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exv4w1

 

EXHIBIT 4.1

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

June 12, 2006

			
	 	 	 
	3.375 shares
	 	Warrant No. W-1

NEW ERA STUDIOS, INC.

STOCK PURCHASE WARRANT

Registered Owner: GARY FREEMAN

     This certifies that, for value received, New Era Studios, Inc., a Nevada corporation, the
(“COMPANY”) grants the following rights to the Registered Owner, or assigns, of this Warrant:

     1. ISSUE. Upon tender (as defined in Section 5 hereof) to the Company, the Company, within
three Business Days of the date thereof, shall issue to the Registered Owner, or assigns, up to the
number of shares specified in Section 2 hereof of fully paid and nonassessable shares of Common
Stock that the Registered Owner, or assigns, is otherwise entitled to purchase.

     2. NUMBER OF SHARES. The total number of shares of Common Stock that the Registered Owner, or
assigns, of this Warrant is entitled to receive upon exercise of this Warrant (the “WARRANT
SHARES”) is three and three hundred seventy-five thousandths (3.375) shares, subject to adjustment
from time to time as set forth in Section 6 hereof. The Company shall at all times reserve and
hold available sufficient shares of Common Stock to satisfy all conversion and purchase rights
represented by this Warrant. The Company covenants and agrees that all shares of Common Stock that
may be issued upon the exercise of this Warrant shall, upon issuance, be duly and validly issued,
fully paid and nonassessable, free from all taxes, liens and charges with respect to the purchase
and the issuance of the shares, and shall not have any legend or restrictions on resale, except as
required by applicable securities laws.

     3. EXERCISE PRICE. The initial per share exercise price of this Warrant, representing the
price per share at which the shares of stock issuable upon exercise of this Warrant may be
purchased, is twenty thousand eight dollars and thirty-two cents ($20,080.32), subject to
adjustment from time to time pursuant to the provisions of Section 6 hereof (the “EXERCISE PRICE”).

 

 

     4. EXERCISE PERIOD. This Warrant may be exercised from the date of execution of this Warrant
up to and including January 26, 2011 (the “EXERCISE PERIOD”). If not exercised during this period,
this Warrant and all rights granted under this Warrant shall expire and lapse.

     5. TENDER; ISSUANCE OF CERTIFICATES.

	 	a.	 	This Warrant may be exercised, in whole or in part, by actual
delivery of (a) an amount of cash equal to the product of the Exercise Price
and the Warrant Shares to be purchased, (b) a duly executed Warrant Exercise
Form, a copy of which is attached to this Warrant as EXHIBIT A,
properly executed by the Registered Owner, or assigns, of this Warrant, and (c)
by surrender of this Warrant. The Warrant Shares so purchased shall be deemed
to be issued to the Registered Owner as of the close of business on the date on
which this Warrant shall have been surrendered, the completed Warrant Exercise
Form shall have been delivered and payment shall have been made for such shares
as set forth above. The payment and Warrant Exercise Form must be delivered to
the registered office of the Company either in person or as provided in Section
14 hereof.
	 
	 	b.	 	In lieu of physical delivery of the Warrant, provided the
Company’s transfer agent is participating in The Depository Trust Company
(“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request of
the Registered Owner and in compliance with the provisions hereof, the Company
shall use its best efforts to cause its transfer agent to electronically
transmit the Warrant Shares to the Registered Owner by crediting the account of
the Registered Owner’s Prime Broker with DTC through its Deposit Withdrawal
Agent Commission system. The time period for delivery described herein shall
apply to the electronic transmittals described herein.
	 
	 	c.	 	Certificates for the Warrant Shares so purchased, representing
the aggregate number of shares specified in the Warrant Exercise Form, shall be
delivered to the Registered Owner within a reasonable time, not exceeding three
(3) Business Days, after this Warrant shall have been so exercised. The
certificates so delivered shall be in such denominations as may be requested by
the Registered Owner and shall be registered in the name of the Registered
Owner or such other name as shall be designated by such Registered Owner. If
this Warrant shall have been exercised only in part, then, unless this Warrant
has expired, the Company shall, at its expense, at the time of delivery of such
certificates, deliver to the Registered Owner a new Warrant representing the
number of shares with respect to which this Warrant shall not then have been
exercised.

 

 

     6. ADJUSTMENT OF EXERCISE PRICE; ADJUSTMENT OF SHARES.

	 	a.	 	COMMON STOCK DIVIDENDS; COMMON STOCK SPLITS; REVERSE COMMON
STOCK SPLITS. If the Company, at any time while this Warrant is outstanding,
(a) shall pay a stock dividend on its Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine outstanding shares of Common Stock into a smaller number of shares or (d) issue by
reclassification of shares of Common Stock any shares of capital stock of the
Company, then (i) the Exercise Price shall be multiplied by a fraction the
numerator of which shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding before such event and the denominator of
which shall be the number of shares of Common Stock outstanding after such
event. Any adjustment made pursuant to this paragraph (6)(a) shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification.
	 
	 	b.	 	RIGHTS; WARRANTS. If the Company, at any time while this
Warrant is outstanding, shall issue rights or warrants to all of the holders of
Common Stock entitling them to subscribe for or purchase shares of Common Stock
at a price per share less than the Exercise Price, the Exercise Price shall be
multiplied by a fraction, the denominator of which shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding on the
date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and the numerator
of which shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding on the date of issuance of such rights or warrants
plus the number of shares which the aggregate offering price of the total
number of shares so offered would purchase at the Exercise Price. Such
adjustment shall be made whenever such rights or warrants are issued, and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants.
	 
	 	c.	 	SUBSCRIPTION RIGHTS. If the Company, at any time while this
Warrant is outstanding, shall distribute to all of the holders of Common Stock
evidence of its indebtedness or assets or rights or warrants to subscribe for
or purchase any security (excluding those referred to in paragraphs 6(a) and
(b) above), then in each such case the Exercise Price at which the Warrant
shall thereafter be exercisable shall be determined by multiplying the Exercise
Price in effect immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction, the
denominator of which shall be the Per Share Market Value of Common Stock
determined as of the record date

 

 

	 	 	 	mentioned above, and the numerator of which shall be such Per Share Market
Value of the Common Stock on such record date less the then fair market
value at such record date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of Common
Stock as determined by the Board of Directors in good faith.
	 
