, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim that any such action, suit or proceeding brought in any such court has
been brought in an inconvenient forum.
22. SEVERABILITY. In the event that any provision of this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to any Party.
23. TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement. IN WITNESS WHEREOF, the Parties have executed this
Agreement as of the day and year first set forth above.
CinemaNow, Inc.
By:__________________________
Title:_______________________
16
<PAGE>
EXHIBIT 10.118 (CONTINUED)
[Investors Signature Page]
INVESTORS:
-----------------------------------
(Print Name of Investor)
-----------------------------------
(Signature)
-----------------------------------
(Title, if applicable)
Address
17
<PAGE>
EXHIBIT 10.118 (CONTINUED)
[Founders Signature Page]
FOUNDERS:
Trimark Holdings, Inc.
By:
-------------------------------
Title:
----------------------------
Trimark Pictures, Inc. (but only
with respect to the Common Stock
to be acquired pursuant to the
Trimark Note (as defined in the
Purchase Agreement))
By:
-------------------------------
Title:
----------------------------
-----------------------------------
Curt Marvis
-----------------------------------
Bruce Eisen
18
<PAGE>
EXHIBIT 10.118 (CONTINUED)
EXHIBIT A
SCHEDULE OF INVESTORS
19
<PAGE>
EXHIBIT 10.118 (CONTINUED)
EXHIBIT B
FOUNDERS
Trimark Holdings, Inc.
c/o CinemaNow, Inc.
4553 Glencoe Avenue
Marina del Rey, California 90292
Trimark Pictures, Inc.
c/o CinemaNow, Inc.
4553 Glencoe Avenue
Marina del Rey, California 90292
Curt Marvis
c/o CinemaNow, Inc.
4553 Glencoe Avenue
Marina del Rey, California 90292
Bruce Eisen
c/o CinemaNow, Inc.
4553 Glencoe Avenue
Marina del Rey, California 90292
20
<PAGE>
EXHIBIT 10.119
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY
NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER SUCH ACT AND APPLICABLE LAWS, OR UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS
NOT REQUIRED.
TRANSFER OF THIS DEBENTURE IS NOT VALID EXCEPT TO THE EXTENT
THAT SUCH TRANSFER HAS BEEN MADE IN COMPLIANCE WITH THE PROVISIONS
REGARDING TRANSFER CONTAINED HEREIN.
CINEMANOW, INC.
CONVERTIBLE SUBORDINATED DEBENTURE
$215,000.000 MARINA DEL REY, CALIFORNIA
FEBRUARY 2, 2000
CinemaNow, Inc., a California corporation (the "Company"), the principal
office of which is located at 4553 Glencoe Avenue, Suite 200, Marina del Rey,
California, for value received hereby promises to pay to the order of Trimark
Pictures, Inc., a California corporation, the sum of Two Hundred Fifteen
Thousand Dollars ($215,000), or such lesser amount as shall then equal the
outstanding principal amount hereof and any unpaid accrued interest hereon, as
set forth below, on June 30, 2001 (the "Maturity Date"), subject to the terms
hereof. This Debenture is issued in connection with the Securities Purchase
Agreement between the Company, the Holder and others dated as of January 6,
2000, as the same may from time to time be amended (the "Purchase Agreement").
The following is a statement of the rights of the Holder of this Debenture
and the conditions to which this Debenture is subject, and to which the Holder
hereof, by the acceptance of this Debenture, agrees:
1. DEFINITIONS. As used in this Debenture, the following terms, unless the
context otherwise requires, have the following meanings:
(i) "Company" includes any corporation which shall succeed to or
assume the obligations of the Company under this Debenture.
(ii) "Holder," when the context refers to a holder of this Debenture,
shall mean any person who shall at the time be the registered holder of this
Debenture.
1
<PAGE>
EXHIBIT 10.119 (CONTINUED)
(iii) "Insolvency Proceeding" means any case or proceeding (x) under
the United States Bankruptcy Code, 11 U.S.C. Sections 101, ET SEQ., or (y) under
any other federal law, or under state law, to reorganize, liquidate, appoint a
trustee for, a receiver for or an assignee for the benefit of creditors of, the
Company, or all or substantially all of the assets of the Company, whether
voluntary or involuntary.
2. INTEREST. This Debenture shall bear interest at the rate of eight percent
(8.00%) per annum (the "Interest Rate") on the principal of this Debenture
outstanding during the period beginning on the date of issuance of this
Debenture and ending on the date when the principal amount of this Debenture has
been paid in full or when the Debenture has been fully converted pursuant to
Section 6 hereof, whichever is earlier. Interest shall be due and payable on the
Maturity Date, or on such earlier date that the Debenture is paid in full or
fully converted pursuant to Section 6 hereof.
3. EVENTS OF DEFAULT. If any of the events specified in this Section 3 shall
occur (herein individually referred to as an "Event of Default"), the Holder of
the Debenture may, so long as such condition exists and subject to Section 4 and
Section 6.7 hereof, declare the entire principal and unpaid accrued interest
hereon immediately due and payable, by notice in writing to the Company:
(i) The institution by the Company of an Insolvency Proceeding, or the
consent by it to the institution of an Insolvency Proceeding or the filing by it
of a petition or answer or consent seeking an Insolvency Proceeding, or the
taking of corporate action by the Company in furtherance of any such action; or
(ii) If, within sixty (60) days after the commencement of an action
against the Company (and service of process in connection therewith on the
Company) seeking an Insolvency Proceeding, such action shall not have been
resolved in favor of the Company or all orders or proceedings thereunder
affecting the operations or the business of the Company stayed, or if the stay
of any such order or proceeding shall thereafter be set aside, or if, within
sixty (60) days after the appointment without the consent or acquiescence of the
Company of any trustee, receiver or liquidator of the Company or of all or any
substantial part of the properties of the Company, such appointment shall not
have been vacated; or
(iii) Any default of the Company declared in writing under any Senior
Indebtedness (as defined below) that gives the holder thereof the right to
accelerate such Senior Indebtedness; or
(iv) Any declaration in writing that the Company is insolvent,
inadequately capitalized, or is unable to pay its debts as they fall due; or
2
<PAGE>
EXHIBIT 10.119 (CONTINUED)
(v) Any default in the payment of the principal or interest of this
Debenture when due and payable, whether at maturity, by acceleration or
otherwise, and such default is not cured by the Company within ten (10) business
days; or
(vi) The rendering of a final judgment or judgments (not subject to
appeal) against the Company or any of its subsidiaries in an amount in excess of
$1 million which remains undischarged or unstayed for a period of 60 (sixty)
days after the date on which the right to appeal has expired.
4. SUBORDINATION AND RANKING. The indebtedness evidenced by this Debenture is
hereby expressly subordinated, to the extent and in the manner set forth herein,
in right of payment to the prior payment in full of all the Company's Senior
Indebtedness, as defined herein. For purposes of this Debenture, "Senior
Indebtedness" shall mean all indebtedness and payment obligations of the Company
of whatever nature other than any such obligations in respect of the Company's
Series A Convertible Preferred Stock. The indebtedness evidenced by this
Debenture shall rank PARI PASSU with all payment obligations of the Company in
respect of the Company's Series A Convertible Preferred Stock. By its acceptance
of this Debenture, the Holder of this Debenture agrees to be bound by the terms
hereof and agrees to execute and deliver such documents as may be reasonably
requested from time to time by the Company or the holder of any Senior
Indebtedness in order to implement the provisions of this Section 4.
5. PREPAYMENT. The Company may at any time prepay in whole or in part the
principal sum of this Debenture, plus accrued interest, without penalty;
provided, however, that the Holder shall have the option to convert such
principal and interest into Common Stock (as defined below) pursuant to Section
6.1 hereof in lieu of accepting prepayment in cash.
6. CONVERSION.
6.1 Conversion at Option of Holder. The Holder of this Debenture shall have the
option, at any time before payment in full of the principal balance of this
Debenture, to convert some or all of the outstanding principal balance of this
Debenture, plus unpaid accrued interest, in accordance with the provisions of
Section 6.4 hereof, into fully paid and nonassessable shares of Common Stock.
6.2 Conversion at Option of Company. The Company shall have the option as of
the Maturity Date, in lieu of cash payment, to convert some or all of the
outstanding principal balance of this Debenture, plus unpaid accrued interest,
in accordance with the provisions of Section 6.4 hereof, into fully paid and
nonassessable shares of Common Stock
6.3 Conversion Upon Event of Default. If an Event of Default occurs, the Holder
of this Debenture shall have the option, as the
3
<PAGE>
EXHIBIT 10.119 (CONTINUED)
Holder's sole and exclusive remedy for any such default while any of the
Company's Series A Convertible Preferred Stock remains outstanding, at any time
before payment in full of the principal balance of this Debenture, to convert
some or all of the outstanding principal balance of this Debenture, plus unpaid
accrued interest, in accordance with the provisions of Section 6.4 hereof, into
fully paid and nonassessable shares of Common Stock.
6.4 Conversion Price and Procedure. The number of shares of the common stock of
the Company, no par value ("Common Stock") into which this Debenture may be
converted pursuant to Section 6.1, 6.2 or 6.3 shall be determined by dividing
the aggregate outstanding principal amount to be converted, together with all
accrued but unpaid interest to the date of conversion, by the Conversion Price
(as defined herein) in effect at the time of such conversion. The "Conversion
Price" shall be an amount equal to $0.675 per share, subject to adjustment as
hereinafter provided.
Before the Holder shall be entitled to convert this Debenture into shares
of Common Stock, it shall surrender this Debenture, duly endorsed, at the office
of the Company together with written notice in the form of the Notice of
Conversion attached to this Debenture of the election to convert all or some of
the same pursuant to Section 6.1 or 6.3, and shall state therein the name or
names in which the certificate or certificates for shares of Common Stock is to
be issued. At its expense, the Company shall, as soon as practicable thereafter,
issue and deliver to such Holder a certificate or certificates for the number of
shares of such Common Stock to which the Holder shall be entitled upon such
conversion (bearing such legends as are required by applicable state and federal
securities laws in the opinion of counsel to the Company), together with any
other securities and property to which the Holder is entitled upon such
conversion under the terms of this Debenture, including a check payable to the
Holder for any cash amounts payable for fractional shares, as described in
Section 6.5 below. In addition, if the Holder has converted only part of the
Debenture, the Company will issue to the Holder a new debenture for the amount
not converted with otherwise the same terms as the Debenture. In the event of
any conversion of this Debenture into Common Stock pursuant to Section 6.1, 6.2
or 6.3, such conversion shall be deemed to have been made immediately before the
close of business on the date of such surrender of the Debenture to be
converted. On and after such deemed conversion date, the Holder entitled to
receive the shares of such Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder of such shares and shall be bound
by the terms of the Purchase Agreement.
If the Company is the subject of any of the proceedings described in paragraphs
(i) or (ii) of Section 3 of this Debenture, no stay, injunction, restraining
order or similar law, rule or order shall be effective as against the Holder for
purposes of this Section 6; PROVIDED that if any such stay, injunction,
restraining order or similar law, rule or order is effective against the Holder,
the Company expressly agrees to waive, modify or release such stay, injunction,
restraining order or
4
<PAGE>
EXHIBIT 10.119 (CONTINUED)
similar law, rule or order to permit the Holder to effect the conversion
provided in this Section 6, and to execute and prosecute all pleadings,
memoranda, affidavits, certificates, instruments and other documents necessary
or appropriate in the discretion of the Holder to effect such waiver,
modification, or release.
6.5 No Fractional Shares. No fractional shares of Common Stock shall be issued
upon conversion of all of the outstanding principal balance of this Debenture
into Common Stock. In lieu of the Company issuing any fractional shares to the
Holder upon the conversion of this Debenture into Common Stock, the Company
shall pay to the Holder the amount of outstanding principal that is not so
converted, such payment to be in the form as provided above.
6.6 No Further Obligations. Upon conversion of all of the outstanding principal
balance of this Debenture, together with all accrued but unpaid interest to the
date of conversion, the Company shall be forever released from all its
obligations and liabilities under this Debenture.
6.7 Remedies. The remedy contained in Section 6.3 of this Debenture shall be
the Holder's sole and exclusive remedy for any Event of Default or other
default under this Debenture (other than a default under the Company's
obligations to the Holder pursuant to the PARI PASSU ranking with payment
obligations in respect of the Company's Series A Convertible Preferred Stock
described in Section 4 above) while any of the Company's Series A Convertible
Preferred Stock remains outstanding, and the Holder hereof expressly
acknowledges and agrees that it shall have no right to commence any suit,
action, proceeding, or case, including an Insolvency Proceeding, in any court
or administrative or arbitral body for any relief or remedy except to enforce
the Holder's rights under Sections 4 and 6.3 while any of the Company's
Series A Convertible Preferred Stock remains outstanding.
Upon the occurrence of an Event of Default, if none of the Company's Series
A Convertible Preferred Stock remains outstanding, the Holder may, so long as
such condition exists, declare the entire principal and interest hereon
immediately due and payable and, in addition, may pursue any and all other
rights and remedies available to it.
7. CONVERSION PRICE ADJUSTMENTS.
7.1 Reclassification, Merger, Sale of Assets, etc. In case of any
reclassification, capital reorganization, or change of the outstanding Common
Stock of the Company (other than as a result of a subdivision, combination or
stock dividend), or in case of any consolidation of the Company with, or merger
of the Company into, another corporation or other business organization (other
than a
5
<PAGE>
EXHIBIT 10.119 (CONTINUED)
consolidation or merger in which the holders of the outstanding voting stock of
the Company immediately before the consummation of such transaction shall,
immediately after such transaction, hold, as a group, at least a majority of the
voting securities of the surviving or successor entity), or in case of any sale
or conveyance to another corporation or other business organization of the
property of the Company, as an entirety or substantially as an entirety, at any
time before the payment or conversion in full ("Full Payment") of the principal
and interest under this Debenture, then, as a condition of such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance, lawful provision shall be made and duly executed documents
evidencing the same from the Company or its successor shall be delivered to the
Holder of this Debenture, so that the Holder of this Debenture shall have the
right before Full Payment to convert pursuant to Section 6.1 the outstanding
principal and unpaid accrued interest under this Debenture into the kind and
amount of shares of stock and other securities and property receivable upon such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance by a holder of the number of shares of Common Stock of the Company
which might have been acquired by the Holder of this Debenture upon full
conversion of such principal and interest immediately before such
reclassification, reorganization, change, consolidation, merger, sale or
conveyance, and in any such case appropriate provisions shall be made with
respect to the rights and interest of the Holder of this Debenture to the end
that the provisions hereof shall thereafter be applicable in relation to any
shares of stock, and other securities and property thereafter deliverable upon
conversion pursuant to Section 6.1 of outstanding principal and unpaid accrued
interest hereunder.
7.2 Split, Subdivision or Combination of Shares. If the Company shall at any
time before Full Payment of this Debenture subdivide its outstanding Common
Stock, by split-up or otherwise, or combine its outstanding Common Stock, or
issue additional shares of its capital stock in payment of a stock dividend in
respect of its Common Stock, the number of shares issuable on the conversion
pursuant to Section 6.1, 6.2 or 6.3 of the outstanding principal and unpaid
accrued interest under this Debenture shall forthwith be proportionately
increased in the case of a subdivision or stock dividend, or proportionately
decreased in the case of a combination, and the Conversion Price then applicable
to shares covered by the outstanding principal and unpaid accrued interest of
this Debenture shall forthwith be proportionately decreased in the case of a
subdivision or stock dividend, or proportionately increased in the case of a
combination.
7.3 Adjustments for Dividends in Stock or Other Securities or Property. If
before Full Payment of this Debenture, the holders of the securities as to which
conversion rights under this Debenture exist at the time shall receive, or, on
or after the record date fixed for the determination of eligible stockholders,
shall have become entitled to receive, without payment therefor, other or
6
<PAGE>
EXHIBIT 10.119 (CONTINUED)
additional stock or other securities or property (other than cash) of the
Company by way of dividend, then and in each case, this Debenture shall
represent the right to acquire upon conversion pursuant to Section 6.1, 6.2 or
6.3 of outstanding principal or unpaid accrued interest, in addition to the
number of shares of the security receivable upon full conversion of such
principal and interest, and without payment of any additional consideration
therefor, the amount of such other or additional stock or other securities or
property (other than cash) of the Company that such holder would hold on the
date of such conversion had it been the holder of record of the security
receivable upon full conversion of outstanding principal or unpaid accrued
interest under this Debenture on the record date of such dividend, giving effect
to all adjustments called for during such period by the provisions of this
Section 7.
7.4 No Impairment. The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issuance or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Section 7 and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder against impairment.
7.5 Notices of Record Date, etc. In the event of:
(i) Any taking by the Company of a record of the holders of any class
of securities of the Company for the purpose of determining the holders thereof
who are entitled to receive any dividend (other than a cash dividend payable out
of earned surplus at the same rate as that of the last such cash dividend
theretofore paid) or other distribution, or any right to subscribe for, purchase
or otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right; or
(ii) Any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any transfer of all
or substantially all of the assets of the Company to any other person or any
consolidation or merger involving the Company; or
(iii) Any voluntary or involuntary dissolution, liquidation or winding
up of the Company;
the Company will mail to the Holder at least twenty (20) days before the
earliest date specified therein, a notice specifying: (a) the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right, and the amount and character of such dividend, distribution or right; and
(b) the date
7
<PAGE>
EXHIBIT 10.119 (CONTINUED)
on which any such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up is expected to become effective
and the record date for determining stockholders entitled to vote thereon.
