AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
Exhibit
10.4
AMENDED
AND RESTATED REGISTRATION RIGHTS AGREEMENT
This
Amended and Restated Registration Rights Agreement (this “Agreement”)
is
made and entered into as of March 19, 2007, by and between CenterStaging Corp.,
a Delaware corporation (the “Company”),
and
Montage Partners III, LLC, a Nevada limited liability company (“Investor”).
WHEREAS,
the Investor and the Company are parties to that certain Securities Purchase
Agreement dated December 12, 2005 (the “Purchase
Agreement”),
pursuant to which, among other things, the Company issued and sold to the
Investor: (i) that certain 6% Secured Debenture, in the principal amount of
$500,000 (the “Debenture”)
convertible into shares of common stock, $0.0001 par value per share of the
Company (the “Common
Stock”),
at a
conversion price of $1.50 per share; (ii) the Common Stock Purchase Warrants
(the “Warrants”)
to
purchase up to 380,000 shares of Common Stock for an exercise price of $1.60
per
share;
WHEREAS,
the Company and the Investor are parties to that certain Registration Rights
Agreement dated December 12, 2005 (the “Registration
Rights Agreement”)
which
was entered into concurrently with the Purchase Agreement; and
WHEREAS,
the Company and the Investor have concurrently herewith entered into that
certain Agreement pursuant to which, among other things, the Company and the
Investor have amended and restated the Debenture and the Warrants (the
“New
Agreement”)
and
the Company has issued to Investor 75,000 shares of Common Stock (the
“Additional
Shares”).
WHEREAS,
the New Agreement contemplates that the Company and the Investor would amend
and
restate the Registration Rights Agreement, this Agreement constitutes such
amended and restated Registration Rights Agreement;
NOW,
THEREFORE, in consideration of the representations, warranties and agreements
contained herein and other good and valuable consideration, the receipt and
legal adequacy of which are hereby acknowledged by the parties, the Company
and
Investor hereby agree as follows:
1. Definitions.
As
used
in this Agreement, the following terms shall have the following
meanings:
“Affiliate”
means,
with respect to any Person, any other Person that directly or indirectly
controls or is controlled by or under common control with such Person. For
the
purposes of this definition, “control,”
when
used with respect to any Person, means the possession, direct or indirect,
of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract
or
otherwise; and the terms “affiliated,”
“controlling”
and
“controlled”
have
meanings correlative to the foregoing.
“Blackout
Period”
shall
have the meaning set forth in Section 3(m).
“Board”
shall
have the meaning set forth in Section 3(m).
“Business
Day”
means
any day except Saturday, Sunday and any day which is a legal holiday or a day
on
which banking institutions in the state of California generally are authorized
or required by law or other government actions to close.
“Commission”
means
the Securities and Exchange Commission.
“Common
Shares”
means
the Additional Shares, the Warrant Shares, the Conversion Shares, and any shares
issued in respect of such Additional Shares, Warrant Shares or Conversion Shares
as a result of any stock split, stock dividend, recapitalization or similar
event with respect to such Shares and any other securities issued in exchange
of
or replacement of such Shares.
“Common
Stock”
means
the Company’s Common Stock, $0.0001 par value.
“Conversion
Shares”
means
the shares of Common Stock issued or issuable upon conversion of the
Debenture.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Holder”
means,
collectively, each holder from time to time of Registrable Securities including,
without limitation, Investor and its assignees. To the extent this Agreement
refers to an election, consent, waiver, request or approval of or by the Holder,
such reference shall mean an election, consent, waiver, request or approval
by
the holders of a majority in interest of the then-outstanding Registrable
Securities (on an as exercised basis).
“Indemnified
Party”
shall
have the meaning set forth in Section 4(c).
“Indemnifying
Party”
shall
have the meaning set forth in Section 4(c).
“Losses”
shall
have the meaning set forth in Section 4(a).
“NASDAQ”
shall
mean the NASDAQ Stock Market.
“Person”
means
an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.
“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Prospectus”
means
the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a
prospectus filed as part of an effective registration statement in reliance
upon
Rule 430A promulgated under the Securities Act), as amended or supplemented
by any prospectus supplement, with respect to the terms of the offering of
any
portion of the Registrable Securities covered by the Registration Statement,
and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference in such
Prospectus.