	 	d.	 	ROUNDING. All calculations under this Section 6 shall be made
to the nearest cent or the nearest l/l000th of a share, as the case may be.
	 
	 	e.	 	NOTICE OF ADJUSTMENT. Whenever the Exercise Price is adjusted
pursuant to paragraphs 6(a), (b) or (c), the Company shall promptly deliver to
the Registered Owner a notice setting forth the Exercise Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.
	 
	 	f.	 	RECLASSIFICATION, ETC. If:

	 	(i)	 	the Company shall declare a dividend (or any
other distribution) on its Common Stock; or
	 
	 	(ii)	 	the Company shall declare a special
nonrecurring cash dividend on or a redemption of its Common Stock; or
	 
	 	(iii)	 	the Company shall authorize the granting to
the holders of the Common Stock rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights; or
	 
	 	(iv)	 	the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common
Stock of the Company, any consolidation or merger to which the Company
is a party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby the
Common Stock is converted into other securities, cash or property;

	 	 	 	then the Company shall cause to be filed at each office or agency maintained
for the purpose of exercise of this Warrant, and shall cause to be delivered
to the Registered Owner, at least 15 Business Days prior to the applicable
record or effective date hereinafter specified, a notice (provided such
notice shall not include any material non-public information) stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be
taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are
to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to
become effective or close, and the date as of which it is

 

 

	 	 	 	expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale,
transfer or share exchange; PROVIDED, HOWEVER, that the failure to mail such
notice or any defect therein or in the mailing thereof shall not affect the
validity of the corporate action required to be specified in such notice.
	 
	 	g.	 	ADJUSTMENT TO EXERCISE PRICE. If the Company, at any time
while this Warrant is outstanding, takes any of the actions described in this
Section 6(g), then, in order to prevent dilution of the rights granted under
this Warrant, the Exercise Price will be subject to adjustment from time to
time as provided in this Section 6(g).

	 	(i)	 	ADJUSTMENT OF EXERCISE PRICE UPON ISSUANCE OF
COMMON STOCK. If at any time while this Warrant is outstanding the
Company issues or sells, or is deemed to have issued or sold, any
            shares of Common Stock (other than shares of Common Stock issued or
deemed to have been issued as consideration for an acquisition
(including earn-out payments funded with Common Stock) by the Company
of a division, assets or business (or stock constituting any portion
thereof) from another person) for a consideration per share less than
the Exercise Price in effect immediately prior to such issuance or
sale, then immediately after such issue or sale, the Exercise Price
then in effect shall be reduced to an amount equal to the consideration
per share of Common Stock of such issuance or sale. For the purpose of
determining the adjusted Exercise Price under this Section 6(g)(i), the
following shall be applicable:

	 	(A)	 	ISSUANCE OF OPTIONS. If at any
time while this Warrant is outstanding the Company in any manner
grants any rights or options to subscribe for or to purchase
Common Stock or any stock or other securities convertible into
or exchangeable for Common Stock (other than the shares of
Common Stock deemed to have been issued by the Company in
connection with an Approved Stock Plan or shares of Common Stock
issued or deemed to have been issued as consideration for an
acquisition (including earn-out payments funded with Common
Stock) by the Company of a division, assets or business (or
stock constituting any portion thereof) from another person)
(such rights or options being herein called “OPTIONS” and such
convertible or exchangeable stock or securities being herein
called “CONVERTIBLE SECURITIES”) and the price per share for
which Common Stock is issuable upon

 

 

	 	 	 	the exercise of such Options or upon conversion or exchange
of such Convertible Securities is less than the Exercise
Price in effect immediately prior to such grant, then the
Exercise Price shall be adjusted to equal the price per share
for which Common Stock is issuable upon the exercise of such
Options or upon the conversion or exchange of such
Convertible Securities. No adjustment of the Exercise Price
shall be made upon the actual issuance of such Common Stock
or of such Convertible Securities upon the exercise of such
Options or upon the actual issuance of such Common Stock upon
conversion or exchange of such Convertible Securities.
	 
	 	(B)	 	ISSUANCE OF CONVERTIBLE
SECURITIES. If at any time while this Warrant is outstanding
the Company in any manner issues or sells any Convertible
Securities and the price per share for which Common Stock is
issuable upon such conversion or exchange (other than the shares
of Common Stock deemed to have been issued by the Company in
connection with an Approved Stock Plan or shares of Common Stock
issued or deemed to have been issued as consideration for an
acquisition (including earn-out payments funded with Common
Stock) by the Company of a division, assets or business (or
stock constituting any portion thereof) from another person) is
less than the Exercise Price in effect immediately prior to
issuance or sale, then the Exercise Price shall be adjusted to
equal the price per share for which Common Stock is issuable
upon the conversion or exchange of such Convertible Securities.
No adjustment of the Exercise Price shall be made upon the
actual issue of such Common Stock upon conversion or exchange of
such Convertible Securities, and if any such issue or sale of
such Convertible Securities is made upon exercise of any Options
for which adjustment of the Exercise Price had been or are to be
made pursuant to other provisions of this Section 6(g)(i), no
further adjustment of the Exercise Price shall be made by reason
of such issue or sale.
	 
	 	(C)	 	CHANGE IN OPTION PRICE OR RATE OF
CONVERSION. If there is a change at any time in (i) the
purchase price provided for in any Options, (ii) the additional
consideration, if any, payable upon the issuance, conversion or
exchange of any Convertible Securities or (iii) the rate at
which any Convertible Securities are convertible into or
exchangeable for Common Stock, then

 

 

	 	 	 	the Exercise Price in effect at the time of such change shall
be readjusted to the exercise Price which would have been in
effect at such time had such Options or Convertible
Securities still outstanding provided for such changed
purchase price, additional consideration or changed
conversion rate, as the case may be, at the time initially
granted, issued or sold; provided that no adjustment shall be
made if such adjustment would result in an increase of the
Exercise Price then in effect.
	 
