Exhibit 10.13
WARRANT AGREEMENT
(GTH CAPITAL, INC.)
This Agreement is entered into as of May 17, 2002, between J2
Communications ("COMPANY") and GTH Capital, Inc. ("HOLDER").
WHEREAS, the Company and National Lampoon Acquisition Group, LLC and
certain of its affiliates (collectively "NLAG") have entered into a Preferred
Stock and Warrant Purchase Agreement dated April 25, 2002, as amended by the
First Amendment to Preferred Stock and Warrant Purchase Agreement dated May 17,
2002, and certain related agreements, dated the date hereof (collectively,
"RELATED AGREEMENTS"), incorporated herein by reference;
WHEREAS, NLAG has required as a condition to entering into the Related
Agreements, that the Company shall issue to Holder a Warrant to purchase certain
of its equity securities;
WHEREAS, in satisfaction of such condition, the Company is prepared to
issue warrants ("WARRANTS") to purchase one thousand two hundred forty-three
(1,243) shares (the "WARRANT SHARES") of Series B Convertible Preferred Stock,
no par value, of Company ("SERIES B PREFERRED"), convertible into shares of
Common Stock, no par value, of the Company (the "CONVERSION SHARES"), as
evidenced by a Warrant Certificate, substantially in the form of EXHIBIT A
hereto, on the terms and conditions set forth herein and therein; and
WHEREAS, the Holder desires to acquire the Warrants on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereby agree as follows:
1. Issuance of Warrants. Subject to the terms and conditions of this
Agreement, the Company hereby issues the Warrants to the Holder simultaneously
with the execution and delivery of this Agreement and the Related Agreements by
delivery to the Holder of a Warrant Certificate registered in the name of the
Holder representing the Warrants.
2. Representations and Warranties. Holder hereby represents and warrants
to the Company as follows:
a. Organization and Standing. Holder is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida.
b. Power. Holder has all requisite power and authority to enter into
this Agreement and all other documents contemplated hereby to which Holder is to
be a
party.
c. Authorization. Holder has taken all actions necessary to
authorize it to perform all of its obligations under this Agreement and to
consummate the transactions contemplated hereby and thereby. This Agreement is a
legally valid and binding obligation of Holder enforceable against it in
accordance with its respective terms, subject to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws of general
application affecting enforcement of creditors' rights generally.
d. Knowledge. Holder is an "accredited investor" as that term is
defined in Rule 501 of Regulation D promulgated under the Securities Act of
1933, as amended (the "Securities Act") and has such knowledge and experience in
financial business matters as to be capable of evaluating the merits and risks
of its investment, has no need for liquidity in its investment and has the
ability to bear the economic risks of its investment.
e. Investment. Holder is acquiring the Warrants for investment for
its own account and not with the view to, or for resale in connection with, any
public distribution thereof. Holder understands that the Warrants, the Warrant
Shares and the Conversion Shares have not been registered under the Securities
Act or under any state securities laws by reason of a specified exemption from
the registration provisions of the Securities Act and such state securities laws
which depends upon, among other things, the bona fide nature of such purchaser's
investment intent as expressed herein.
f. Resale Restrictions. Holder acknowledges that the Warrants, the
Warrant Shares and the Conversion Shares acquired by it must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available.
g. Exemption from Securities Act. The offer and sale by the Company
of the Warrants, the Warrant Shares and the Conversion Shares to the Holder, as
contemplated by this Agreement, qualifies for exemption from the registration
requirements of the Securities Act, without limitation, pursuant to the
requirements of Rule 506 promulgated thereunder in so far as such requirements
apply to the purchasers of securities in a transaction relying on such rule for
an exemption from the registration requirements of the Securities Act.
3. Registration Rights. Holder shall have the registration rights and
obligations with regard to the Conversion Shares as set forth in the NLAG
Registration Rights Agreement entered into on the date hereof; provided,
however, that, prior to June 1, 2004, the Holder shall only have, and hereby
agrees only to exercise, such rights in connection with, and with respect to, an
underwritten offering of Common Stock of the Company.
4. Assignment. Except as expressly permitted herein, this Agreement is
not assignable by either party without the prior written consent of the other
party.
5. Miscellaneous:
a. If any provision of this Agreement is held invalid for any
reason, such holding shall not affect the remaining provisions of this
Agreement, but instead this Agreement shall be construed and enforced as if such
provision had never been included in this Agreement.
b. The substantive laws of the State of California shall govern this
Agreement, without reference to California conflict of law provisions.
c. Any reference to the masculine, feminine or neuter gender in this
Agreement shall be a reference to such other gender as is appropriate.
d. This Warrant Agreement shall not be construed as giving Holder
any right to be retained by the Company in any capacity.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
J2 COMMUNICATIONS
By:______________________________________
Xxxxx X. Xxxxxxx, President
GTH CAPITAL, INC.
