Exhibit 10.2
2002 EMPLOYMENT AGREEMENT
BETWEEN J2 COMMUNICATIONS
AND
XXXXX X. XXXXXXX
This 2002 EMPLOYMENT AGREEMENT, dated as of May 17, 2002 (the
"Agreement"), is entered into by and between J2 COMMUNICATIONS, a California
corporation (the "Company"), and XXXXX X. XXXXXXX ("Executive").
RECITALS
WHEREAS, Executive has served since 1986 and continues to serve as
Chairman of the Board of Directors, President and Chief Executive Officer of the
Company;
WHEREAS, Executive and the Company are parties to a Restated Employment
Agreement dated as of July 1, 1999 (the "1999 Employment Agreement");
WHEREAS, National Lampoon Acquisition Group LLC, a California limited
liability company ("NLAG"), and/or certain affiliates of NLAG, propose to invest
an amount equal to at least Two Million Five Hundred Thousand Dollars
($2,500,000) in the Company (the "NLAG Investment") and are receiving options to
purchase additional shares of capital stock from the Company pursuant to that
certain Preferred Stock and Warrant Purchase Agreement dated as of April 25,
2002, as amended by the First Amendment to Preferred Stock and Warrant Purchase
Agreement dated May 17, 2002 (the "Stock Purchase Agreement"), and Executive,
the Company, such investors and certain other shareholders of the Company
propose to enter into various agreements and certain other transactions in
connection therewith and ancillary thereto (including this Agreement), as set
forth in the Stock Purchase Agreement, the Jimirro Registration Rights Agreement
(the "Jimirro Registration Rights Agreement") dated as of even date herewith
between Executive and the Company, the NLAG Registration Rights Agreement (the
"NLAG Registration Rights Agreement") dated as of even date herewith among NLAG,
the Company and certain affiliates of NLAG and the Voting Agreement (the "Voting
Agreement") dated as of even date herewith among Executive, NLAG and certain
affiliates of NLAG (the NLAG Investment and such other transactions,
collectively, the "Transactions");
WHEREAS, it is a condition to the consummation of the Transactions that
Executive and Company terminate the 1999 Agreement and enter into this
Agreement;
WHEREAS, in consideration of the termination of the 1999 Agreement, the
execution by Executive of this Agreement, and the forgiveness by Executive of
the principal amount of and all interest accrued on all Contingent Note (as
defined below), the Company has agreed to pay the Executive the sum of One
Million One Hundred Thousand Dollars ($1,100,000);
WHEREAS, all of the obligations of the Company to Executive pursuant to
this
Agreement (including without limitation any such obligations pursuant to the
Severance Note (as defined below)) are secured by a perfected first priority
security interest on all of the assets of the Company pursuant to a Security
Agreement between the Company and Executive dated as of even date herewith (the
"Security Agreement"); and
WHEREAS, the Board has determined that this Agreement is in the best
interests of the Company:
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, the parties hereto agree as follows:
1. EMPLOYMENT
(a) Executive Employment. The Company hereby employs Executive, and
Executive hereby agrees to perform services for the Company for and during the
term hereof, and to serve as President and Chief Executive Officer of the
Company and, for so long as Executive is a director of the Company, as Chairman
of the Board. Executive shall perform such executive duties and have such
executive responsibilities as are set forth in the Bylaws of the Company and as
may from time to time be assigned to Executive by the Board. The Executive shall
report solely to the Board and shall be subject to direction solely from the
Board in the performance of his duties hereunder. Unless Executive otherwise
consents in writing, Executive shall also serve in the same positions, and shall
have similar responsibilities with respect to, each entity of which equity
securities or other ownership interests having ordinary voting power to elect
members of the board of directors or other persons performing similar functions
are at the time directly or indirectly wholly-owned by the Company, one or more
of the other wholly-owned subsidiaries of the Company or any combination thereof
(such entities, collectively, the "Subsidiaries"). For purposes of this
Agreement, unless the context otherwise requires, references to the business of
"the Company" shall include all Subsidiaries of the Company and any successor
corporation or corporations which may be the eventual successor to the present
or future business and/or assets of the Company.
(b) Duties. Throughout the period that the Executive is employed by the
Company hereunder (the "Employment Term"), Executive shall devote substantially
all of his time, energy and skill during normal business hours to the business
and affairs of the Company, consistent with past practice of the Company and the
Executive, except for vacation periods and periods of illness or incapacity, but
nothing in this Agreement shall preclude Executive from devoting reasonable
amounts of time to serve as a director or member of a committee of any
organization involving no material and substantial conflict of interest with the
Company or from pursuing personal investments provided that Employee shall not,
directly or indirectly, as employee, consultant, agent, investor, principal,
partner, stockholder (except as a holder of less that 1% of the issued and
outstanding stock or debt of a publicly held corporation), officer, director or
otherwise, engage or participate in any business similar to or in competition in
any manner
whatsoever with the business as now or hereafter conducted.
(c) Place of Employment. The Company shall not change the location of
the principal office of the Company or Executive's principal place of employment
during the Employment Term without the prior written approval of Executive. The
Executive shall not be required to travel from Los Angeles on business for
unreasonable periods of time or on an unreasonable number of business trips.
2. COMPENSATION. The Company shall provide to Executive and pay the following
forms of compensation:
(a) Base Salary.
(i) During the Employment Term, and retroactively from and
including January 1, 2002, the Company shall pay to Executive an annual
salary (the "Base Salary") for the services to be rendered by him
hereunder, including all services to be rendered as an officer, employee
or director of the Company or any of its Subsidiaries, which shall
initially be Five Hundred Thousand Dollars ($500,000) per year. Such
salary shall be payable in cash in semimonthly payments on the 1st and
15th days of each month. Executive's Base Salary as in effect from time
to time shall not be subject to reduction without Executive's prior
written consent.
(ii) Executive is the payee of a certain promissory note
executed by the Company as listed on Schedule 1 (the "Contingent Note").
In consideration of the termination of the 1999 Agreement, the execution
by Executive of this Agreement, and the forgiveness by Executive of the
principal amount of and all interest accrued on the Contingent Note, the
Company shall pay to Executive concurrently with the execution of this
Agreement the sum of One Million, One Hundred Thousand Dollars
($1,100,000). Concurrently with the execution of this Agreement,
Executive shall execute and deliver to the Company the Note Termination
Agreement attached as EXHIBIT A and shall return the Contingent Note to
the Company marked "cancelled," dated as of event date herewith and
executed by Executive.
(iii) Adjustments to Base Salary. Executive's Base Salary may be
increased (but not decreased) by the Board in its sole discretion.
(b) Xxx Xxxxxx Compensation. In addition to his Base Salary, Executive
shall be entitled to receive as additional compensation directly from all
relevant payors, such sums as may become payable to Executive pursuant to the
Absolute Assignment dated as of even date herewith relating to gross revenues
from the movie "National Lampoon's Xxx Xxxxxx" (the "Absolute Assignment"). The
Company shall give irrevocable instructions to the relevant payors such that the
amounts due to Executive pursuant to the Absolute Assignment (such amounts, the
"Xxx Xxxxxx Payments") are to be paid directly to Executive or his assigns,
shall not subsequently take any actions inconsistent with such instructions, and
shall use its reasonable efforts to ensure that Executive receives directly
such Xxx Xxxxxx Payments; provided, however, that Company shall not be required
to guaranty payment of such amounts to Executive. Executive's rights pursuant to
the Absolute Assignment shall survive termination of Executive's employment for
any reason whatsoever or his death or disability.
(c) Stock Options. Commencing on January 31, 2003 and continuing on the
last day of each month thereafter for the duration of the Employment Term, the
Board (acting solely by "outside directors" as such term is defined in the
regulations regarding performance based compensation under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code")), shall grant to
Executive options to purchase 5,000 shares of the Company's Common Stock, no par
value (the "Common Stock") on the following terms and conditions:
(i) The exercise price of each option shall be equal to (A) if
the Common Stock is traded on the NASDAQ Automated Quotation System, the
average of the last reported sale price for one share of Common Stock
during the five (5) business days preceding the date of grant as
reported on the NASDAQ Automated Quotation System; (B) if transactions
in the Common Stock are reported on the NASDAQ National Market System or
the Common Stock is listed on any national stock exchange, the average
of the last reported sale price for one share of Common Stock during the
five (5) business days preceding the date of grant, as reported on such
system or by such exchange; or (C) if neither (A) nor (B) is applicable,
then the fair market value of one share of the Common Stock, as
determined in good faith by the Board.
(ii) All stock options granted to Executive pursuant to this
Section 4(c): (A) shall be immediately exercisable; (B) shall expire to
the extent not exercised prior to the close of business on the day ten
(10) years from the date of grant; (C) may be exercised as to the whole
or any part, by written notice to the Company, stating the number of
shares with respect to which the option is being exercised and
specifying a date, not less than ten (10) nor more than twenty (20) days
after the date of such notice, as the date on which the stock will be
taken up and payment, if any, made therefor at the principal office of
the Company; (D) shall be governed by agreements substantially in the
form of the agreement attached hereto as EXHIBIT B, which includes
standard "cashless exercise" provisions, or as otherwise agreed upon by
the parties; and (E) shall be subject to all other terms identical to
those contained in the Company's Amended and Restated 1999 Stock Option,
Deferred Stock and Restricted Stock Plan (the "Plan"). The Company shall
use its best efforts to assure that all options are granted to Executive
under the Plan, or a similar plan later adopted by the Company which
satisfies the conditions of Rule 16b-3 of the Securities and Exchange
Commission or any successor thereto.
(iii) In the event of a change in the number of the Company's
shares of Common Stock outstanding caused by an event listed in Section
3.3 of the Plan, the number of shares subject to options granted before
the date of such event shall
be adjusted in accordance with the procedures contained in such Section
and the number of options to be granted to Executive pursuant to this
Section 2(c) shall be correspondingly adjusted.
(iv) Notwithstanding the foregoing, if and to the extent that,
in the opinion of counsel, the Company is unable to grant the Executive
any stock options due Executive pursuant to this Section 2(c) because
such grant would violate any state or federal securities law,
regulation, permit or approval obtained by the Company, then the Company
shall to the extent it is able to do so without violation of the
foregoing, at the time such stock options would otherwise be granted to
Executive hereunder, agree with the Executive on a reasonably
equivalent, alternative form of compensation, with the agreement of
neither party to be unreasonably withheld.
(v) To the extent such options are unavailable under the Plan,
the Company shall nevertheless be required to issue such options and
register such options (and the Common Stock with respect to which such
options are exercisable) as soon as practicable after issuance on Form
S-8 or any successor form thereto pursuant to the rules and regulations
of the Securities and Exchange Commission. If registration of such
options (and the Common Stock with respect to which such options are
exercisable) is not possible pursuant to Form S-8 or any such successor
form, the Company shall be required to register such options (and the
Common Stock with respect to which such options are exercisable)
pursuant to the provisions of the Jimirro Registration Rights
Agreement. The Company shall at all times during the Employment Term
reserve a sufficient number of options under the Plan for granting to
Executive during the next succeeding five years of the Employment Term.
(e) INTENTIONALLY OMITTED.
(f) Vacation. During the Employment Term, Executive shall be entitled to
four (4) weeks paid vacation per year to be taken at such times as are mutually
satisfactory to Executive and to the Company.