7.6 RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock solely for the purpose of effecting the conversion of the Debenture
such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of the Debenture; and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of the entire outstanding principal amount, in addition
to such other remedies as shall be available to the Holder of this Debenture,
the Company will use its best efforts to take such corporate action as may, in
the opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes.
8. Assignment. Subject to the restrictions on transfer described in Section 10
below, the rights and obligations of the Company and the Holder of this
Debenture shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties; provided however, that, except in
connection with a sale of all or substantially all of the Company's assets and a
related assumption of the Company's liabilities, the Company will not assign
this Debenture without the prior written consent of the Holder, which consent
shall not be unreasonably withheld.
9. Waiver and Amendment. Any provision of this Debenture may be amended,
waived or modified upon the written consent of the Company and the Holder of the
Debenture.
10. Transfer of this Debenture or Securities Issuable on Conversion Hereof. The
Holder may not offer, sell or otherwise dispose of this Debenture without the
prior written consent of the Company, which consent shall not be unreasonably
withheld, except to an affiliate of the Holder (as that term is defined in the
Securities Act of 1933, as amended (the "Securities Act")). With respect to any
offer, sale or other disposition of this Debenture or Common Stock into which
such Debenture may be converted, the Holder will give prior written notice to
the Company thereto, describing briefly the manner thereof, together with a
written opinion of such Holder's counsel, to the effect that such offer, sale or
other distribution may be effected without registration or qualification (under
any federal or applicable state law then in effect). Such opinion shall be
reasonably satisfactory in form and substance to the Company and the Company's
counsel. Promptly upon receiving such notice and opinion, and provided that the
Company has determined to consent to such sale or other disposition with respect
to the Debenture, the Company, as promptly as practicable,
8
<PAGE>
EXHIBIT 10.119 (CONTINUED)
shall notify such Holder that such Holder may sell or otherwise dispose of this
Debenture or such Common Stock, all in accordance with the terms of the notice
delivered to the Company. If a determination has been made pursuant to this
Section 10 that the opinion of counsel for the Holder is not reasonably
satisfactory to the Company or the Company's counsel or that the Company will
not consent to such sale or other disposition with respect to the Debenture, the
Company shall so notify the Holder promptly after such determination has been
made. Each Debenture thus transferred and each certificate representing the
Common Stock thus transferred shall bear a legend as to the applicable
restrictions on transferability in order to ensure compliance with the
Securities Act, unless in the opinion of counsel for the Company such legend is
not required in order to ensure compliance with the Securities Act. The Company
may issue stop transfer instructions to its transfer agent in connection with
such restrictions.
11. NOTICES. Unless otherwise provided, all notices and other communications
required or permitted under this Debenture shall be in writing and shall be
mailed by United States first-class mail, postage prepaid or delivered
personally by hand or by a nationally recognized courier addressed to the party
to be notified at the address indicated for such person on the signature page
hereof, or at such other address as such party may designate by ten (10) days'
advance written notice to the other parties hereto. All such notices and other
written communications shall be effective on the date of mailing or delivery.
12. NO STOCKHOLDER RIGHTS. Nothing contained in this Debenture shall be
construed as conferring upon the Holder or any other person the right to vote or
to consent or to receive notice as a stockholder in respect of meetings of
stockholders for the election of directors of the Company or any other matters
or any rights whatsoever as a stockholder of the Company, and no dividends or
interest shall be payable or accrued in respect of this Debenture or the
interest represented hereby or the Common Stock obtainable hereunder until, and
only to the extent that, this Debenture shall have been converted.
13. GOVERNING LAW. This Debenture shall be governed by and construed in
accordance with the laws of the State of California, excluding that body of law
relating to conflict of laws.
14. HEADINGS; REFERENCES. All headings used herein are used for convenience
only and shall not be used to construe or interpret this Debenture. Except where
otherwise indicated, all references herein to Sections refer to Sections hereof.
[SIGNATURE PAGE FOLLOWS]
9
<PAGE>
EXHIBIT 10.119 (CONTINUED)
IN WITNESS WHEREOF, the Company has caused this Debenture to be executed
this 2nd day of February, 2000.
CINEMANOW, INC.
By: /s/
------------------------------------
Name: CURT MARVIS
Title: CHIEF EXECUTIVE OFFICER
Address: 4553 Glencoe Avenue, Suite 200
Marina del Rey, CA 90292
AGREEMENT OF HOLDER:
The undersigned Holder agrees to be bound by the terms and conditions of the
foregoing Debenture, including without limitation the provisions of Section 4
("Subordination and Ranking") above.
TRIMARK PICTURES, INC.
By: /s/
--------------------------------------
Name: JEFF GONZALEZ
Title: CHIEF FINANCIAL OFFICER
Address: 4553 Glencoe Avenue, Suite 200
Marina del Rey, California 90292
10
<PAGE>
EXHIBIT 10.119 (CONTINUED)
NOTICE OF CONVERSION
(To Be Signed Upon Conversion of Debenture)
CinemaNow, Inc.
Attn: President
4553 Glencoe Avenue, Suite 200
Marina del Rey, California 90292
The undersigned, the Holder of the foregoing Debenture, hereby surrenders
such Debenture for conversion into shares of Common Stock of CinemaNow, Inc.
equivalent in amount of $______ principal amount of such Debenture plus all
unpaid accrued interest through the date of such conversion, and requests
that the certificates for such shares be issued in the name of, and delivered
to _____________________________, whose address is ___________________________.
If the principal amount requested for conversion is less than the full
outstanding principal amount of the Debenture, the Holder requests that the
Company issue to the Holder a new debenture for the amount not converted with
the same terms as the Debenture.
Dated:__________________________
TRIMARK PICTURES, INC.
By: _______________________________
Name: ____________________________
Title: _____________________________
Address: 4553 Glencoe Avenue, Suite 200
Marina del Rey, CA 90292
11
<PAGE>
EXHIBIT 10.120
AGREEMENT
This agreement (the "Agreement"), dated as of December 10, 1999,
memorializes the material terms of the agreement between Trimark Pictures, Inc.
("Trimark") and CinemaNow Inc. ("CN") concerning CN's rights and obligations to
advertise and exhibit certain Trimark motion pictures over the Internet.
Trimark's obligations to CN hereunder and the grant of rights set forth
herein are contingent upon CN raising and receiving financing, independent of
Trimark, in the amount of two million dollars ($2,000,000.00) prior to February
1, 2000.
A. ACKNOWLEDGEMENTS
1. Trimark is a wholly owned subsidiary of Trimark Holdings, Inc. Trimark
Holdings, Inc. is the majority shareholder of CN.
2. CN, by means of a series of private placement stock offerings, intends
to raise financing, which financing will be used as a portion of the
capitalization of CN.
3. CN, at some point, if and when justified by the prevailing business
circumstances and conditions, may elect to raise additional capital by means of
an initial public offering or further private placements.
4. Trimark has agreed to an exclusive output agreement with CN (except with
respect to the existing agreement between Trimark and Broadcast.com dated as of
February 22, 1999) with respect to the Internet Rights (defined below) to all
Trimark's motion pictures in the United States and Canada (in all instances, to
the extent Trimark controls such rights, from time to time) under the terms and
conditions set forth herein.
5. Trimark shall have the right to sell or license all rights to its
Pictures at any time (but no more than three (3) Pictures per year), inclusive
of Internet Rights, provided further that such Internet Rights are included as
part of a bundle of rights.
B. THE PICTURES
1. Subject to the terms of this Agreement, the "Pictures" shall be all
motion pictures which Trimark controls or to which Trimark obtains "all
rights" and/or "video on demand" rights and/or the right to exhibit
such motion picture over the Internet ("Internet Rights") during the
term of this Agreement.
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EXHIBIT 10.120 (CONTINUED)
2. (i) For the purposes of this agreement, the Internet shall mean any
wired network (including, without limitation, the Internet, the
Internet II, or any other online services network which utilize a
combination of computer terminals, terminal servers, modems, cable
modems, HFC, coaxial cable, xDSL, router, splitters, switches,
multicasting technology, power lines, or other high speed wire data
connections and any and all other wired networks) that distributes
audio or video using digital algorithms, one and/or two-way digital
services, or any wireless network that provides access to such wired
network (except AM/FM radio broadcast stations and television broadcast
stations, direct broadcast satellite, pay cable, basic cable and any
other form of television and/or radio transmission).
(ii) As of the date hereof, the consensus of the Parties, based upon
analysis of existing contractual language, is that a grant of "all
rights" and/or "video on demand" rights encompass a grant of Internet
Rights, as such term is defined herein ("Consensus"). In the event that
future judicial decisions, legislative acts, collective bargaining
agreements which are binding upon either party, arbitration decisions
which are binding upon either party, and/or similar authoritative
determinations (collectively, "Precedential Decisions") mandate and/or
require a definition of Internet Rights inconsistent with the
Consensus, the parties agree to amend this Agreement to the minimum
extent necessary to conform with the limitations required by such
Precedential Decisions.
C. THE RIGHTS
1. Subject to all contractual third party restrictions with respect to the
Pictures, whether now existing or which exist as a result of Future Agreements
(defined below) (collectively, "Third Party Restrictions"), including without
limitation, restrictions set forth in acquisition agreements and domestic
television license agreements, publicity and promotional limitations in artist
agreements, and restrictions in international license agreements, Trimark hereby
grants to CN, to the extent controlled by Trimark, for each Picture, Advertising
Rights (defined below) and exclusive Internet Rights during the Alternative
Media Window ("AMW") (as defined in paragraph C5 below) in the United States and
Canada in the English Language.
"Future Agreements" shall mean all acquisition, production and/or licensing
Agreements which Trimark enters into with respect to the Pictures after the date
of this Agreement. In entering into Future Agreements, Trimark shall use
commercially reasonable, good faith efforts to provide CN with an AMW of at
least six months for each Picture. In no event shall Future Agreements
substantially effect the number of Pictures for which rights are granted to CN
hereunder as of the date of this Agreement.
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EXHIBIT 10.120 (CONTINUED)
2. The "Advertising Rights" to the Pictures shall mean the right to
advertise and promote, using any and all means, methods, processes, devices or
media (whether now known or hereafter devised CN's rights in and to the
Pictures. In connection with the foregoing, CN and CN's sub-distributors and
licensees shall have the right (subject to all Third Party Restrictions) to use
the name, likeness, voice and biography of all persons rendering services in
connection with the Pictures; and the right to insert advertising (paid and
otherwise) into the Pictures, to have such advertising precede or follow the
Pictures and/or surrounding the Pictures in connection with the exploitation of
the Internet Rights.
3. The term of this Agreement shall be five years ("Term") from the date
first written above, provided, however, that in no event shall CN have less than
six months to exploit any particular Picture from the date of the first AMW with
respect to such Picture, provided further that such AMW occurs within the Term.
Hence, if the first AMW to a Picture after the first four years and six months
of this agreement, the Term of this agreement with respect to such Picture shall
continue for a period of six months from the date of the first AMW with respect
to such Picture.
4. CN is currently reviewing Trimark's library of Pictures and is selecting
only those titles to which Trimark controls "all rights" and/or "Video on
Demand" rights without an express reservation of Internet Rights or any part
thereof. In accordance with Paragraph 2 (ii), each such title shall constitute a
Picture hereunder. CN shall provide Trimark with a written list of such Pictures
when its review is complete. Trimark shall have the right to disapprove CN's
determinations based upon further review of the subject agreements.
5. With respect to each Picture, the "Alternative Media Window" shall mean
the windows or periods of time where Internet Rights may be exploited. The AMW
shall occur during such time as such exploitation does not infringe upon the
Third Party Restrictions or other exclusive windows pertaining to other media as
set forth in paragraph 6, below. However, with respect to each Picture, Trimark
shall use good faith efforts to insure that the AMW is at least six months in
length. Trimark shall notify CN of the AMW and of existing Third Party
Restrictions in writing within three weeks of CN's request therefor with respect
to any particular Picture. CN agrees to limit its requests to no more than ten
(10) Pictures per week. Trimark shall notify CN on a continuing basis of the
AMW's and Third Party Restrictions and as such AMW's and Third Party
Restrictions may change from time to time based upon Third Party Agreements.
Trimark's providing AMWs and Third Party Restrictions shall not be construed as
an affirmation that Trimark controls Internet Rights.
6. Notwithstanding anything herein to the contrary, the parties acknowledge
and agree that Trimark shall have the right to distribute each Picture via home
video, pay-per-view, pay television, basic cable television, network television
and
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EXHIBIT 10.120 (CONTINUED)
syndicated television and to create reasonable exclusive windows for each of
these media in accordance with Trimark's customary industry practice (i.e.
windows in which Internet Rights may not be exploited) .
D. TRIMARK PARTICIPATION
1. The parties acknowledge and agree that CN shall have the right to
determine how the Pictures are distributed, subject to Trimark having been
granted such rights from its third party licensors (i.e., whether on a
pay-per-view basis [however, in the event that CN desires to distribute any
Picture on a pay-per-view basis during Trimark's pay-per-view window, CN shall
be required to obtain Trimark's consent therewith, it being acknowledged and
agreed that Trimark shall not be required to give such consent and, if Trimark
does so consent, Trimark shall have the right to determine the price for said
pay-per-view showing] subscription basis, advertiser/sponsorship, or otherwise).
In the event that CN elects to distribute the Pictures on a pay-per-view basis,
CN shall determine the pricing of the Picture. If as part of a subscription or
package basis, CN shall allocate part of said subscription or package fee to the
Pictures on a fair and reasonable basis. If CN elects to distribute the Pictures
on an advertising/sponsorship basis, CN shall have the right to sell, barter and
otherwise deal with third parties with respect to advertising that may be
inserted into the Picture and/or otherwise made available to users who view the
Pictures. As between CN and Trimark, CN shall have the right to determine and
sell such advertising, except that Trimark shall be entitled to one banner ad
for Trimark's own purposes (i.e., to promote Trimark and/or its products, not
for re-sale to a third party) on the CN web site in a prominent position on a
continuing basis. In this regard, Trimark shall provide CN with the content of
such banner ad from time to time. Said advertising may include "Picture Ads"
which shall be those advertisements that are either inserted into the Picture or
immediately precede or follow the Picture and are delivered to the viewer of the
Picture as part of the delivery of the Picture. In addition, said advertising
may include "Site Ads" which shall consist of all other types of advertising
(i.e., banner ads, streaming banner ads, interstitial advertisements, e-mail
advertisements, v-mail advertisements, etc.) that are delivered to the viewer of
the Picture and/or applicable web site.
2. Trimark's Participation shall mean twenty-five percent (25%) of total
gross revenues generated by CN from the exploitation of, or in connection with,
the Pictures, including, but not limited to, from pay per view transactions and
any and all forms of advertising, including, but not limited to Picture Ads and
Site Ads. A monetary amount for all barter advertising shall be calculated on a
fair and reasonable basis. To the extent that an advertisement appears on a page
where more than one entity (including Trimark) are entitled to participate in
advertising revenue, a fair allocation of such revenue shall be made between
such parties.
(i) 3. Notwithstanding the foregoing, CN shall not be required to pay
the Trimark Participation on any gross
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EXHIBIT 10.120 (CONTINUED)
revenues generated in connection with the Pictures until such time as
CN has generated an aggregate of twenty million dollars
($20,000,000.00) in gross revenues attributable to the Pictures (as to
which the Trimark Participation is calculated per paragraph 2 above)
from and after December 10, 2001.
4. Except as set forth above, CN shall pay the Trimark Participation
directly to Trimark. Trimark shall be accorded customary reporting and audit
rights. Reporting and payments of monies due shall be on the same schedule as
reports are prepared for the Series A Holders, but no less than once per
quarter.
5. The foregoing notwithstanding, Trimark shall immediately be entitled to
receive the Trimark Participation with respect to any gross revenues generated
after an Initial Public Offering for any portion of CN's shares.
6. Notwithstanding anything to the contrary, as between CN and Trimark, in
the event that any third party payments (i.e., re-use fees, residuals,
supplemental payments, or any similar payments of any nature) (collectively
"Third Party Claims") are due as a result of CN's exploitation of any of the
Pictures, CN shall be solely responsible for such payments. CN shall immediately
pay Trimark the amount of such payments upon presentation of an invoice
therefor. Trimark shall use reasonable business judgment in determining whether
or not to oppose a claim for Third Party Payments taking into consideration the
current state of the law with respect to matters covered by this paragraph.
F. DIGITIZATION
CN shall be responsible for digitizing the Pictures at no cost to Trimark.
G. MUTUAL LINKS
The parties shall provide mutual links to one another's web sites.
H. RIGHT OF FIRST NEGOTIATION
For 15 business days, commencing 180 days prior to the expiration of the
Term, the Parties shall enter into negotiations with each other with respect to
the extension of this agreement. If the parties fail to reach an agreement, the
parties shall have no further obligations to each other except as set forth
herein.
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EXHIBIT 10.120 (CONTINUED)
In this regard, at the conclusion of the Term, CN shall deliver to Trimark
all materials in CN's possession pertaining to the Pictures, including the
digitized masters and CN shall have no further rights to the Pictures and/or any
materials pertaining thereto.
I. SUB-DISTRIBUTION
CN shall be entitled to engage in sub-distribution of the Pictures, it
being acknowledged and agreed that CN shall indemnify and defend Trimark against
any action arising against Trimark as a result of such sub-distribution.