	 	(D)	 	EFFECT ON EXERCISE PRICE OF
CERTAIN EVENTS. For purposes of determining the adjusted
Exercise Price under this Section 6(g)(i), the following shall
be applicable:

	 	(I)	 	CALCULATION OF
CONSIDERATION RECEIVED. If any Common Stock, Options or
Convertible Securities are issued or sold or deemed to
have been issued or sold for cash, the consideration
received therefor will be deemed to be the net amount
received by the Company therefor. In case any Common
Stock, Options or Convertible Securities are issued or
sold for a consideration other than cash, the amount of
the consideration other than cash received by the
Company will be the fair value of such consideration,
except where such consideration consists of securities,
in which case the amount of consideration received by
the Company will be the arithmetic average of the Per
Share Market Values of such security for the five (5)
consecutive Trading Days immediately preceding the date
of receipt thereof. In case any Common Stock, Options
or Convertible Securities are issued to the owners of
the non-surviving entity in connection with any merger
in which the Company is the surviving entity the amount
of consideration therefor will be deemed to be the fair
value of such portion of the net assets and business of
the non-surviving entity as is attributable to such
Common Stock, Options or Convertible Securities, as the
case may be. The fair value of any consideration other
than cash or securities will be determined jointly by
the Company and the registered owners of a majority of
the Warrants then outstanding. If such parties are
unable to reach agreement within thirty (30) days after
the occurrence of an event requiring valuation

 

 

	 	 	 	(the “VALUATION EVENT”), the fair value of such
consideration will be determined within four (4) days
of the thirtieth (30th) day following the Valuation
Event by an Appraiser selected in good faith by the
Company and agreed upon in good faith by the holders
of a majority of the Warrants then outstanding. The
determination of such Appraiser shall be binding upon
all parties absent manifest error.
	 
	 	(II)	 	INTEGRATED
TRANSACTIONS. In case any Option is issued in
connection with the issue or sale of other securities of
the Company, together comprising one integrated
transaction in which no specific consideration is
allocated to such Options by the parties thereto, the
Options will be deemed to have been issued for an
aggregate consideration of $.001.
	 
	 	(III)	 	TREASURY SHARES.
The number of shares of Common Stock outstanding at any
given time does not include shares owned or held by or
for the account of the Company, and the disposition of
any shares so owned or held will be considered an issue
or sale of Common Stock.
	 
	 	(IV)	 	RECORD DATE. If
the Company takes a record of the holders of Common
Stock for the purpose of entitling them (1) to receive a
dividend or other distribution payable in Common Stock,
Options or in Convertible Securities or (2) to subscribe
for or purchase Common Stock, Options or Convertible
Securities, then such record date will be deemed to be
the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other
distribution or the date of the granting of such right
of subscription or purchase, as the case may be.
	 
	 	(V)	 	CERTAIN EVENTS.
If any event occurs of the type contemplated by the
provisions of this Section 6(g)(i) (subject to the
exceptions stated therein) but not expressly provided
for by such provisions (including, without limitation,
the granting of stock appreciation rights, phantom stock
rights or other

 

 

	 	 	 	rights with equity features), then the Company’s
Board of Directors will make an appropriate
adjustment in the Exercise Price so as to protect the
rights of the Registered Owner, or assigns, of this
Warrant; provided, however, that no such adjustment
will increase the Exercise Price as otherwise
determined pursuant to this Section 6(g).

	 	h.	 	ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment of the
Exercise Price as a result of the calculations made in this Section 6, this
Warrant shall thereafter evidence the right to receive, at the adjusted
Exercise Price, that number of shares of Common Stock (calculated to the
nearest one-thousandth) obtained by dividing (i) the product of the aggregate
number of shares covered by this Warrant immediately prior to such adjustment
and the Exercise Price in effect immediately prior to such adjustment of the
Exercise Price by (ii) the Exercise Price in effect immediately after such
adjustment of the Exercise Price.
	 
	 	i.	 	INCREASE IN EXERCISE PRICE. In no event shall any provision in
this Section 6 cause the Exercise Price to be greater than the Exercise Price
on the date of issuance of this Warrant.
	 
	 	j.	 	CERTAIN EXCEPTIONS. Sections 6(a) through 6(i) shall not apply
to securities to be issued by the Company or selling stockholders in connection
with a public offering by the Company.

     7. OFFICER’S CERTIFICATE. Whenever the number of shares purchasable upon exercise shall be
adjusted as required by the provisions of Section 6, the Company shall forthwith maintain at its
principal office an officer’s certificate showing the adjusted number of shares determined as
herein provided, setting forth in reasonable detail the facts requiring such adjustment and the
manner of computing such adjustment. Each such officer’s certificate shall be signed by the
chairman, president or chief financial officer of the Company and by the secretary or any assistant
secretary of the Company. Each such officer’s certificate shall be made available at all
reasonable times for inspection by any Registered Owner of the Warrants and the Company shall,
forthwith after each such adjustment, deliver a copy of such certificate to the each of the
Registered Owners.

     8. DEFINITIONS. As used in this Warrant, the following terms 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 of “AFFILIATED,” CONTROLLING” and “CONTROLLED” have meanings correlative
to the foregoing.

     “APPRAISER” shall mean a nationally recognized or major regional investment banking firm or
firm of independent certified public accountants of recognized standing.

     “APPROVED STOCK PLAN” shall mean any contract, plan or agreement which has been approved by
the Board of Directors of the Company, pursuant to which the Company’s securities may be issued to
any employee, officer, director or consultant.

     “BUSINESS DAY” means any day except Saturday, Sunday and any day which shall be a legal
holiday or a day on which banking institutions in the state of Nevada generally are authorized or
required by law or other government actions to close.

     “COMMON STOCK” means the shares of the Company’s Common Stock, par value $.001 per share.

     “COMPANY” means New Era Studios, Inc., a Nevada corporation.

     “CONVERTIBLE SECURITIES” has the meaning assigned to it in Section 6(g)(i)(A) hereof.

     “EXERCISE PERIOD” has the meaning assigned to it in Section 4 hereof.

     “EXERCISE PRICE” has the meaning assigned to it in Section 3 hereof.

     “MATERIAL ADVERSE EFFECT” means any act or activity that would individually or in the
aggregate, (i) adversely affect the legality, validity or enforceability of any of this Warrant or
the Registration Rights Agreement or any of the transactions contemplated hereby or thereby, (ii)
have or result in a material adverse effect on the results of operations, assets, prospects, or
financial condition of the Company and its Affiliates, taken as a whole or (iii) impair the
Company’s ability to perform fully on a timely basis its obligations under this any of this Warrant
or the Registration Rights Agreement.