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“Registrable
Securities”
means
the Common Shares until, in the case of any of the Common Shares (a) a
Registration Statement covering such Common Shares has been declared effective
by the Commission and continues to be effective, or (b) such Common Shares
are sold in compliance with Rule 144 or may be sold pursuant to
Rule 144(k), after which time such Common Shares shall not be considered
Registrable Securities.
“Registration
Statement”
means
the registration statement, including the Prospectus, amendments and supplements
to such registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference
in
such registration statement, for the Shares (other than a registration statement
on Form S-4 or Form S-8, or their successors, or any registration statement
covering only securities proposed to be issued in exchange for securities or
assets of another entity).
“Rule 144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule 158”
means
Rule 158 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Rule 415”
means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Special
Counsel”
means
an attorney selected by and acting as special counsel to Holder.
“Warrant
Shares”
means
the shares of Common Stock issued or issuable upon exercise of the
Warrants.
2. Registration.
(a) Piggyback
Registration.
(i) Piggyback
Registration.
If at
any time on or after the date of this Agreement the Company proposes to file
a
Registration Statement under the Securities Act with respect to an offering
for
cash of equity securities, or securities or other obligations exercisable or
exchangeable for, or convertible into, equity securities, by the Company for
its
own account or for stockholders of the Company for their account, then the
Company shall (a) give written notice of such proposed filing to the Investors
as soon as practicable but in no event less than 10 days before the anticipated
filing date, which notice shall describe the amount and type of securities
to be
included in such offering, the intended method(s) of distribution, and the
name
of the proposed managing Underwriter or Underwriters, if any, of the offering,
and (b) include in the Registration Statement for such offering such number
of
shares of Registrable Securities as such Investors may request in writing within
five days following receipt of such notice (a “Piggyback
Registration”).
If
the offering involves an Underwriter or Underwriters, as a condition to
including Registrable Securities in the Piggyback Registration, the Investor
must enter into an underwriting agreement in customary form with the Underwriter
or Underwriters selected for such Piggyback Registration.
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(ii) Withdrawal.
The
Investor may elect to withdraw its request for inclusion of Registrable
Securities in any Piggyback Registration by giving written notice to the Company
of such request to withdraw prior to the effectiveness of the Registration
Statement. The Company (whether on its own determination or as the result of
a
withdrawal by persons making a demand pursuant to written contractual
obligations) may withdraw a registration statement at any time prior to the
effectiveness of the Registration Statement.
(b) Payments
by the Company.
(i) If
a
Registration Statement is filed with the SEC after March 12, 2007 and does
not
include the Registrable Securities, except for exclusion of the Registrable
Securities pursuant to Section 2(a)(ii) above, on the date of such filing (the
“Required
Filing Date”)
the
Company shall pay Investor a filing penalty (collectively “Filing
Penalties”),
(i)
on the first day after the Required Filing Date, an amount equal to $10,000
and
(ii) on each subsequent monthly anniversary of the Filing Date, if the
Registration Statement is not amended to include the Registrable Securities
or
if a new Registration Statement is not filed to include the Registrable
Securities, on or before such date, an amount $10,000.
(ii) Filing
Penalties will be payable to the Investor by the Company in cash or other
immediately available funds on the date such Filing Penalty is incurred.
(iii) The
parties acknowledge that the damages which may be incurred by the Investor
if
the Registration Statement does not include the Registrable Securities may
be
difficult to ascertain. The parties agree that the Filing Penalties represent
a
reasonable estimate on the part of the parties, as of the date of this
Agreement, of the amount of such damages. The payment of the Filing Penalties
to
the Investor shall not limit the Investor’s other rights and remedies hereunder
or under any other document entered into in connection herewith.
(iv) Notwithstanding
the foregoing, the amounts payable by the Company pursuant to this provision
shall not be payable to the extent any delay in the effectiveness of the
Registration Statement occurs because of an act of, or a failure to act or
to
act timely by the Investor or its counsel if the Company timely forwards to
counsel any required documents or in the event all of the Registrable Securities
may be sold pursuant to Rule 144 or another available exemption under the
Act.
3. Registration
Procedures; Company’s Obligations.
