Exhibit 1
J2 COMMUNICATIONS
NLAG REGISTRATION RIGHTS AGREEMENT
May 17, 2002
NLAG REGISTRATION RIGHTS AGREEMENT
THIS NLAG REGISTRATION RIGHTS AGREEMENT, dated as of May 17, 2002 (this
"AGREEMENT"), is entered into by and made among J2 COMMUNICATIONS, a
California corporation (the "COMPANY"), National Lampoon Acquisition Group,
LLC, a California limited liability company ("NLAG"), GTH Capital, Inc., a
Florida corporation ("GTH"), and those parties set forth on the Schedule of
Shareholders attached hereto (each, a "SHAREHOLDER" and collectively, the
"SHAREHOLDERS").
In consideration of the promises made herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
Article 1. DEFINITIONS.
Section 1.1 DEFINITIONS. As used in this Article 1 and elsewhere in
this Agreement, the following terms shall have the following respective
meanings:
"COMMISSION" means the Securities and Exchange Commission or any
other federal agency administering the Securities Act.
"COMMON SHARES" means the Company's Common Stock, no par value per
share.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any similar federal law then in force.
"PERSON" means an individual, a partnership, a joint venture, a corporation,
a limited liability company, a trust, an unincorporated organization, a
government or any department or agency thereof or any other entity.
"REGISTRABLE SECURITIES" means (i) any Common Shares issued or issuable upon
conversion of the Series B Shares, (ii) any Common Shares issued in respect
of securities issued pursuant to the conversion of the Series B Shares upon
any stock split, stock dividend, recapitalization or similar event, and (iii)
any Common Shares issued or issuable upon exercise of the warrants to
purchase Common Shares issued to the Shareholders in connection with their
purchase of Series B Shares.
"REGISTRATION EXPENSES" shall have the meaning set forth in Section
5.1.
"REGISTRATION STATEMENT" means the prospectus and other documents
filed with the Commission to effect a registration under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"SELLING EXPENSES" means all underwriting discounts, selling
commissions and transfer taxes incurred pursuant to the sale of Registrable
Securities.
"SERIES B SHARES" means the shares of Series B Convertible Preferred
Stock of the Company, no par value per share.
"SERIES B MAJORITY" means Shareholders holding in the aggregate not
less than 50% of the outstanding Registrable Securities.
Article 2. DEMAND REGISTRATIONS.
Section 2.1 REQUESTS FOR REGISTRATION. Subject to Section 2.7, a Series B
Majority shall have the right to make up to two separate requests in writing
that the Company effect the registration of all or a part of the Registrable
Securities held by those Shareholders, each such request to specify the
registration form to be used and the intended method or methods of
disposition of the Registrable Securities. The Company shall pay all
Registration Expenses in connection with any registration pursuant to this
Section 2.1, and all Selling Expenses shall be borne by the holders of the
securities so registered pro rata on the basis of the number of their shares
so registered. Each request for a registration pursuant to this Section 2.1
shall specify the approximate number of Registrable Securities requested to
be registered. Promptly after receipt of any such request, the Company will
give written notice of the requested registration to all other holders of
Registrable Securities and, subject to Section 2.4 below, will include in
such registration all Registrable Securities with respect to which the
Company has received written requests for inclusion therein within fifteen
(15) days after the receipt of the Company's notice. A request for
registration will not count as a request for registration under this Section
2.1 until the Registration Statement relating to the registration has become
effective, provided that, in any event, the Company will pay all Registration
Expenses in connection with any registration pursuant to this Section 2.1,
regardless of whether the Registration Statement relating thereto has become
effective unless such Registration Statement is withdrawn at the request of a
Series B Majority, other than pursuant to Section 2.4, in which case the
Series B Majority shall pay all such Registration Expenses.