(g) Other Benefits. During the Employment Term, the Company shall
continue to provide Executive with benefits substantially similar to those
enjoyed by him under any of the Company's vacation, pension, retirement, life
insurance, medical, health and accident, or disability plans or policies in
which he is presently participating and the Company shall not take any action
which would directly or indirectly materially reduce any of such benefits or
deprive Executive of any material fringe benefit presently enjoyed by him
immediately prior to the date of this Agreement. During the Employment Term,
Executive shall also be entitled to participate or continue to participate in or
receive benefits under all of the Company's employee benefit plans, policies,
practices and arrangements made available by the Company in the future to its
executive employees subject to and on a basis consistent with the terms,
conditions and overall administration of such benefit plans and the terms of
this Agreement. Without limiting the foregoing,
during the Employment Term, the Company shall continue to provide Executive with
support services comparable to those currently provided to him, including
without limitation the exclusive use of his current office and the exclusive
services of his current secretary, apart from her duties as office manager. At
its discretion, the Board may grant to Executive benefits under the Company's
existing employee benefit plans in addition to those presently enjoyed by
Executive or specified herein, based upon Executive's contributions to the
success of the Company.
(h) Excise Tax Gross-Up Payment.
(i) The provisions of this subsection (h) shall apply only if
(X) the Company terminates Executive's employment hereunder at any time
on or before May 16, 2003 or (Y) the applicable Change in Control (as
defined below) occurs after the date hereof.
(ii) Subject to subsection (i) above, in the event that any
payment and/or the value of any benefit, or any portion thereof,
received or to be received by Executive (other than any amount paid to
Executive pursuant to this Section 2(h)) (collectively, "Payments") will
make Executive liable for payment of the excise tax (the "Excise Tax")
provided for under Section 4999 of the Code, then the Company or the
acquiring or successor entity of the Company shall pay to Executive
within ninety (90) days of the date Executive becomes subject to the
Excise Tax, an additional amount (the "Excise Tax Gross-Up Payment")
such that the net after-tax amount retained by the Executive, after
deduction of (X) any Excise Tax on the Payments, and (Y) any federal,
state, local or foreign income, employment or other tax and Excise Tax
upon any payment provided for by this Section 2(h), shall be equal to
the Payments, reduced by the amount of any United States federal, state
and local income or employment tax liability of the Executive calculated
as if the Payments were not subject to the Excise Tax. Under no
circumstances shall the terms of this Section 2(h) be construed to alter
the timing, form, or any other provisions of the Payments. For the
purposes of determining whether any of the Payments will be subject to
the Excise Tax and the amount of such Excise Tax:
(1) Any other payments or benefits received or to be
received by Executive in connection with the transactions
contemplated by a Change in Control or Executive's termination of
employment (whether pursuant to the terms of this Agreement or
any other plan, arrangement or agreement with the Company), shall
be treated as "parachute payments" within the meaning of Section
280G of the Code, and all "excess parachute payments" within the
meaning of Section 280G shall be treated as subject to the Excise
Tax, unless in the opinion of tax counsel selected by the Company
and acceptable to Executive, such other payments or benefits (in
whole or in part) do not constitute parachute payments, or such
excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered within the
meaning of Section 280G in excess of the "base amount" within the
meaning of Section 280G,
or are otherwise not subject to the Excise Tax.
(2) The amount of the Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (1) the
total amount of the Payments, or (2) the amount of the excess
parachute payments within the meaning of Section 280G (after
applying the above provisions).
(3) The value of the non-cash benefits, or any deferred
payment or benefit, shall be determined by an independent public
accounting firm mutually agreeable to the Company and Executive
(the "Accountants") in accordance with the principles of Section
280G of the Code.
(iii) For purposes of determining the amount of the Excise Tax
Gross-Up Payment, Executive shall be deemed to pay federal income taxes
at the highest marginal rate of federal income taxation for the calendar
year with respect to which the Excise Tax Gross-Up Payment is to be
made, and state and local income taxes at the highest marginal rate of
taxation in the state and locality of the Executive's residence on the
date of the Excise Tax Gross-Up Payment is to be made, net of the
maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes.
(iv) In the event that the Excise Tax is subsequently determined
to be less than the amount taken into account under this Section 2(h),
Executive shall repay to the Company at the time that the amount of such
reduction of Excise Tax is finally determined, an amount equal to the
sum of the following: (i) the amount of the reduction of the Excise Tax,
(ii) the amount of the reduction in all other taxes generated by the
reduction in the Excise Tax, and (iii) interest on the amount of the sum
of (i) and (ii) at the rate provided in Section 1274(b)(2)(B) of the
Code.
(v) In the event that the Excise Tax is determined to exceed the
amount previously taken into account under the Section 2(h) (including
by reason of any payment the existence or amount of which cannot be
determined at the time of the Excise Tax Gross-Up Payment), the Company
shall make an additional Excise Tax Gross-Up Payment in respect to such
excess (plus any interest payable with respect to such excess) at the
time that the amount of such excess is finally determined in accordance
with the principles set forth above.
(vi) Unless the Company and Executive otherwise agree in
writing, any determination required under this Section 2(h) shall be
made in writing by the Accountants, whose determination shall be
conclusive and binding upon Executive and the Company for all purposes.
For purposes of making the calculations required by this Section 2(h),
the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of
the Code. The Company and Executive shall furnish to the Accountants
such information and documents as the Accountants may reasonably
request in order to make a determination under this Section 2(h). The
Company shall bear all costs the Accountants may reasonably incur in
connection with any calculations contemplated by this Section 2(h).
(vii) References to Sections 280G and 4999 of the Code shall
include any provisions which are similar to or are a successor to such
Code section.
3. EXPENSES. Executive shall be reimbursed for expenses incurred for business
purposes by the Company upon presenting satisfactory vouchers evidencing such
expenses. Executive shall be provided with and the Company shall pay all
insurance, maintenance, license, registration and operational expenses for an
automobile of his choice (luxury class).
4. TERMINATION.
(a) Term. This Agreement shall be in effect from the date hereof through
a period ending December 31, 2007 (the "Initial Term"), unless extended or
earlier terminated in accordance with this Section 4. Any early termination of
this Agreement shall be subject to delay if a Notice of Dispute is delivered in
accordance with Section 4(i).
(b) Automatic Extension. Effective on December 31, 2003 and on December
31 of each year thereafter, the remaining term of this Agreement shall be
extended automatically without any further action of the parties such that as of
each December 31 the remaining term hereof will be five (5) years.
(c) Death. This Agreement shall be terminated automatically upon the
death of Executive.
(d) Disability. This Agreement shall be terminated automatically upon
the permanent disability of Executive. For purposes of this Agreement, a
permanent disability shall be deemed to have occurred if (i) Executive is unable
to perform his material duties hereunder for a period of ninety (90) consecutive
days, or one hundred eighty (180) days in any one (1) year, on account of any
physical or mental disability; or (ii) a licensed physician selected by the
Company and approved by Executive (or his closest relative if Executive is
unable to act), which approval shall not be unreasonably withheld, makes a
medical determination of physical or medical disability or incapacity of
Executive.
(e) Termination by the Company For Cause. This Agreement may be
terminated voluntarily by the Company immediately at any time during its term
for "Cause" which shall mean (i) the willful and continued failure by Executive
to substantially perform his duties with the Company in good faith (other than
any such failure resulting from his incapacity due to physical or mental illness
or any such actual or anticipated failure resulting from his termination
pursuant to Section 4(f)), after a demand for substantial performance is
delivered to him by the Board which specifically identifies the manner in which
the Board believes that Executive has not substantially performed his duties in
good faith; or (ii) the willful engaging by Executive in conduct which is
demonstrably and materially injurious to the Company, monetarily or otherwise.
For purposes of this Section 4(e), no act, or failure to act, on the Executive's
part shall be considered "willful" unless done, or omitted to be done, by him in
bad faith and without reasonable belief that his action or omission was in the
best interest of the Company. Notwithstanding the foregoing, Executive shall not
be deemed to have been terminated for cause unless and until there shall have
been delivered to him a Notice of Termination (as defined in Section 4(h) below)
and a copy of a resolution duly adopted by the affirmative vote of at least six
of the six members of the Board (excluding Executive) at a meeting of the Board
called and held for such purpose (after reasonable written notice to Executive,
not less than 10 days prior to the date of such meeting, detailing the alleged
basis for such determination; and an opportunity for Executive, together with
his counsel, to be heard before such meeting), finding that in the good faith
opinion of the Board, Executive was guilty of conduct set forth above in clause
(i) or (ii) of the first sentence of this Section 4(e) and specifying the
particulars thereof in detail. Any dispute concerning a determination of "Cause"
pursuant hereto shall be subject to arbitration pursuant to Section 9(c) hereof.
(f) Termination by the Company For Convenience. This Agreement may be
terminated by the Company after December 31, 2002 at any time during its
then-remaining term for "Convenience." Notwithstanding the foregoing, Executive
shall not be deemed to have been terminated for Convenience pursuant to this
Section 4(f) unless and until (i) the Company shall have delivered to him a
Notice of Termination (as defined in Section 4(h) below) and a copy of a
resolution duly adopted by either (X) a majority of the directors designated by
the holders of shares of Series B Preferred Stock, no par value, of the Company
or (Y) three of the directors (other than Executive), and (ii) there shall have
been provided to Executive the Cash Severance Payment, the Severance Note, the
car title, and the estimated tax payment required under Section 5 hereof.
(g) Termination by Executive for Good Reason. Executive shall be
entitled to terminate his employment upon any of the "Executive Good Reason
Termination Events" listed below by delivery to the Company of a Notice of
Termination. The right of Executive to terminate his employment shall be in
addition to all rights to damages or other remedies to which Executive may be
entitled by law; provided, however, that upon the provision of the compensation
and benefits upon termination set forth in Section 5 below to Executive, the
Company shall have no further liability or obligation hereunder to Executive to
pay the compensation or provide the benefits specified in Section 2 hereof, or
to his executors or administrators, his heirs or assigns or any other person
claiming under or through him therefor; provided, further, that the foregoing
shall not relieve the Company from its obligations under Section 2(b) and shall
not relieve the Company from its obligations to Executive or his successors or
assigns under the Jimirro Registration Rights Agreement, the Voting Agreement,
the Severance Note, or the Security Agreement. The term "Executive Good Reason
Termination Events" shall mean the occurrence of any one or more of the
following:
(i) any failure by the Company to pay any amounts when due to
Executive pursuant to this Agreement, the Indemnity Agreement,
or the Jimirro Registration Rights Agreement, which failure
continues for more than ten (10) days after written notice
thereof is given by Executive to the Designated Officer of the
Company at the Designated Officer's address pursuant to Section
9(b) hereof;
(ii) any material breach of (A) any obligation of the
Company to Executive pursuant to this Agreement, the Indemnity
Agreement, the Jimirro Registration Rights Agreement or the
Security Agreement not constituting a payment obligation, or (B)
any obligation of any party to the Voting Agreement (other than
Executive), which (I) in the case of any Designated Breach,
continues for a period of 10 days after the earlier of (X) the
date upon which the Designated Officer had actual knowledge of
such breach or (Y) the date upon which Executive gives written
notice of such breach to the Designated Officer of the Company
at the Designated Officer's address pursuant to Section 9(b)
hereof; and (II) in the case of any such breach other than a
Designated Breach (as defined below), continues for a period of
10 days after the date upon which Executive gives written notice
of such breach to the Designated Officer of the Company at the
Designated Officer's address pursuant to Section 9(b) hereof;
(iii) the failure of the Company to cause the election
of Executive to the Board upon the end of any term of office of
Executive as a member of the Board, or the failure to maintain
Executive in office as a director at any other time; provided
that the Executive is one of the persons nominated by the
Executive to be one of the Jimirro Directors (as defined in the
Voting Agreement) pursuant to the Voting Agreement at such time;
(iv) any purported termination of Executive's employment
by the Company upon which a Notice of Dispute is properly given
if pursuant to Section 4(i) it is determined, either by a
binding arbitration award or by a final judgment, order or
decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been perfected),
that such purported termination was invalid;
(v) the occurrence after the date hereof of a "Change in
Control of the Company," which shall be deemed to occur: (A)
upon a change in control of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended ("Exchange Act"), whether or not the Company is
then subject to such reporting requirement; (B) any "person" (as
such term is defined in Section 3(a) (9) of the Exchange Act)
(other than NLAG and the Shareholders (as defined in the Voting
Agreement) and their affiliates (as defined in Rule 12b-2
promulgated under the Exchange Act), associates (as defined in
Rule 12b-2
promulgated under the Exchange Act) and transferees that are
parties to the Voting Agreement) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the
Company's then outstanding securities; (C) at any time during
the one year following the date hereof, the members of the Board
of Directors of the Company do not consist of (X) the Jimirro
Directors (as defined in the Voting Agreement), (Y) the Series B
Directors (as defined in the Voting Agreement) and (Z) one
person nominated jointly by a majority of the Jimirro Directors
and a majority of the Series B Directors (the "Independent
Director"); (D) the sale of all or substantially all of the
assets of the Company; or (E) the merger of the Company with any
other corporation if shareholders of the Company prior to the
effective date of the merger own, immediately following the
merger, less than seventy-five percent of the combined voting
power of the surviving corporation excluding from such ownership
any voting securities not received in exchange for or in respect
of voting securities of the Company; provided, however, that (X)
none of the Transactions (including the exercise of options to
purchase additional shares under the Stock Purchase Agreement)
shall be deemed to constitute a "Change in Control of the
Company," (Y) no transfers of securities between or among the
Shareholders (as defined in the Voting Agreement) or any of
their associates or affiliates shall be deemed to constitute a
"Change in Control of the Company," and (Z) no additional
purchases of Company securities by the Shareholders (as defined
in the Voting Agreement) or any of their associates or
affiliates after the date hereof shall be deemed to constitute a
"Change in Control of the Company;"
(vi) the failure of the Company to obtain an assumption
agreement as required by Section 6 hereof prior to the
effectiveness of any such succession as defined therein. Any
purported termination of employment by Executive pursuant to
this Section 4(g) shall be made by giving a Notice of
Termination within one (1) year in the case of clause (v) and
six (6) months in the case of clauses (i), (ii), (iii), (iv) and
(vi) hereof of the event giving rise to the right to terminate.