By:______________________________________
Xxx Xxxxx, Chief Operating Officer
EXHIBIT A
WARRANT CERTIFICATE
Void after May 16, 2007
Warrants to Purchase an Aggregate of 1,243 Shares of Series B Convertible
Preferred Stock of J2 Communications
THESE WARRANTS, THE PREFERRED STOCK ISSUABLE UPON THEIR EXERCISE, AND
THE COMMON STOCK ISSUABLE UPON THEIR CONVERSION, HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND
MAY NOT BE PLEDGED, SOLD, ASSIGNED OR OTHERWISE TRANSFERRED, DISPOSED OF
OR OFFERED FOR SALE, IN WHOLE OR IN PART, UNLESS (1) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAW HAS BECOME EFFECTIVE WITH RESPECT THERETO OR (2) A VALID EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE.WARRANTS TO PURCHASE SERIES B
CONVERTIBLE PREFERRED STOCK OF J2 COMMUNICATIONS
This is to certify that GTH Capital, Inc. ("HOLDER") is entitled to
purchase, subject to the provisions of this Warrant Certificate, from J2
Communications, a California corporation ("COMPANY"), one thousand two hundred
forty-three (1,243) shares of Series B Preferred Stock,no par value, of the
Company ("SERIES B PREFERRED"), which are convertible into fully paid, validly
issued and nonassessable shares of Common Stock, no par value, of the Company
("CONVERSION SHARES"), at an initial exercise price equal to One Hundred Ninety
Seven Dollars and 29/100 Dollars ($197.29) per share of Series B Preferred, at
any time or from time to time during the period from the date hereof through and
including May 16, 2007 (the "TERMINATION DATE"). The number of shares of Series
B Preferred to be received upon the exercise of these Warrants and the price to
be paid for each share of Series B Preferred may be adjusted from time to time
as hereinafter set forth. The shares of Series B Preferred deliverable upon such
exercise are hereinafter sometimes referred to as "WARRANT SHARES" and the
exercise price of a Warrant to purchase one share of Series B Preferred in
effect at any time and as adjusted from time to time is hereinafter sometimes
referred to as the "EXERCISE PRICE."
(a) Exercise of Warrant. These Warrants may be exercised in whole or in
part at any time or from time to time until the Termination Date. These Warrants
may be exercised by presentation and surrender hereof to the Company at its
principal office, or at the office of its stock transfer agent, if any, with the
Purchase Form annexed hereto duly executed and accompanied by payment of the
Exercise Price for the number of Warrant Shares specified in such form.
(b) Adjustment. The Company shall make or provide for such adjustments
in the numbers of Warrant Shares, in the price per Warrant Share applicable to
the Warrant, and in the kind of shares covered by the Warrant, as is equitably
required to prevent dilution or enlargement of the rights of Holder that
otherwise would result from any stock dividend, stock split, combination of
shares, recapitalization or other change in the capital structure of the Company
or any other corporate transaction or event having a similar effect.
(c) Issuance of Shares. As soon as practicable after each such exercise
of Warrants, but not later than thirty (30) days from the date of such exercise,
the Company shall issue and deliver to the Holder a certificate or certificates
for the Warrant Shares issuable upon such exercise, registered in the name of
the Holder. If these Warrants should be exercised in part only, the Company
shall, upon surrender of the Warrants for cancellation, execute and deliver new
Warrants evidencing the rights of the Holder to purchase the balance of the
Warrant Shares purchasable hereunder. Upon receipt by the Company of the
Warrants at its office, or by the stock transfer agent of the Company at its
office, in proper form for exercise, the Holder shall be deemed to be the holder
of record of the Warrant Shares issuable upon such exercise, notwithstanding
that the stock transfer books of the Company shall then be closed or that
certificates representing such shares shall not then be physically delivered to
the Holder.
(d) Reservation Of Shares. The Company shall at all times reserve for
issuance and/or delivery upon exercise of the Warrants such number of shares of
its authorized but unissued Series B Preferred as shall be required for issuance
and delivery upon exercise of the Warrants, and such number of its authorized by
unissued Conversion Shares as shall be required for issuance and delivery upon
conversion of such Warrant Shares.
(e) Fractional Shares. No fractional shares or script representing
fractional shares shall be issued upon the exercise of these Warrants. All
fractional shares shall be eliminated by rounding any fraction to the nearest
whole number of shares of Series B Preferred.
(f) Exchange Of Warrant. These Warrants are exchangeable, without
expense, at the option of the Holder, upon presentation and surrender hereof to
the Company or at the office of its stock transfer agent, if any, for other
Warrants of different denominations entitling the Holder to purchase in the
aggregate the same number of shares of Series B Preferred purchasable hereunder.
The Warrants may be divided or combined with other Warrants which carry the same
rights upon presentation hereof at the principal office of the Company or at the
office of its stock transfer agent, if any, together with a written notice
specifying the denominations in which new Warrants are to be issued and signed
by the Holder. The term "Warrants" as used herein includes any Warrants into
which these Warrants may be divided or exchanged. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
these Warrants, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of these
Warrants, if mutilated, the Company will execute and deliver new Warrants of
like tenor and date.
(g) Rights Of The Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
unless and until the Warrants are exercised, and the rights of the Holder are
limited to those expressed herein and are not enforceable against the Company
except to the extent set forth herein.
IN WITNESS WHEREOF, the Company has caused these Warrants to be signed
and attested by the undersigned, each being duly authorized, as of the date
below.
J2 COMMUNICATIONS
By:__________________________________
Xxxxx X. Xxxxxxx, President
Dated: May 17, 2002
Attest:
_________________________________
Xxxxx Xxxx, Acting Secretary
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise the within
Warrants to the extent of purchasing _______ shares of Series B Preferred and
hereby makes payment of ____________ in payment of the actual exercise price
thereof.
GTH CAPITAL, INC.
By:________________________ Date:________________________
EIN:_____________________
Address:________________________________________________________________________