Section 2.2 SHORT-FORM REGISTRATIONS. The Company shall use its best efforts
to qualify for registration on Form S-2 or S-3 or any comparable or successor
form or forms or any similar short form registration ("SHORT-FORM
REGISTRATIONS"). Subject to Section 2.7 (for registration on Form S-2 or any
comparable or successor form or forms) and to Section 2.4 below, in addition
to the demand registrations provided pursuant to Section 2.1 above, a Series
B Majority will be entitled to request at any time and from time to time an
unlimited number of Short-Form Registrations in which the Company will pay
all Registration Expenses, provided that the Company shall not be obligated
to effect any registration pursuant to this Section 2.2 more than twice in
any one year. Registration on Form S-3 or any comparable or successor form or
forms shall not be subject to the minimum demand threshold set forth in
Section 2.7.
Section 2.3 PRIORITY ON DEMAND REGISTRATIONS. If any registration pursuant to
Section 2.1 or Section 2.2 (a "DEMAND REGISTRATION") is an underwritten
offering and the managing underwriters advise the Company in writing that in
their opinion the number of Registrable Securities and other securities
requested to be included in the offering exceeds the number of Registrable
Securities and other securities, if any, which can be sold therein without
adversely affecting the marketability of the offering, the Company will
include in the offering prior to the inclusion of any securities which are
not Registrable Securities the number of Registrable Securities requested to
be included that, in the opinion of such underwriters, can be sold without
adversely affecting the marketability of the offering, pro rata among the
respective holders thereof on the basis of the aggregate number of
Registrable Securities owned by each holder.
Section 2.4 RESTRICTIONS ON DEMAND REGISTRATIONS. The Company may postpone
for a reasonable period of time, not to exceed 120 days, the filing of a
prospectus or the effectiveness of a Registration Statement for a Demand
Registration if the Company concludes, following consultation with, and after
obtaining the good faith approval of, the board of directors of the Company,
that the Demand Registration would reasonably be expected to have a material
adverse effect on any proposal or plan by the Company to engage in any
acquisition of assets (other than in the ordinary course of business) or any
merger, amalgamation, consolidation, tender offer or similar transaction or
otherwise would have a material adverse effect on the business, assets,
operations, prospects or financial or other condition of the Company;
provided, however, that in that event, the holders of a majority of
Registrable Securities requesting the Demand Registration will be entitled to
withdraw their request and, if the request is withdrawn, such Demand
Registration will not count as one of the permitted Demand Registrations
hereunder and the Company will pay, to the fullest extent permitted by
applicable law, all Registration Expenses in connection with the registration
or prospectus; provided, further, that the Company may not use this deferral
right more than twice in the aggregate or more than once in any twelve month
period.
Section 2.5 SELECTION OF UNDERWRITERS. On any Demand Registration, a Series B
Majority will have the right to select the investment banker(s) and
manager(s) to administer the offering, subject to the Company's approval
which will not be unreasonably withheld or delayed.
Section 2.6 OTHER REGISTRATION RIGHTS. Except as provided in this Agreement
and except for registration rights granted to Xxxxx X. Xxxxxxx ("JIMMIRO"),
the Company will not grant to any holder or prospective holder of any
securities of the Company registration rights with respect to the securities
which are senior or pari passu to the rights granted hereunder without the
prior written consent of a Series B Majority.
Section 2.7 DEMAND THRESHOLD. The minimum demand threshold for any Demand
Registration under Section 2.1 or on Form S-2 or any comparable or successor
form or forms (but not Form S-3 or any comparable or successor form or forms)
under Section 2.2 of this Agreement shall be the lesser of (1) Five Hundred
Thousand Dollars ($500,000) and (2) the greater of (a) Fifty Percent (50%) of
the Series B Shares owned by the Shareholders and (b) One Hundred Thousand
Dollars ($100,000).
Article 3. PIGGYBACK REGISTRATIONS.