The failure of Executive to give a Notice of Termination within
such period shall not be construed to prevent the giving of
Notice of Termination upon the next occurrence of any event set
forth in clauses (i) through (vi) of this Section 4(g).
Executive's right to terminate his employment pursuant to this
Section 4(g) shall not be affected by his incapacity due to
physical or mental illness. The term "Designated Officer" shall
mean the following: (a) at any time that Xxxxxxx X. Xxxxxx is an
officer or director of the Company, Xxxxxxx X. Xxxxxx or any
other party designated as the "Designated Officer" in writing by
Xxxxxxx X. Xxxxxx to Executive at Executive's notice address
pursuant to Section 9(b) of this Agreement, and (b) at any time
that Xxxxxxx X. Xxxxxx is not an officer or director of the
Company,
any party designated as the "Designated Officer" in writing by
the Company to Executive pursuant to Section 9(b) of this
Agreement (provided, however, that such party shall be one of
the Series B Directors (as such term is defined in the Voting
Agreement) other than Xxxxxx X. Xxxxxx). The term "Designated
Breach" shall mean any breach by the Company of Sections 6 or
9(h) of this Agreement, any breach by the Company of Sections
5(a)(ii), 5(a)(v), 5(a)(viii), 5(a)(ix), 5(c)(i), 5(c)(ii),
5(f), 5(g), 5(i), 5(j), 5(k), or 16 of the Security Agreement,
any breach by the Company of Section 11 of the Indemnity
Agreement, any breach by the Company of Sections 3.1 or 9.5 of
the Registration Rights Agreement, any breach by the Designated
Officer of the Voting Agreement, and any breach by any party
(other than Executive) of Section 3(a) of the Voting Agreement.
(h) Notice of Termination. "Notice of Termination" shall be a written
notice terminating Executive's employment hereunder which shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of employment under the provision so indicated.
(i) Notice of Dispute. Within fifteen (15) days after Notice of
Termination is given pursuant to Sections 4(e) or 4(g), the party receiving such
Notice of Termination may notify the other party that a dispute exists
concerning the termination ("Notice of Dispute"), and the Date of Termination
shall be the date on which the dispute is finally resolved, either by mutual
written agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected); and
provided, however, that the Date of Termination shall be extended by a Notice of
Dispute only if the party delivering such notice pursues the resolution of such
dispute with reasonable diligence. Notwithstanding the pendency of a Notice of
Dispute, the Company will continue to pay Executive his full compensation in
effect when the notice giving rise to the dispute was given and continue him as
a participant in all compensation, bonus, benefit and insurance plans in which
he was participating when the notice giving rise to the dispute was given, until
the dispute is finally resolved. Notwithstanding anything expressed or implied
to the contrary in this Section 4(i), the failure of a party to give a Notice of
Dispute or to pursue a dispute with reasonable diligence shall not foreclose the
party from disputing such termination or otherwise pursuing any rights to
damages or other remedies to which the party may be entitled at law.
(j) Date of Termination. Subject to Section 4(i), "Date of Termination"
means (i) if employment is terminated upon the death of Executive, the date of
such death; (ii) if employment is terminated upon the permanent disability of
Executive as provided for in Section 4(d), on the date permanent disability is
first established pursuant to that Section; (iii) if employment is terminated
pursuant to Section 4(e), the date specified in the second to last sentence of
Section 4(e); (iv) if employment is terminated pursuant to Section 4(f), the
date specified in the last sentence of Section 4(f); (v) if employment is
terminated
pursuant to Section 4(g) (other than Section 4(g)(v)), the date specified in the
Notice of Termination, which shall be not less than thirty (30) nor more than
sixty (60) days following the date the Notice of Termination is delivered to the
Company; or (vi) if employment is terminated pursuant to clause (v) of Section
4(g), the date on which any such succession becomes effective.
5. COMPENSATION AND BENEFITS UPON TERMINATION. In addition to any benefits
mandated by law, upon termination of employment, Executive shall be entitled to
the compensation and benefits described below. Upon the provision of such
compensation and benefits to Executive, the Company shall have no further
liability or obligation hereunder to Executive to pay the compensation or
provide the benefits specified in Section 2 hereof, or to his executors or
administrators, his heirs or assigns or any other person claiming under or
through him therefor; provided, however, that the foregoing shall not relieve
the Company from its obligations under Section 2(b) and shall not relieve the
Company from its obligations to Executive or his successors or assigns under the
Jimirro Registration Rights Agreement, the Severance Note, or the Security
Agreement.
(a) Death. Upon the death of Executive, the Company shall provide to the
estate of Executive the compensation and benefits set forth in Section 5(d)
below. In addition, the Company shall continue to use its reasonable efforts to
ensure that the Executive's estate receives directly the Xxx Xxxxxx Payments
from the applicable payors pursuant to the Absolute Assignment; provided,
however, that Company shall not be required to guaranty payment of such amounts
to Executive.
(b) Disability. Upon the disability of Executive, the Company shall
provide to Executive the compensation and benefits set forth in Section 5(d)
below; provided, however, that the Cash Severance Amount shall be reduced by an
amount equal to the discounted present value (determined using a 8% discount
factor) as of the date of the disability of Executive of any insurance benefits
paid or payable to Executive pursuant to any insurance maintained by the Company
at its expense. In addition, the Company shall continue to use its reasonable
efforts to ensure that the Executive receive directly the Xxx Xxxxxx Payments
from the applicable payors pursuant to the Absolute Assignment; provided,
however, that Company shall not be required to guaranty payment of such amounts
to Executive.
(c) Cause. If Executive's employment shall be terminated by the Company
for Cause or by Executive without Good Reason, the Company shall pay Executive
his full Base Salary in effect at the Date of Termination and other benefits to
which he is entitled through the Date of Termination at the rate in effect at
the time Notice of Termination is given. In addition, the Company shall continue
to use its reasonable efforts to ensure that the Executive receive directly the
Xxx Xxxxxx Payments from the applicable payors pursuant to the Absolute
Assignment; provided, however, that Company shall not be required to guaranty
payment of such amounts to Executive.
(d) Termination by Company for Convenience; Termination by Executive for
Good Reason. If Executive's employment by the Company shall be terminated by the
Company for Convenience pursuant to Section 4(f), or by Executive for Good
Reason pursuant to Section 4(g), then Executive shall be entitled to the
compensation provided in Subsections (d)(i) through (d)(iv) below
(i) The Company shall pay Executive, contemporaneously with the
delivery to Executive of a Notice of Termination with respect to the
Company's termination of the Executive for Convenience under Section
4(f), and no later than five (5) days after the Executive's delivery of
a Notice of Termination pursuant to Section 4(g), the sum of One Million
Four Hundred Thousand Dollars ($1,400,000) in cash, representing One
Million Dollars ($1,000,000) based on two years of Base Compensation at
the initial rate set forth herein and Four Hundred Thousand Dollars
($400,000) representing the estimated fair value of the fringe benefits
and stock options that would be afforded to Executive if he were to
continue to be employed by the Company for the remaining term of his
employment under this Agreement (such total cash payment of One Million
Four Hundred Thousand Dollars ($1,400,000), the "Cash Severance
Payment").
(ii) The Company shall deliver to Executive, contemporaneously
with the delivery to Executive of a Notice of Termination with respect
to the Company's termination of the Executive for Convenience under
Section 4(f), and no later than five (5) days after the Executive's
delivery of a Notice of Termination pursuant to Section 4(g), a
Severance Note in the initial principal amount of One Million Dollars
($1,000,000) in the form attached as EXHIBIT C (the "Severance Note").
(iii) The Company shall transfer to Executive, contemporaneously
with the delivery to Executive of a Notice of Termination with respect
to the Company's termination of the Executive for Convenience under
Section 4(f), and no later than five (5) days after the Executive's
delivery of a Notice of Termination pursuant to Section 4(g), at no cost
title of the automobile provided to Executive pursuant hereto free and
clear of any lien or other encumbrance.
(iv) The Company shall, contemporaneously with the delivery to
Executive of a Notice of Termination with respect to the Company's
termination of the Executive for Convenience under Section 4(f), and no
later than five (5) days after the Executive's delivery of a Notice of
Termination pursuant to Section 4(g), forgive all amounts due by
Executive under that certain promissory note of Executive dated July 14,
1986 (the "Executive Note"). On such date, the shares of the Company's
Common Stock that have been pledged to secure the payment of the
Executive Note shall be released from such pledge and all legends
related to such pledge shall be removed from the related stock
certificates. In addition, the Company will pay timely to Executive, as
set forth below, all Federal, state and local income, excise, employment
and other taxes that may be imposed upon Executive directly or by
withholding by reason of the forgiveness of the principal of and
interest on such promissory note and the payment of any amounts on his
account pursuant to this sentence. If Executive terminates his
employment under this Agreement for Good Reason pursuant to Section
4(g), he may elect to submit a good faith estimate of such taxes upon
giving the applicable Notice of Termination, and such termination shall
not be effective unless and until the Company has paid to Executive the
amount of such estimate. If the Company elects to cause a Termination
for Convenience pursuant to Section 4(f), it shall contemporaneously
with the giving of Notice of Termination pay to Executive an amount
equal to fifty percent (50%) of the total amount of principal plus
accrued interest with respect to the Executive Note as of such date as
an estimate of such taxes, and such termination shall not be effective
unless and until the Company has made such payment, as well as the Cash
Severance Payment and delivery of the Severance Note. In either case,
the estimated amount paid by the Company shall not represent a final
determination of the amount of such taxes, and if the actual amount of
such taxes differs from such estimate, the Company or Executive, as
applicable, shall pay such excess to the other upon demand.