In
connection with the registration of the Registrable Securities, the Company
shall:
(a) Prepare
and file with the Commission the Registration Statement on Form S-3 (or if
the
Company is not then eligible to register for resale the Registrable Securities
on Form S-3 such registration shall be on another appropriate form in accordance
with the Securities Act and the Rules promulgated thereunder) that shall include
a description of the method or methods of distribution of the Registrable
Securities as specified by the Holder, and use its commercially reasonable
best
efforts to cause the Registration Statement to become effective and remain
effective for a period of two years from the effective date of the Registration
Statement as provided herein; provided, however, that not less than two (2)
Business Days prior to the filing of the Registration Statement or any related
Prospectus or any amendment or supplement thereto (including any document that
would be incorporated therein by reference), the Company shall (i) furnish
to the Holder and any Special Counsel, copies of all such documents proposed
to
be filed, which documents (other than those incorporated by reference) will
be
subject to the timely review of and comment by such Special Counsel, and
(ii) at the request of the Holder cause its officers and directors, counsel
and independent certified public accountants to respond to such
inquiries,
and to
make available for inspection by the Holder all financial and other records,
pertinent corporate documents and properties of the Company, as
shall
be necessary, in the reasonable opinion of such Special Counsel, to conduct
a
reasonable investigation within the meaning of the Securities Act. The Company
shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holder or any Special Counsel
shall reasonably object in writing within two (2) Business Days of their
receipt thereof.
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(b) (i) Prepare
and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the two-year period from the effective date of the Registration
Statement; (ii) cause the related Prospectus to be amended or supplemented
by any required Prospectus supplement, and as so supplemented or amended to
be
filed pursuant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; (iii) respond promptly to any
comments received from the Commission with respect to the Registration Statement
or any amendment thereto and promptly provide the Holder true and complete
copies of all correspondence from and to the Commission relating to the
Registration Statement; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration Statement
during the applicable period in accordance with the intended methods of
disposition by the Holder set forth in the Registration Statement as so amended
or in such Prospectus as so supplemented.
(c) Notify
the Holder of Registrable Securities to be sold and any Special Counsel promptly
(and, in the case of (i)(A) below, not less than two (2) Business Days
prior to such filing and, in the case of (i)(C) below, no later than the first
Business Day following the date on which the Registration Statement becomes
effective) and (if requested by any such Person) confirm such notice in writing
no later than two (2) Business Days following the day (i)(A) when a
Prospectus or any Prospectus supplement or post-effective amendment to the
Registration Statement is proposed to be filed, (B) when the Commission
notifies the Company whether there will be a “review” of such Registration
Statement and whenever the Commission comments in writing on such Registration
Statement, and (C) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus or
for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any
or
all of the Registrable Securities or the initiation of any Proceedings for
that
purpose; (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any Proceeding for such purpose; and (v) of
the occurrence of any event that makes any statement made in the Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material
fact
or omit to state any material fact required to be stated therein or necessary
to
make the statements therein, in the light of the circumstances under which
they
were made, not misleading.
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The
Company shall promptly furnish to the Special Counsel, without charge,
(i) any correspondence from the Commission or the Commission’s staff to the
Company or its representatives relating to any Registration Statement, and
(ii) promptly after the same is prepared and filed with the Commission, a
copy of any written response to the correspondence received from the
Commission.
(d) Use
its
commercially reasonable best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of, (i) any order suspending the effectiveness of the
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities
for sale in any U.S. jurisdiction, at the earliest practicable
moment.
(e) If
requested by the Holder, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment to the Registration Statement such
information as the Company reasonably agrees should be included therein, and
(ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement
or
post-effective amendment.
(f) Furnish
to the Holder and any Special Counsel, without charge, at least one conformed
copy of each Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to
be
incorporated therein by reference, and all exhibits to the extent requested
by
such Person (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission.
(g) Promptly
deliver to the Holder and any Special Counsel, without charge, as many copies
of
the Registration Statement, Prospectus or Prospectuses (including each form
of
prospectus) and each amendment or supplement thereto as such Persons may
reasonably request; and the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by the selling Holder in
connection with the offering and sale of the Registrable Securities covered
by
such Prospectus and any amendment or supplement thereto.
(h) Prior
to
any public offering of Registrable Securities, use its commercially reasonable
best efforts to register or qualify or cooperate with the selling Holder and
any
Special Counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as the Holder reasonably requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the two-year period from the effective date of
the
Registration Statement and to do any and all other acts or things necessary
or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statement; provided, however, that the
Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action that would
subject it to general service of process in any such jurisdiction where it
is
not then so subject or subject the Company to any tax in any such jurisdiction
where it is not then so subject.