     “OPTIONS” has the meaning assigned to it in Section 6(g)(i)(A) hereof.

     “OTCBB” means the OTC Bulletin Board of the National Association of Securities Dealers, Inc.

     “PER SHARE MARKET VALUE” means on any particular date (i) the closing bid price per share of
the Common Stock on such date on the National Market System of the Nasdaq Stock Market or other
registered national stock exchange on which the Common Stock is then listed or if there is no such
price on such date, then the closing bid price on such exchange or quotation system on the date
nearest preceding such date, or (ii) if the Common Stock is not listed then on the National Market
System of the Nasdaq Stock Market or any registered national stock exchange, the closing bid price
for a share of Common Stock in the over-the-counter

 

 

market, as reported by the National Quotation Bureau Incorporated (or similar organization or
agency succeeding to its functions of reporting prices) at the close of business on such date or on
the OTCBB, as applicable, or (iii) if the Common Stock is not then publicly traded the fair market
value of a share of Common Stock as determined by an Appraiser selected in good faith by the holder
of this Warrant; PROVIDED, HOWEVER, that the Company, after receipt of the determination by such
Appraiser, shall have the right to select, in good faith, an additional Appraiser, in which case
the fair market value shall be equal to the average of the determinations by each such Appraiser;
and PROVIDED, FURTHER that all determinations of the Per Share Market Value shall be appropriately
adjusted for any stock dividends, stock splits or other similar transactions during such period.

     “REGISTERED OWNER” means the person identified on the face of this Warrant as the registered
owner hereof or such other person as shown on the records of the Company as being the registered
owner of this Warrant.

     “REGISTRATION RIGHTS AGREEMENT” means that certain Registration Rights Agreement, dated June
___, 2006, between the Company and the Registered Owner.

     “TRADING DAY(S)” means any day on which the primary market on which shares of Common Stock are
listed is open for trading.

     “WARRANT(S)” means the warrants outstanding as of execution date of this Warrant.

     9. REGISTRATION RIGHTS. The Company will undertake the registration of the Common Stock into
which such Warrants are exercisable at such times and upon such terms pursuant to the provisions of
the Registration Rights Agreement.

     10. RESERVATION OF UNDERLYING SHARES; LISTING. The Company covenants that it will at all times
reserve and keep available out of its authorized shares of Common Stock, free from preemptive
rights, solely for the purpose of issue upon exercise of the Warrants as herein provided, such
number of shares of the Common Stock as shall then be issuable upon the exercise of all outstanding
Warrants into Common Stock. The Company covenants that all shares of the Common Stock issued upon
exercise of the Warrant which shall be so issuable shall, when issued, be duly and validly issued
and fully paid and non-assessable. The Company shall promptly secure the listing of the shares of
Common Stock issuable upon exercise of the Warrant upon each national securities exchange or
automated quotation system, if any, upon which shares of Common Stock are then listed (subject to
official notice of issuance upon exercise of this Warrant) and shall maintain, so long as any other
shares of Common Stock shall be so listed, such listing of all shares of Common Stock from time to
time issuable upon the exercise of this Warrant and the Company shall so list on each national
securities exchange or automated quotation system, as the case may be, and shall maintain such
listing of, any other shares of capital stock of the Company issuable upon the exercise of this
Warrant if and so long as any shares of the same class shall be listed on such national securities
exchange or automated quotation system.

 

 

     11. COMPANY’S RIGHT TO CANCEL RIGHT TO EXERCISE. The Company shall have the right to cancel
the Registered Owner’s right to exercise up to 50% of the shares of Common Stock receivable upon
the exercise of this Warrant in the event that Bandari Beach Lim & Cleland LLP (“Bandari”) or the
Registered Owner cancels the Letter of Understanding (“LOU”), dated January 27, 2006, by and
between Bandari and Silvergraph LGT, LLC (“Silvergraph”) n/k/a the Company, for any reason other
than the nonpayment of fees under the LOU or Good Reason. For purposes of this section, “Good
Reason” means (i) any material adverse alteration in the nature or status of the Registered Owner’s
responsibilities or the assignment to the Registered Owner of any duties inconsistent with his
status as the Company’s Chief Financial Officer; (ii) the direction or insistence, direct or
indirect, by the Board of Directors of the Company (or in the event of a merger, consolidation or
share exchange of the Company with or into a company with common stock registered under the
Securities Act of 1933, as amended, and/or the Securities Exchange Act of 1934, as amended the
Board of Directors of the surviving or parent entity) or any executive officer to which the
Registered Owner reports to take any action that, in the Registered Owner’s reasonable belief, is
in violation of any U.S. or state law, rule or regulation, or of generally accepted accounting
principles; (iii) the breach of the LOU or any obligation thereunder by the Company; (iv) the
commission of any act of dishonesty, fraud or other misconduct by the Company or its Board of
Directors (or in the event of a merger, consolidation or share exchange of the Company with or into
a company with common stock registered under the Securities Act of 1933, as amended, and/or the
Securities Exchange Act of 1934, as amended, the Board of Directors of the surviving or parent
entity); or (v) if the Company (or, in the event of a merger, consolidation or share exchange with
or into a company with common stock registered under the Securities Act of 1933, as amended, and/or
the Securities Exchange Act of 1934, as amended, the surviving or parent entity) becomes insolvent
or seeks protection under any bankruptcy, receivership, trust, deed, creditor’s arrangement, or
comparable proceeding. The right to cancel up to 50% of the shares of Common Stock receivable upon
the exercise of this Warrant shall decrease on a monthly, ratable basis (i.e. 1/12th or
4.167% per month), beginning July 1, 2006 through June 30, 2007, at which time the Company shall
not have the ability to cancel the Registered Owner’s exercise rights underlying this Warrant. In
no event will this limitation on the right to cancel affect the Exercise Period of this Warrant.