Section 3.1 RIGHT TO PIGGYBACK. Whenever the Company proposes to register or
qualify for distribution by prospectus any of its securities (other than
pursuant to a Demand Registration or a registration under the Securities Act
on Form S-4 or S-8 or any successor or similar forms) and the registration
form or prospectus to be filed may be used for the registration or
qualification for distribution of Registrable Securities (a "PIGGYBACK
REGISTRATION"), whether or not for sale for its own account, the Company will
give prompt written notice to all holders of Registrable Securities of its
intention to effect the registration or file the prospectus and will include
in the registration or qualification all Registrable Securities with respect
to which the Company has received written requests for inclusion therein
within fifteen (15) days after the receipt of the Company's notice. Any
holder of Registration Securities that has given a written request may
withdraw its Registrable Securities from the related Piggyback Registration
by giving written notice to the Company and the managing underwriter, if any,
on or before the thirtieth (30th) day prior to the planned effective date of
the related Piggyback Registration.
Section 3.2 PIGGYBACK EXPENSES. The Registration Expenses of the holders of
Registrable Securities will be paid by the Company in all Piggyback
Registrations whether or not any registration or prospectus has become
effective or final.
Section 3.3 PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is
an underwritten primary registration or distribution by prospectus on behalf
of the Company, and the managing underwriters advise the Company in writing
(with a copy to each party hereto requesting registration or qualification
for distribution by prospectus of Registrable Securities) that in their
opinion the number of securities requested to be included in the registration
or prospectus exceeds the number which can be sold in an offering without
adversely affecting the marketability of the offering, the Company will
include in the registration or prospectus (i) first, the securities the
Company proposes to sell, (ii) second, the Registrable Securities requested
to be included in the registration and any securities requested by Jimirro to
be included in the registration, pro rata among the holders of the securities
on the basis of the number of securities so requested to be included therein
owned by each holder, and (iii) third, other securities requested to be
included in the registration. The Company shall have the right to terminate
or withdraw any registration initiated by it under this Section prior to the
effectiveness of such registration, whether or not any Shareholder has
elected to include securities in the registration, and except pursuant to
Section 3.2 the Company shall have no liability to any of the Shareholders in
connection with such termination or withdrawal.
Section 3.4 PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration
is an underwritten secondary registration or distribution by prospectus on
behalf of holders of the Company's securities, and the managing underwriters
advise the Company in writing that in their opinion the number of securities
requested to be included in the registration or qualification for
distribution by prospectus exceeds the number which can be sold in an
offering without adversely affecting the marketability of the offering, the
Company will include in the registration or prospectus (i) first, the
securities requested to be included therein by the holders requesting the
registration, (ii) second, the Registrable Securities requested to be
included in the registration, pro rata among the holders of such Registrable
Securities on the basis of the number of Registrable Securities so requested
to be included therein owned by each holder, and (iii) third, other
securities requested to be included in the registration.
Section 3.5 OTHER REGISTRATIONS. If the Company has previously filed
a Registration Statement with respect to Registrable Securities pursuant to
Article 2 or pursuant to Article 3, and if such previous registration or
offering by prospectus has not been withdrawn or abandoned, the Company will
not file and shall not be required to file or cause to be effected any other
registration of any of its equity securities or securities convertible or
exchangeable into or exercisable for its equity securities under the
Securities Act (except under the Securities Act on Form S-4 or S-8 or any
successor or similar forms), whether on its own behalf or at the request of
any holder or holders of such securities, until a period of at least ninety
(90) days have elapsed from the effective date of such previous registration.
Article 4. REGISTRATION PROCEDURES.