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(i) Cooperate
with the Holder to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold pursuant to the
Registration Statement and to enable such Registrable Securities to be in such
denominations and registered in such names as the Holder may request at least
two (2) Business Days prior to any sale of Registrable
Securities.
(j) Upon
the
occurrence of any event contemplated by Section 3(c)(v), promptly prepare a
supplement or amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an untrue statement
of a
material fact or omit to state a material fact required to be stated therein
or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(k) Cause
all
Registrable Securities relating to such Registration Statement to be quoted
by
NASDAQ or any other securities exchange, quotation system, market or
over-the-counter bulletin board, if any, on which the same securities issued
by
the Company are then listed.
(l) Comply
in
all material respects with all applicable rules and regulations of the
Commission and make generally available to its security holders earning
statements satisfying the provisions of Section 11(a) of the Securities Act
and Rule 158 not later than forty-five (45) days after the end of any
twelve (12) month period (or ninety (90) days after the end of any twelve (12)
month period if such period is a fiscal year) commencing on the first day of
the
first fiscal quarter of the Company after the effective date of the Registration
Statement, which statement shall conform to the requirements of
Rule 158.
(m) If
(i) there is material non-public information regarding the Company which
the Company’s Board of Directors (the “Board”)
reasonably determines not to be in the Company’s best interest to disclose and
which the Company is not otherwise required to disclose, or (ii) there is a
significant business opportunity (including, but not limited to, the acquisition
or disposition of assets (other than in the ordinary course of business) or
any
merger, consolidation, tender offer or other similar transaction) available
to
the Company which the Board reasonably determines not to be in the Company’s
best interest to disclose and which the Company would be required to disclose
under the Registration Statement, then the Company may suspend effectiveness
of
the Registration Statement and suspend the sale of Registrable Securities under
the Registration Statement one (1) time every three (3) months or
three (3) times in any twelve month period, provided that the Company may
not suspend its obligation for more than sixty (60) days in the aggregate in
any
twelve month period (each, a “Blackout
Period”);
provided,
however,
that no
such suspension shall be permitted for more than twenty (20) consecutive days,
arising out of the same set of facts, circumstances or transactions, and that
there shall be at least two business days between each Blackout
Period.
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(n) Within
two (2) Business Days after the Registration Statement which includes the
Registrable Securities is ordered effective by the Commission, the Company
shall
deliver to the transfer agent for such Registrable Securities (with copies
to
the Holder whose Registrable Securities are included in such Registration
Statement) confirmation that the Registration Statement has been declared
effective by the Commission.
4. Registration
Procedures; Holder’s Obligations
In
connection with the registration of the Registrable Securities, the Holder
shall:
(a) If
the
Registration Statement refers to the Holder by name or otherwise as the holder
of any securities of the Company, have the right to require (if such reference
to the Holder by name or otherwise is not required by the Securities Act or
any
similar federal statute then in force) the deletion of the reference to the
Holder in any amendment or supplement to the Registration Statement filed or
prepared subsequent to the time that such reference ceases to be
required.
(b) (i) not
sell any Registrable Securities under the Registration Statement until it has
received copies of the Prospectus as then amended or supplemented as
contemplated in Section 3(g) and notice from the Company that such
Registration Statement and any post-effective amendments thereto have become
effective as contemplated by Section 3(c), (ii) comply with the
prospectus delivery requirements of the Securities Act as applicable to it
in
connection with sales of Registrable Securities pursuant to the Registration
Statement, and (iii) furnish to the Company information regarding such
Holder and the distribution of such Registrable Securities as is required by
law
to be disclosed in the Registration Statement, and the Company may exclude
from
such registration the Registrable Securities of the Holder if it fails to
furnish such information within a reasonable time prior to the filing of each
Registration Statement, supplemented Prospectus and/or amended Registration
Statement.
(c) upon
receipt of a notice from the Company of the occurrence of any event of the
kind
described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or 3(m),
forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until the Holder’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement contemplated
by
Section 3(j), or until it is advised in writing by the Company that the use
of the applicable Prospectus may be resumed, and, in either case, has received
copies of any additional or supplemental filings that are incorporated or deemed
to be incorporated by reference in such Prospectus or Registration
Statement.