J. BANKRUPTCY
Trimark shall have the right to terminate this agreement (to the extent
allowable under U.S. law) upon thirty (30) days prior written notice to CN in
the event CN (i) shall make an assignment for the benefit of creditors; (ii)
shall file any voluntary petition under the bankruptcy or insolvency laws of the
United States or any state; (iii) shall have a bankruptcy petition filed against
it with respect to which CN shall not file for dismissal thereof within sixty
(60) days or which shall not be dismissed within such time period; or (iv) shall
have or suffer a receiver or trustee to be appointed for CN's general business
or property with respect to which CN shall not file for dismissal of such
receiver or trustee within sixty (60) days, or which shall not be dismissed
within such time period. In the event that Trimark shall elect to terminate this
agreement as provided herein, all rights granted to CN herein shall cease and
terminate with effect the day immediately prior to the occurrence of such
default.
K. INDEMNIFICATION
1. CN will indemnify and hold harmless Trimark, it assigns, successors,
affiliates, parent, licensees, officer and employees, and agents, from and
against any and all liability, losses, claims, damages, expenses (including
reasonable outside attorney's fees) and judgments resulting or arising from a
breach of any obligation undertaken by CN in this Agreement or any exercise of
any rights in excess of the rights granted hereunder.
2. Trimark will indemnify and hold harmless CN, it assigns, successors,
affiliates, parent, licensees, officer and employees, and agents, from and
against any and all liability, losses, claims, damages, expenses (including
reasonable outside attorney's fees) and judgments resulting or arising from a
breach of any obligation undertaken by Trimark in this Agreement.
L. LOGOS AND MATERIALS
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EXHIBIT 10.120 (CONTINUED)
1. CN shall, at Trimark's request, ship to Trimark, in accordance with
Trimark's instructions, at Trimark's cost with respect to any duplication
expenses, copies of any materials in connection with the Pictures, including,
but not limited to, digitized versions of the Pictures and promotion,
advertising and marketing materials created by CN in connection with the
Pictures. All contracts and laboratory access letters (or the equivalents
thereof) entered into by CN for the Pictures with any laboratories (or the
equivalents thereof) shall specifically provide for Trimark's free and
unencumbered access to all such materials in perpetuity.
2. CN has the obligation (and to contractually require sub-distributors) to
display, visibly and prominently, Trimark's trademark and logo in connection
with CN's exploitation of the Pictures. Trimark's logo and trademark shall never
be smaller nor less visible than any other trademark and logo (except CN's
and/or CN's sub-distributors and/or sub-licensees which are not motion picture
distribution competitors of Trimark) appearing in any display, screens, stills,
posters, jackets, or on-line equivalents thereof and any other marketing
material related to the Pictures. CN shall not remove Trimark's logos from the
Pictures.
M. INFORMATION
CN shall grant Trimark reasonable access to any and all information Trimark
requests in connection with the exploitation of the Pictures including, but not
limited to, the names, addresses and any other information of individuals and/or
entities viewing the Pictures, provided that CN shall not be required to provide
any such information in violation of its company policies with respect to the
privacy of its customers or associates. CN shall maintain a registration
database to facilitate any such access.
N. DELIVERY
As available, Trimark shall lend to CN a master (the "Original Master")
video tape, disc or film element of each Picture and shall provide to CN one (1)
VHS screening cassette of each Picture. CN shall have the obligation to create
one or more digitized versions of the Master (each of which shall be referred to
herein as a "Digital Master" and collectively as the "Digital Masters") for use
in transmitting the Pictures via the Internet Rights and, after having created
the Digital Master, shall return the Original Master to Trimark. The foregoing
notwithstanding, in the event that Trimark does not have, with respect to any
particular Picture, an Original Master in addition to its original protection
master of said Picture, then CN shall be required to have an Original Master
manufactured, at CN's sole cost and expense. As between CN and Trimark, CN shall
advance one hundred percent (100%) of the cost of creating and
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EXHIBIT 10.120 (CONTINUED)
maintaining the Digital Masters. At the conclusion of the Term, CN shall return
the Digital Masters and any all other material created by CN in connection with
the Pictures to Trimark. Notwithstanding anything herein to the contrary, CN's
possession of the Digital Masters shall not transfer the copyright to the
Picture except as otherwise set forth herein.
O. GENERAL
1. Trimark's rights and remedies shall be cumulative, and none of them
shall be exclusive of any other allowed by law, except that Trimark shall not
seek injunctive relief except in the event of CN's exploitation in excess of the
rights granted hereunder. If Trimark defaults, CN shall not be entitled to
terminate or rescind this Deal Memo, nor to obtain injunctive relief with
respect to the exercise by Trimark of the rights granted hereunder; CN's sole
remedy shall be an action at law for damages.
2. This Agreement is governed and controlled by the laws of the State of
California.
3. Trimark is hereby granted a continuing security interest in to the
rights granted to CN to secure CN's obligation under the terms of this
Agreement.
4. All items not addressed above shall be negotiated in good faith pursuant to
the parties standard business practices.
AGREED TO AND ACCEPTED BY:
TRIMARK PICTURES, INC. CINEMANOW, INC.
- ------------------------- -------------------------
Signature Signature
- ------------------------- -------------------------
Print Name Print Name
- ------------------------- -------------------------
Title Title
- ------------------------- -------------------------
Date Date
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Mark Amin #1
EXHIBIT 10.121
CINEMANOW, INC.
2000 Stock Option Plan
Nonstatutory Stock Option Agreement
CinemaNow, Inc., a California corporation (the "Company"), hereby enters
into this agreement (the "Option Agreement") with Mark Amin (the "Optionee") on
this 1st day of March, 2000, whereby the Company grants to the Optionee the
right and option to purchase an aggregate of 700,000 shares of Common Stock (the
"Shares") of the Company. This Option is in all respects subject to the terms,
definitions and provisions of the CinemaNow, Inc. 2000 Stock Option Plan (the
"Plan") adopted by the Company and incorporated herein by reference. The terms
defined in the Plan shall have the same meanings herein.
1. Nature of the Option. This Option is intended to be a nonstatutory stock
option and is NOT intended to be an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or to
otherwise qualify for any special tax benefits to the Optionee.
2. Exercise Price. The exercise price is $.7425 per Share, which price is
not less than 100% of the Fair Market Value thereof on the date this Option is
granted.
3. Method of Payment. The consideration to be paid for the Shares to be
issued upon exercise of this Option shall consist entirely of cash or check
payable to the Company or such other consideration and method of payment
permitted under any laws to which the Company is subject and which is approved
by the Board.
4. Exercise of Option. This Option shall be exercisable during its term
only in accordance with the terms and provisions of the Plan and this Option as
follows:
(a) This Option shall vest and be exercisable cumulatively as
follows: 33% of the Option shall vest on the first anniversary of the date of
grant (the "First Anniversary") and the remaining 66% of the Option shall vest
in two (2) equal annual installments from the First Anniversary, as long as the
Optionee continues to serve as an Employee. The Optionee may exercise the
exercisable portion of this Option in whole or in part at any time during his or
her employment with the Company, provided that Optionee's Continuous Status as
an Employee has not terminated since the grant of this Option. However, an
Option may not be exercised for a fraction of a Share. In the event of the
Optionee's termination of employment with the Company, or the Optionee's
disability or death, the provisions of Sections 7 or 8 below shall apply to any
exercise of this Option.
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EXHIBIT 10.121 (CONTINUED)
(b) This Option shall be exercisable by written notice which shall
state the election to exercise this Option, the number of Shares in respect to
which this Option is being exercised and such other representations and
agreements as may be required by the Company hereunder or pursuant to the
provisions of the Plan. Such written notice shall be signed by the Optionee and
shall be delivered in person or by certified mail to the Secretary of the
Company or such other person as may be designated by the Company. The written
notice shall be accompanied by payment of the purchase price and an executed
Stock Purchase Agreement in the form of Exhibit 1 hereto. The certificate or
certificates for the Shares as to which this Option is exercised shall be
registered in the name of the Optionee.
(c) No rights of a shareholder shall exist with respect to the Shares
under this Option as a result of the mere grant of this Option or the exercise
of this Option. Such rights shall exist only after issuance of a stock
certificate in accordance with Section 7(i) of the Plan.
5. Restrictions on Exercise. This Option may not be exercised until such
time as the Plan has been approved by the shareholders of the Company as set
forth in Section 13 of the Plan, or if the issuance of Shares upon Optionee's
exercise or the method of payment of consideration for such Shares would
constitute a violation of any applicable Federal or state securities law or
other applicable law or regulation. As a condition to the exercise of this
Option, the Company may require the Optionee to make any representation and
warranty to the Company as may be required by any applicable law or regulation.
6. Investment Representations. In connection with the acquisition of this
Option, the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, will be acquiring the Shares for investment in his or her own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons and by
reason of his or her business or financial experience has, and could be
reasonably assumed to have, the capacity to evaluate the merits and risks of
purchasing Common Stock of the Company and to make an informed investment
decision with respect thereto and to protect the Optionee's interests in
connection with the acquisition of this Option and the Shares.
7. Termination of Employment.
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EXHIBIT 10.121 (CONTINUED)
(a) If the Optionee ceases to serve as an Employee for any reason
other than death, permanent and total disability (within the meaning of Section
22(e)(3) of the Code) or Termination for Cause and thereby terminates his or her
Continuous Status as an Employee, the Optionee shall have the right to exercise
this Option at any time within 30 days after the date of such termination to the
extent that the Optionee was entitled to exercise this Option at the date of
such termination. The Committee may at any time and from time-to-time prior to
the termination of this Option, with the consent of Optionee, extend the period
of time during which the Optionee may exercise this Option following the date
the Optionee ceases to serve as an Employee for a period which shall not exceed
an aggregate of six months; provided, however, that this Option shall remain
exercisable only to the extent that the Optionee was entitled to exercise this
Option at the date of such termination. To the extent that the Optionee was not
entitled to exercise this Option at the date of termination, or to the extent
this Option is not exercised within the time specified herein, this Option shall
terminate. Notwithstanding the foregoing, this Option shall not be exercisable
after the expiration of the term set forth in Section 9 hereof.
(b) If an Optionee's Continuous Status as an Employee terminates due
to his or her Termination for Cause, the Option shall terminate immediately.
Notwithstanding the foregoing, this Option shall not be exercisable after the
expiration of the term set forth in Section 9 hereof.
8. Death or Disability. If the Optionee ceases to serve as an Employee due
to death or permanent and total disability (within the meaning of Section
22(e)(3) of the Code), this Option may be exercised at any time within six
months after the date of death or termination of employment due to disability,
in the case of death, by the Optionee's estate or by a person who acquired the
right to exercise this Option by bequest or inheritance, or, in the case of
disability, by the Optionee, but in any case only to the extent the Optionee was
entitled to exercise this Option at the date of such termination. To the extent
that the Optionee was not entitled to exercise this Option at the date of
termination, or to the extent this Option is not exercised within the time
specified herein, this Option shall terminate. Notwithstanding the foregoing,
this Option shall not be exercisable after the expiration of the term set forth
in Section 9 hereof.
9. Term of Option. This Option may not be exercised more than ten (10)
years from the date of the grant of this Option and may be exercised during such
term only in accordance with the Plan and the terms of this Option Agreement.
Notwithstanding any provision in the Plan with respect to the post-employment
exercise of this Option, this Option may not be exercised after the expiration
of its term.
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EXHIBIT 10.121 (CONTINUED)
10. Withholding Upon Exercise of Option. The Company reserves the right to
withhold, in accordance with any applicable laws, from any consideration payable
to Optionee any taxes required to be withheld by Federal, state or local law as
a result of the grant or exercise of this Option or the sale or other
disposition of the Shares issued upon exercise of this Option. If the amount of
any consideration payable to the Optionee is insufficient to pay such taxes or
if no consideration is payable to the Optionee, upon the request of the Company,
the Optionee shall pay to the Company in cash an amount sufficient for the
Company to satisfy any Federal, state or local tax withholding requirements it
may incur, as a result of the grant or exercise of this Option or the sale or
other disposition of the Shares issued upon the exercise of this Option.
11. Nontransferability of Option. Except as otherwise determined by the
Board or Committee at the date of grant or otherwise, this Option may not be
sold, pledged, assigned, hypothecated, gifted, transferred or disposed of in any
manner either voluntarily or involuntarily by operation of law, other than by
will or by the laws of descent or distribution. Subject to the foregoing and the
terms of the Plan, the terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
12. No Right of Employment. Neither this Option nor the Plan shall confer
upon the Optionee any right to continue in the employment of the Company or
limit in any respect the right of the Company to discharge the Optionee at any
time, with or without cause and with or without notice.
13. Miscellaneous.
(a) SUCCESSORS AND ASSIGNS. This Option Agreement shall bind and
inure only to the benefit of the parties to this Option Agreement (the
"Parties") and their respective successors and assigns.
(b) NO THIRD-PARTY BENEFICIARIES. Nothing in this Option Agreement is
intended to confer any rights or remedies on any persons other than the Parties
and their respective successors or assigns. Nothing in this Option Agreement is
intended to relieve or discharge the obligation or liability of third persons to
any Party. No provision of this Option Agreement shall give any third person any
right of subrogation or action over or against any Party.
(c) AMENDMENTS. (i) The Board reserves the right to amend the terms
and provisions of this Option without the Optionee's consent to comply with any
Federal or state securities law.
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EXHIBIT 10.121 (CONTINUED)
(ii) Except as specifically provided in subsection (i) above, this
Option Agreement shall not be changed or modified, in whole or in part, except
by supplemental agreement signed by the Parties. Either Party may waive
compliance by the other Party with any of the covenants or conditions of this
Option Agreement, but no waiver shall be binding unless executed in writing by
the Party making the waiver. No waiver of any provision of this Option Agreement
shall be deemed, or shall constitute, a waiver of any other provision, whether
or not similar, nor shall any waiver constitute a continuing waiver. Any consent
under this Option Agreement shall be in writing and shall be effective only to
the extent specifically set forth in such writing. For the protection of the
Parties, amendments, waivers and consents that are not in writing and executed
by the Party to be bound may be enforced only if they are detrimentally relied
upon and proved by clear and convincing evidence. Such evidence shall not
include any alleged reliance.
(d) NOTICE. Any notice, instruction or communication required or
permitted to be given under this Option Agreement to any Party shall be in
writing and shall be deemed given when actually received or, if earlier, five
days after deposit in the United States mail by certified or express mail,
return receipt requested, first class postage prepaid, addressed to the
principal office of such Party or to such other address as such Party may
request by written notice.
(e) GOVERNING LAW. To the extent that Federal laws do not otherwise
control, the Plan and this Option Agreement and all determinations made or
actions taken pursuant hereto shall be governed by the laws of the state of
California, without regard to the conflict of laws rules thereof.
(f) ENTIRE AGREEMENT. This Option Agreement (including the exhibit
hereto) and the Plan constitute the entire agreement between the Parties with
regard to the subject matter hereof. This Option Agreement supersedes all
previous agreements between the Parties, and there are now no agreements,
representations or warranties between the Parties, other than those set forth
herein.
(g) SEVERABILITY. If any provision of this Option Agreement or the
application of such provision to any person or circumstances is held invalid or
unenforceable, the remainder of this Option Agreement, or the application of
such provision to persons or circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby.
(h) OPTIONEE REPRESENTATION. The Optionee acknowledges receipt of the
Plan, a copy of which is attached hereto, and hereby accepts the grant of this
Option subject to all of the terms and provisions thereof.
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EXHIBIT 10.121 (CONTINUED)
IN WITNESS WHEREOF, this Option Agreement has been duly executed on behalf
of the Company by an authorized representative of the Company and by the
Optionee as of the date and year first written above.
DATE OF GRANT: March 1, 2000
CinemaNow, Inc.
a California corporation
By:______________________________________
Title:___________________________________
Optionee:
_________________________________________
Mark Amin
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EXHIBIT 10.121 (CONTINUED)
THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXECUTION OF THIS
OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE, TRANSFER OR
DISTRIBUTION THEREOF. NO SUCH SALE, TRANSFER OR DISTRIBUTION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATING THERETO OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS OPTION ARE SUBJECT
TO A RIGHT OF FIRST REFUSAL AND A REPURCHASE RIGHT AND MAY BE TRANSFERRED ONLY
IN ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE AGREEMENT TO BE ENTERED INTO
BETWEEN THE HOLDER OF THIS OPTION AND THE COMPANY UPON EXERCISE OF THIS OPTION,
A COPY OF WHICH AGREEMENT IS ON FILE WITH THE SECRETARY OF THE COMPANY.
7
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EXHIBIT 10.121 (CONTINUED)
[For Use upon Exercise of Options]
EXHIBIT 1
CINEMANOW, INC.
STOCK PURCHASE AGREEMENT
This Agreement is made as of the ______ day of _______________, 200__, by
and between CinemaNow, Inc., a California corporation (the "Company"), and Mark
Amin ("Optionee"). Unless the context herein otherwise requires, capitalized
terms used herein shall have the same meaning as such capitalized terms have
under the Company's 2000 Stock Option Plan.
R E C I T A L S
A. Optionee was granted a Stock Option (the "Option") on March 1, 2000,
pursuant to the Company's 2000 Stock Option Plan (the "Plan"), the terms and
conditions of which are incorporated herein by reference.
B. Pursuant to said Option, Optionee was granted the right to purchase
700,000 shares of the Company's Common Stock, as adjusted in accordance with the
Plan (the "Optioned Shares").