     12. NOTICES. Any notice or other communication required or permitted to be given hereunder
shall be in writing and shall be deemed to have been received (a) upon hand delivery (receipt
acknowledged) or delivery by telex (with correct answer back received), telecopy or facsimile (with
transmission confirmation report) at the address or number designated below (if received by 8:00
p.m. EST where such notice is to be received), or the first Business Day following such delivery
(if received after 8:00 p.m. EST where such notice is to be received) or (b) on the second Business
Day following the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for
such communications are (i) if to the Company to New Era Studios, Inc., 111919 Burke Street, Santa
Fe Springs, California 90670, attn: James R. Simpson and (ii) if to the Registered Owner to Gary
Freeman, c/o Bandari Beach Lim & Cleland LLP, 12424 Wilshire Boulevard, Suite 750, Los Angeles,
California 90025 or such other address as may be designated in writing hereafter, in the same
manner, by such person.

 

 

     13. COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. The Company covenants that if any shares of
Common Stock required to be reserved for purposes of exercise of Warrants hereunder require
registration with or approval of any governmental authority under any Federal or state law, or any
national securities exchange, before such shares may be issued upon exercise, the Company will use
its best efforts to cause such shares to be duly registered or approved, as the case may be.

     14. PAYMENT OF TAX UPON ISSUE OF TRANSFER. The issuance of certificates for shares of the
Common Stock upon exercise of the Warrants shall be made without charge to the Registered Owners
thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or
delivery of such certificate, provided that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the issuance and delivery of any such
certificate upon exercise in a name other than that of the Registered Owner of such Warrant so
converted and the Company shall not be required to issue or deliver such certificates unless or
until the person or persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company that such tax has
been paid.

     15. WARRANTS OWNED BY COMPANY DEEMED NOT OUTSTANDING. In determining whether the holders of
the outstanding Warrants have concurred in any direction, consent or waiver under this Warrant,
warrants which are owned by the Company or any other obligor on the warrants or by any person
directly or indirectly controlling or controlled by or under direct or indirect common control with
the Company or any other obligor on the warrants shall be disregarded and deemed not to be
outstanding for the purpose of any such determination; provided that any Warrants owned by the
Registered Owner shall be deemed outstanding for purposes of making such a determination. Warrants
so owned which have been pledged in good faith may be regarded as outstanding if the pledgee
establishes to the satisfaction of the Company the pledgee’s right so to act with respect to such
warrants and that the pledgee is not the Company or any other obligor upon the securities or any
person directly or indirectly controlling or controlled by or under direct or indirect common
control with the Company or any other obligor on the warrants.

     16. PERMITTED TRANSFER OF WARRANT. Notwithstanding any other term in this Warrant, if the
Company is acquired by an entity that has a class of its common stock registered under the
Securities Act of 1933, as amended, and/or the Securities Exchange Act of 1934, as amended, this
Warrant shall automatically, without further action, transfer to become a warrant to purchase the
common stock so registered of the acquiring company with the ratio of the Underlying Shares being
adjusted to satisfy the exchange ratio employed in the acquisition of the Common Stock of the
Company (and subject to all other adjustments as set forth in this Warrant). Consequently, no new
warrant needs to be issued in this case.

     17. EFFECT OF HEADINGS. The section headings herein are for convenience only and shall not
affect the construction hereof.

     18. NO RIGHTS AS STOCKHOLDER. This Warrant shall not entitle the Registered Owner to any
rights as a stockholder of the Company, including without limitation, the right to

 

 

vote, to receive dividends and other distributions, or to receive notice of, or to attend, meetings
of stockholders or any other proceedings of the Company, unless and to the extent converted into
shares of Common Stock in accordance with the terms hereof.

     19. CERTAIN ACTIONS PROHIBITED. The Company will not, by amendment of its charter documents
or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed by it hereunder, but will at all times
in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of
all such action as may reasonably be requested by the holder of this Warrant in order to protect
the exercise privilege of the holder of this Warrant against dilution or other impairment,
consistent with the tenor and purpose of this Warrant. Without limiting the generality of the
foregoing, the Company (i) will not increase the par value of any shares of Common Stock receivable
upon the exercise of this Warrant above the Exercise Price then in effect, and (ii) will take all
such actions as may be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.

     20. SUCCESSORS AND ASSIGNS. This Warrant shall be binding upon and inure to the benefit of
the Registered Owners and its assigns, and shall be binding upon any entity succeeding to the
Company by merger or acquisition of all or substantially all the assets of the Company.

     21. GOVERNING LAW. This Warrant shall be governed by and construed and enforced in accordance
with the internal laws of the State of Nevada without regard to the principles of conflicts of law
thereof. Each party hereby irrevocably submits to the nonexclusive jurisdiction of the state and
federal courts sitting in the City of Reno, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof
to such party at the address for such notices to it under this Warrant and agrees that such service
shall constitute good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any manner permitted by
law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized
officer as of the date first set forth above.

	 	 	 	 	 	 	 
	 	 	NEW ERA STUDIOS, INC
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ James R. Simpson	 	 
	 

	 	 	 	 

         James R. Simpson
	 	 
	 

	 	 	 	         Chief Executive Officer	 	 

 

 

EXHIBIT A

Warrant Exercise Form

TO: NEW ERA STUDIOS, INC.

     The
undersigned hereby: (1) irrevocably subscribes for and offers to purchase ___ shares
of Common Stock of New Era Studios, Inc., pursuant to Warrant No.
___ heretofore issued to
___ on ___, 200_; (2) encloses a payment
in cash of $___ for these
shares at a price of $___ per share (as adjusted pursuant to the provisions of the Warrant); and,
(3) requests that a certificate for the shares be issued in the name of the undersigned and
delivered to the undersigned at the address specified below.

	 	 	 	 
	 	Date:
	 	 
	 	 

	 	 
	 	 
	 	 
	 	Investor Name:
	 	 
	 	 

	 	 
	 	 
	 	 
	 	Taxpayer Identification
	 	 
	 	Number:
	 	 
	 	 

	 	 
	 	 
	 	 
	 	By:
	 	 
	 	 

	 	 
	 	 
	 	 
	 	Printed Name:
	 	 
	 	 

	 	 
	 	 
	 	 
	 	Title:
	 	 
	 	 

	 	 
	 	 
	 	 
	 	Address:
	 	 
	 	 

	 	 
	 
	 	 
	 	 
	 	 

	 	 
	 
	 	 
	 	 
	 	 

	 	 

			
	 	Note:	 	The above signature should correspond exactly with the name on the face of
this Warrant Certificate or with the name of assignee appearing in assignment form
below.