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5. Registration
Expenses
All
reasonable fees and expenses incident to the performance of or compliance with
this Agreement by the Company shall be borne by the Company whether or not
the
Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The
fees
and expenses referred to in the foregoing sentence shall include, without
limitation, the following: (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required
to be made with NASDAQ and each securities exchange or other market on which
Registrable Securities are required hereunder to be listed, (B) with
respect to filings required to be made with the Commission, and (C) in
compliance with state securities or Blue Sky laws); (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is requested by the holders of a majority of the Registrable
Securities included in the Registration Statement); (iii) messenger,
telephone and delivery expenses incurred by the Company; (iv) fees and
disbursements of counsel for the Company; and (v) fees and expenses of all
other Persons retained by the Company in connection with the consummation of
the
transactions contemplated by this Agreement, including, without limitation,
the
Company’s independent public accountants (including the expenses of any comfort
letters or costs associated with the delivery by independent public accountants
of a comfort letter or comfort letters). In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, and
the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder. The
Company shall not be responsible for the payment of any commissions or other
expenses incurred by the Holder in connection with their sales of Registrable
Securities or for the fees of any Special Counsel.
6. Indemnification
(a) Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Agreement, indemnify
and
hold harmless Investor, its permitted assignees, officers, directors, agents,
brokers (including brokers who offer and sell Registrable Securities as
principal as a result of a pledge or any failure to perform under a margin
call
of Common Stock), investment advisors and employees, each Person who controls
Investor or a permitted assignee (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, and the
respective successors, assigns, estate and personal representatives of each
of
the foregoing, to the fullest extent permitted by applicable law, from and
against any and all claims, losses, damages, liabilities, penalties, judgments,
costs (including, without limitation, costs of investigation) and expenses
(including, without limitation, reasonable attorneys’ fees and expenses)
(collectively, “Losses”),
as
incurred, arising out of or relating to any untrue or alleged untrue statement
of a material fact contained in the Registration Statement, any Prospectus,
as
supplemented or amended, if applicable, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated therein
or
necessary to make the statements therein (in the case of any Prospectus or
form
of prospectus or supplement thereto, in the light of the circumstances under
which they were made) not misleading, except (i) to the extent, but only to
the extent, that such untrue statements or omissions are based upon information
regarding the Holder furnished in writing to the Company by the Holder expressly
for use in the Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto, or (ii) as a result
of the failure of the Holder to deliver a Prospectus, as amended or
supplemented, to a purchaser in connection with an offer or sale (provided
that
copies of the Prospectus, as amended or supplemented, have been provided to
the
Holder by the Company for delivery to such purchaser). The Company shall notify
the Holder promptly of the institution, threat or assertion of any Proceeding
of
which the Company is aware in connection with the transactions contemplated
by
this Agreement. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of an Indemnified Party (as defined
in
Section 6(c) hereof) and shall survive the transfer of the Registrable
Securities by the Holder.
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(b) Indemnification
by Investor.
Investor and its permitted assignees shall, jointly and severally, indemnify
and
hold harmless the Company, its directors, officers, agents and employees, each
Person who controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, and the respective
successors, assigns, estate and personal representatives of each of the
foregoing, to the fullest extent permitted by applicable law, from and against
any and all Losses, as incurred, arising out of or relating to any untrue or
alleged untrue statement of a material fact contained in the Registration
Statement, any Prospectus, as supplemented or amended, if applicable, or arising
out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus or form of prospectus or supplement thereto, in
the
light of the circumstances under which they were made) not misleading, to the
extent, but only to the extent, that (i) such untrue statement or omission
is contained in or omitted from any information so furnished in writing by
the
Holder or the Special Counsel to the Company specifically for inclusion in
the
Registration Statement or such Prospectus, and (ii) such information was
reasonably relied upon by the Company for use in the Registration Statement,
such Prospectus or such form of prospectus or, to the extent that such
information relates to the Holder or the Holder’s proposed method of
distribution of Registrable Securities, was reviewed and expressly approved
in
writing by the Holder expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus Supplement. Notwithstanding anything
to
the contrary contained herein, the Holder shall be liable under this
Section 6(b) for only that amount as does not exceed the net proceeds to
the Holder as a result of the sale of Registrable Securities pursuant to such
Registration Statement.