C. Optionee has elected to exercise the Option to purchase __________ of
such Optioned Shares (herein referred to as the "Shares") under the Stock Option
Agreement evidencing such Option (the "Option Agreement").
D. As required by the Option Agreement, as a condition to Optionee's
exercise of his or her Option, Optionee must execute this Agreement which gives
the Company the right of first refusal upon transfer of the Shares and right of
repurchase of the Shares.
NOW, THEREFORE, IT IS AGREED between the parties as follows:
1. Exercise of Option. Subject to the terms and conditions hereof, Optionee
hereby agrees to exercise his or her Option or a portion thereof to purchase
__________ Shares at $.7425 per Share, payable in accordance with the terms and
provisions of the Option Agreement.
2. Company's Right to Repurchase Shares.
(a) If an Optionee ceases to serve as an Employee for any reason, the
Company shall have the right to repurchase any or all of the Shares purchased by
Optionee hereunder, at a price to be determined as set forth below. Such right
on the part of the Company shall commence upon the last day of such Optionee's
Continuous Status as an Employee (the "Termination Date") and
8
<PAGE>
EXHIBIT 10.121 (CONTINUED)
shall expire on the 90th calendar day after the Termination Date (or in the case
of Common Stock issued upon exercise of Options after the Termination Date,
within 90 calendar days after the date of exercise).
(b) The repurchase price shall be determined as follows: If an
Optionee ceases to serve as an Employee for any reason during the five (5) year
period following the date of grant, the repurchase price shall equal the
exercise price of the Option times the number of Shares to be repurchased,
provided that the right to repurchase at the exercise price lapses at the rate
of twenty percent (20%) of the Shares per year over such five (5) year period
(without respect to the date the Option was exercised or became exercisable).
For Shares for which the right to repurchase at the exercise price pursuant to
the foregoing sentence has lapsed or if the termination of employment occurs
after the fifth anniversary of the date of grant, the repurchase price shall
equal 100% of the Fair Market Value of the Shares to be repurchased on the
Termination Date. The repurchase price may be paid by the Company by cash,
check, evidence of cancellation of indebtedness of Optionee to the Company, or
some combination thereof, as the Company acting in its sole discretion may
determine.
3. Right of First Refusal. Before any Shares registered in the name of
Optionee may be sold or transferred (including transfer by operation of law),
such Shares shall first be offered to the Company at the same price, and upon
the same terms (or terms as similar as reasonably possible), in the following
manner:
(a) Optionee shall deliver a notice ("Notice") to the Company stating
(i) his or her bona fide intention to sell or transfer such Shares, (ii) the
number of such Shares to be sold or transferred, (iii) the price for which he or
she proposes to sell or transfer such Shares, and (iv) the name of the proposed
purchaser or transferee.
(b) Within 30 days after receipt of the Notice, the Company or its
assignee may elect to purchase any or all Shares to which the Notice refers, at
the price per share and on the same terms (or terms as similar as reasonably
possible) specified in the Notice.
(c) If all or a portion of the Shares to which the Notice refers are
not elected to be purchased pursuant to Section 3(b) hereof, Optionee may sell
the Shares not purchased by the Company to any person named in the Notice at the
price and terms specified in the Notice or at a higher price, provided that such
sale or transfer is consummated within 60 days of the date of said Notice to the
Company, and, provided further, that any such sale is in accordance with all the
terms and conditions hereof.
In the event of any transfer by operation of law or other involuntary transfer
(including, but not limited to, by will or by
9
<PAGE>
EXHIBIT 10.121 (CONTINUED)
the laws of descent or distribution) where there is no price established as a
matter of law, the Company shall have the right to repurchase all of the Shares
purchased by Optionee hereunder, at a price to be determined as set forth in
Section 2(b) above. In such event, Optionee or Optionee's estate shall notify
the Company promptly after the happening of the event giving rise to the
involuntary transfer. Within 30 days after receipt of such Notice, the Company
or its assignee may elect to purchase any or all Shares to which the Notice
refers.
4. Termination of Repurchase Right and Right of First Refusal. Optionee's
obligations and the Company's rights under Sections 2 and 3 above shall
terminate upon the first sale of Common Stock by the Company to the public which
is effected pursuant to a registration statement filed with, and declared
effective by, the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Act").
5. Assignment. The Company may assign its rights under Sections 2 and 3
hereof to one or more persons or entities who shall have the right to exercise
such rights in his, her or its own name and for his, her or its own account. If
the exercise of any such right requires the consent of the California Securities
Commissioner or the consent of the Securities Commissioner, or the equivalent,
of another state, the parties agree to cooperate in requesting such consent.
6. Adjustment. If, from time to time during the term of the repurchase
right available pursuant to Section 2 hereof or the right of first refusal
available pursuant to Section 3 hereof:
(a) There is any stock dividend or liquidating dividend of cash
and/or property, stock split or other change in the character or amount of any
of the outstanding securities of the Company; or
(b) There is any consolidation, merger or sale of all or
substantially all of the assets of the Company;
then, in such event, any and all new, substituted or additional securities or
other property to which Optionee is entitled by reason of his or her ownership
of Shares shall be immediately subject to the right of repurchase set forth in
Section 2 hereof and right of first refusal set forth in Section 3 hereof and be
included in the word "Shares" for all purposes with the same force and effect as
the Shares presently subject to such right of first refusal (provided, however,
if such consolidation, merger or sale of all, or substantially all, of the
assets of the Company causes a termination of the right of repurchase set forth
in Section 2 hereof and right of first refusal set forth in Section 3 hereof,
then such new, substituted or additional securities or other property shall not
be included in the word "Shares" for the purposes of this Section).
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<PAGE>
EXHIBIT 10.121 (CONTINUED)
7. Legends. All certificates representing any Shares of the Company subject
to the provisions of this Agreement shall have endorsed thereon legends in
substantially the following form unless in the opinion of the Company's counsel
such legends are no longer necessary:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL AND A REPURCHASE RIGHT AND MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE AGREEMENT BETWEEN THE COMPANY AND
THE REGISTERED HOLDER, A COPY OF WHICH AGREEMENT IS ON FILE WITH THE SECRETARY
OF THE COMPANY."
(b) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER THE
SECURITIES LAWS OF ANY STATE, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH
A VIEW TO, OR IN CONNECTION WITH, THE SALE, TRANSFER OR DISTRIBUTION THEREOF. NO
SUCH SALE, TRANSFER OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
8. Investment Representations. Unless the Shares have been registered under
the Act, in which event the Company will so advise Optionee in writing, Optionee
agrees, represents and warrants, in connection with the proposed purchase of the
Shares, as follows:
(a) Optionee represents and warrants that he or she is purchasing the
Shares solely for Optionee's own account for investment and not with a view to,
or for resale in connection with any distribution thereof within the meaning of
the Act. Optionee further represents that he or she does not have any present
intention of selling, offering to sell or otherwise disposing of or distributing
the Shares or any portion thereof; and that the entire legal and beneficial
interest of the Shares Optionee is purchasing is being purchased for, and will
be held for the account of, Optionee only and neither in whole nor in part for
any other person.
(b) Optionee represents and warrants that he or she is aware of the
Company's business affairs and financial condition and has acquired sufficient
information about the Company to reach an informed and knowledgeable decision to
acquire the Shares. Optionee further represents that he or she has a preexisting
personal or business relationship with the officers and directors of the Company
and that Optionee has such knowledge and experience in business and financial
matters to enable him or her to evaluate the risks of the prospective investment
and to make an informed investment decision with respect thereto and that he or
she has the capacity to protect his or her own interests in connection with the
purchase of the Shares. Optionee further represents and warrants that Optionee
has discussed the Company and its plans,
11
<PAGE>
EXHIBIT 10.121 (CONTINUED)
operations and financial condition with its officers, has received all such
information as he or she deems necessary and appropriate to enable Optionee to
evaluate the financial risk inherent in making an investment in the Shares and
has received satisfactory and complete information concerning the business and
financial condition of the Company in response to all inquiries in respect
thereof.
(c) Optionee represents and warrants that he or she realizes that
Optionee's purchase of the Shares will be a speculative investment and that he
or she is able, without impairing Optionee's financial condition, to hold the
Shares for an indefinite period of time and to suffer a complete loss on his or
her investment.
(d) Optionee represents and warrants that the Company has disclosed
to him or her in writing that: (i) the sale of the Shares has not been
registered under the Act, and the Shares must be held indefinitely unless a
transfer of them is subsequently registered under the Act or an exemption from
such registration is available, and the Company is under no obligation to
register the Shares; and (ii) the Company shall make a notation in its records
of the aforementioned restrictions on transfer and legends.
(e) Optionee represents and warrants that he or she is aware of the
provisions of Rule 144, promulgated under the Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly, from the issuer thereof (or an affiliate of such issuer) in a
non-public offering subject to the satisfaction of certain conditions,
including, among other things: the resale occurring not less than one year from
the date Optionee has purchased and paid for the Shares; the availability of
certain public information concerning the Company; the sale being through a
broker in an unsolicited "brokers' transaction" or in a transaction directly
with a market maker (as such term is defined under the Securities Exchange Act
of 1934); and that any sale of the Shares may be made by Optionee, if he or she
is an affiliate of the Company, only in limited amounts during any three-month
period not exceeding specified limitations. Optionee further represents that
Optionee understands that at the time he or she wishes to sell the Shares there
may be no public market upon which to make such a sale, and that, even if such a
public market then exists, the Company may not be satisfying the current public
information requirements of Rule 144, and that, in such event, he or she may be
precluded from selling the Shares under Rule 144 even if the one-year minimum
holding period had been satisfied. Optionee represents that he or she
understands that in the event the applicable requirements of Rule 144 are not
satisfied, registration under the Act, compliance with Regulation A or some
other registration exemption will be required; and that, notwithstanding the
fact that Rule 144 is not exclusive, the Staff of the SEC has expressed its
opinion that persons proposing to sell private placement securities other than
in a registered offering and otherwise than pursuant to Rule 144
12
<PAGE>
EXHIBIT 10.121 (CONTINUED)
will have a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that such persons and
their respective brokers who participate in such transactions do so at their own
risk.
(f) Without in any way limiting Optionee's representations and
warranties set forth herein, Optionee further agrees that he or she shall in no
event make any disposition of all or any portion of the Shares which Optionee is
purchasing unless and until:
(i) There is then in effect a Registration Statement under the
Act covering such proposed disposition and such disposition is made in
accordance with said Registration Statement; or
(ii) Optionee shall have (x) notified the Company of the proposed
disposition and furnished the Company with a detailed statement of the
circumstances surrounding the proposed disposition, and (y) furnished
the Company with an opinion of his or her own counsel to the effect
that such disposition will not require registration of such Shares
under the Act, and such opinion of his or her counsel shall have been
concurred in by counsel for the Company and the Company shall have
advised Optionee of such concurrence.
9. Escrow. As security for his or her faithful performance of the terms of
this Agreement and to insure the availability for delivery of Optionee's Shares
upon exercise of the Company's right to repurchase and right of first refusal
herein provided for, Optionee agrees to deliver to and deposit with the
Secretary of the Company or the Secretary's nominee (in either case, the "Escrow
Agent"), as Escrow Agent in this transaction, two Assignments Separate From
Certificate duly endorsed (with date and number of shares blank) in the form
attached hereto as Attachment A, together with the certificate or certificates
evidencing the Shares; said documents are to be held by the Escrow Agent and
delivered to said Escrow Agent pursuant to the Joint Escrow Instructions of the
Company and Optionee set forth in Attachment B attached hereto and incorporated
herein by this reference, which instructions shall also be delivered to the
Escrow Agent at the closing hereunder.
10. Restriction on Alienation. Optionee agrees that he or she will not
sell, transfer, gift, pledge, hypothecate, assign or otherwise dispose of any of
the Shares or any right or interest therein, whether voluntary, by operation of
law or otherwise, without the prior written consent of the Company, except a
transfer which meets the requirements of this Agreement and complies with all
applicable law. Any sale, transfer, gift, pledge, hypothecation, assignment or
purported sale, transfer or other disposition of such Shares by Optionee shall
be null and
13
<PAGE>
EXHIBIT 10.121 (CONTINUED)
void unless the terms, conditions and provisions of this Agreement are strictly
observed.
11. Lockup Agreement. Optionee, if requested by the Company and an
underwriter of Common Stock or other securities of the Company, agrees not to
sell or otherwise transfer or dispose of any Common Stock (or other securities)
of the Company held by Optionee during the period not to exceed 180 days as
requested by the managing underwriter following the effective date of a
registration statement of the Company filed under the Act, provided that all
officers and directors of the Company are required or agree to enter into
similar agreements. Such agreement shall be in writing in a form satisfactory to
the Company and such underwriter. The Company may impose stop-transfer
instructions with respect to the shares or other securities subject to the
foregoing restriction until the end of such period.
12. Miscellaneous.
(a) The Company shall not be required (i) to transfer on its books
any Shares which shall have been sold or transferred in violation of any of the
provisions set forth in this Agreement, or (ii) to treat as owner of such Shares
or to accord the right to vote as such owner or to pay dividends to any
transferee to whom such Shares shall have been so transferred.
(b) Subject to the provisions of this Agreement, Optionee shall,
during the term of this Agreement, exercise all rights and privileges of a
shareholder of the Company with respect to the purchased Shares.
(c) The parties agree to execute such further instruments and to take
such further action as may reasonably be necessary to carry out the intent of
this Agreement.
(d) Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail with
postage and fees prepaid, addressed to the other party hereto at such party's
address hereinafter shown below such party's signature or at such other address
as such party may designate by ten days advance written notice to the other
party hereto.
(e) This Agreement shall inure to the benefit of the successors and
assigns of the Company and, subject to all compliance with the restrictions on
transfer herein set forth, be binding upon Optionee, his or her heirs,
executors, administrators and permitted successors and assigns.
(f) This Agreement shall be construed under the laws of the State of
California and constitutes the entire Agreement of the parties with respect to
the subject matter hereof superseding
14
<PAGE>
EXHIBIT 10.121 (CONTINUED)
all prior written or oral agreements, and no amendment or addition hereto shall
be deemed effective unless agreed to in writing by the parties hereto.
(g) Optionee agrees that, until a public market for the Shares
exists, the Shares cannot be readily purchased, sold or evaluated in the open
market, that they have a unique and special value, and that the Company and its
shareholders would be irreparably damaged if the terms of this Agreement were
not capable of being specifically enforced and, for this reason, among others,
Optionee agrees that the Company shall be entitled to a decree of specific
performance of the terms hereof or an injunction restraining violation of this
Agreement, said right to be in addition to any other remedies available to the
Company.
(h) If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless continue in full force and effect without being
impaired or invalidated in any way and shall be construed in accordance with the
purposes and tenor and effect of this Agreement.
(i) Nothing in this Agreement shall be deemed to create any term of
employment or affect in any manner whatsoever the right or power of the Company
to terminate Optionee's employment, for any reason, with or without cause.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CinemaNow, Inc., a California corporation
By:_______________________________________
Title:____________________________________
Address:__________________________________
__________________________________
OPTIONEE
Signature:________________________________
Address: ________________________________
________________________________
15
<PAGE>
EXHIBIT 10.121 (CONTINUED)
SPOUSAL CONSENT
The undersigned spouse of Optionee acknowledges that he or she has read the
foregoing Agreement and agrees that his or her interest, if any, in the Shares
subject to the foregoing Agreement shall be irrevocably bound by this Agreement
and further understands and agrees that any community property interest, if any,
in the Shares shall be similarly bound by this Agreement.
Date:___________________________ _______________________________________
Spouse of Optionee
Print Spouse's Name:___________________
16
<PAGE>
EXHIBIT 10.121 (CONTINUED)
ATTACHMENT A TO STOCK PURCHASE AGREEMENT
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED _____________________________ hereby sells, assigns and
transfers unto ______________________________ ____________________ (____)
shares of the Common Stock (the "Shares") of CinemaNow, Inc., a California
corporation (the "Company"), standing in the undersigned's name on the books
of the Company represented by Certificate No. ________ herewith, and does
hereby irrevocably constitute and appoint________________________________
attorney to transfer the Shares on the books of the Company with full power
of substitution in the premises.
Dated:_______________________________________
Signature:______________________________
Printed Name:___________________________
17
<PAGE>
EXHIBIT 10.121 (CONTINUED)
ATTACHMENT B TO STOCK PURCHASE AGREEMENT
JOINT ESCROW INSTRUCTIONS
_______________, 200_
Corporate Secretary
CinemaNow, Inc.
4553 Glencoe Avenue, Suite 200
Marina del Rey, CA 90292
Dear Sir:
As Escrow Agent for both CinemaNow, Inc., a California corporation (the
"Company"), and the undersigned grantee of an option to purchase stock of the
Company ("Optionee"), you are hereby authorized and directed to hold the
documents delivered to you pursuant to the terms of that certain Stock Purchase
Agreement (the "Agreement"), dated as of _______________, 200__, to which a copy
of these Joint Escrow Instructions is attached as Attachment B, in accordance
with the following instructions:
1. In the event the Company and/or any assignee of the Company (referred to
collectively for convenience herein as the "Company") shall elect to exercise
the repurchase right or the right of first refusal (collectively, the
"Repurchase Rights") set forth in the Agreement, the Company shall give to
Optionee and you a written notice specifying the number of shares of stock to be
purchased, the purchase price and the time for a closing hereunder at the
principal office of the Company. Optionee and the Company hereby irrevocably
authorize and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.