AND, if said number of shares shall not be all the shares purchasable under the within Warrant, a
new Warrant Certificate is to be issued in the name of said undersigned for the balance remaining
of the shares purchasable thereunder less any fraction of a share paid in cash and delivered to the
address stated above.exv4w2

 

EXHIBIT 4.2

REGISTRATION RIGHTS AGREEMENT

     This Registration Rights Agreement (this “Agreement”) is made and entered into as of June 12,
2006, between NEW ERA STUDIOS, INC., a Nevada corporation (the “Company”) and GARY FREEMAN (the
“Purchaser”).

     This Agreement is made pursuant to the Stock Purchase Warrant, dated as of the date hereof
between the Company and the Purchaser (the “Warrant Agreement”).

     The Company and the Purchaser hereby agree as follows:

     1. Definitions

     As used in this Agreement, the following terms shall have the following meanings:

     “Advice” has meaning set forth in Section 3(o) hereof.

     “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.

     “Business Day” means any day except Saturday, Sunday and any day which shall be a
legal holiday or a day on which banking institutions in the State of Nevada generally are
authorized or required by law or other government actions to close.

     “Closing Date” shall mean the execution date of the Warrant.

     “Commission” means the Securities and Exchange Commission.

     “Common Stock” means the Company’s Common Stock, par value $.001 per share.

     “Effectiveness Date” means the tenth day after the Company has received notice
(written or oral) from the Commission that the Commission Staff will not be reviewing the
Registration Statement or has no further comments on the Registration Statement.

     “Effectiveness Period” has the meaning set forth in Section 2(a) hereof. “Exchange
Act” means the Securities Exchange Act of 1934, as amended. “Event” has the meaning set forth in
Section 2(d) hereof.

     “Holder” means the holder from time to time of Registrable Securities.

     “Indemnified Party” has the meaning set forth in Section 5(c) hereof. “Indemnifying
Party” has the meaning set forth in Section 5(c) hereof.

     “Initial Registration Statement” has the meaning set forth in Section 2(a) hereof.
“Losses” has the meaning set forth in Section 5(a) hereof.

 

 

     “OTCBB” means the OTC Bulletin Board of the National Association of Securities
Dealers, Inc.

     “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.

     “Registrable Securities” means the shares of Common Stock issued or issuable upon (i)
exercise of the Warrant and (ii) any shares of the Company’s capital stock issued with respect to
(i) as a result of any stock split, stock dividend, recapitalization, exchange or similar event or
otherwise.

     “Registration Delay Payment” has the meaning set forth in Section 2(d) hereof.

     “Registration Statement” means the Initial Registration Statement and any additional
registration statements contemplated by Sections 2(a), 2(b) and 7(d), including (in each case) 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.

     “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.

     “Securities Act,” means the Securities Act of 1933, as amended.

     “Trading Day” means a day on which the OTCBB (or in the event the Common Stock is not
traded on OTCBB, such other securities market on which the Common Stock is listed) is open for
trading.

2

 

     “Underlying Shares” means the shares of Common Stock issuable upon exercise of the
Warrant.

     “Underwritten Offering” means a registration in connection with which securities of
the Company are sold to an underwriter for reoffering to the public pursuant to an effective
registration statement, whether on a firm commitment or best efforts basis.

     “Warrant” means the warrant issuable pursuant to the Warrant Agreement.

     2. Registration Requirements

     The Company shall prepare and file with the Commission a Registration Statement (the
“Initial Registration Statement”) which shall cover all Registrable Securities at such time
as the Company or any then parent of the Company may determine to file a registration statement
with the Commission for the Company’s Common Stock or the common stock of any then parent of the
Company. The Initial Registration Statement shall be on a form of registration statement then
applicable to the resale of the Registrable Securities. The Company shall use its best efforts to
cause the Initial Registration Statement to be declared effective under the Securities Act as
promptly as possible after the filing thereof, and to keep such Initial Registration Statement
continuously effective under the Securities Act until such earlier date when all Registrable
Securities covered by such Initial Registration Statement have been sold or may be sold without
volume restrictions pursuant to Rule 144 as determined by counsel to the Company (the
“Effectiveness Period”). The number of shares of Common Stock initially included in the
Initial Registration Statement shall be the Underlying Shares.

     3. Registration Procedures

     In connection with the Company’s registration obligations hereunder, the Company shall:

          (a) Prepare and file with the Commission a Registration Statement on a form of registration
statement then applicable to the resale of the Registrable Securities; and cause the Registration
Statement once it is effective to remain effective as provided herein; provided, however, that not
less than three (3) 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, if reasonably practicable furnish to the
Holder copies of all such documents proposed to be filed (including documents incorporated by
reference), which documents will be subject to the review of such Holder. The sections of such
Registration Statement covering information with respect to the Holder, the Holder’s beneficial
ownership of securities of the Company or the Holder’s intended method of disposition of
Registrable Securities shall conform to the information provided to the Company by the Holder.

          (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 for the Effectiveness Period; (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 as promptly as practicable to any

3

 

comments received from the Commission with respect to the Registration Statement or any
amendment thereto; 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 thereof 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 (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) if at any time any of the
representations and warranties of the Company contained in any agreement (including any
underwriting agreement) contemplated hereby ceases to be true and correct in all material respects;
(v) 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 (vi) 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 light of the
circumstances under which they were made, not misleading.

          (d) Use its 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 jurisdiction, at the earliest practicable moment.

          (e) If requested by any managing underwriter in connection with an Underwritten Offering, (i)
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; provided, however, that the Company shall not be
required to take any action pursuant to this Section 3(e) that would, in the opinion of counsel for
the Company, violate applicable law.

          (f) Deliver to the Holder without charge, as many copies of the Prospectus or Prospectuses
(including each form of prospectus) and each amendment or supplement thereto as

4

 

such Person 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.

          (g) Prior to any public offering of Registrable Securities, use its best efforts to register
or qualify or cooperate with the selling Holder 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 requests in writing, to keep each such registration or qualification (or
exemption therefrom) effective during the Effectiveness Period 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 a 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 material tax in any such jurisdiction
where it is not then so subject.

          (h) Cooperate with the Holder and any managing underwriter to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to be sold pursuant to
a Registration Statement, which certificates shall be free, to the extent permitted by applicable
law, of all restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such managing underwriters or the Holder may
request at least two (2) Business Days prior to any sale of Registrable Securities.