(c) Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
pursuant to Section 6(a) or 6(b) hereunder (an “Indemnified
Party”),
such
Indemnified Party promptly shall notify the Person from whom indemnity is sought
(the “Indemnifying
Party)
in
writing, and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party
and
the payment of all fees and expenses incurred in connection with defense
thereof; provided,
that
the failure of any Indemnified Party to give such notice shall not relieve
the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally determined by a court
of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have materially and adversely prejudiced
the Indemnifying Party.
10
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (i) the Indemnifying Party has agreed in writing to pay such fees
and expenses; or (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (iii) the
named parties to any such Proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised in writing by counsel that a conflict of interest
would exist if the same counsel were to represent such Indemnified Party and
the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at
the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense
of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld, conditioned or delayed. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, which consent shall not unreasonably be withheld, conditioned or delayed,
effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.
All
reasonable fees and expenses of the Indemnified Party (including reasonable
fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten (10)
Business Days of written notice thereof to the Indemnifying Party (regardless
of
whether it is ultimately determined that an Indemnified Party is not entitled
to
indemnification hereunder; provided,
that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder or pursuant to applicable law).
(d) Contribution.
If a
claim for indemnification under Section 6(a) or 6(b) is unavailable to an
Indemnified Party because of a failure or refusal of a governmental authority
to
enforce such indemnification in accordance with its terms (by reason of public
policy or otherwise), then each Indemnifying Party, in lieu of indemnifying
such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates
to
information supplied by, such Indemnifying Party or Indemnified Party, and
the parties’
relative intent, knowledge, access to information and opportunity to correct
or
prevent such action, statement or omission. The amount paid or payable by a
party as a result of any Losses shall be deemed to include, subject to the
limitations set forth in Section 6(c), any reasonable attorneys’ or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees
or
expenses if the indemnification provided for under Section 6(a) or 6(b) was
available to such party in accordance with its terms. Notwithstanding anything
to the contrary contained herein, the Holder shall be liable or required to
contribute under this Section 6(d) for only that amount as does not exceed
the net proceeds to the Holder as a result of the sale of Registrable Securities
pursuant to the Registration Statement.
11
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6(d) were determined by pro rata allocation or by
any other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph. 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.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties.
7. Rule 144.
As
long
as the Holder owns Registrable Securities, the Company covenants to timely
file
(or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to Section 13(a) or 15(d) of the Exchange Act and to promptly
furnish the Holder with true and complete copies of all such filings. As long
as
the Holder owns Registrable Securities, if the Company is not required to file
reports pursuant to Section 13(a) or 15(d) of the Exchange Act, it will
prepare and furnish to the Holder and make publicly available in accordance
with
Rule 144(c) promulgated under the Securities Act annual and quarterly
financial statements, together with a discussion and analysis of such financial
statements in form and substance substantially similar to those that would
otherwise be required to be included in reports required by Section 13(a)
or 15(d) of the Exchange Act, as well as any other information required thereby,
in the time period that such filings would have been required to have been
made
under the Exchange Act. The Company further covenants that it will take such
further action as the Holder may reasonably request, all to the extent required
from time to time to enable the Holder to sell the Common Shares without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 promulgated under the Securities Act. Upon the request
of any Holder, the Company shall deliver to such Holder a written certification
of a duly authorized officer as to whether it has complied with such
requirements.
8. Miscellaneous.
(a) Remedies.
In the
event of a breach by the Company or by the Holder of any of their obligations
under this Agreement, the Holder or the Company, as the case may be, in addition
to being entitled to exercise all rights granted by law and under this
Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement.
The Company and the Holder each agree that monetary damages would not
provide adequate
compensation for any losses incurred by reason of a breach by it of any of
the
provisions of this Agreement and hereby further each agree that, in the event
of
any action for specific performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate.
12
(b) No
Inconsistent Agreements.
Neither
the Company nor any of its Affiliates has as of the date hereof entered into,
nor shall the Company or any of its Affiliates, on or after the date of this
Agreement, enter into, any agreement with respect to its securities that is
inconsistent with the rights granted to the Holder in this Agreement or
otherwise conflicts with the provisions hereof. Without limiting the generality
of the foregoing, without the written consent of the Holder, the Company shall
not grant to any Person the right to request the Company to register any
securities of the Company under the Securities Act if the rights so granted
are
inconsistent with the rights granted to the Holder set forth herein, or
otherwise prevent the Company with complying with all of its obligations
hereunder.
(c) Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of California, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning this Agreement shall be commenced in the state and
federal courts sitting in the City of Los Angeles, California (the
“Los Angeles
Courts”).