(v) Notwithstanding any termination by the Company for
Convenience or termination by Executive for Good Reason, the Company
shall continue to use its reasonable efforts to ensure that the
Executive receive directly the Xxx Xxxxxx Payments from the applicable
payors pursuant to the Absolute Assignment; provided, however, that
Company shall not be required to guaranty payment of such amounts to
Executive.
(e) No Mitigation of Damages. Executive shall not be required to
mitigate the amount of any payment provided for in Sections 2 or 3 or in this
Section 5 by seeking other employment or otherwise, nor shall the amount of any
payment or benefit provided for in Sections 2 or 3 or in this Section 5 be
reduced by any compensation earned by him as the result of employment by another
employer or by retirement benefits after the Date of Termination. The Company
shall not be entitled to any rights to offset, mitigate or otherwise reduce the
amounts owing to Executive by virtue of Sections 2 or 3 or this Section 5 with
respect to any rights, claims or damages which the Company may have against
Executive.
6. SUCCESSORS. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
7. REGISTRATION RIGHTS.
(a) The Company shall register all options of Executive (regardless of
whether such options have been granted under this Agreement or otherwise), and
the Common Stock with respect to which such options are exercisable, as soon as
practicable after issuance on Form S-8 or any successor form thereto pursuant to
the rules and regulations of the Securities and Exchange Commission. If
registration of such options (and the
Common Stock with respect to which such options are exercisable) is not possible
pursuant to Form S-8 or any such successor form, the Company shall be required
to register such options (and the Common Stock with respect to which such
options are exercisable) pursuant to the provisions of the Jimirro Registration
Rights Agreement..
(b) The Company shall grant to Executive registration rights with
respect to all of his shares of Common Stock (including such shares of Common
Stock issuable pursuant to Executive's options) as set forth in the Jimirro
Registration Rights Agreement dated as of even date herewith. The granting of
such registration rights to Executive is in consideration for the performance by
Executive of his obligations under this Agreement.
8. INDEMNITY. Concurrently with the execution of this Agreement, the Company and
the Executive shall execute and deliver to each other an Indemnity Agreement in
the form attached as EXHIBIT D hereto. The delivery of such agreement by the
Company is in consideration for the performance by Executive of his obligations
under this Agreement.
9. MISCELLANEOUS.
(a) Severability, The provisions of this Agreement shall be severable
and if any provision hereof shall be judged to be invalid, such invalidity shall
not affect any other portion of this Agreement which can be given effect.
(b) Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be duly given if actually received or if
duly mailed, registered or certified mail, return receipt requested, postage
prepaid:
If to the Company, to:
J2 Communications
00000 Xxxxxxxx Xxxx.
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
If to Executive, to:
Xxxxx X. Xxxxxxx
00000 Xxxxxxxx Xxxx.
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
If to Designated Officer, to:
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
with a copy to:
Xxxxx X. Xxxxxxx
Xxxxxx Xxxxxxxx & Xxxxxxx LLP
1400 First Indiana Plaza
000 Xxxxx Xxxxxxxxxxxx
Xxxxxxxxxxxx, XX 00000-0000
or to such other address as either party or the Designated Officer may furnish
to the other in writing, making specific reference to this Section 9(b).
(c) Arbitration. In the event that there shall be a dispute between the
parties hereto concerning the meaning, application or interpretation of this
Agreement or of the legal relations connected therewith, or concerning any
alleged breach hereof, or to enforce the terms hereof or to seek damages in
respect of a breach hereof or otherwise relating hereto, then such dispute shall
be referred to the American Arbitration Association for arbitration before a
single arbitration in Los Angeles, California, according to the rules of the
arbitrator appointed by said Association; and the decision of such Association
shall be final and binding on the parties hereto.
(d) Rights to Work Product. Executive grants to the Company all rights
of every kind whatsoever, exclusively and perpetually, in and to all services
performed by him for the Company hereunder, during the term hereof, and the
results and proceeds thereof, including all of Executive's creative works
including without limitation ideas, concepts, formats, themes, screenplays,
and/or adaptations of the foregoing, whether or not reduced to writing, and
whether or not otherwise protected by copyrights, or rights thereto, or at
common law or otherwise during the term hereof. Executive agrees that all films,
film rights, videotapes, distribution rights, literary material, photoplays,
music rights, ideas for photoplays, scripts and similar rights, presentations,
ideas, formats and all other material (collectively referred to as "Material")
submitted to him by third parties during the term of his employment hereunder
shall be deemed to be submitted to the Company and upon the termination of his
employment hereunder Executive shall forthwith deliver all such Material in his
possession, if any, to the Company.
(e) Confidentiality. Without the express prior written consent of the
Company, Executive shall not, except in the ordinary course of performing his
duties for the Company or as required in order to perfect his security interest
in the Company's assets pursuant to the Security Agreement, disclose or make
available to anyone outside the Company, any confidential or proprietary
information of the Company, its Subsidiaries, or affiliated corporations or
entities including, without limitation, trade secrets, customer lists, financial
data, programming plans or other information not generally known to any
competitor of the Company, its Subsidiaries or affiliated corporations or
entities. Upon termination of his employment, Executive shall deliver to the
Company all documents in his possession containing any such confidential or
proprietary information; provided, however, that Employee shall be entitled to
retain a copy (but not the original) of his personal correspondence file. The
agreements of Executive set forth in this Section 9(e)
shall survive the end of the Employment Term.
(f) Name. The Company acknowledges that part of its name ("J2") relates
and refers to Executive's initials and that such corporate name will be
inevitably associated with Executive within the entertainment industry.
Executive hereby grants the Company the right to use his initials as part of its
name without additional compensation therefor; provided however, that should
Executive's employment with the Company be terminated for any reason, the
Company shall, upon written request of Executive, change its name from "J2" to a
name that does not utilize J2 or Executive's initials within a reasonable time
period (not to exceed one year) following such request.
(g) Attorneys' Fees. In the event of any dispute hereunder, or in the
event of any action to enforce the terms and provisions of this Agreement, the
prevailing party shall be entitled to recover from the other his reasonable
attorneys' fees and disbursements and other costs incurred in connection
therewith.
(h) Assignment. Neither this Agreement nor any right or interest under
this Agreement shall be assignable by Executive. This Agreement shall not be
assignable by the Company without the prior written consent of Executive.
(i) Entire Agreement. This Agreement, the Absolute Assignment, the
Indemnity Agreement, and the Jimirro Registration Rights Agreement set forth the
entire understanding and agreement of the parties with respect to Executive's
employment by the Company on and after the date hereof. Said agreements shall be
binding upon the heirs, administrators, successors and assigns of the parties
hereto. There are no oral agreements, modifications, representations or
understandings relating to Executive's employment by the Company on and after
the date hereof which are not specifically set forth herein. All negotiations
regarding Executive's employment by the Company on and after the date hereof are
merged into this Agreement, the Absolute Assignment, the Indemnity Agreement and
the Jimirro Registration Rights Agreement.
(j) Governing Law. This Agreement and each of the provisions hereunder
shall be interpreted according to and governed by the internal laws of the State
of New York regardless of the principles of choice of law of that or any other
jurisdiction. The parties hereto submit to the jurisdiction of the state and
federal courts of the State of New York.
[Signature page follows]
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its officer thereunto duly authorized, and Executive has executed this
Agreement as of the day and year first above written.
"The Company"
J2 COMMUNICATIONS
By:_________________________
"Executive"
XXXXX X. XXXXXXX
----------------------------
EXHIBIT A
NOTE TERMINATION AGREEMENT
This NOTE TERMINATION AGREEMENT, dated as of May 17, 2002 (the "Note
Termination Agreement"), is entered into by and between J2 COMMUNICATIONS, a
California corporation (the "Company"), and XXXXX X. XXXXXXX ("Executive").
WHEREAS, Executive has served since 1986 and continues to serve as
Chairman of the Board of Directors, President and Chief Executive Officer of the
Company;
WHEREAS, Executive and the Company are parties to a Restated Employment
Agreement, dated as of July 1, 1999 (the "1999 Employment Agreement");
WHEREAS, contingent on certain events, Executive and the Company have
agreed to terminate the Restated Employment Agreement and enter into a 2002
Employment Agreement (the "2002 Employment Agreement");
WHEREAS, in consideration of the termination of the 1999 Agreement, the
execution by Executive of the 2002 Employment Agreement and the forgiveness by
Executive of the principal amount of and all interest accrued on the Contingent
Note (as defined below), the Company has agreed to pay the Executive the sum of
One Million One Hundred Thousand Dollars ($1,100,000).
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, the parties hereto agree as follows:
1. Executive hereby releases the Company from any liability to Executive
pursuant to the contingent promissory note listed on Exhibit A hereto (the
"Contingent Promissory Note"). The Executive represents and warrants to the
Company that the Contingent Promissory Note listed on Exhibit A is the only
promissory note currently due and owing from the Company to Executive. The
Company represents and warrants to Executive that the Contingent Promissory Note
is enforceable in accordance with its terms.
2. Contemporaneously with the execution and delivery of this Note
Termination Agreement, (a) the Company will pay to Executive by wire transfer of
immediately available funds to a bank account designated in writing by Executive
the sum of One Million One Hundred Thousand Dollars ($1,100,000) and (b)
Executive will deliver to the Company the original of the Contingent Promissory
Note marked "cancelled," dated as of even date herewith and executed by
Executive.
3. This Note Termination Agreement and each of the provisions hereunder
shall
be interpreted according to and governed by the internal laws of the State of
California regardless of the principles of choice of law of that or any other
jurisdiction. The parties hereto submit to the jurisdiction of the state and
federal courts of the State of California.
IN WITNESS WHEREOF the parties hereto have signed this Note Termination
Agreement as of the date first above written:
EXECUTIVE J2 COMMUNICATIONS, INC.
__________________________ By:___________________________
Xxxxx X. Xxxxxxx Its:__________________________
EXHIBIT A
1. A Contingent Note dated July 1, 1999 and made between J2 Communications
("Obligor") and Xxxxx X. Xxxxxxx ("Holder") for an amount of $2,150,625.
EXHIBIT B
J2 COMMUNICATIONS
NON-QUALIFIED STOCK OPTION AGREEMENT
Xxxxx X. Xxxxxxx Date Option Granted: ___________, 200__
Name of Optionee
00000 XXXXXXXX XXXX., PENTHOUSE 0
Xxxxxxxxx Xxxxxxx
XXX XXXXXXX, XX 00000
City, State and Zip Code
THIS AGREEMENT (this "Agreement") is made as of the date set forth above
between J2 COMMUNICATIONS, a California corporation (hereinafter called the
"Company"), and the optionee named above (hereinafter called the "Optionee").
RECITAL
The Board of Directors of the Company, or a duly appointed Committee (as
such term is defined in the J2 COMMUNICATIONS Amended and Restated 1999 Stock
Option, Deferred Stock and Restricted Stock Plan (the "Plan")), acting solely by
"outside directors", as such term is defined in the regulations regarding
performance based compensation under Section 162(m) of the Internal Revenue Code
of 1986 (as amended), has determined that it is to the advantage and interest of
the Company and its shareholders to grant the option provided for herein to the
Optionee as an inducement to associate with, and remain in the service of, the
Company or any of its Subsidiaries (as such term is defined in the Plan) and as
an incentive for increased effort during such service. All capitalized terms
used herein which are not otherwise defined herein, shall have the meaning
ascribed to them in the Plan.
In consideration of the mutual covenants herein contained, the parties
hereto agree as follows:
(a) Grant of Option. Pursuant to and subject to the terms and conditions
of the Plan, the Company grants to the Optionee the right and option (the "Stock
Option") to purchase on the terms and conditions hereinafter set forth all or
any part of an aggregate of five thousand (5,000) shares (the "Shares") of the
presently authorized and unissued Common Stock of the Company at the purchase
price of $_____ per share as the Optionee may, from time to time, elect. The
Stock Option shall vest in its entirety immediately upon being granted.