          (i) Upon the occurrence of any event contemplated by Section 3(c)(vi), as promptly as
possible, 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 light of the circumstances under which they were made,
not misleading.

          (j) Cause all Registrable Securities relating to such Registration Statement to be listed on
the OTCBB and any other securities exchange, quotation system, market or over-the-counter bulletin
board, if any, on which similar securities issued by the Company are then listed.

          (k) Enter into such agreements (including an underwriting agreement in form, scope and
substance as is customary in Underwritten Offerings) and take all such other actions in connection
therewith (including those reasonably requested by any managing underwriters and the Holder) in
order to expedite or facilitate the disposition of such Registrable Securities, and whether or not
an underwriting agreement is entered into, (i) make such representations and warranties to such
Holder and such underwriters as are customarily made by issuers to underwriters in underwritten
public offerings, and confirm the same if and when requested; (ii) in the case of an Underwritten
Offering obtain and deliver copies thereof to the managing underwriters, if any, of opinions of
counsel to the Company and updates thereof addressed to

5

 

each such underwriter, in form, scope and substance reasonably satisfactory to any such
managing underwriters covering the matters customarily covered in opinions requested in
Underwritten Offerings and such other matters as may be reasonably requested by such underwriters;
(iii) if an underwriting agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable to the selling Holder and the underwriters, if any,
than those set forth in Section 5 (or such other provisions and procedures acceptable to the
managing underwriters, if any); and (iv) deliver such documents and certificates as may be
reasonably requested by the Holder to evidence the continued validity of the representations and
warranties made pursuant to clause 3(k)(i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered into by the Company.

          (l) Comply in all material respects with applicable rules and regulations of the Commission
and make generally available to its securityholders earning statements satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 not later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if such period is a fiscal year)
(i) commencing at the end of any fiscal quarter in which Registrable Securities are sold to
underwriters in a firm commitment or best efforts Underwritten Offering and (ii) if not sold to
underwriters in such an offering, 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) The Company may require the selling Holder to 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 who unreasonably fails to furnish such information within a
reasonable time after receiving such request.

     The Holder covenants and agrees that (i) it will 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(f) and notice from the Company that such Registration
Statement and any post-effective amendments thereto have become effective as contemplated by
Section 3(c).

     The Holder agrees by its acquisition of such Registrable Securities that, 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(c)(vi), the Holder will forthwith discontinue disposition of such
Registrable Securities under the Registration Statement until such Holder’s receipt of the copies
of the supplemented Prospectus and/or amended Registration Statement contemplated by Section 3(i),
or until it is advised in writing (the “Advice”) 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.

          (n) The Company agrees to respond to any comments on a Registration Statement received from
the Commission staff as promptly as possible.

6

 

          (o) Within two (2) Business Days after a Registration Statement which covers applicable
Registrable Securities is ordered effective by the Commission, the Company shall deliver, and shall
cause legal counsel for the Company to deliver, to the transfer agent for such Registrable
Securities (with copies to the Holder) confirmation that such Registration Statement has been
declared effective by the Commission in the form attached hereto as Exhibit A.

     4. Registration Expenses

     All 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 pursuant to an Underwritten Offering and
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, (i) all registration and
filing fees (including, without limitation, fees and expenses (A) with respect to filings required
to be made with the OTCBB and each other securities exchange or market on which Registrable
Securities are required hereunder to be listed and (B) in compliance with state securities or Blue
Sky laws, (ii) printing expenses, (iii) fees and disbursements of counsel for the Company, and (iv)
fees and expenses of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement.

     5. Indemnification

          (a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless the Holder from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation, costs of preparation
and attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating
to (i) any untrue or alleged untrue statement of a material fact contained in the Registration
Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in
any preliminary Prospectus, 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 light of the circumstances
under which they were made) not misleading (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made), except to the
extent, but only to the extent, that such untrue statements or omissions are based solely upon and
in conformity with information regarding such Holder furnished in writing to the Company by such
Holder expressly for use therein, which information was reasonably relied on by the Company for use
therein or to the extent that such information relates to such Holder or such Holder’s proposed
method of distribution of Registrable Securities and was reviewed and expressly approved in writing
by such Holder expressly for use in the Registration Statement, such Prospectus or such form of
prospectus or in any amendment or supplement thereto or (ii) any violation or alleged violation by
the Company of the Securities Act, the Exchange Act, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of Registrable Securities. The Company shall
not, however, be liable for any Losses to the Holder with respect to any untrue or alleged untrue
statement of material fact or omission or alleged omission of material fact if such statement or
omission was made in a preliminary Prospectus and the untrue or alleged untrue statement of
material fact or omission or

7

 

alleged omission of material fact contained in such preliminary Prospectus was corrected in
the final Prospectus (or any amendment or supplement thereto).

          (b) Indemnification by Holder. The Holder shall indemnify and hold harmless the
Company, the 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 from and against all
Losses, as incurred, arising solely out of or based solely upon any untrue statement of a material
fact contained in the Registration Statement, any Prospectus, or any form of prospectus, or arising
solely out of or based solely upon any omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading to the extent, but only to the extent, that
such untrue statement or omission is contained in any information so furnished in writing by such
Holder to the Company specifically for inclusion in the Registration Statement or such Prospectus
and that 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 such Holder or such Holder’s proposed method of distribution of Registrable Securities
and was reviewed and expressly approved in writing by such Holder expressly for use in the
Registration Statement, such Prospectus or such form of prospectus.

          (c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity 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,
however, 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 to the
extent that such failure shall have materially adversely prejudiced the Indemnifying Party.

     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: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (2) 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 (3) 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 by counsel that a conflict of interest is likely
to 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.
No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an

8

 

unconditional release of such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.

          (d) Contribution. If a claim for indemnification under Section 5(a) or 5(b) is
unavailable to an Indemnified Party because of a failure or refusal of a court of competent
jurisdiction 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 5(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 in this Section was available to such party in accordance with its terms.

     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.

     6. Rule 144

     As long as any Holder owns Registrable Securities, the Company agrees to use its best efforts
to 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.

     7. 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 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 agrees that, in the event of any action for

9

 

specific performance in respect of such breach, it shall waive the defense that a remedy at
law would be adequate.