Section 4.1 REGISTRATION PROCEDURES. Subject to Sections 2.4 and 3.5,
whenever the holders of Registrable Securities have requested that any
Registrable Securities be registered pursuant to this Agreement, the Company
will use its best efforts to effect the registration and sale of those
Registrable Securities in accordance with the intended method of disposition
thereof, and pursuant thereto the Company will as expeditiously as possible:
(a) prepare and, within sixty (60) days after the end of the period within
which requests for registration may be given to the Company, unless the
failure to file within such sixty (60) day period occurs due to matters
outside the Company's control, in which case as soon as practicable, file
with the Commission a Registration Statement with respect to the Registrable
Securities and thereafter use its best efforts to cause the Registration
Statement to become effective (provided that before filing a Registration
Statement or any amendments or supplements thereto, the Company will furnish
to the counsel selected by the holders of a majority of the Registrable
Securities covered by the Registration Statement copies of all documents
proposed to be filed, which documents will be subject to review of counsel);
(b) prepare and file with the Commission any amendments and supplements to
the Registration Statement as may be necessary to keep the Registration
Statement effective for a period of either (i) not less than ninety (90) days
(subject to extension pursuant to Section 7.2) or, if the Registration
Statement relates to an underwritten offering, such longer period as in the
opinion of counsel for the underwriters a prospectus is required by law to be
delivered in connection with sales of Registrable Securities by an
underwriter or dealer or (ii) a shorter period as will terminate when all of
the securities covered by the Registration Statement have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof set forth in the Registration Statement (but in any event not before
the expiration of any longer period required under the Securities Act), and
to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by the Registration Statement until
such time as all of the securities have been disposed of in accordance with
the intended methods of disposition by the seller or sellers thereof set
forth in the Registration Statement;
(c) furnish to each seller of Registrable Securities the number of copies of
the Registration Statement, each amendment and supplement thereto, including
each preliminary prospectus, final prospectus and other documents as the
seller may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by the seller;
(d) use its best efforts to register or qualify the Registrable Securities
under any other securities or blue sky laws of any jurisdictions as any
seller reasonably requests and do any and all other acts and things which may
be reasonably necessary or advisable to enable the seller to consummate the
disposition in those jurisdictions of the Registrable Securities owned by the
seller (provided that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subparagraph, (ii) subject itself to
taxation in any jurisdiction or (iii) consent to general service of process
in any jurisdiction);
(e) promptly notify each seller of the Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the discovery of the happening
of any event as a result of which, the prospectus contains an untrue
statement of a material fact or omits to state any fact necessary to make the
statements therein not misleading in the light of the circumstances under
which they were made, and, at the request of any such seller, the Company
will prepare and furnish to seller a reasonable number of copies of a
supplement or amendment to the prospectus so that, as thereafter delivered to
the purchasers of Registrable Securities, the prospectus will not contain an
untrue statement of a material fact or omit to state any fact necessary to
make the statements therein not misleading in the light of the circumstances
under which they were made;
(f) use its best efforts to cause all the Registrable Securities to be listed
on each securities exchange on which similar securities issued by the Company
are then listed;
(g) provide a transfer agent and registrar for all the Registrable Securities
not later than the effective date of, or date of final receipt for, the
Registration Statement;
(h) enter into any customary agreements (including underwriting agreements
with customary provisions) and take all other actions as the holders of a
majority of the Registrable Securities being sold or the underwriters, if
any, reasonably request in order to expedite or facilitate the disposition of
the Registrable Securities (including, without limitation, effecting a share
split or a combination of shares);
(i) make available for inspection, subject to reasonable confidentiality
restrictions on use, by any seller of Registrable Securities, any underwriter
participating in any disposition pursuant to the Registration Statement and
any attorney, accountant or other agent retained by any seller or
underwriter, all financial and other records, pertinent corporate documents
and documents relating to the business of the Company, and cause the
Company's officers, directors, employees and independent accountants to
supply all information reasonably requested by any seller, underwriter,
attorney, accountant or agent in connection with the Registration Statement;
(j) otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the period of
at least twelve (12) months beginning with the first day of the Company's
first full calendar quarter after the effective date of the Registration
Statement, which earnings statement shall satisfy, in the case of a
registration in the United States, the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder;
(k) in the event of the issuance of any stop order suspending the
effectiveness of a Registration Statement, or of any order suspending or
preventing the use of any related prospectus or ordering the cessation of
trading or suspending the qualification of any securities included in the
Registration Statement for sale in any jurisdiction, the Company will use its
best efforts promptly to obtain the withdrawal of the order;
(l) obtain one or more comfort letters, addressed to the holders of the
Registrable Securities being sold, dated the effective date of such
Registration Statement (and, if the registration includes an underwritten
public offering, dated the date of the closing under the underwriting
agreement) signed by the Company's independent public accountants in
customary form and covering matters of the type customarily covered by
comfort letters as the holders of a majority of the Registrable Securities
being sold reasonably request; and (m) provide legal opinions of the
Company's outside counsel, addressed to the holders of the Registrable
Securities being sold, dated the effective date of the Registration Statement
(and, if the registration includes an underwritten public offering, dated the
date of the closing under the underwriting agreement), with respect to the
Registration Statement, each amendment and supplement thereto (including the
preliminary prospectus) and all other documents relating thereto in customary
form and covering matters of the type customarily covered by legal opinions
of such nature. The Company may require each seller of Registrable Securities
as to which any registration is being effected to furnish the Company with
information regarding the seller and the intended and actual distribution of
the securities as the Company may from time to time reasonably request.