(b) Exercise. The right to exercise the Stock Option granted hereunder,
to the extent unexercised, shall remain in effect for a period of ten years from
the date of grant, and thereafter shall terminate and expire.
(c) Method of Exercise. The Stock Option may be exercised by the
Optionee
from time to time by delivering written notice to the Company (in the form
attached hereto as Exhibit A) stating the number of Shares with respect to which
the Stock Option is being exercised, together with payment in full of the
purchase price for the number of Shares being exercised. Payment of the purchase
price, in whole or in part, may be made (A) in cash or by certified or cashier's
check payable to the order of the Company, (B) in the form of unrestricted Stock
(if held for at least six 6 months) already owned by the Optionee, (C) by
cancellation of any indebtedness owed by the Company to the Optionee, (D)
through the surrender of shares of Stock then issuable upon exercise of the
Stock Option having a Fair Market Value on the date of exercise thereof equal to
the aggregate exercise price of the Stock Option exercised or portion thereof,
or (E) by any combination of the foregoing. If requested by the Board of
Directors of the Company or the Committee, prior to the delivery of any Shares,
the Optionee, or any other person entitled to exercise the Stock Option, shall
supply the Board of Directors of the Company or the Committee with a
representation that the Shares are not being acquired with a view to
distribution and will be sold or otherwise disposed of only in accordance with
applicable federal and state statutes, rules and regulations. As soon after the
notice of exercise as the Company is reasonably able to comply, the Company
shall, without transfer or issue tax to the Optionee or other person entitled to
exercise the Stock Option, deliver to the Optionee or such other person, at the
main office of the Company or such other place as shall be mutually acceptable,
a certificate or certificates for the shares being exercised.
The Optionee may exercise the Stock Option for less than the total
number of Shares for which the Stock Option is exercisable, provided that a
partial exercise may not (i) be for less than 100 shares, except in the final
year of the Stock Option, and (ii) include any fractional shares.
(d) Termination of Stock Option. Notwithstanding anything in this
Agreement or the Plan to the contrary, this Stock Option shall terminate and
expire as provided in paragraph (b) of this Agreement or at such earlier times
and on such terms as follows:
(1) Termination by Death. If the Optionee's employment with the
Company, any Subsidiary or Parent Corporation terminates by reason of
death, the Stock Option may thereafter be immediately exercised by the
legal representative of the estate or by the legatee of the Optionee
under the will of the Optionee, until the expiration of the stated term
of the Stock Option;
(2) Termination by Reason of Disability. No termination of the
Optionee's employment with the Company, any Subsidiary or Parent
Corporation by reason of Disability shall affect the exercisability of
the Stock Option; and
(3) Other Termination. Except as otherwise provided in this
paragraph or otherwise determined by the Administrator, if the
Optionee's employment with the Company, any Subsidiary or Parent
Corporation terminates for any reason other than death or Disability,
the Stock Option may be exercised until the expiration of the stated
term of this Stock Option; provided, however, that if the expiration of
the stated term of the Stock Option is less than 30 days from the date
of termination, then the Stock Option shall expire 30 days from the date
of termination.
(e) Adjustments. The number and kind of shares subject to this Stock
Option and
the price to be paid therefor shall be subject to adjustment as provided in the
Plan.
(f) Non-Transferability. This Stock Option is not assignable or
transferable by the Optionee, either voluntarily or by operation of law, other
than by will or by the laws of descent and distribution, and is exercisable,
during the Optionee's lifetime, only by the Optionee.
(g) No Shareholder Rights. The Optionee or other person entitled to
exercise the Stock Option shall have no rights or privileges as a shareholder
with respect to any Shares subject hereto until the Optionee or such person has
(1) given written notice of exercise, (2) paid in full for such Shares, and (3)
if requested, given the representations provided for in paragraphs (c) and (i)
of this Agreement (the "Exercise Conditions"), and no adjustment (except such
adjustments as may be effected pursuant to the provisions of paragraph (e)
hereof) shall be made for dividends or distributions of rights in respect of
such Shares if the record date is prior to the date on which the Optionee or
such person shall have satisfied all of the Exercise Conditions.
(h) Plan Controls. The Stock Option shall be subject to and governed by
the provisions of the Plan (a copy of which is attached hereto as Exhibit B),
which the Committee alone shall have the authority to interpret and construe. In
the event of any conflict between the provisions of this Agreement and the Plan,
the Plan shall govern. All determinations and interpretations thereof made by
the Committee shall be conclusive and binding on all parties hereto and upon
their successors and assigns. This Stock Option is not intended to meet the
requirements of an incentive stock option within the meaning of Section 422A of
the Code.
(i) Conditions to Issuance of Shares. THE COMPANY'S OBLIGATION TO ISSUE
SHARES OF ITS COMMON STOCK UPON EXERCISE OF THE STOCK OPTION IS EXPRESSLY
CONDITIONED UPON THE COMPLETION BY THE COMPANY OF ANY REGISTRATION OR OTHER
QUALIFICATION OF SUCH SHARES UNDER ANY STATE AND/OR FEDERAL LAW OR RULINGS OR
REGULATIONS OF ANY GOVERNMENT REGULATORY BODY or THE MAKING OF SUCH INVESTMENT
REPRESENTATIONS OR OTHER REPRESENTATIONS AND AGREEMENTS BY THE OPTIONEE OR ANY
PERSON ENTITLED TO EXERCISE THE STOCK OPTION IN ORDER TO COMPLY WITH THE
REQUIREMENTS OF ANY EXEMPTION FROM ANY SUCH REGISTRATION OR OTHER QUALIFICATION
OF SUCH SHARES WHICH THE COMMITTEE SHALL, IN ITS REASONABLE DISCRETION, DEEM
NECESSARY OR ADVISABLE. SUCH REQUIRED REPRESENTATIONS AND AGREEMENTS INCLUDE
REPRESENTATIONS AND AGREEMENTS THAT THE OPTIONEE, OR ANY OTHER PERSON ENTITLED
TO EXERCISE THE STOCK OPTION, (A) IS NOT PURCHASING SUCH SHARES FOR DISTRIBUTION
AND (B) AGREES TO HAVE PLACED UPON THE FACE AND REVERSE OF ANY CERTIFICATES FOR
SUCH SHARES A LEGEND SETTING FORTH ANY REPRESENTATIONS AND AGREEMENTS WHICH HAVE
BEEN GIVEN TO THE COMMITTEE OR A REFERENCE THERETO AND STATING THAT, PRIOR TO
MAKING ANY SALE OR OTHER DISPOSITION OF ANY SUCH SHARES, THE OPTIONEE, OR ANY
OTHER PERSON ENTITLED TO EXERCISE THE STOCK OPTION, WILL GIVE THE COMPANY NOTICE
OF INTENTION TO SELL OR DISPOSE OF THE SHARES NOT LESS THAN FIVE DAYS PRIOR TO
SUCH SALE OR DISPOSITION.
(j) Method of Acceptance. This Agreement is addressed to the Optionee in
duplicate and shall not be effective until the Optionee executes the acceptance
below and returns one copy to the Company, thereby acknowledging that he has
read and agreed to all the terms and conditions of this Agreement and the Plan.
(k) Governing Law. THIS OPTION AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO
CONTRACTS MADE IN, AND TO BE PERFORMED WITHIN, THAT STATE.
EXECUTED as of the __th day of __________, 200___.
J2 COMMUNICATIONS
----------------------------
By:
Title:
ACCEPTED:
--------------------------
XXXXX X. XXXXXXX, Optionee
--------------------------
Date
EXHIBIT "A"
J2 COMMUNICATIONS
AMENDED AND RESTATED 1999 STOCK OPTION, DEFERRED STOCK
AND RESTRICTED STOCK PLAN
Notice of Exercise
Corporate Secretary
J2 Communications.
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Dear Sir:
1. I am the holder of an option granted under the Company's Amended and Restated
1999 Stock Option, Deferred Stock and Restricted Stock Plan (the "Plan"). I
hereby exercise my option (the "Option") to purchase ___________________________
(______) shares (the "Shares") of the Company's Common Stock at an exercise
price of ____________ Dollars and __________ Cents ($___) per Share. Payment to
the Company of the aggregate exercise price for the Shares, in accordance with
the provisions of the Stock Option Agreement between me and the Company
regarding the Option (the "Option Agreement"), is enclosed.
2. Tax Representation. I understand that I may suffer adverse tax consequences
as a result of my purchase or disposition of the Shares. I represent that I have
consulted any tax consultants I deem advisable in connection with the purchase
or disposition of the Shares (or have knowingly chosen not to consult a tax
advisor) and that I am not relying on the Company or its employees, directors,
officers, attorneys or accountants for any tax advice. The Option I am hereby
exercising is a Non-Qualified Stock Option, which is a taxable event.
3. Other Acknowledgments.
a. I acknowledge receipt of copies of the Company's current Prospectus
with respect to the Plan and its most recent Annual Report to Shareholders.
b. I am aware that the Securities Act of 1933, as amended, and the
regulations and requirements of the Securities and Exchange Commission
thereunder, may impose limitations on the resale of the Company's stock acquired
pursuant to this option exercise. I hereby certify that any resale of such stock
will be made in compliance with the Act and those regulations and requirements
and any applicable state securities laws, rules and regulations.
c. I hereby appoint U.S. Stock Transfer Corporation as my agent to
accept delivery of the shares of the Company's stock being purchased on my
behalf pursuant to this option exercise, and request U.S. Stock Transfer
Corporation to forward the
certificates representing those shares to me at the address shown above.
d. Prior to delivery of the Shares, I agree to make such representations
as are required by or pursuant to the Plan or the Option Agreement.
e. I agree to have placed on the face and reverse of any certificates
for the Shares such legend as is required by or pursuant to the Option
Agreement.
Date: __________________________
Very truly yours,
--------------------
Optionee
------------------------------
Social Security Number
------------------------------
------------------------------
(Address)
EXHIBIT C
[FORM OF]
SECURED PROMISSORY NOTE
$1,000,000 Issuance Date: [Date]
FOR VALUE RECEIVED, the undersigned, [J2 Communications, a California
corporation ("Obligor")] promises to pay to the order of Xxxxx X. Xxxxxxx or his
lawful assignee ("Holder"), the principal sum of One Million Dollars
($1,000,000) in lawful money of the United States, with interest thereon in like
lawful money, at the rate provided below from the date such principal is
advanced until payment in full thereof.
This Note is referred to and is executed and delivered pursuant to that
certain 2002 Employment Agreement, dated as of May 17, 2002 (as it may be
amended, supplemented or otherwise modified from time to time, the ("Employment
Agreement")), between the Obligor and Xxxxx X. Xxxxxxx. Capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the
Employment Agreement or, if not defined therein, in the Security Agreement dated
as of May 17, 2002, between the Obligor and Xxxxx X. Xxxxxxx (the "Security
Agreement"). "Designated Officer" shall mean the following: (a) at any time that
Xxxxxxx X. Xxxxxx is an officer or director of Obligor, Xxxxxxx X. Xxxxxx or any
other party designated as the "Designated Officer" in writing by Xxxxxxx X.
Xxxxxx to Holder at Holder's address for notices pursuant to Section 11 of the
Security Agreement, and (b) at any time that Xxxxxxx X. Xxxxxx is not an officer
or director of Obligor, any party designated as the "Designated Officer" in
writing by Obligor to Holder pursuant to Section 11 of the Security Agreement
(provided, however, that such party shall be one of the Series B Directors (as
such term is defined in the Voting Agreement dated as of May 17, 2002 among
Holder and certain other shareholders of Obligor) other than Xxxxxx X. Xxxxxx.