Each
party hereto hereby irrevocably submits to the exclusive jurisdiction of the
Los Angeles Courts for the adjudication of any dispute with respect to this
Agreement, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, or such Los Angeles Courts are improper or
inconvenient venue for such proceeding. Each party hereto hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right
to
trial by jury in any legal proceeding arising out of or relating to this
Agreement.
(d) Amendments
and Waivers.
The
provisions of this Agreement, including the provisions of this sentence, may
not
be amended, modified or supplemented, and waivers or consents to departures
from
the provisions hereof may not be given, unless the same shall be in writing
and
signed by the Company and Investor.
(e) Notices.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earlier of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified for notice prior to 5:00 p.m., Pacific Time, on a Business Day,
(ii) the first Business Day after the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile telephone number
specified for notice later than 5:00 p.m., Pacific Time, on any date and earlier
than 11:59 p.m., Pacific Time, on such date, (iii) the Business Day
following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) actual receipt by the party to whom such notice is
required to be given.
13
(i) |
if
to the Company:
0000
Xxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxxxxx 00000
Attention:
Chief Financial Officer
Telecopier:
(000)
000-0000
Telephone:
(000) 000-0000
|
|
with a copy to: | ||
Xxxx
& Xxxxx Professional
Corporation
0000
Xxxxxxx Xxxx
Xxxx, 00xx
Xxxxx
Xxx Xxxxxxx,
Xxxxxxxxxx
00000-0000
Attention:
Xxxx
X. Xxxxx, Esq.
Telecopier:
(000)
000-0000
Telephone:
(000)
000-0000
|
||
(ii) |
if
to Montage Partners III, LLC:
0000
Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxxxx X. Xxxxxxxxx
Telecopier:
000-000-0000
Telephone:
000-000-0000
|
or
to
such other address or addresses or facsimile number or numbers as any such
party
may most recently have designated in writing to the other parties hereto by
such
notice.
(f) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns.
(g) Assignment
of Registration Rights.
The
rights of the Holder hereunder, including the right to have the Company register
for resale Registrable Securities in accordance with the terms of this
Agreement, shall be assignable by each Holder to any transferee of the Holder
of
all or a portion of
the
shares of Registrable Securities if: (i) the Holder agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement
is furnished to the Company within a reasonable time after such assignment;
(ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (A) the name and address of
such transferee or assignee, and (B) the securities with respect to which
such registration rights are being transferred or assigned; (iii) following
such transfer or assignment the further disposition of such securities by the
transferee or assignees is restricted under the Securities Act and applicable
state securities laws; and (iv) at or before the time the Company receives
the written notice contemplated by clause (ii) of this Section, the
transferee or assignee agrees in writing with the Company to be bound by all
of
the provisions of this Agreement. In addition, the Holder shall have the right
to assign its rights hereunder to any other Person with the prior written
consent of the Company, which consent shall not be unreasonably withheld,
conditioned or delayed. The rights to assignment shall apply to the Holder
(and
to subsequent) successors and assigns. In the event of an assignment pursuant
to
this Section 8(g), Investor shall pay all incremental costs and expenses
incurred by the Company in connection with filing a Registration Statement
(or
an amendment to the Registration Statement) to register the shares of
Registrable Securities assigned to any assignee or transferee of
Investor.
14
(h) Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original, and all of which taken together
shall constitute one and the same Agreement. In the event that any signature
is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
(i) Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
(j) Termination.
This
Agreement shall terminate on the date on which all of the Registrable Securities
may be sold without restriction pursuant to Rule 144(k) of the Securities
Act.
(k) Severability.
If any
term, provision, covenant or restriction of this Agreement is held to be
invalid, illegal, void or unenforceable in any respect, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain
in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ
an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to
be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be
hereafter declared invalid, illegal, void or unenforceable.
(l) Headings.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
(signature
page follows)
15
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized persons as of the date first indicated
above.
CENTERSTAGING CORP. | |||
By: | /s/ Xxxxxx Xxxxxxxxxx | ||
Name: | Xxxxxx Xxxxxxxxxx | ||
Title: | CFO | ||
MONTAGE PARTNERS III, LLC | |||
By: | /s/ Xxxxxxx X. Xxxxxxxxx | ||
Name: | Xxxxxxx X. Xxxxxxxxx | ||
Title: | Manager | ||