2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company against the
simultaneous delivery to you of the purchase price (by check, evidence of
cancellation of indebtedness of Optionee to the Company or a promissory note, or
some combination thereof) for the number of shares of stock being purchased
pursuant to the exercise of the Repurchase Rights.
3. Optionee irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said stock as provided in the Agreement. Optionee
does hereby irrevocably constitute and appoint you as his or her
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all stock certificates, stock assignments or other
18
<PAGE>
EXHIBIT 10.121 (CONTINUED)
documents necessary or appropriate to make such securities negotiable and to
complete any transaction herein contemplated.
4. This escrow shall terminate at such time as there are no longer any
shares of stock subject to the Repurchase Rights under the Agreement.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities or other property belonging to Optionee,
you shall deliver all of same to Optionee and shall be discharged of all further
obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked only
by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Optionee while acting in good faith and
in the exercise of your own good judgment, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.
8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law, and you are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree of any court,
you shall not be liable to either of the other parties hereto or to any other
person, firm or corporation by reason of such compliance, notwithstanding any
such order, judgment or decree being subsequently reversed, modified, annulled,
set aside, vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under any
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. You shall be entitled to employ such legal counsel (including without
limitation Bryan Cave LLP) and other experts as you may deem necessary or proper
to advise you in connection with your obligations hereunder, may rely upon the
advice of such
19
<PAGE>
EXHIBIT 10.121 (CONTINUED)
counsel, and may pay such counsel reasonable compensation therefor.
12. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be Secretary of the Company or if you shall resign by written
notice to each of the other parties hereto. In the event of any such
termination, the Company shall appoint any officer of the Company as successor
Escrow Agent.
13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
dispute shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses, or at such other address as a party may designate by ten
days advance written notice to each of the other parties hereto.
COMPANY: CinemaNow, Inc.
4553 Glencoe Avenue, Suite 200
Marina del Rey, CA 90292
Attention: President
OPTIONEE:
______________________________
______________________________
______________________________
ESCROW AGENT: CinemaNow, Inc.
4553 Glencoe Avenue, Suite 200
Marina del Rey, CA 90292
Attention: Corporate Secretary
16. By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.
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<PAGE>
EXHIBIT 10.121 (CONTINUED)
17. This instrument shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
Very truly yours,
CinemaNow, Inc., a California corporation
By:_________________________________________
Title:______________________________________
OPTIONEE
____________________________________________
Signature:__________________________________
Print Name:_________________________________
Agreed to and accepted as of the date set forth above.
ESCROW AGENT
Signature:___________________________________
Print Name:__________________________________
21
<PAGE>
Mark Amin #2
EXHIBIT 10.122
CINEMANOW, INC.
2000 Stock Option Plan
Nonstatutory Stock Option Agreement
CinemaNow, Inc., a California corporation (the "Company"), hereby enters
into this agreement (the "Option Agreement") with Mark Amin (the "Optionee") on
this 1st day of March, 2000, whereby the Company grants to the Optionee the
right and option to purchase an aggregate of 700,000 shares of Common Stock (the
"Shares") of the Company. This Option is in all respects subject to the terms,
definitions and provisions of the CinemaNow, Inc. 2000 Stock Option Plan (the
"Plan") adopted by the Company and incorporated herein by reference. The terms
defined in the Plan shall have the same meanings herein.
1. Nature of the Option. This Option is intended to be a nonstatutory
stock option and is NOT intended to be an incentive stock option within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or to otherwise qualify for any special tax benefits to the Optionee.
2. Exercise Price. The exercise price is $2.00 per Share, which price is
not less than 100% of the Fair Market Value thereof on the date this Option is
granted.
3. Method of Payment. The consideration to be paid for the Shares to be
issued upon exercise of this Option shall consist entirely of cash or check
payable to the Company or such other consideration and method of payment
permitted under any laws to which the Company is subject and which is approved
by the Board.
4. Exercise of Option. This Option shall be exercisable during its term
only in accordance with the terms and provisions of the Plan and this Option as
follows:
(a) This Option shall vest and be exercisable cumulatively as
follows: 33% of the Option shall vest on the first anniversary of the date
of grant (the "First Anniversary") and the remaining 66% of the Option
shall vest in two (2) equal annual installments from the First Anniversary, as
long as the Optionee continues to serve as an Employee. The Optionee may
exercise the exercisable portion of this Option in whole or in part at any time
during his or her employment with the Company, provided that Optionee's
Continuous Status as an Employee has not terminated since the grant of this
Option. However, an Option may not be exercised for a fraction of a Share. In
the event of the Optionee's termination of employment with the Company, or the
Optionee's disability or death, the provisions of Sections 7 or 8 below shall
apply to any exercise of this Option.
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<PAGE>
EXHIBIT 10.122 (CONTINUED)
(b) This Option shall be exercisable by written notice which shall
state the election to exercise this Option, the number of Shares in respect to
which this Option is being exercised and such other representations and
agreements as may be required by the Company hereunder or pursuant to the
provisions of the Plan. Such written notice shall be signed by the Optionee and
shall be delivered in person or by certified mail to the Secretary of the
Company or such other person as may be designated by the Company. The written
notice shall be accompanied by payment of the purchase price and an executed
Stock Purchase Agreement in the form of Exhibit 1 hereto. The certificate or
certificates for the Shares as to which this Option is exercised shall be
registered in the name of the Optionee.
(c) No rights of a shareholder shall exist with respect to the Shares
under this Option as a result of the mere grant of this Option or the exercise
of this Option. Such rights shall exist only after issuance of a stock
certificate in accordance with Section 7(i) of the Plan.
5. Restrictions on Exercise. This Option may not be exercised until such
time as the Plan has been approved by the shareholders of the Company as set
forth in Section 13 of the Plan, or if the issuance of Shares upon Optionee's
exercise or the method of payment of consideration for such Shares would
constitute a violation of any applicable Federal or state securities law or
other applicable law or regulation. As a condition to the exercise of this
Option, the Company may require the Optionee to make any representation and
warranty to the Company as may be required by any applicable law or regulation.
6. Investment Representations. In connection with the acquisition of this
Option, the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, will be acquiring the Shares for investment in his or her own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons and by
reason of his or her business or financial experience has, and could be
reasonably assumed to have, the capacity to evaluate the merits and risks of
purchasing Common Stock of the Company and to make an informed investment
decision with respect thereto and to protect the Optionee's interests in
connection with the acquisition of this Option and the Shares.
7. Termination of Employment.
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EXHIBIT 10.122 (CONTINUED)
(a) If the Optionee ceases to serve as an Employee for any reason
other than death, permanent and total disability (within the meaning of Section
22(e)(3) of the Code) or Termination for Cause and thereby terminates his or her
Continuous Status as an Employee, the Optionee shall have the right to exercise
this Option at any time within 30 days after the date of such termination to the
extent that the Optionee was entitled to exercise this Option at the date of
such termination. The Committee may at any time and from time-to-time prior to
the termination of this Option, with the consent of Optionee, extend the period
of time during which the Optionee may exercise this Option following the date
the Optionee ceases to serve as an Employee for a period which shall not exceed
an aggregate of six months; provided, however, that this Option shall remain
exercisable only to the extent that the Optionee was entitled to exercise this
Option at the date of such termination. To the extent that the Optionee was not
entitled to exercise this Option at the date of termination, or to the extent
this Option is not exercised within the time specified herein, this Option shall
terminate. Notwithstanding the foregoing, this Option shall not be exercisable
after the expiration of the term set forth in Section 9 hereof.
(b) If an Optionee's Continuous Status as an Employee terminates due
to his or her Termination for Cause, the Option shall terminate immediately.
Notwithstanding the foregoing, this Option shall not be exercisable after the
expiration of the term set forth in Section 9 hereof.
8. Death or Disability. If the Optionee ceases to serve as an Employee due
to death or permanent and total disability (within the meaning of Section
22(e)(3) of the Code), this Option may be exercised at any time within six
months after the date of death or termination of employment due to disability,
in the case of death, by the Optionee's estate or by a person who acquired the
right to exercise this Option by bequest or inheritance, or, in the case of
disability, by the Optionee, but in any case only to the extent the Optionee was
entitled to exercise this Option at the date of such termination. To the extent
that the Optionee was not entitled to exercise this Option at the date of
termination, or to the extent this Option is not exercised within the time
specified herein, this Option shall terminate. Notwithstanding the foregoing,
this Option shall not be exercisable after the expiration of the term set forth
in Section 9 hereof.
9. Term of Option. This Option may not be exercised more than ten (10)
years from the date of the grant of this Option and may be exercised during such
term only in accordance with the Plan and the terms of this Option Agreement.
Notwithstanding any provision in the Plan with respect to the post-employment
exercise of this Option, this Option may not be exercised after the expiration
of its term.
3
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EXHIBIT 10.122 (CONTINUED)
10. Withholding Upon Exercise of Option. The Company reserves the right to
withhold, in accordance with any applicable laws, from any consideration payable
to Optionee any taxes required to be withheld by Federal, state or local law as
a result of the grant or exercise of this Option or the sale or other
disposition of the Shares issued upon exercise of this Option. If the amount of
any consideration payable to the Optionee is insufficient to pay such taxes or
if no consideration is payable to the Optionee, upon the request of the Company,
the Optionee shall pay to the Company in cash an amount sufficient for the
Company to satisfy any Federal, state or local tax withholding requirements it
may incur, as a result of the grant or exercise of this Option or the sale or
other disposition of the Shares issued upon the exercise of this Option.
11. Nontransferability of Option. Except as otherwise determined by the
Board or Committee at the date of grant or otherwise, this Option may not be
sold, pledged, assigned, hypothecated, gifted, transferred or disposed of in any
manner either voluntarily or involuntarily by operation of law, other than by
will or by the laws of descent or distribution. Subject to the foregoing and the
terms of the Plan, the terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
12. No Right of Employment. Neither this Option nor the Plan shall
confer upon the Optionee any right to continue in the employment of the Company
or limit in any respect the right of the Company to discharge the Optionee at
any time, with or without cause and with or without notice.
13. Miscellaneous.
(a) SUCCESSORS AND ASSIGNs. This Option Agreement shall bind and inure
only to the benefit of the parties to this Option Agreement (the "Parties") and
their respective successors and assigns.
(b) NO THIRD-PARTY BENEFICIARIES. Nothing in this Option Agreement is
intended to confer any rights or remedies on any persons other than the Parties
and their respective successors or assigns. Nothing in this Option Agreement is
intended to relieve or discharge the obligation or liability of third persons to
any Party. No provision of this Option Agreement shall give any third person any
right of subrogation or action over or against any Party.
(c) AMENDMENTS. (i) The Board reserves the right to amend the
terms and provisions of this Option without the Optionee's consent to comply
with any Federal or state securities law.
(ii) Except as specifically provided in subsection (i) above,
this Option Agreement shall not be changed
4
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EXHIBIT 10.122 (CONTINUED)
or modified, in whole or in part, except by supplemental agreement signed by the
Parties. Either Party may waive compliance by the other Party with any of the
covenants or conditions of this Option Agreement, but no waiver shall be binding
unless executed in writing by the Party making the waiver. No waiver of any
provision of this Option Agreement shall be deemed, or shall constitute, a
waiver of any other provision, whether or not similar, nor shall any waiver
constitute a continuing waiver. Any consent under this Option Agreement shall be
in writing and shall be effective only to the extent specifically set forth in
such writing. For the protection of the Parties, amendments, waivers and
consents that are not in writing and executed by the Party to be bound may be
enforced only if they are detrimentally relied upon and proved by clear and
convincing evidence. Such evidence shall not include any alleged reliance.
(d) NOTICE. Any notice, instruction or communication required or
permitted to be given under this Option Agreement to any Party shall be in
writing and shall be deemed given when actually received or, if earlier, five
days after deposit in the United States mail by certified or express mail,
return receipt requested, first class postage prepaid, addressed to the
principal office of such Party or to such other address as such Party may
request by written notice.
(e) GOVERNING LAW. To the extent that Federal laws do not otherwise
control, the Plan and this Option Agreement and all determinations made or
actions taken pursuant hereto shall be governed by the laws of the state of
California, without regard to the conflict of laws rules thereof.
(f) ENTIRE AGREEMENT. This Option Agreement (including the exhibit
hereto) and the Plan constitute the entire agreement between the Parties with
regard to the subject matter hereof. This Option Agreement supersedes all
previous agreements between the Parties, and there are now no agreements,
representations or warranties between the Parties, other than those set forth
herein.
(g) SEVERABILITY. If any provision of this Option Agreement or
the application of such provision to any person or circumstances is held invalid
or unenforceable, the remainder of this Option Agreement, or the application of
such provision to persons or circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby.
(h) OPTIONEE REPRESENTATION. The Optionee acknowledges receipt of the
Plan, a copy of which is attached hereto, and hereby accepts the grant of this
Option subject to all of the terms and provisions thereof.
IN WITNESS WHEREOF, this Option Agreement has been duly executed on behalf
of the Company by an authorized representative
5
<PAGE>
EXHIBIT 10.122 (CONTINUED)
of the Company and by the Optionee as of the date and year first written above.
DATE OF GRANT: March 1, 2000
CinemaNow, Inc.
a California corporation
By:
------------------------------------
Title:
---------------------------------
Optionee:
---------------------------------------
Mark Amin
6
<PAGE>
EXHIBIT 10.122 (CONTINUED)
THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXECUTION OF THIS
OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE, TRANSFER OR
DISTRIBUTION THEREOF. NO SUCH SALE, TRANSFER OR DISTRIBUTION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATING THERETO OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS OPTION ARE SUBJECT
TO A RIGHT OF FIRST REFUSAL AND A REPURCHASE RIGHT AND MAY BE TRANSFERRED ONLY
IN ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE AGREEMENT TO BE ENTERED INTO
BETWEEN THE HOLDER OF THIS OPTION AND THE COMPANY UPON EXERCISE OF THIS OPTION,
A COPY OF WHICH AGREEMENT IS ON FILE WITH THE SECRETARY OF THE COMPANY.
7
<PAGE>
EXHIBIT 10.122 (CONTINUED)
[For Use upon Exercise of Options]
EXHIBIT 1
CINEMANOW, INC.
STOCK PURCHASE AGREEMENT
This Agreement is made as of the ______ day of _______________, 200__, by
and between CinemaNow, Inc., a California corporation (the "Company"), and Mark
Amin ("Optionee"). Unless the context herein otherwise requires, capitalized
terms used herein shall have the same meaning as such capitalized terms have
under the Company's 2000 Stock Option Plan.
R E C I T A L S
A. Optionee was granted a Stock Option (the "Option") on March 1, 2000,
pursuant to the Company's 2000 Stock Option Plan (the "Plan"), the terms and
conditions of which are incorporated herein by reference.
B. Pursuant to said Option, Optionee was granted the right to purchase
700,000 shares of the Company's Common Stock, as adjusted in accordance with the
Plan (the "Optioned Shares").
C. Optionee has elected to exercise the Option to purchase __________ of
such Optioned Shares (herein referred to as the "Shares") under the Stock Option
Agreement evidencing such Option (the "Option Agreement").
D. As required by the Option Agreement, as a condition to Optionee's
exercise of his or her Option, Optionee must execute this Agreement which gives
the Company the right of first refusal upon transfer of the Shares and right of
repurchase of the Shares.
NOW, THEREFORE, IT IS AGREED between the parties as follows:
1. Exercise of Option. Subject to the terms and conditions hereof, Optionee
hereby agrees to exercise his or her Option or a portion thereof to purchase
__________ Shares at $2.00 per Share, payable in accordance with the terms and
provisions of the Option Agreement.
2. Company's Right to Repurchase Shares.
(a) If an Optionee ceases to serve as an Employee for any reason, the
Company shall have the right to repurchase any or all of the Shares purchased by
Optionee hereunder, at a price to be determined as set forth below. Such right
on the part of the Company shall commence upon the last day of such Optionee's
Continuous Status as an Employee (the "Termination Date") and shall expire on
the 90th calendar day after the Termination Date (or in the case of Common Stock
issued upon exercise of Options
8
<PAGE>
EXHIBIT 10.122 (CONTINUED)
after the Termination Date, within 90 calendar days after the date of exercise).
(b) The repurchase price shall be determined as follows: If an
Optionee ceases to serve as an Employee for any reason during the five (5) year
period following the date of grant, the repurchase price shall equal the
exercise price of the Option times the number of Shares to be repurchased,
provided that the right to repurchase at the exercise price lapses at the rate
of twenty percent (20%) of the Shares per year over such five (5) year period
(without respect to the date the Option was exercised or became exercisable).
For Shares for which the right to repurchase at the exercise price pursuant to
the foregoing sentence has lapsed or if the termination of employment occurs
after the fifth anniversary of the date of grant, the repurchase price shall
equal 100% of the Fair Market Value of the Shares to be repurchased on the
Termination Date. The repurchase price may be paid by the Company by cash,
check, evidence of cancellation of indebtedness of Optionee to the Company, or
some combination thereof, as the Company acting in its sole discretion may
determine.
3. Right of First Refusal. Before any Shares registered in the name of
Optionee may be sold or transferred (including transfer by operation of law),
such Shares shall first be offered to the Company at the same price, and upon
the same terms (or terms as similar as reasonably possible), in the following
manner:
(a) Optionee shall deliver a notice ("Notice") to the Company stating
(i) his or her bona fide intention to sell or transfer such Shares, (ii) the
number of such Shares to be sold or transferred, (iii) the price for which he or
she proposes to sell or transfer such Shares, and (iv) the name of the proposed
purchaser or transferee.