The outstanding principal amount hereof (including, to the extent
permitted by law, on interest hereon not paid when due) shall bear interest from
the date made until paid in full in cash at a rate equal to the "Prime Rate" (as
defined below) plus 200 basis points (such rate, the "Note Interest Rate"). The
Prime Rate shall mean (a) for any day on or before the first Payment Date (as
defined below), the rate publicly quoted by Citibank, N.A. as its "base,"
"prime" or comparable rate (which may not be the lowest such rate available to
Citibank customers) on the Issuance Date of this Note (as set forth above) and
(b) for any day after the first Payment Date (as defined below), the rate
publicly quoted by Citibank, N.A. as its "base," "prime" or comparable rate
(which may not be the lowest such rate available to Citibank customers) on the
then most recent Payment Date. "Business Day" means a day other than Saturday,
Sunday or any day on which the banks in the States of California or New York are
authorized to close. The obligations of Obligor to Holder pursuant to this Note,
including without limitation the obligation to pay principal and accrued
interest hereunder, are referred to collectively as the "Obligations."
All interest charges shall be computed on the basis of a year of 360
days and actual days elapsed. Interest not paid when due shall accrue at a rate
equal to 2% per annum over the Note Interest Rate (the "Default Rate").
Principal and interest on this Note shall be payable in 12 monthly installments
equal to the sum of (i) Eighty Three Thousand, Three Hundred and Thirty Three
Dollars and Thirty Three Cents ($83,333.33) in principal plus (ii) accrued but
unpaid interest in arrears to the date of payment, with the first such payment
due ten Business Days after the Issuance Date of this Note (as set forth above)
and subsequent payments due monthly on the same day of each month thereafter
(provided, however, that if any such day is not a Business Day, then the payment
for such month shall be due on immediately preceding Business Day) (each such
date, a "Payment Date"). All principal and accrued interest hereunder not
earlier paid shall be due and payable in full on the earlier of (i) one year
after the Issuance Date of this Note (as set forth above) and (ii) the date of
the consummation or occurrence of any Change in Control, as such term is defined
in the Employment Agreement (such earlier date, the "Maturity Date").
The Obligations pursuant hereto are secured by all of the assets of
Obligor pursuant to the Security
Agreement.
Each of the following specified events hereby constitutes and is herein
referred to individually as en "Event of Default":
(a) Obligor's failure to make (or cause to be made) any principal or
interest payments to the Holder under this Note when the same are due, which
failure continues for more than ten (10) days after written notice thereof is
given by the Holder to the Designated Officer of Obligor at the Obligor's
address for notices pursuant to the Employment Agreement;
(b) Obligor's failure to pay any amounts when due to Holder under the
Employment Agreement, the Security Agreement, the Indemnity Agreement between
Obligor and Holder dated May 17, 2002 (the "Indemnity Agreement" or the Jimirro
Registration Rights Agreement between Obligor and Holder dated May 17, 2002 (the
"Registration Rights Agreement"), which failure continues for more than ten (10)
days after written notice thereof is given by the Holder to the Designated
Officer of the Obligor at the Obligor's address for notices pursuant to the
Employment Agreement;
(c) the occurrence of an "Event of Default" under (and as such term is
defined in) the Security Agreement; or
(d) suspension by the Obligor of its business operations and failure to
reinstate operations within twenty (20) Business Days of such suspension, or the
bankruptcy, insolvency, or liquidation of Obligor.
At the Holder's option, upon the occurrence of an Event of Default, and
at any time thereafter if such Event of Default shall then be continuing, the
indebtedness evidenced by this Note may, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived by the Obligor, be
forthwith called due and payable, if not otherwise then due and payable
(anything in this Note or other agreement, contract, indenture, document or
instrument contained to the contrary notwithstanding) and the Maturity Date
shall be accelerated accordingly; and the Holder may pursue the remedies
afforded to it hereunder or under any of the documents executed in connection
herewith, including without limitation the Security Agreement, or any other
remedy afforded to it by law or equity, and the Holder may, at its option, do
and perform all other acts and things reasonably necessary for the proper
preservation and protection of its rights hereunder, or pursuant to the Security
Agreement, all at the cost and expense of Obligor; provided, however, that upon
an Event of Default set forth in subsection (d) above, the indebtedness
evidenced by this Note shall automatically be due and payable without further
action by the Holder.
No provisions of this Note shall be deemed to establish or require the
payment of interest of a rate in excess of the maximum rate permitted by
applicable law (the "Maximum Legal Rate"). In the event that the interest
required to be paid under this Note exceeds the Maximum Legal Rate, the interest
required to be paid hereunder or under the Note shall be automatically reduced
to the Maximum Legal Rate. In the event any interest paid exceeds the then
applicable interest rate, the excess of such interest over the maximum amount of
interest permitted to be charged shall automatically be deemed to reduce the
accrued and unpaid fees mad expanses due to the Holder under this Note, if any;
then to reduce the accrued end unpaid interest, if any; and then to reduce
principal of the indebtedness evidenced hereby; the balance of any excess
interest remaining after the application of the foregoing, if any, shall be
refunded to the Obligor. If any of the indebtedness evidenced by this Note is
not paid when due (whether by acceleration or otherwise), then all of such
indebtedness shall bear interest at the Default Rate applicable thereto until so
paid; and if any other Default or Event of Default occurs, then at the election
of the Holder, while any such Default or Event of Default is outstanding, all of
the Obligations shall bear interest at the Default Rate applicable thereto.
Interest calculated at the Default Rate shall be immediately due and owing and
shall accrue and be payable from the date such payment was due to and including
the date of payment.
All payments in respect of this Note shall be made to Holder at
____________________________ or at such other place as may be designated in
writing by the Holder for such purpose in accordance with the terms of the
Employment Agreement.
The principal and all accrued and unpaid interest thereon shall be due
and payable in full as provided herein. Such payment is subject to earlier
acceleration and/or mandatory prepayments as provided in the Security Agreement.
If this Note is not paid in full on the Maturity Date, the Obligor promises to
pay all reasonable costs and expenses of collection (including, without
limitation, reasonable attorneys' fees and expenses and court costs incurred by
the holder hereof on account of such collection whether or not suit is filed
thereon).
The Obligor waives protest, diligence, presentment, demand for payment;
notice of default or nonpayment, notice of dishonor and all other demands and
notices in connection with the delivery, acceptance, performance and enforcement
of this Note, and to the fullest extent permitted by law, all rights to assert
any statute of limitations to an action hereunder.
This Note shall be governed by, and construed and interpreted in
accordance with, the internal laws of the State of New York.
[OBLIGOR]
By: _________________
Name:
EXHIBIT D
RESTATED INDEMNIFICATION AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into this 17th day
of May, 2002 between J2 Communications, a California corporation (the "Company")
and Xxxxx X. Xxxxxxx ("Indemnitee").
WITNESSETH THAT:
WHEREAS, Indemnitee performs a valuable service for the Company; and
WHEREAS, the Board of Directors of the Company having adopted the Second
Amended and Restated Articles of Incorporation (the "Certificate") permitting
the Board of Directors to indemnify certain agents and employees designated by
the Board of Directors (the "Officers") and directors (the "Directors") of the
Company; and
WHEREAS, the Certificate and Section 317 of the California General
Corporation Law, as amended ("Law"), permits the Company to indemnify its
Officers and Directors; and
WHEREAS, as a result of recent developments affecting the terms, scope
and availability of D & O Insurance there exists general uncertainty as to the
extent of protection afforded the Company's Officers and Directors by such D&O
Insurance and said uncertainty also exists under statutory and bylaw
indemnification provisions; and
WHEREAS, in recognition of past services and in order to induce
Indemnitee to continue to serve as an officer and/or a director of the Company,
the Company has determined and agreed to enter into this contract with
Indemnitee;
NOW, THEREFORE, in consideration of Indemnitee's continued service as an
Officer and/or a Director after the date hereof, the parties hereto agree as
follows:
1. Indemnity of Indemnitee. The Company hereby agrees to hold harmless
and indemnity Indemnitee to the fullest extent authorized or permitted by the
provisions of the Law, as such may be amended from time to time, and Article IV
of the Certificate, as such may be amended. The benefits afforded hereby may not
be reduced at a subsequent date without the express written permission of the
Indemnitee. In furtherance of the foregoing indemnification, and without
limiting the generality thereof:
(a) Proceedings Other Than Proceedings by or in the Right of the
Company. Indemnitee shall be entitled to the rights of indemnification
provided in this Section 1(a) if, by reason of his Corporate Status (as
hereinafter defined), he is, or is threatened to be made, a party to or
participant in any Proceeding (as hereinafter defined) other than a
Proceeding by or in the right of the Company. Pursuant to this Section
1(a), Indemnitee shall be indemnified against all
Expenses (as hereinafter defined), judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by him or on
his behalf in connection with such Proceeding or any claim, issue or
matter therein, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company
and, with respect to any criminal Proceeding, had no reasonable cause to
believe his conduct was unlawful.
(b) Proceedings by or in the Right of the Company. Indemnitee
shall be entitled to the rights of indemnification provided in this
Section 1(b) if, by reason of his Corporate Status, he is, or is
threatened to be made, a party to or participant in any Proceeding
brought by or in the right of the Company to procure a judgment in its
favor. Pursuant to this Section 1(b), Indemnitee shall be indemnified
against all Expenses actually and reasonably incurred by him or on his
behalf in connection with such Proceeding if be acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the Company; provided, however, that, if applicable law so
provides, no indemnification against such Expenses shall be made in
respect of any claim, issue or matter in such Proceeding as to which
Indemnitee shall have been adjudged to be liable to the Company unless
and to the extent that the Superior Court of the State of California, or
the court in which such Proceeding shall have been brought or is
pending, shall determine that such indemnification may be made.
(c) Indemnification for Expenses of a Party Who is Wholly or
Partly Successful. Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee is, by reason of his Corporate
Status, a party to and is successful, on the merits or otherwise, in any
Proceeding, he shall be indemnified to the tiniest extent permitted by
law against all Expenses actually and reasonably incurred by him or on
his behalf in connection therewith. If Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or
otherwise, as to one or more but less than all claims, issues or matters
in such Proceeding, the Company shall indemnify Indemnitee against all
Expenses actually and reasonably incurred by him or on his behalf in
connection with each successfully resolved claim, issue or matter. For
purposes of this Section and without limitation, the termination of any
claim, issue or matter in such a Proceeding by dismissal, with or
without prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.
2. Additional Indemnity.
(a) Subject only to the exclusions set forth in Section 2(b)
hereof, the Company hereby further agrees to hold harmless and indemnify
Indemnitee against any and all Expenses, judgments, fines and amounts
paid in settlement actually and reasonably incurred by Indemnitee in
connection with any Proceeding (including an action by or on behalf of
the Company) to which Indemnitee is, was or at any time becomes a party,
or is threatened to be made a party, by reason of his Corporate Status;
provided, however, that with respect to
actions by or on behalf of the Company, indemnification of Indemnitee
against any judgments shall be made by the Company only as authorized in
the specific case upon a determination that Indemnitee acted in good
faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company; and (b) No indemnity pursuant to this
Section 2 shall be paid by the Company:
(i) In respect to remuneration paid to Indemnitee if it
shall be determined by a final judgment or other final
adjudication that such remuneration was in violation of law;
(ii) On account of any suit in which judgment is
rendered against Indemnitee for an accounting of profits made
from the purchase or sale by Indemnitee of securities of the
Company pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or
similar provisions of any federal, state or local statutory law;
(iii) On account of Indemnitee's conduct which is
finally adjudged to have been knowingly fraudulent or
deliberately dishonest, or to constitute willful misconduct; or
(iv) If a final decision by a court having jurisdiction
in the matter shall determine that such indemnification is not
lawful.