Article 5. REGISTRATION EXPENSES.
Section 5.1 REGISTRATION EXPENSES. Except as otherwise expressly provided
herein, all expenses incidental to the Company's performance of or compliance
with this Agreement, including, without limitation, all registration and
filing fees, fees and expenses of compliance with securities or blue sky
laws, word processing, duplicating and printing expenses, messenger and
delivery expenses, and fees and disbursements of counsel for the Company and
all independent certified public accountants, underwriters and other Persons
retained by the Company (all expenses being herein called "REGISTRATION
EXPENSES"), will be borne by the Company. The Company will, in any event, pay
its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting
duties), the expense of any annual audit or quarterly review, the expense of
any liability insurance and the expenses and fees for listing the securities
to be registered on each securities exchange on which similar securities
issued by the Company are then listed. Notwithstanding the foregoing, all
Selling Expenses shall be borne by the holders of the securities so
registered pro rata on the basis of the number of their shares so registered.
Section 5.2 COUNSEL FEES. In connection with each Demand Registration and
each Piggyback Registration, the Company will reimburse the holders of
Registrable Securities covered by the registration or qualification for the
reasonable fees and disbursements of, if applicable, one United States
counsel chosen by the holders of a majority of the Registrable Securities
included in the registration or qualification.
Section 5.3 ALLOCATION OF UNPAID EXPENSES. To the extent Registration
Expenses are not required to be paid by the Company, each holder of
securities included in any registration or qualification hereunder will pay
those Registration Expenses allocable to the registration or qualification of
the holder's securities so included, and any Registration Expenses not so
allocable will be borne by all sellers of securities included in the
registration in proportion to the aggregate selling price of the securities
to be so registered or qualified.
Article 6. INDEMNIFICATION.
Section 6.1 INDEMNIFICATION. The Company agrees to indemnify and hold
harmless, and hereby does indemnify and hold harmless, each holder of
Registrable Securities, its affiliates and their respective officers,
directors and partners and each Person who controls the holder (within the
meaning of the Securities Act) against, and pay and reimburse the holder,
affiliate, director, officer or partner or controlling person for any losses,
claims, damages and liabilities, joint or several, to which the holder or any
such affiliate, director, officer or partner or controlling person may become
subject under the Securities Act or otherwise, insofar as the losses, claims,
damages or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon (i) any untrue
or alleged untrue statement of material fact contained in any Registration
Statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or, (ii) any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and the Company will pay and reimburse holder and
each affiliate, director, officer, partner and controlling person for any
legal or any other expenses actually and reasonably incurred by them in
connection with investigating or defending any loss, claim, liability, action
or proceeding; provided, however, that the Company shall not be liable in any
case to the extent that any loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement, or omission or alleged
omission, made in the Registration Statement, any prospectus or preliminary
prospectus or any amendment or supplement thereto, or in any application, in
reliance upon, and in conformity with, Written information prepared and
furnished to the Company by the holder expressly for use therein or by the
holder's failure to deliver a copy of the Registration Statement or
prospectus or any amendments or supplements thereto after the Company has
furnished the holder with a sufficient number of copies of the same. In
connection with an underwritten offering, the Company, if requested, will
indemnify the underwriters, their officers and directors and each Person who
controls the underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of the
holders of Registrable Securities.