(b) Within 30 days after receipt of the Notice, the Company or its
assignee may elect to purchase any or all Shares to which the Notice refers, at
the price per share and on the same terms (or terms as similar as reasonably
possible) specified in the Notice.
(c) If all or a portion of the Shares to which the Notice refers are
not elected to be purchased pursuant to Section 3(b) hereof, Optionee may sell
the Shares not purchased by the Company to any person named in the Notice at the
price and terms specified in the Notice or at a higher price, provided that such
sale or transfer is consummated within 60 days of the date of said Notice to the
Company, and, provided further, that any such sale is in accordance with all the
terms and conditions hereof.
In the event of any transfer by operation of law or other involuntary transfer
(including, but not limited to, by will or by the laws of descent or
distribution) where there is no price
9
<PAGE>
EXHIBIT 10.122 (CONTINUED)
established as a matter of law, the Company shall have the right to repurchase
all of the Shares purchased by Optionee hereunder, at a price to be determined
as set forth in Section 2(b) above. In such event, Optionee or Optionee's estate
shall notify the Company promptly after the happening of the event giving rise
to the involuntary transfer. Within 30 days after receipt of such Notice, the
Company or its assignee may elect to purchase any or all Shares to which the
Notice refers.
4. Termination of Repurchase Right and Right of First Refusal. Optionee's
obligations and the Company's rights under Sections 2 and 3 above shall
terminate upon the first sale of Common Stock by the Company to the public which
is effected pursuant to a registration statement filed with, and declared
effective by, the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Act").
5. Assignment. The Company may assign its rights under Sections 2 and 3
hereof to one or more persons or entities who shall have the right to exercise
such rights in his, her or its own name and for his, her or its own account. If
the exercise of any such right requires the consent of the California Securities
Commissioner or the consent of the Securities Commissioner, or the equivalent,
of another state, the parties agree to cooperate in requesting such consent.
6. Adjustment. If, from time to time during the term of the repurchase
right available pursuant to Section 2 hereof or the right of first refusal
available pursuant to Section 3 hereof:
(a) There is any stock dividend or liquidating dividend of cash and/or
property, stock split or other change in the character or amount of any of the
outstanding securities of the Company; or
(b) There is any consolidation, merger or sale of all or substantially
all of the assets of the Company;
then, in such event, any and all new, substituted or additional securities or
other property to which Optionee is entitled by reason of his or her ownership
of Shares shall be immediately subject to the right of repurchase set forth in
Section 2 hereof and right of first refusal set forth in Section 3 hereof and be
included in the word "Shares" for all purposes with the same force and effect as
the Shares presently subject to such right of first refusal (provided, however,
if such consolidation, merger or sale of all, or substantially all, of the
assets of the Company causes a termination of the right of repurchase set forth
in Section 2 hereof and right of first refusal set forth in Section 3 hereof,
then such new, substituted or additional securities or other property shall not
be included in the word "Shares" for the purposes of this Section).
10
<PAGE>
EXHIBIT 10.122 (CONTINUED)
7. Legends. All certificates representing any Shares of the Company subject
to the provisions of this Agreement shall have endorsed thereon legends in
substantially the following form unless in the opinion of the Company's counsel
such legends are no longer necessary:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL AND A REPURCHASE RIGHT AND MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE AGREEMENT BETWEEN THE COMPANY AND
THE REGISTERED HOLDER, A COPY OF WHICH AGREEMENT IS ON FILE WITH THE SECRETARY
OF THE COMPANY."
(b) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER
THE SECURITIES LAWS OF ANY STATE, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE, TRANSFER OR DISTRIBUTION
THEREOF. NO SUCH SALE, TRANSFER OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
8. Investment Representations. Unless the Shares have been registered under
the Act, in which event the Company will so advise Optionee in writing, Optionee
agrees, represents and warrants, in connection with the proposed purchase of the
Shares, as follows:
(a) Optionee represents and warrants that he or she is purchasing the
Shares solely for Optionee's own account for investment and not with a view to,
or for resale in connection with any distribution thereof within the meaning of
the Act. Optionee further represents that he or she does not have any present
intention of selling, offering to sell or otherwise disposing of or distributing
the Shares or any portion thereof; and that the entire legal and beneficial
interest of the Shares Optionee is purchasing is being purchased for, and will
be held for the account of, Optionee only and neither in whole nor in part for
any other person.
(b) Optionee represents and warrants that he or she is aware of the
Company's business affairs and financial condition and has acquired sufficient
information about the Company to reach an informed and knowledgeable decision to
acquire the Shares. Optionee further represents that he or she has a preexisting
personal or business relationship with the officers and directors of the Company
and that Optionee has such knowledge and experience in business and financial
matters to enable him or her to evaluate the risks of the prospective investment
and to make an informed investment decision with respect thereto and that he or
she has the capacity to protect his or her own interests in connection with the
purchase of the Shares. Optionee further represents and warrants that Optionee
has discussed the Company and its plans,
11
<PAGE>
EXHIBIT 10.122 (CONTINUED)
operations and financial condition with its officers, has received all such
information as he or she deems necessary and appropriate to enable Optionee to
evaluate the financial risk inherent in making an investment in the Shares and
has received satisfactory and complete information concerning the business and
financial condition of the Company in response to all inquiries in respect
thereof.
(c) Optionee represents and warrants that he or she realizes that
Optionee's purchase of the Shares will be a speculative investment and that he
or she is able, without impairing Optionee's financial condition, to hold the
Shares for an indefinite period of time and to suffer a complete loss on his or
her investment.
(d) Optionee represents and warrants that the Company has disclosed to
him or her in writing that: (i) the sale of the Shares has not been registered
under the Act, and the Shares must be held indefinitely unless a transfer of
them is subsequently registered under the Act or an exemption from such
registration is available, and the Company is under no obligation to register
the Shares; and (ii) the Company shall make a notation in its records of the
aforementioned restrictions on transfer and legends.
(e) Optionee represents and warrants that he or she is aware of the
provisions of Rule 144, promulgated under the Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly, from the issuer thereof (or an affiliate of such issuer) in a
non-public offering subject to the satisfaction of certain conditions,
including, among other things: the resale occurring not less than one year from
the date Optionee has purchased and paid for the Shares; the availability of
certain public information concerning the Company; the sale being through a
broker in an unsolicited "brokers' transaction" or in a transaction directly
with a market maker (as such term is defined under the Securities Exchange Act
of 1934); and that any sale of the Shares may be made by Optionee, if he or she
is an affiliate of the Company, only in limited amounts during any three-month
period not exceeding specified limitations. Optionee further represents that
Optionee understands that at the time he or she wishes to sell the Shares there
may be no public market upon which to make such a sale, and that, even if such a
public market then exists, the Company may not be satisfying the current public
information requirements of Rule 144, and that, in such event, he or she may be
precluded from selling the Shares under Rule 144 even if the one-year minimum
holding period had been satisfied. Optionee represents that he or she
understands that in the event the applicable requirements of Rule 144 are not
satisfied, registration under the Act, compliance with Regulation A or some
other registration exemption will be required; and that, notwithstanding the
fact that Rule 144 is not exclusive, the Staff of the SEC has expressed its
opinion that persons proposing to sell private placement securities other than
in a registered offering and otherwise than pursuant to Rule 144
12
<PAGE>
EXHIBIT 10.122 (CONTINUED)
will have a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales, and that such persons and
their respective brokers who participate in such transactions do so at their own
risk.
(f) Without in any way limiting Optionee's representations and
warranties set forth herein, Optionee further agrees that he or she shall in no
event make any disposition of all or any portion of the Shares which Optionee is
purchasing unless and until:
(i) There is then in effect a Registration Statement under the
Act covering such proposed disposition and such disposition is made in
accordance with said Registration Statement; or
(ii) Optionee shall have (x) notified the Company of the proposed
disposition and furnished the Company with a detailed statement of the
circumstances surrounding the proposed disposition, and (y) furnished
the Company with an opinion of his or her own counsel to the effect
that such disposition will not require registration of such Shares
under the Act, and such opinion of his or her counsel shall have been
concurred in by counsel for the Company and the Company shall have
advised Optionee of such concurrence.
9. Escrow. As security for his or her faithful performance of the terms of
this Agreement and to insure the availability for delivery of Optionee's Shares
upon exercise of the Company's right to repurchase and right of first refusal
herein provided for, Optionee agrees to deliver to and deposit with the
Secretary of the Company or the Secretary's nominee (in either case, the "Escrow
Agent"), as Escrow Agent in this transaction, two Assignments Separate From
Certificate duly endorsed (with date and number of shares blank) in the form
attached hereto as Attachment A, together with the certificate or certificates
evidencing the Shares; said documents are to be held by the Escrow Agent and
delivered to said Escrow Agent pursuant to the Joint Escrow Instructions of the
Company and Optionee set forth in Attachment B attached hereto and incorporated
herein by this reference, which instructions shall also be delivered to the
Escrow Agent at the closing hereunder.
10. Restriction on Alienation. Optionee agrees that he or she will not
sell, transfer, gift, pledge, hypothecate, assign or otherwise dispose of any of
the Shares or any right or interest therein, whether voluntary, by operation of
law or otherwise, without the prior written consent of the Company, except a
transfer which meets the requirements of this Agreement and complies with all
applicable law. Any sale, transfer, gift, pledge, hypothecation, assignment or
purported sale, transfer or other disposition of such Shares by Optionee shall
be null and
13
<PAGE>
EXHIBIT 10.122 (CONTINUED)
void unless the terms, conditions and provisions of this Agreement
are strictly observed.
11. Lockup Agreement. Optionee, if requested by the Company and an
underwriter of Common Stock or other securities of the Company, agrees not to
sell or otherwise transfer or dispose of any Common Stock (or other securities)
of the Company held by Optionee during the period not to exceed 180 days as
requested by the managing underwriter following the effective date of a
registration statement of the Company filed under the Act, provided that all
officers and directors of the Company are required or agree to enter into
similar agreements. Such agreement shall be in writing in a form satisfactory to
the Company and such underwriter. The Company may impose stop-transfer
instructions with respect to the shares or other securities subject to the
foregoing restriction until the end of such period.
12. Miscellaneous.
(a) The Company shall not be required (i) to transfer on its books
any Shares which shall have been sold or transferred in violation of any of the
provisions set forth in this Agreement, or (ii) to treat as owner of such Shares
or to accord the right to vote as such owner or to pay dividends to any
transferee to whom such Shares shall have been so transferred.
(b) Subject to the provisions of this Agreement, Optionee shall,
during the term of this Agreement, exercise all rights and privileges of a
shareholder of the Company with respect to the purchased Shares.
(c) The parties agree to execute such further instruments and to take
such further action as may reasonably be necessary to carry out the intent of
this Agreement.
(d) Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail with
postage and fees prepaid, addressed to the other party hereto at such party's
address hereinafter shown below such party's signature or at such other address
as such party may designate by ten days advance written notice to the other
party hereto.
(e) This Agreement shall inure to the benefit of the successors and
assigns of the Company and, subject to all compliance with the restrictions on
transfer herein set forth, be binding upon Optionee, his or her heirs,
executors, administrators and permitted successors and assigns.
(f) This Agreement shall be construed under the laws of the State of
California and constitutes the entire Agreement of the parties with respect to
the subject matter hereof superseding
14
<PAGE>
EXHIBIT 10.122 (CONTINUED)
all prior written or oral agreements, and no amendment or addition hereto shall
be deemed effective unless agreed to in writing by the parties hereto.
(g) Optionee agrees that, until a public market for the Shares
exists, the Shares cannot be readily purchased, sold or evaluated in the open
market, that they have a unique and special value, and that the Company and its
shareholders would be irreparably damaged if the terms of this Agreement were
not capable of being specifically enforced and, for this reason, among others,
Optionee agrees that the Company shall be entitled to a decree of specific
performance of the terms hereof or an injunction restraining violation of this
Agreement, said right to be in addition to any other remedies available to the
Company.
(h) If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless continue in full force and effect without being
impaired or invalidated in any way and shall be construed in accordance with the
purposes and tenor and effect of this Agreement.
(i) Nothing in this Agreement shall be deemed to create any term of
employment or affect in any manner whatsoever the right or power of the Company
to terminate Optionee's employment, for any reason, with or without cause.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CinemaNow, Inc., a California corporation
By:
--------------------------------------
Title:
-----------------------------------
Address:
---------------------------------
---------------------------------
OPTIONEE
Signature:
-------------------------------
Address:
-------------------------------
-------------------------------
15
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EXHIBIT 10.122 (CONTINUED)
SPOUSAL CONSENT
The undersigned spouse of Optionee acknowledges that he or she has read the
foregoing Agreement and agrees that his or her interest, if any, in the Shares
subject to the foregoing Agreement shall be irrevocably bound by this Agreement
and further understands and agrees that any community property interest, if any,
in the Shares shall be similarly bound by this Agreement.
Date:___________________ _________________________________
Spouse of Optionee
Print Spouse's Name:_________________________
16
<PAGE>
EXHIBIT 10.122 (CONTINUED)
ATTACHMENT A TO STOCK PURCHASE AGREEMENT
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED _________________________________ hereby sells, assigns and
transfers unto ___________________________________ _______________________
(____) shares of the Common Stock (the "Shares") of CinemaNow, Inc., a
California corporation (the "Company"), standing in the undersigned's name on
the books of the Company represented by Certificate No. ________ herewith, and
does hereby irrevocably constitute and appoint ________________________________
attorney to transfer the Shares on the books of the Company with full power of
substitution in the premises.
Dated:________________________________
Signature:_______________________________
Printed Name:____________________________
17
<PAGE>
EXHIBIT 10.122 (CONTINUED)
ATTACHMENT B TO STOCK PURCHASE AGREEMENT
JOINT ESCROW INSTRUCTIONS
_______________, 200_
Corporate Secretary
CinemaNow, Inc.
4553 Glencoe Avenue, Suite 200
Marina del Rey, CA 90292
Dear Sir:
As Escrow Agent for both CinemaNow, Inc., a California corporation (the
"Company"), and the undersigned grantee of an option to purchase stock of the
Company ("Optionee"), you are hereby authorized and directed to hold the
documents delivered to you pursuant to the terms of that certain Stock Purchase
Agreement (the "Agreement"), dated as of _______________, 200__, to which a copy
of these Joint Escrow Instructions is attached as Attachment B, in accordance
with the following instructions:
1. In the event the Company and/or any assignee of the Company (referred to
collectively for convenience herein as the "Company") shall elect to exercise
the repurchase right or the right of first refusal (collectively, the
"Repurchase Rights") set forth in the Agreement, the Company shall give to
Optionee and you a written notice specifying the number of shares of stock to be
purchased, the purchase price and the time for a closing hereunder at the
principal office of the Company. Optionee and the Company hereby irrevocably
authorize and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.
2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company against the
simultaneous delivery to you of the purchase price (by check, evidence of
cancellation of indebtedness of Optionee to the Company or a promissory note, or
some combination thereof) for the number of shares of stock being purchased
pursuant to the exercise of the Repurchase Rights.
3. Optionee irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said stock as provided in the Agreement. Optionee
does hereby irrevocably constitute and appoint you as his or her
attorney-in-fact and
18
<PAGE>
EXHIBIT 10.122 (CONTINUED)
agent for the term of this escrow to execute with respect to such securities all
stock certificates, stock assignments or other documents necessary or
appropriate to make such securities negotiable and to complete any transaction
herein contemplated.
4. This escrow shall terminate at such time as there are no longer any
shares of stock subject to the Repurchase Rights under the Agreement.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities or other property belonging to Optionee,
you shall deliver all of same to Optionee and shall be discharged of all further
obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked only
by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Optionee while acting in good faith and
in the exercise of your own good judgment, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.
8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law, and you are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree of any court,
you shall not be liable to either of the other parties hereto or to any other
person, firm or corporation by reason of such compliance, notwithstanding any
such order, judgment or decree being subsequently reversed, modified, annulled,
set aside, vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under any
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. You shall be entitled to employ such legal counsel (including without
limitation Bryan Cave LLP) and other experts as you may deem necessary or proper
to advise you in connection with
19
<PAGE>
EXHIBIT 10.122 (CONTINUED)
your obligations hereunder, may rely upon the advice of such counsel, and may
pay such counsel reasonable compensation therefor.
12. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be Secretary of the Company or if you shall resign by written
notice to each of the other parties hereto. In the event of any such
termination, the Company shall appoint any officer of the Company as successor
Escrow Agent.
13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
dispute shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses, or at such other address as a party may designate by ten
days advance written notice to each of the other parties hereto.
COMPANY: CinemaNow, Inc.
4553 Glencoe Avenue, Suite 200
Marina del Rey, CA 90292
Attention: President
OPTIONEE:
______________________________
______________________________
______________________________
ESCROW AGENT: CinemaNow, Inc.
4553 Glencoe Avenue, Suite 200
Marina del Rey, CA 90292
Attention: Corporate Secretary
20
<PAGE>
EXHIBIT 10.122 (CONTINUED)
16. By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.
17. This instrument shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
Very truly yours,
CinemaNow, Inc., a California corporation
By: _____________________________________
Title: __________________________________
OPTIONEE
_________________________________________
Signature: ______________________________
Print Name:______________________________
Agreed to and accepted as of the date set forth above.