3. Contribution. If the indemnification provided in Sections 1 and 2 is
unavailable and may not be paid to Indemnitee for any reason other than those
set forth in paragraphs (i), (ii) and (iii) of Section 2(b), then in respect to
any Proceeding in which the Company is jointly liable with Indemnitee (or would
be if joined in such Proceeding), the Company shall contribute to the amount of
Expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred and paid or payable by Indemnitee in such proportion as is
appropriate to reflect (i) the relative benefits received by the Company on the
one hand and by the Indemnitee on the other hand from the transaction from which
such Proceeding arose, and (ii) the relative fault of the Company on the one
hand and of the Indemnitee on the other hand in connection with the events which
resulted in such Expenses, judgments, fines or settlement amounts, as well as
any other relevant equitable considerations. The relative fault of the Company
on the one band and of the Indemnitee on the other hand shall be determined by
reference to, among other things, the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent the circumstances
resulting in such Expenses, judgments, fines or settlement amounts. The Company
agrees that it would not be just and equitable if contribution pursuant to this
Section 3 were determined by pro rata allocation or any other method of
allocation which does not take account of the foregoing equitable
considerations.
4. Indemnification for Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is, by reason of his
Corporate Status, a witness in any Proceeding to which Indemnitee is not a
party, he shall be
indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection therewith.
5. Advancement of Expenses. Notwithstanding any other provision of this
Agreement, the Company shall advance all reasonable Expenses incurred by or on
behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee's
Corporate Status within ten days after the receipt by the Company of a statement
or statements from Indemnitee requesting such advance or advances from time to
time, whether prior to or after final disposition of such Proceeding. Such
statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by an undertaking by
or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately
be determined that Indemnitee is not entitled to be indemnified against such
Expenses. Any advances and undertakings to repay pursuant to this Section 5
shall be unsecured and interest free. Notwithstanding the foregoing, the
obligation of the Company to advance Expenses pursuant to this Section 5 shall
be subject to the condition that, if, when and to the extent that the Company
determines that Indemnitee would not be permitted to be indemnified under
applicable law, the Company shall be entitled to be reimbursed, within thirty
(30) days of such determination, by Indemnitee (who hereby agrees to reimburse
the Company) for all such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the Company that
Indemnitee would not be permitted to be indemnified under applicable law shall
not be binding and Indemnitee shall not be required to .reimburse the Company
for any advance of Expenses until a final judicial determination is made with
respect thereto (as to which all rights of appeal therefrom have been exhausted
or lapsed).
6. Procedure for Determination of Entitlement to Indemnification.
(a) To obtain indemnification (including, but not limited to, the
advancement of Expenses and contribution by the Company) under this
Agreement, Indemnitee shall submit to the Chief Executive Officer (if
Indemnitee is not then serving as the Chief Executive Officer) or Chief
Financial Officer a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee
and is reasonably necessary to determine whether and to what extent
Indemnitee is entitled to indemnification. The Secretary or any
Assistant Secretary of the Company shall, promptly upon receipt of such
a request for indemnification, advise the Board of Directors in writing
that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification
pursuant to the first sentence of Section 6(a) hereof, a determination,
if required by applicable law, with respect to Indemnitee's entitlement
thereto shall be made in the specific case:
(i) if a Change in Control (as hereinafter defined) shall
have occurred, by Independent Counsel (as hereinafter defined) in
a written opinion to the Board of Directors, a copy of which
shall be delivered to Indemnitee (unless Indemnitee shall request
that such determination be made by the Board of Directors or the
stockholders, in which case the determination shall be made in
the manner provided in Clause (ii) below), or
(ii) if a Change in Control shall not have occurred, (A)
by the Board of Directors by a majority vote of a quorum
consisting of Disinterested Directors (as hereinafter defined),
or (B) if a quorum of the Board of Directors consisting of
Disinterested Directors is not obtainable or, even if obtainable,
said Disinterested Directors so direct, by Independent Counsel in
a written opinion to the Board of Directors, a copy of which
shall be delivered to Indemnitee, or (C) if so directed by said
Disinterested Directors, by the stockholders of the Company. If
it is determined that Indemnitee is entitled to indemnification,
payment to Indemnitee shall be made within ten (10) days after
such determination. Indemnitee shall cooperate with the person,
persons or entity making such determination with respect to
Indemnitee's entitlement to indemnification, including providing
to such person, persons or entity upon reasonable advance request
any documentation or information which is not privileged or
otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such
determination. Any Independent Counsel, member of the Board of
Directors, or stockholder of the Company shall act reasonably and
in good faith in making a determination under the Agreement of
the Indemnitee's entitlement to indemnification. Any Expenses
incurred by Indemnitee in so cooperating with the person, persons
or entity making such determination shall be borne by the Company
(irrespective of the determination as to Indemnitee's entitlement
to indemnification) and the Company hereby indemnifies and agrees
to hold Indemnitee harmless therefrom.
(c) If the determination of entitlement to indemnification is to
be made by Independent Counsel pursuant to Section 6(b) hereof, the
Independent Counsel shall be selected as provided in this Section 6(c).
If a Change in Control shall not have occurred, the Independent Counsel
shall be selected by the Board of Directors, and the Company shall give
written notice to Indemnitee advising him of the identity of the
Independent Counsel so selected. If a Change in Control shall have
occurred, the Independent Counsel shall be selected by Indemnitee
(unless Indemnitee shall request that such selection be made by the
Board of Directors, in which event the preceding sentence shall apply),
and Indemnitee shall give written notice to the Company advising it of
the identity of the Independent Counsel so selected. In either event,
Indemnitee or the Company, as the case may be, may, within 10 days after
such written notice of selection shall have been given, deliver to the
Company or to Indemnitee, as the case may be, a
written objection to such selection; provided, however, that such
objection may be asserted only on the ground that the Independent
Counsel so selected does not meet the requirements of "Independent
Counsel" as defined in Section 14 of this Agreement, and the objection
shall set forth with particularity the factual basis of such assertion.
Absent a proper and timely objection, the person so selected shall act
as Independent Counsel. If a written objection is made and
substantiated, the Independent Counsel selected may not serve as
Independent Counsel unless and until such objection is withdrawn or a
court has determined that such objection is without merit. If, within 20
days after submission by Indemnitee of a written request for
indemnification pursuant to Section 6(a) hereof, no Independent Counsel
shall have been selected and not objected to, either the Company or
Indemnitee may petition the Superior Court of the State of California or
other court of competent jurisdiction for resolution of any objection
which shall have been made by the Company or Indemnitee to the other's
selection of Independent Counsel and/or for the appointment as
independent Counsel of a person selected by the court or by such other
person as the court shall designate, and the person with respect to whom
all objections are so resolved or the person so appointed shall act as
Independent Counsel under Section 6(b) hereof. The Company shall pay any
and all reasonable fees and expenses of Independent Counsel incurred by
such Independent Counsel in connection with acting pursuant to Section
6(b) hereof, and the Company shall pay all reasonable fees and expenses
incident to the procedures of this Section 6(c), regardless of the
manner in which such Independent Counsel was selected or appointed. Upon
the due commencement of any judicial proceeding or arbitration pursuant
to Section 8(a)(iii) of this Agreement, Independent Counsel shall be
discharged and relieved of any further responsibility in such capacity
(subject to the applicable standards of professional conduct then
prevailing).
(d) The Company shall not be required to obtain the consent of
the Indemnitee to the settlement of any Proceeding which the Company has
undertaken to defend if the Company assumes full and sole responsibility
for such settlement and the settlement grants the Indemnitee a complete
and unqualified release in respect of the potential liability.
7. Presumptions and Effect of Certain Proceedings.
(a) In making a determination with respect to entitlement to
indemnification hereunder, the person or persons or entity making such
determination shall presume that Indemnitee is entitled to
indemnification under this Agreement if Indemnitee has submitted a
request for indemnification in accordance with Section 6(a) of this
Agreement, and the Company shall have the burden of proof to overcome
that presumption in connection with the making by any person, persons or
entity of any determination contrary to that presumption.
(b) If the person, persons or entity empowered or selected under
Section 5 of this Agreement to determine whether Indemnitee is entitled
to indemnification
shall not have made a determination within thirty (30) days after
receipt by the Company of the request therefor, the requisite
determination of entitlement to indemnification shall be deemed to have
been made and Indemnitee shall be entitled to such indemnification,
absent
(i) a misstatement by Indemnitee of a material fact, or
an omission of a material fact necessary to make Indemnitee's
statement not materially misleading, in connection with the
request for indemnification, or
(ii) a prohibition of such indemnification under
applicable law; provided, however, that such 30 day period may
be extended for a reasonable time, not to exceed an additional
fifteen (15) days, if the person, persons or entity making the
determination with respect to entitlement to indemnification in
good faith requires such additional time for the obtaining or
evaluating documentation and/or information relating thereto;
and provided, further, that the foregoing provisions of this
Section 7(b) shall not apply if the determination of entitlement
to indemnification is to be made by the stockholders pursuant to
Section 5(b) of this Agreement and if(A) within fifteen (15)
days after receipt by the Company of the request for such
determination the Board of Directors or the Disinterested
Directors, if appropriate, resolve to submit such determination
to the stockholders for their consideration at an annual meeting
thereof to be held within seventy-five (75) days after such
receipt and such determination is made thereat, or (B) a special
meeting of' stockholders is called within fifteen (15) days
after such receipt for the purpose of making such determination,
such meeting is held for such purpose within sixty (60) days
after having been so called and such determination is made
thereat, or
(iii) if the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to
Section 6(b) of this Agreement.
(c) The termination of any Proceeding or of any claim, issue or
matter therein, by judgment, order, settlement (with or without court
approval), conviction, or upon a plea of nolo contendre or its
equivalent, shall not (except as otherwise expressly provided in this
Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in
good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Company or, with respect to any
criminal Proceeding, that Indemnitee had reasonable cause to believe
that his conduct was unlawful.
(d) For purposes of any determination of good faith, Indemnitee
shall be deemed to have acted in good faith if Indemnitee's action is
based on the records or books of account of the Enterprise (as
hereinafter defined), including financial statements, or on information
supplied to Indemnitee by the Officers and Directors of the Enterprise
in the course of their duties, or on the advice of legal
counsel for the Enterprise or on information or records given or reports
made to the Enterprise by an independent certified public accountant or
by an appraiser or other expert selected with reasonable care by the
Enterprise. In addition, the knowledge and/or actions, or failure to
act, of any director, officer, agent or employee of the Enterprise shall
not be imputed to Indemnitee for purposes of determining the right to
indemnification under this Agreement. The provisions of this Section
7(d) shall not be deemed to be exclusive or to limit in any way the
other circumstances in which the Indemnitee may be deemed to have met
the applicable standard of conduct set forth in this Agreement.
8. Remedies of Indemnitee.
(a) In the event that:
(i) a determination is made pursuant to Section 6 of
this Agreement that Indemnitee is not entitled to
indemnification under this Agreement,
(ii) advancement of Expenses is not timely made pursuant
to Section 5 of this Agreement,
(iii) no determination of entitlement to indemnification
shall have been made pursuant to Section 6(b) of this Agreement
within ninety (90) days after receipt by the Company of the
request for indemnification,
(iv) payment of indemnification is not made pursuant to
Section 3 or 4 of this Agreement within ten (10) days after
receipt by the Company of a written request therefor, or
(v) payment of indemnification is not made within ten
(10) days after a determination has been made that Indemnitee is
entitled to indemnification or such determination is deemed to
have been made pursuant to Section 6 or 7 of this Agreement,
Indemnitee shall be entitled to an adjudication in an
appropriate court of the State of California, or in any other
court of competent jurisdiction, of his entitlement to such
indemnification. Alternatively, Indemnitee, at his option, may
seek an award in arbitration to be conducted by a single
arbitrator pursuant to the Commercial Arbitration Rules of the
American Arbitration Association. Indemnitee shall commence such
proceeding seeking an adjudication or an award in arbitration
within one hundred eighty (180) days following the date on which
Indemnitee first has the right to commence such proceeding
pursuant to this Section 8(a). The Company shall not oppose
Indemnitee's right to seek any such adjudication or award in
arbitration.