          (b) Piggy-Back Registrations. If, at any time when there is not an effective
Registration Statement covering the Registrable Securities, the Company shall determine to prepare
and file with the Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity securities, other than on
Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any acquisition of any entity
or business or equity securities issuable in connection with stock option or other employee benefit
plans, the Company shall send to the Holder written notice of such determination and, if within ten
(10) days after receipt of such notice, such Holder shall so request in writing, (which request
shall specify the Registrable Securities intended to be disposed of by the Purchaser), the Company
will use reasonable efforts to effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the Holder, to the extent
requisite to permit the disposition of the Registrable Securities so to be registered, provided
that if at any time after giving written notice of its intention to register any securities and
prior to the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register or to delay registration
of such securities, the Company may, at its election, give written notice of such determination to
such Holder and, thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with such registration, and
(ii) in the case of a determination to delay registering, shall be permitted to delay registering
any Registrable Securities being registered pursuant to this Section 7(b) for the same period as
the delay in registering such other securities. The Company shall include in such registration
statement all or any part of such Registrable Securities such Holder requests to be registered;
provided, however, that the Company shall not be required to register any Registrable Securities
pursuant to this Section 7(b) that are eligible for sale pursuant to Rule 144(k) of the Securities
Act. In the case of an underwritten public offering, if the managing underwriter(s) or
underwriter(s) should reasonably object to the inclusion of the Registrable Securities in such
registration statement, then if the Company after consultation with the Underwriter’s
representative should reasonably determine that the inclusion of such Registrable Securities would
materially adversely affect the offering contemplated in such registration statement, and based on
such determination recommends inclusion in such registration statement of fewer Registrable
Securities than proposed to be sold by the Holder, then (x) the number of Registrable Securities of
the Holder included in such registration statement shall be reduced or (y) none of the Registrable
Securities of the Holder shall be included in such registration statement if the Company, after
consultation with the underwriter(s), recommends the inclusion of none of such Registrable
Securities; provided, however, that if securities are being offered for the account of other
persons or entities as well as the Company, such reduction shall not represent a greater fraction
of the number of Registrable Securities intended to be offered by the Holder than the fraction of
similar reductions imposed on such other persons or entities (other than the Company).

          (c) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and waivers or

10

 

consents to departures from the provisions hereof may not be given, unless the same shall be
in writing and signed by the Company and the Holder.

          (d) Notices. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be deemed to have been received (a) upon hand delivery
(receipt acknowledged) or delivery by telex (with correct answer back received), telecopy or
facsimile (with transmission confirmation report) at the address or number designated below (if
received by 8:00 p.m. PST where such notice is to be received), or the first Business Day following
such delivery (if received after 8:00 p.m. PST where such notice is to be received) or (b) on the
next succeeding Business Day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first
occur. The addresses for such communications are (i) if to the Company to New Era Studios, Inc.,
11919 Burke Street, Santa Fe Springs, California 90670 attn: James R. Simpson, and (ii) if to the
Purchaser to Gary Freeman, c/o Bandari Beach Lim & Cleland LLP, 12424 Wilshire Boulevard, Suite
750, Los Angeles, California 90025 or such other address as may be designated in writing hereafter,
in the same manner, by such Person.

          (e) Permitted Transfer of Warrant. Notwithstanding any other term in this Agreement,
if the transaction reflected in Section 16 of the Warrant occurs, the terms of this Agreement shall
apply to the common stock of the acquiring entity reflected in Section 16 of the Warrant.

          (f) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and shall inure to the
benefit of the Holder. Neither the Company nor the Holder may assign its rights or obligations
hereunder without the prior written consent of the other.

          (g) 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 and 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.

          (h) Governing Law. The laws of the State of Nevada shall govern all issues concerning
the relative rights of the Company and the Purchaser as its stockholder, and the construction,
validity, enforcement and interpretation of this Agreement, without regard to principles of
conflicts of law. Each party hereby irrevocably submits to the exclusive jurisdiction of the state
and federal courts sitting in the City of Reno, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of process and
consent to process being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.

11

 

Nothing contained herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law.

          (i) Cumulative Remedies. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.

          (j) Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, 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.

          (k) Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.

[Signature Page Follows]

12

 

     IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the
date first written above.

	 	 	 	 	 	 	 
	 	 	NEW ERA STUDIOS, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ James R. Simpson	 	 
	 

	 	 	 	 

        Name: James R. Simpson
	 	 
	 

	 	 	 	        Title: Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	     /s/ Gary Freeman
	 	 	   
	 

	 	Gary Freeman
	 	 

 

 

EXHIBIT A

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

[TRANSFER AGENT]

Attn.:

     Re: New Era Studios, Inc.

Ladies and Gentlemen:

     We are counsel to New Era Studios, Inc., a Nevada corporation (the “Company”), and have
represented the Company in connection with that certain Stock Purchase Warrant (the “Warrant”)
entered into by and between the Company and the registered owner named therein (collectively, the
“Holder”) pursuant to which the Company issued a right to acquire shares of Common Stock. Pursuant
to the Warrant, the Company also has entered into a Registration Rights Agreement with the Holder
(the “Registration Rights Agreement”) pursuant to which the Company agreed, among other things, to
register the Registrable Securities (as defined in the Registration Rights Agreement), including
the shares of Common Stock issuable upon the exercise of the Warrant, under the Securities Act of
1933, as amended (the “1933 Act”). In connection with the Company’s obligations under the
Registration Rights Agreement, on ___,200-, the Company filed a Registration Statement on
Form ___ (File No. 333-___) (the “Registration Statement”) with the Securities and Exchange
Commission (the “SEC”) relating to the Registrable Securities which names the Holder as a selling
stockholder thereunder.

     In connection with the foregoing, we advise you that a member of the SEC’s staff has advised
us by telephone that the SEC has entered an order declaring the Registration Statement effective
under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no
knowledge, after telephonic inquiry of a member of the SEC’s staff, that any stop order suspending
its effectiveness has been issued or that any proceedings for that purpose are pending before, or
threatened by, the SEC and the Registrable Securities are available for resale under the 1933 Act
pursuant to the Registration Statement.

Very truly yours,

[ISSUER’S COUNSEL]

cc: Gary Freeman

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