ESCROW AGENT
Signature:____________________________________
Print Name:___________________________________
21
<PAGE>
Mark Amin #3
EXHIBIT 10.123
CINEMANOW, INC.
2000 Stock Option Plan
Nonstatutory Stock Option Agreement
CinemaNow, Inc., a California corporation (the "Company"), hereby enters
into this agreement (the "Option Agreement") with Mark Amin (the "Optionee") on
this 1st day of March, 2000, whereby the Company grants to the Optionee the
right and option to purchase an aggregate of 700,000 shares of Common Stock (the
"Shares") of the Company. This Option is in all respects subject to the terms,
definitions and provisions of the CinemaNow, Inc. 2000 Stock Option Plan (the
"Plan") adopted by the Company and incorporated herein by reference. The terms
defined in the Plan shall have the same meanings herein.
1. Nature of the Option. This Option is intended to be a nonstatutory stock
option and is NOT intended to be an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or to
otherwise qualify for any special tax benefits to the Optionee.
2. Exercise Price. The exercise price is $5.00 per Share, which price is
not less than 100% of the Fair Market Value thereof on the date this Option is
granted.
3. Method of Payment. The consideration to be paid for the Shares to be
issued upon exercise of this Option shall consist entirely of cash or check
payable to the Company or such other consideration and method of payment
permitted under any laws to which the Company is subject and which is approved
by the Board.
4. Exercise of Option. This Option shall be exercisable during its term
only in accordance with the terms and provisions of the Plan and this Option as
follows:
(a) This Option shall vest and be exercisable cumulatively as follows:
33% of the Option shall vest on the first anniversary of the date of grant (the
"First Anniversary") and the remaining 66% of the Option shall vest in two (2)
equal annual installments from the First Anniversary, as long as the Optionee
continues to serve as an Employee. The Optionee may exercise the exercisable
portion of this Option in whole or in part at any time during his or her
employment with the Company, provided that Optionee's Continuous Status as an
Employee has not terminated since the grant of this Option. However, an Option
may not be exercised for a fraction of a Share. In the event of the Optionee's
termination of employment with the Company, or the Optionee's disability or
death, the provisions of Sections 7 or 8 below shall apply to any exercise of
this Option.
(b) This Option shall be exercisable by written notice which shall state
the election to exercise this Option, the number of Shares in respect to which
this Option is being exercised and
1
<PAGE>
EXHIBIT 10.123 (CONTINUED)
such other representations and agreements as may be required by the Company
hereunder or pursuant to the provisions of the Plan. Such written notice shall
be signed by the Optionee and shall be delivered in person or by certified mail
to the Secretary of the Company or such other person as may be designated by the
Company. The written notice shall be accompanied by payment of the purchase
price and an executed Stock Purchase Agreement in the form of Exhibit 1 hereto.
The certificate or certificates for the Shares as to which this Option is
exercised shall be registered in the name of the Optionee.
(c) No rights of a shareholder shall exist with respect to the Shares
under this Option as a result of the mere grant of this Option or the exercise
of this Option. Such rights shall exist only after issuance of a stock
certificate in accordance with Section 7(i) of the Plan.
5. Restrictions on Exercise. This Option may not be exercised until such
time as the Plan has been approved by the shareholders of the Company as set
forth in Section 13 of the Plan, or if the issuance of Shares upon Optionee's
exercise or the method of payment of consideration for such Shares would
constitute a violation of any applicable Federal or state securities law or
other applicable law or regulation. As a condition to the exercise of this
Option, the Company may require the Optionee to make any representation and
warranty to the Company as may be required by any applicable law or regulation.
6. Investment Representations. In connection with the acquisition of this
Option, the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, will be acquiring the Shares for investment in his or her own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons and by
reason of his or her business or financial experience has, and could be
reasonably assumed to have, the capacity to evaluate the merits and risks of
purchasing Common Stock of the Company and to make an informed investment
decision with respect thereto and to protect the Optionee's interests in
connection with the acquisition of this Option and the Shares.
7. Termination of Employment.
(a) If the Optionee ceases to serve as an Employee for any reason other
than death, permanent and total disability (within the meaning of Section
22(e)(3) of the Code) or Termination for Cause and thereby terminates his or her
Continuous Status as an Employee, the Optionee shall have the right to exercise
this Option at any time within 30 days after the date of such termination to the
extent that the Optionee was entitled to exercise this Option at the date of
such termination. The Committee may at any time and from
2
<PAGE>
EXHIBIT 10.123 (CONTINUED)
time-to-time prior to the termination of this Option, with the consent of
Optionee, extend the period of time during which the Optionee may exercise this
Option following the date the Optionee ceases to serve as an Employee for a
period which shall not exceed an aggregate of six months; provided, however,
that this Option shall remain exercisable only to the extent that the Optionee
was entitled to exercise this Option at the date of such termination. To the
extent that the Optionee was not entitled to exercise this Option at the date of
termination, or to the extent this Option is not exercised within the time
specified herein, this Option shall terminate. Notwithstanding the foregoing,
this Option shall not be exercisable after the expiration of the term set forth
in Section 9 hereof.
(b) If an Optionee's Continuous Status as an Employee terminates due to
his or her Termination for Cause, the Option shall terminate immediately.
Notwithstanding the foregoing, this Option shall not be exercisable after the
expiration of the term set forth in Section 9 hereof.
8. Death or Disability. If the Optionee ceases to serve as an Employee due
to death or permanent and total disability (within the meaning of Section
22(e)(3) of the Code), this Option may be exercised at any time within six
months after the date of death or termination of employment due to disability,
in the case of death, by the Optionee's estate or by a person who acquired the
right to exercise this Option by bequest or inheritance, or, in the case of
disability, by the Optionee, but in any case only to the extent the Optionee was
entitled to exercise this Option at the date of such termination. To the extent
that the Optionee was not entitled to exercise this Option at the date of
termination, or to the extent this Option is not exercised within the time
specified herein, this Option shall terminate. Notwithstanding the foregoing,
this Option shall not be exercisable after the expiration of the term set forth
in Section 9 hereof.
9. Term of Option. This Option may not be exercised more than ten (10)
years from the date of the grant of this Option and may be exercised during such
term only in accordance with the Plan and the terms of this Option Agreement.
Notwithstanding any provision in the Plan with respect to the post-employment
exercise of this Option, this Option may not be exercised after the expiration
of its term.
10. Withholding Upon Exercise of Option. The Company reserves the right to
withhold, in accordance with any applicable laws, from any consideration payable
to Optionee any taxes required to be withheld by Federal, state or local law as
a result of the grant or exercise of this Option or the sale or other
disposition of the Shares issued upon exercise of this Option. If the amount of
any consideration payable to the Optionee is insufficient to pay such taxes or
if no consideration is payable to the Optionee, upon the request of the Company,
the Optionee shall pay to the Company in cash an amount sufficient for the
Company to satisfy any Federal, state or local tax withholding requirements it
may incur, as a
3
<PAGE>
EXHIBIT 10.123 (CONTINUED)
result of the grant or exercise of this Option or the sale or other disposition
of the Shares issued upon the exercise of this Option.
11. Nontransferability of Option. Except as otherwise determined by the
Board or Committee at the date of grant or otherwise, this Option may not be
sold, pledged, assigned, hypothecated, gifted, transferred or disposed of in any
manner either voluntarily or involuntarily by operation of law, other than by
will or by the laws of descent or distribution. Subject to the foregoing and the
terms of the Plan, the terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
12. No Right of Employment. Neither this Option nor the Plan shall confer
upon the Optionee any right to continue in the employment of the Company or
limit in any respect the right of the Company to discharge the Optionee at any
time, with or without cause and with or without notice.
13. Miscellaneous.
(a) SUCCESSORS AND ASSIGNS. This Option Agreement shall bind and inure
only to the benefit of the parties to this Option Agreement (the "Parties") and
their respective successors and assigns.
(b) NO THIRD-PARTY BENEFICIARIES. Nothing in this Option Agreement is
intended to confer any rights or remedies on any persons other than the Parties
and their respective successors or assigns. Nothing in this Option Agreement is
intended to relieve or discharge the obligation or liability of third persons to
any Party. No provision of this Option Agreement shall give any third person any
right of subrogation or action over or against any Party.
(c) AMENDMENTS. (i) The Board reserves the right to amend the terms and
provisions of this Option without the Optionee's consent to comply with any
Federal or state securities law.
(ii) Except as specifically provided in subsection (i) above, this
Option Agreement shall not be changed or modified, in whole or in part, except
by supplemental agreement signed by the Parties. Either Party may waive
compliance by the other Party with any of the covenants or conditions of this
Option Agreement, but no waiver shall be binding unless executed in writing by
the Party making the waiver. No waiver of any provision of this Option Agreement
shall be deemed, or shall constitute, a waiver of any other provision, whether
or not similar, nor shall any waiver constitute a continuing waiver. Any consent
under this Option Agreement shall be in writing and shall be effective only to
the extent specifically set forth in such writing. For the protection of the
Parties, amendments, waivers and consents that are not in writing and executed
by the Party to be bound may be enforced only if they are detrimentally relied
upon and proved by clear and convincing evidence. Such evidence shall not
include any alleged reliance.
4
<PAGE>
EXHIBIT 10.123 (CONTINUED)
(d) NOTICE. Any notice, instruction or communication required or
permitted to be given under this Option Agreement to any Party shall be in
writing and shall be deemed given when actually received or, if earlier, five
days after deposit in the United States mail by certified or express mail,
return receipt requested, first class postage prepaid, addressed to the
principal office of such Party or to such other address as such Party may
request by written notice.
(e) GOVERNING LAW. To the extent that Federal laws do not otherwise
control, the Plan and this Option Agreement and all determinations made or
actions taken pursuant hereto shall be governed by the laws of the state of
California, without regard to the conflict of laws rules thereof.
(f) ENTIRE AGREEMENT. This Option Agreement (including the exhibit
hereto) and the Plan constitute the entire agreement between the Parties with
regard to the subject matter hereof. This Option Agreement supersedes all
previous agreements between the Parties, and there are now no agreements,
representations or warranties between the Parties, other than those set forth
herein.
(g) SEVERABILITY. If any provision of this Option Agreement or the
application of such provision to any person or circumstances is held invalid or
unenforceable, the remainder of this Option Agreement, or the application of
such provision to persons or circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby.
(h) OPTIONEE REPRESENTATION. The Optionee acknowledges receipt of the
Plan, a copy of which is attached hereto, and hereby accepts the grant of this
Option subject to all of the terms and provisions thereof.
IN WITNESS WHEREOF, this Option Agreement has been duly executed on behalf
of the Company by an authorized representative of the Company and by the
Optionee as of the date and year first written above.
DATE OF GRANT: March 1, 2000
CinemaNow, Inc.
a California corporation
By:
---------------------------
Title:
------------------------
Optionee:
------------------------------
Mark Amin
5
<PAGE>
EXHIBIT 10.123 (CONTINUED)
THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXECUTION OF THIS
OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE, TRANSFER OR
DISTRIBUTION THEREOF. NO SUCH SALE, TRANSFER OR DISTRIBUTION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATING THERETO OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS OPTION ARE SUBJECT
TO A RIGHT OF FIRST REFUSAL AND A REPURCHASE RIGHT AND MAY BE TRANSFERRED ONLY
IN ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE AGREEMENT TO BE ENTERED INTO
BETWEEN THE HOLDER OF THIS OPTION AND THE COMPANY UPON EXERCISE OF THIS OPTION,
A COPY OF WHICH AGREEMENT IS ON FILE WITH THE SECRETARY OF THE COMPANY.
6
<PAGE>
EXHIBIT 10.123 (CONTINUED)
[For Use upon Exercise of Options]
EXHIBIT 1
CINEMANOW, INC.
STOCK PURCHASE AGREEMENT
This Agreement is made as of the ______ day of _______________, 200__, by
and between CinemaNow, Inc., a California corporation (the "Company"), and Mark
Amin ("Optionee"). Unless the context herein otherwise requires, capitalized
terms used herein shall have the same meaning as such capitalized terms have
under the Company's 2000 Stock Option Plan.
R E C I T A L S
A. Optionee was granted a Stock Option (the "Option") on March 1, 2000,
pursuant to the Company's 2000 Stock Option Plan (the "Plan"), the terms and
conditions of which are incorporated herein by reference.
B. Pursuant to said Option, Optionee was granted the right to purchase
700,000 shares of the Company's Common Stock, as adjusted in accordance with the
Plan (the "Optioned Shares").
C. Optionee has elected to exercise the Option to purchase __________ of
such Optioned Shares (herein referred to as the "Shares") under the Stock Option
Agreement evidencing such Option (the "Option Agreement").
D. As required by the Option Agreement, as a condition to Optionee's
exercise of his or her Option, Optionee must execute this Agreement which gives
the Company the right of first refusal upon transfer of the Shares and right of
repurchase of the Shares.
NOW, THEREFORE, IT IS AGREED between the parties as follows:
1. Exercise of Option. Subject to the terms and conditions hereof, Optionee
hereby agrees to exercise his or her Option or a portion thereof to purchase
__________ Shares at $5.00 per Share, payable in accordance with the terms and
provisions of the Option Agreement.
2. Company's Right to Repurchase Shares.
(a) If an Optionee ceases to serve as an Employee for any reason, the
Company shall have the right to repurchase any or all of the Shares purchased by
Optionee hereunder, at a price to be determined as set forth below. Such right
on the part of the Company shall commence upon the last day of such Optionee's
Continuous Status as an Employee (the "Termination Date") and shall expire on
the 90th calendar day after the Termination Date (or in the case of Common Stock
issued upon exercise of Options after the Termination Date, within 90 calendar
days after the date of exercise).
7
<PAGE>
EXHIBIT 10.123 (CONTINUED)
(b) The repurchase price shall be determined as follows: If an Optionee
ceases to serve as an Employee for any reason during the five (5) year period
following the date of grant, the repurchase price shall equal the exercise price
of the Option times the number of Shares to be repurchased, provided that the
right to repurchase at the exercise price lapses at the rate of twenty percent
(20%) of the Shares per year over such five (5) year period (without respect to
the date the Option was exercised or became exercisable). For Shares for which
the right to repurchase at the exercise price pursuant to the foregoing sentence
has lapsed or if the termination of employment occurs after the fifth
anniversary of the date of grant, the repurchase price shall equal 100% of the
Fair Market Value of the Shares to be repurchased on the Termination Date. The
repurchase price may be paid by the Company by cash, check, evidence of
cancellation of indebtedness of Optionee to the Company, or some combination
thereof, as the Company acting in its sole discretion may determine.
3. Right of First Refusal. Before any Shares registered in the name of
Optionee may be sold or transferred (including transfer by operation of law),
such Shares shall first be offered to the Company at the same price, and upon
the same terms (or terms as similar as reasonably possible), in the following
manner:
(a) Optionee shall deliver a notice ("Notice") to the Company stating
(i) his or her bona fide intention to sell or transfer such Shares, (ii) the
number of such Shares to be sold or transferred, (iii) the price for which he or
she proposes to sell or transfer such Shares, and (iv) the name of the proposed
purchaser or transferee.
(b) Within 30 days after receipt of the Notice, the Company or its
assignee may elect to purchase any or all Shares to which the Notice refers, at
the price per share and on the same terms (or terms as similar as reasonably
possible) specified in the Notice.
(c) If all or a portion of the Shares to which the Notice refers are not
elected to be purchased pursuant to Section 3(b) hereof, Optionee may sell the
Shares not purchased by the Company to any person named in the Notice at the
price and terms specified in the Notice or at a higher price, provided that such
sale or transfer is consummated within 60 days of the date of said Notice to the
Company, and, provided further, that any such sale is in accordance with all the
terms and conditions hereof.
In the event of any transfer by operation of law or other involuntary
transfer (including, but not limited to, by will or by the laws of descent or
distribution) where there is no price established as a matter of law, the
Company shall have the right to repurchase all of the Shares purchased by
Optionee hereunder, at a price to be determined as set forth in Section 2(b)
above. In such event, Optionee or Optionee's estate shall notify the Company
promptly after the happening of the event giving rise to the involuntary
transfer. Within 30 days after receipt of such Notice,
8
<PAGE>
EXHIBIT 10.123 (CONTINUED)
the Company or its assignee may elect to purchase any or all Shares to which the
Notice refers.
4. Termination of Repurchase Right and Right of First Refusal. Optionee's
obligations and the Company's rights under Sections 2 and 3 above shall
terminate upon the first sale of Common Stock by the Company to the public which
is effected pursuant to a registration statement filed with, and declared
effective by, the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Act").
5. Assignment. The Company may assign its rights under Sections 2 and 3
hereof to one or more persons or entities who shall have the right to exercise
such rights in his, her or its own name and for his, her or its own account. If
the exercise of any such right requires the consent of the California Securities
Commissioner or the consent of the Securities Commissioner, or the equivalent,
of another state, the parties agree to cooperate in requesting such consent.