(b) In the event that a determination shall have been made
pursuant to Section 6(b) of this Agreement that Indemnitee is not
entitled to indemnification, any judicial proceeding or arbitration
commenced pursuant to this Section 8 shall
be conducted in all respects as a de novo trial, or arbitration, on the
merits and Indemnitee shall not be prejudiced by reason of that adverse
determination.
(c) If a determination shall have been made pursuant to Section
6(b) of this Agreement that Indemnitee is entitled to indemnification,
the Company shall be bound by such determination in any judicial
proceeding or arbitration commenced pursuant to this Section 8, absent:
(i) a misstatement by Indemnitee of a material fact, or
an omission of a material fact necessary to make Indemnitee's
statement not materially misleading, in connection with the
request for indemnification, or
(ii) a prohibition of such indemnification under
applicable law.
(d) In the event that Indemnitee, pursuant to this Section 8,
seeks a judicial adjudication of or an award in arbitration to enforce
his rights under, or to recover damages for breach of this Agreement,
Indemnitee shall be entitled to recover from the Company, and shall be
indemnified by the Company against, any and all expenses (of the types
described in the definition of Expenses in Section 14 of this Agreement)
actually and reasonably incurred by him in such judicial adjudication or
arbitration, but only if he prevails therein. If it shall be determined
in said judicial adjudication or arbitration that Indemnitee is entitled
to receive part but not all of the indemnification sought, the expenses
incurred by Indemnitee in connection with such judicial adjudication or
arbitration shall be appropriately prorated. The Company shall indemnify
Indemnitee against any and all expenses and, if requested by Indemnitee,
shall (within ten (10) days after receipt by the Company of a written
request therefor) advance such expenses to Indemnitee, which are
incurred by Indemnitee in connection with any action brought by
Indemnitee to recover under any Directors' and Officers' liability
insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to such
indemnification, advancement of expenses or insurance recovery, as the
case may be.
(e) The Company shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this Section 8
that the procedures and presumptions of this Agreement are not valid,
binding and enforceable and shall stipulate in any such court or before
any such arbitrator that the Company is bound by all the provisions of
this Agreement.
9. Non-Exclusivity; Survival of Rights; Insurance; Subrogation.
(a) The rights of indemnification as provided by this Agreement
shall not be deemed exclusive of any other rights to which Indemnitee
may at anytime be entitled under applicable law, the Certificate, any
agreement, a vote of stockholders or a resolution of Directors, or
otherwise. No amendment, alteration or repeal of this Agreement or of
any provision hereof shall limit or restrict any
right of Indemnitee under this Agreement in respect of any action taken
or omitted by such Indemnitee in his Corporate Status prior to such
amendment, alteration or repeal. To the extent that a change in the Law,
whether by statute or judicial decision, permits greater indemnification
than would be afforded currently under the Certificate and this
Agreement, it is the intent of the parties hereto that Indemnitee shall
enjoy by this Agreement the greater benefits so afforded by such change.
No right or remedy herein conferred is intended to be exclusive of any
other right or remedy, and every other right and remedy shall be
cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of
any other right or remedy.
(b) To the extent that the Company maintains an insurance policy
or policies providing liability insurance for Directors, Officers,
employees, or agents or fiduciaries of the Company or of any other
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise which such person serves at the request of the Company,
Indemnitee shall be covered by such policy or policies in accordance
with its or their terms to the maximum extent of the coverage available
fir any such director, officer, employee or agent under such policy or
policies. A minimum of One Million Dollars ($1,000,000) of insurance
shall be maintained at all times.
(c) In the event of any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required
and take all action necessary to secure such rights, including execution
of such documents as are necessary to enable the Company to bring suit
to enforce such rights; provided, however, the Company may not be
subrogated to any rights until Indemnitee has been paid in full all
amounts owed to him hereunder, or unless Indemnitee shall have secured
all benefits owing to him hereunder.
(d) The Company shall not be liable under this Agreement to make
any payment of amounts otherwise indemnifiable hereunder if and to the
extent that Indemnitee has otherwise actually received such payment
under any insurance policy, contract, agreement or otherwise.
10. Exception to Right of Indemnification. Notwithstanding any other
provision of this Agreement, Indemnitee shall nor be entitled to indemnification
under this Agreement with respect to any Proceeding brought by Indemnitee, or
any claim therein, unless
(a) the bringing of such Proceeding or making of such claim
shall have been approved by the Board of Directors or
(b) such Proceeding is being brought by the Indemnitee to assert
his rights
under this Agreement.
11. Duration of Agreement. All agreements and obligations of the Company
contained herein shall continue during the period Indemnitee is an officer
and/or a director of the Company (or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) and shall continue
thereafter so long as Indemnitee shall be subject to any Proceeding (or any
proceeding commenced under Section 3 hereof) by reason of his Corporate Status,
whether or not he is acting or serving in any such capacity at the time any
liability or expense is incurred for which indemnification can be provided under
this Agreement. This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective successors
(including any direct or indirect successor by purchase, merger, consolidation
or otherwise to all or substantially all of the business or assets of the
Company), assigns, spouses, heirs, executors and personal and legal
representatives. This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as an officer and/or a director of the Company or
any other enterprise at the Company's request.
12. Security. The Company acknowledges and agrees that its obligations
to Indemnitee pursuant to this Agreement are secured by all of the Company's
assets pursuant to that certain Security Agreement dated as of May 17, 2002. To
the extent requested by the Indemnitee and approved by the Board of Directors,
the Company may at any time and from time to time provide additional security to
the Indemnitee for the Company's obligations hereunder through an irrevocable
bank line of credit, funded trust or other collateral. Any and all such
security, once provided to the Indemnitee, may not be revoked or released
without the prior written consent of the Indemnitee.
13. Enforcement.
(a) The Company expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on it
hereby in order to induce Indemnitee to serve as an officer and/or a
director of the Company, and the Company acknowledges that Indemnitee is
relying upon this Agreement in serving as an officer and/or a director
of the Company.
(b) This Agreement constitutes the entire agreement between the
pates hereto with respect to the subject matter hereof and supersedes
all prior agreements and understandings, oral, written and implied,
between the parties hereto with respect to the subject matter hereof.
14. Definitions. For purposes of this Agreement:
(a) "Change in Control" means a change in control of the Company
occurring after the date of this Agreement of a nature that would
constitute a Change in Control under that certain Employment Agreement,
dated as of May 17, 2002 between the Company and Xxxxx X. Xxxxxxx
(b) "Corporate Status" describes the status of a person who is
or was a director, officer, employee or agent or fiduciary of the
Company or of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise for which such person is or
was serving in such capacity at the express request of the Company.
(c) "Disinterested Director" means a director of the Company who
is not and was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee; provided, however, that neither
Indemnitee nor Xxxxxx Xxxxxx shall be "Disinterested Directors"
hereunder, and both Indemnitee and Xxxxxx Xxxxxx shall recuse themselves
from any determinations made or to be made by the Board of Directors
pursuant to this Agreement.
(d) "Enterprise" shall mean the Company and any other
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise of which Indemnitee is or was serving at the express
written request of the Company as a director, officer, employee, agent
or fiduciary.
(e) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, fees of
accountants, witness fees, travel expenses, duplicating costs, printing
and binding costs, telephone charges, postage, delivery service fees,
and all other disbursements or expenses of the types customarily
incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, participating, or being or preparing
to be a witness in a Proceeding.
(f) "Independent Counsel" means a law firm of national
reputation, that is experienced in matters of California corporation law
and neither presently is, nor in the past five years has been, retained
to represent:
(i) the Company or Indemnitee in any matter including
with respect to matters concerning other indemnitees under
similar indemnification agreements, or
(ii) any other party to the Proceeding giving rise to a
claim for indemnification hereunder. Notwithstanding the
foregoing, the term "Independent Counsel" shall not include any
person who, under the applicable standards of professional
conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to
determine Indemnitee's rights under this Agreement. Without
limiting the foregoing, the term "Independent Counsel" shall not
include Xxxxxxxxx Traurig LLP or any other law firm in which
Xxxx X. Xxxxxxxx is a partner or with which he is otherwise
affiliated or associated. The Company agrees to pay the
reasonable fees of the Independent Counsel referred to above and
to fully indemnify such counsel against any and all
Expenses, claims, liabilities and damages arising our of or
relating to this Agreement or its engagement pursuant hereto.
(g) "Proceeding" includes any threatened, pending or
completed action, suit, arbitration, alternate dispute
resolution mechanism, investigation, inquiry, administrative
hearing or any other actual, threatened or completed proceeding,
whether brought by or in the right of the Company or otherwise
and whether civil, criminal, administrative or investigative, in
which Indemnitee was, is or will be involved as a party or
otherwise, by reason of the fact that Indemnitee is or was an
officer and/or a director of the Company, by reason of any
action taken by him or of any inaction on his part while acting
as an officer and/or a director of the Company, or by reason of
the fact that he is or was serving at the request of the Company
as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise; in each case whether or not he is acting or serving
in any such capacity at the time any liability or expense is
incurred for which indemnification can be provided under this
Agreement, and in each case whether or not based on any fact or
facts occurring before, on or after the date of this Agreement,
including one pending before, on or after the date of this
Agreement, and excluding one initiated by an Indemnitee pursuant
to Section 8 of this Agreement to enforce his rights under this
Agreement.
15. Severability. If any provision or provisions of this Agreement shall
be held by a court of competent jurisdiction to be invalid, void, illegal or
otherwise unenforceable for any reason whatsoever:
(a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including without limitation, each portion
of any section of this Agreement containing any such provision held to
be invalid, illegal or unenforceable, that is not itself invalid,
illegal or unenforceable) shall not in any way be affected or impaired
thereby and shall remain enforceable to the fullest extent permitted by
law; and
(b) to the fullest extent possible, the provisions of this
Agreement (including, without limitation, each portion of any section of
this Agreement containing any such provision held to be invalid, illegal
or unenforceable, that is not itself invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested
thereby.
16. Modification and Waiver. No supplement, modification, termination or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
17. Notice by Indemnitee. Indemnitee agrees promptly to notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification covered hereunder. The failure
to so notify the Company shall not relieve the Company of any obligation which
it may have to the Indemnitee under this Agreement or otherwise.
18. Notices. All notices, requests, demands and other communications
hereunder stall be in writing and shall be deemed to have been duly given if (i)
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed, or (ii) mailed by certified or
registered mail with postage prepaid, on the third business day after the date
on which it is so mailed:
(a) If to Indemnitee, to:
Xxxxx X. Xxxxxxx
00000 Xxxxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
(b) If to the Company, to:
J2 Communications
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
or to such other address as may have been furnished in writing to Indemnitee by
the Company or in writing to the Company by Indemnitee, as the case may be.
19. Identical Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.
20. Headings. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
21. Governing Law. The parties agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of California without application of the conflict of laws principles
thereof.
22. Gender. Use of the masculine pronoun shall be deemed to include
usage of the feminine pronoun where appropriate.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
COMPANY:
J2 COMMUNICATIONS,
a California corporation
By:______________________________
Name: Xxxxx X. Xxxxxxx
Title: President
INDEMNITEE:
-------------------------
XXXXX X. XXXXXXX