6. Adjustment. If, from time to time during the term of the repurchase
right available pursuant to Section 2 hereof or the right of first refusal
available pursuant to Section 3 hereof:
(a) There is any stock dividend or liquidating dividend of cash and/or
property, stock split or other change in the character or amount of any of the
outstanding securities of the Company; or
(b) There is any consolidation, merger or sale of all or substantially
all of the assets of the Company;
then, in such event, any and all new, substituted or additional securities or
other property to which Optionee is entitled by reason of his or her ownership
of Shares shall be immediately subject to the right of repurchase set forth in
Section 2 hereof and right of first refusal set forth in Section 3 hereof and be
included in the word "Shares" for all purposes with the same force and effect as
the Shares presently subject to such right of first refusal (provided, however,
if such consolidation, merger or sale of all, or substantially all, of the
assets of the Company causes a termination of the right of repurchase set forth
in Section 2 hereof and right of first refusal set forth in Section 3 hereof,
then such new, substituted or additional securities or other property shall not
be included in the word "Shares" for the purposes of this Section).
7. Legends. All certificates representing any Shares of the Company subject
to the provisions of this Agreement shall have endorsed thereon legends in
substantially the following form unless in the opinion of the Company's counsel
such legends are no longer necessary:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF FIRST REFUSAL AND A REPURCHASE RIGHT AND MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE
9
<PAGE>
EXHIBIT 10.123 (CONTINUED)
AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, A COPY OF WHICH
AGREEMENT IS ON FILE WITH THE SECRETARY OF THE COMPANY."
(b) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER THE
SECURITIES LAWS OF ANY STATE, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH
A VIEW TO, OR IN CONNECTION WITH, THE SALE, TRANSFER OR DISTRIBUTION THEREOF. NO
SUCH SALE, TRANSFER OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
8. Investment Representations. Unless the Shares have been registered under
the Act, in which event the Company will so advise Optionee in writing, Optionee
agrees, represents and warrants, in connection with the proposed purchase of the
Shares, as follows:
(a) Optionee represents and warrants that he or she is purchasing the
Shares solely for Optionee's own account for investment and not with a view to,
or for resale in connection with any distribution thereof within the meaning of
the Act. Optionee further represents that he or she does not have any present
intention of selling, offering to sell or otherwise disposing of or distributing
the Shares or any portion thereof; and that the entire legal and beneficial
interest of the Shares Optionee is purchasing is being purchased for, and will
be held for the account of, Optionee only and neither in whole nor in part for
any other person.
(b) Optionee represents and warrants that he or she is aware of the
Company's business affairs and financial condition and has acquired sufficient
information about the Company to reach an informed and knowledgeable decision to
acquire the Shares. Optionee further represents that he or she has a preexisting
personal or business relationship with the officers and directors of the Company
and that Optionee has such knowledge and experience in business and financial
matters to enable him or her to evaluate the risks of the prospective investment
and to make an informed investment decision with respect thereto and that he or
she has the capacity to protect his or her own interests in connection with the
purchase of the Shares. Optionee further represents and warrants that Optionee
has discussed the Company and its plans, operations and financial condition with
its officers, has received all such information as he or she deems necessary and
appropriate to enable Optionee to evaluate the financial risk inherent in making
an investment in the Shares and has received satisfactory and complete
information concerning the business and financial condition of the Company in
response to all inquiries in respect thereof.
(c) Optionee represents and warrants that he or she realizes that
Optionee's purchase of the Shares will be a speculative investment and that he
or she is able, without impairing Optionee's financial condition, to hold the
Shares for an indefinite period of time and to suffer a complete loss on his or
her investment.
10
<PAGE>
EXHIBIT 10.123 (CONTINUED)
(d) Optionee represents and warrants that the Company has disclosed to
him or her in writing that: (i) the sale of the Shares has not been registered
under the Act, and the Shares must be held indefinitely unless a transfer of
them is subsequently registered under the Act or an exemption from such
registration is available, and the Company is under no obligation to register
the Shares; and (ii) the Company shall make a notation in its records of the
aforementioned restrictions on transfer and legends.
(e) Optionee represents and warrants that he or she is aware of the
provisions of Rule 144, promulgated under the Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly, from the issuer thereof (or an affiliate of such issuer) in a
non-public offering subject to the satisfaction of certain conditions,
including, among other things: the resale occurring not less than one year from
the date Optionee has purchased and paid for the Shares; the availability of
certain public information concerning the Company; the sale being through a
broker in an unsolicited "brokers' transaction" or in a transaction directly
with a market maker (as such term is defined under the Securities Exchange Act
of 1934); and that any sale of the Shares may be made by Optionee, if he or she
is an affiliate of the Company, only in limited amounts during any three-month
period not exceeding specified limitations. Optionee further represents that
Optionee understands that at the time he or she wishes to sell the Shares there
may be no public market upon which to make such a sale, and that, even if such a
public market then exists, the Company may not be satisfying the current public
information requirements of Rule 144, and that, in such event, he or she may be
precluded from selling the Shares under Rule 144 even if the one-year minimum
holding period had been satisfied. Optionee represents that he or she
understands that in the event the applicable requirements of Rule 144 are not
satisfied, registration under the Act, compliance with Regulation A or some
other registration exemption will be required; and that, notwithstanding the
fact that Rule 144 is not exclusive, the Staff of the SEC has expressed its
opinion that persons proposing to sell private placement securities other than
in a registered offering and otherwise than pursuant to Rule 144 will have a
substantial burden of proof in establishing that an exemption from registration
is available for such offers or sales, and that such persons and their
respective brokers who participate in such transactions do so at their own risk.
(f) Without in any way limiting Optionee's representations and
warranties set forth herein, Optionee further agrees that he or she shall in no
event make any disposition of all or any portion of the Shares which Optionee is
purchasing unless and until:
(i) There is then in effect a Registration Statement under the
Act covering such proposed disposition and such disposition is made in
accordance with said Registration Statement; or
(ii) Optionee shall have (x) notified the Company of the proposed
disposition and furnished the
11
<PAGE>
EXHIBIT 10.123 (CONTINUED)
Company with a detailed statement of the circumstances surrounding the
proposed disposition, and (y) furnished the Company with an opinion of
his or her own counsel to the effect that such disposition will not
require registration of such Shares under the Act, and such opinion of
his or her counsel shall have been concurred in by counsel for the
Company and the Company shall have advised Optionee of such
concurrence.
9. Escrow. As security for his or her faithful performance of the terms of
this Agreement and to insure the availability for delivery of Optionee's Shares
upon exercise of the Company's right to repurchase and right of first refusal
herein provided for, Optionee agrees to deliver to and deposit with the
Secretary of the Company or the Secretary's nominee (in either case, the "Escrow
Agent"), as Escrow Agent in this transaction, two Assignments Separate From
Certificate duly endorsed (with date and number of shares blank) in the form
attached hereto as Attachment A, together with the certificate or certificates
evidencing the Shares; said documents are to be held by the Escrow Agent and
delivered to said Escrow Agent pursuant to the Joint Escrow Instructions of the
Company and Optionee set forth in Attachment B attached hereto and incorporated
herein by this reference, which instructions shall also be delivered to the
Escrow Agent at the closing hereunder.
10. Restriction on Alienation. Optionee agrees that he or she will not
sell, transfer, gift, pledge, hypothecate, assign or otherwise dispose of any of
the Shares or any right or interest therein, whether voluntary, by operation of
law or otherwise, without the prior written consent of the Company, except a
transfer which meets the requirements of this Agreement and complies with all
applicable law. Any sale, transfer, gift, pledge, hypothecation, assignment or
purported sale, transfer or other disposition of such Shares by Optionee shall
be null and void unless the terms, conditions and provisions of this Agreement
are strictly observed.
11. Lockup Agreement. Optionee, if requested by the Company and an
underwriter of Common Stock or other securities of the Company, agrees not to
sell or otherwise transfer or dispose of any Common Stock (or other securities)
of the Company held by Optionee during the period not to exceed 180 days as
requested by the managing underwriter following the effective date of a
registration statement of the Company filed under the Act, provided that all
officers and directors of the Company are required or agree to enter into
similar agreements. Such agreement shall be in writing in a form satisfactory to
the Company and such underwriter. The Company may impose stop-transfer
instructions with respect to the shares or other securities subject to the
foregoing restriction until the end of such period.
12. Miscellaneous.
(a) The Company shall not be required (i) to transfer on its books any
Shares which shall have been sold or transferred in violation of any of the
provisions set forth in this Agreement, or (ii) to treat as owner of such Shares
or to accord the right to vote
12
<PAGE>
EXHIBIT 10.123 (CONTINUED)
as such owner or to pay dividends to any transferee to whom such Shares shall
have been so transferred.
(b) Subject to the provisions of this Agreement, Optionee shall, during
the term of this Agreement, exercise all rights and privileges of a shareholder
of the Company with respect to the purchased Shares.
(c) The parties agree to execute such further instruments and to take
such further action as may reasonably be necessary to carry out the intent of
this Agreement.
(d) Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to the other party hereto at such party's address
hereinafter shown below such party's signature or at such other address as such
party may designate by ten days advance written notice to the other party
hereto.
(e) This Agreement shall inure to the benefit of the successors and
assigns of the Company and, subject to all compliance with the restrictions on
transfer herein set forth, be binding upon Optionee, his or her heirs,
executors, administrators and permitted successors and assigns.
(f) This Agreement shall be construed under the laws of the State of
California and constitutes the entire Agreement of the parties with respect to
the subject matter hereof superseding all prior written or oral agreements, and
no amendment or addition hereto shall be deemed effective unless agreed to in
writing by the parties hereto.
(g) Optionee agrees that, until a public market for the Shares exists,
the Shares cannot be readily purchased, sold or evaluated in the open market,
that they have a unique and special value, and that the Company and its
shareholders would be irreparably damaged if the terms of this Agreement were
not capable of being specifically enforced and, for this reason, among others,
Optionee agrees that the Company shall be entitled to a decree of specific
performance of the terms hereof or an injunction restraining violation of this
Agreement, said right to be in addition to any other remedies available to the
Company.
(h) If any provision of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining provisions
shall nevertheless continue in full force and effect without being impaired or
invalidated in any way and shall be construed in accordance with the purposes
and tenor and effect of this Agreement.
(i) Nothing in this Agreement shall be deemed to create any term of
employment or affect in any manner whatsoever the right
13
<PAGE>
EXHIBIT 10.123 (CONTINUED)
or power of the Company to terminate Optionee's employment, for any reason, with
or without cause.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CinemaNow, Inc., a California corporation
By:
--------------------------------------
Title:
-----------------------------------
Address:
---------------------------------
---------------------------------
OPTIONEE
Signature:
-------------------------------
Address:
---------------------------------
---------------------------------
14
<PAGE>
EXHIBIT 10.123 (CONTINUED)
SPOUSAL CONSENT
The undersigned spouse of Optionee acknowledges that he or she has read the
foregoing Agreement and agrees that his or her interest, if any, in the Shares
subject to the foregoing Agreement shall be irrevocably bound by this Agreement
and further understands and agrees that any community property interest, if any,
in the Shares shall be similarly bound by this Agreement.
Date:
-------------------------------- -------------------------------------
Spouse of Optionee
Print Spouse's Name:
-----------------
15
<PAGE>
EXHIBIT 10.123 (CONTINUED)
ATTACHMENT A TO STOCK PURCHASE AGREEMENT
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED _________________________________ hereby sells, assigns
and transfers unto ___________________________________ (____) shares of the
Common Stock (the "Shares") of CinemaNow, Inc., a California corporation (the
"Company"), standing in the undersigned's name on the books of the Company
represented by Certificate No. ________ herewith, and does hereby irrevocably
constitute and appoint_______________________________ attorney to transfer
the Shares on the books of the Company with full power of substitution in the
premises.
Dated:
---------------------------
Signature:
--------------------------------
Printed Name:
-----------------------------
16
<PAGE>
EXHIBIT 10.123 (CONTINUED)
ATTACHMENT B TO STOCK PURCHASE AGREEMENT
JOINT ESCROW INSTRUCTIONS
_______________, 200_
Corporate Secretary
CinemaNow, Inc.
4553 Glencoe Avenue, Suite 200
Marina del Rey, CA 90292
Dear Sir:
As Escrow Agent for both CinemaNow, Inc., a California corporation (the
"Company"), and the undersigned grantee of an option to purchase stock of the
Company ("Optionee"), you are hereby authorized and directed to hold the
documents delivered to you pursuant to the terms of that certain Stock Purchase
Agreement (the "Agreement"), dated as of _______________, 200__, to which a copy
of these Joint Escrow Instructions is attached as Attachment B, in accordance
with the following instructions:
1. In the event the Company and/or any assignee of the Company (referred to
collectively for convenience herein as the "Company") shall elect to exercise
the repurchase right or the right of first refusal (collectively, the
"Repurchase Rights") set forth in the Agreement, the Company shall give to
Optionee and you a written notice specifying the number of shares of stock to be
purchased, the purchase price and the time for a closing hereunder at the
principal office of the Company. Optionee and the Company hereby irrevocably
authorize and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.
2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company against the
simultaneous delivery to you of the purchase price (by check, evidence of
cancellation of indebtedness of Optionee to the Company or a promissory note, or
some combination thereof) for the number of shares of stock being purchased
pursuant to the exercise of the Repurchase Rights.
3. Optionee irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said stock as provided in the Agreement. Optionee
does hereby irrevocably constitute and appoint you as his or her
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all stock certificates, stock assignments or other
17
<PAGE>
EXHIBIT 10.123 (CONTINUED)
documents necessary or appropriate to make such securities negotiable and to
complete any transaction herein contemplated.
4. This escrow shall terminate at such time as there are no longer any
shares of stock subject to the Repurchase Rights under the Agreement.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities or other property belonging to Optionee,
you shall deliver all of same to Optionee and shall be discharged of all further
obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked only
by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Optionee while acting in good faith and
in the exercise of your own good judgment, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.
8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law, and you are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree of any court,
you shall not be liable to either of the other parties hereto or to any other
person, firm or corporation by reason of such compliance, notwithstanding any
such order, judgment or decree being subsequently reversed, modified, annulled,
set aside, vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under any
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. You shall be entitled to employ such legal counsel (including without
limitation Bryan Cave LLP) and other experts as you may deem necessary or proper
to advise you in connection with your obligations hereunder, may rely upon the
advice of such counsel, and may pay such counsel reasonable compensation
therefor.
12. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be Secretary of the Company or if you shall resign by written
notice to each of the other parties
18
<PAGE>
EXHIBIT 10.123 (CONTINUED)
hereto. In the event of any such termination, the Company shall appoint any
officer of the Company as successor Escrow Agent.
13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
dispute shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses, or at such other address as a party may designate by ten
days advance written notice to each of the other parties hereto.
COMPANY: CinemaNow, Inc.
4553 Glencoe Avenue, Suite 200
Marina del Rey, CA 90292
Attention: President
OPTIONEE:
-------------------------------
-------------------------------
-------------------------------
ESCROW AGENT: CinemaNow, Inc.
4553 Glencoe Avenue, Suite 200
Marina del Rey, CA 90292
Attention: Corporate Secretary
16. By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.
19
<PAGE>
EXHIBIT 10.123 (CONTINUED)
17. This instrument shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
Very truly yours,
CinemaNow, Inc., a California corporation
By:
-------------------------------------
Title:
-----------------------------------
OPTIONEE
-----------------------------------------
Signature:
-------------------------------
Print Name:
------------------------------
Agreed to and accepted as of the date set forth above.
ESCROW AGENT
Signature:
-------------------------------
Print Name:
------------------------------
20
<PAGE>
EXHIBIT 10.124
As of March 23, 2000 Via personal delivery
Cami Winikoff
C/o Trimark Pictures, Inc.
Dear Cami:
This letter (the "Amendment") shall amend the terms of your employment
agreement (the "Agreement") with Trimark Pictures, Inc. ("Trimark") dated as of
February 1, 1999.
1. Paragraph 1 shall be deemed deleted and the following paragraph shall be
inserted in its place:
1. TERM: January 13, 2000 through January 13, 2003 (the "Term").
2. Paragraph 2 shall be deemed deleted and the following paragraph shall be
inserted in its place:
2. TITLE: Chief Operating Officer
3. SIGNING BONUS: Upon your signature of this Amendment, Trimark shall pay
you the sum of $32,000.00.
The agreement, as amended hereby shall continue in full force and effect.
Sincerely, AGREED AND ACCEPTED BY:
\s\ Mark Amin \s\ Cami Winikoff
- ------------------------- ----------------------------
Mark Amin Cami Winikoff Date
President
1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2000 AND THE CONSOLIDATED STATEMENTS
OF OPERATIONS FOR THE PERIOD ENDED MARCH 31, 2000.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 3,444
<SECURITIES> 1,028
<RECEIVABLES> 29,110
<ALLOWANCES> 8,311
<INVENTORY> 2,551
<CURRENT-ASSETS> 0<F1>
<PP&E> 3,976
<DEPRECIATION> 3,202
<TOTAL-ASSETS> 71,805
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 34,000
0
0
<COMMON> 6
<OTHER-SE> 18,679
<TOTAL-LIABILITY-AND-EQUITY> 71,805
<SALES> 67,044
<TOTAL-REVENUES> 67,044
<CGS> 53,644
<TOTAL-COSTS> 53,644
<OTHER-EXPENSES> 9,403
<LOSS-PROVISION> 357
<INTEREST-EXPENSE> 1,925
<INCOME-PRETAX> 4,805
<INCOME-TAX> (38)
<INCOME-CONTINUING> 4,843
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,843
<EPS-BASIC> 1.05
<EPS-DILUTED> 1.05
<FN>
<F1>IN ACCORDANCE WITH INDUSTRY PRACTICE THE COMPANY PREPARES AN UNCLASSIFIED
BALANCE SHEET
</FN>
</TABLE>