Section 6.2 COOPERATION. In connection with any Registration Statement in
which a holder of Registrable Securities is participating, each holder will
furnish to the Company in writing the information and affidavits as the
Company reasonably requests for use in connection with any Registration
Statement or prospectus and will indemnify and hold harmless the Company, its
directors and officers, each underwriter and each other Person who controls
the Company (within the meaning of the Securities Act) against any losses,
claims, damages and liabilities, joint or several, to which the Company or
any director or officer, any underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as the losses, claims,
damages or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon (i) any untrue
or alleged untrue statement of material fact contained in the Registration
Statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or in any application or (ii) any omission or alleged
omission of a material fact required to be stated therein or necessary to
make the statements therein not misleading, but only to the extent that the
untrue statement or omission is made in the Registration Statement, any
prospectus or preliminary prospectus or any amendment or supplement thereto,
or in any application, in reliance upon and in conformity with written
information prepared and furnished to the Company by the holder expressly for
use therein, and such holder will reimburse the Company and each director,
officer, underwriter and controlling Person for any legal or any other
expenses actually and reasonably incurred by them in connection with
investigating or defending any loss, claim, liability, action or proceeding;
provided, however, that the obligation to indemnify and hold harmless will be
individual and several to each holder and will be limited to the net amount
of proceeds received by the holder from the sale of Registrable Securities
pursuant to the Registration Statement.
Section 6.3 CONTRIBUTION. If the indemnification provided for in Sections 6.1
or 6.2 is unavailable to an indemnified party under such Sections (other than
by reason of exceptions provided in those Sections) in respect of any claims
referred to in such Sections, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such claims in such
proportion as is appropriate to reflect the relative fault of the Company on
the one hand and of the Shareholder on the other in connection with the
statements or omissions which resulted in such claims. The amount paid or
payable by a party as a result of the claims referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or claim.
The relative fault of the Company on the one hand and of the Shareholder on
the other shall be determined by reference to, among other things, whether
the applicable misstatement or alleged misstatement relates to information
supplied by the Company or by the Shareholder and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such misstatement or alleged misstatement. The Company and the
Shareholder agree that it would not be just and equitable if contribution
pursuant to this Section 6.3 were determine by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
Section 6.3, the Shareholder shall not be required to contribute any amount
pursuant hereto in excess of the net proceeds (after deducting any discounts
or commissions received by an underwriter in connection with such
registration) from the offering received by the Shareholder. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution hereunder from any person
who was not guilty of such fraudulent misrepresentation.
Section 6.4 NOTICE. Any Person entitled to indemnification hereunder will (i)
give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) unless in the indemnified
party's reasonable judgment a conflict of interest between the indemnified
and indemnifying parties may exist with respect to the claim, permit the
indemnifying party to assume the defense of the claim with counsel reasonably
satisfactory to the indemnified party. If the defense is assumed, the
indemnifying party will not be subject to any liability for any settlement
made by the indemnified party without the indemnifying party's consent (but
its consent will not be unreasonably withheld). An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by the indemnifying party with respect to the claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between the indemnified party and any other of the
indemnified parties with respect to the claim.
Section 6.5 SURVIVAL. The indemnification provided for under this Agreement
will remain in full force and effect regardless of any investigation made by
or on behalf of the indemnified party or any officer, director or controlling
Person of the indemnified party and will survive the transfer of securities.
Each party hereto also agrees to make any provisions, as are reasonably
requested by any indemnified party, for contribution to the party in the
event that indemnification from the party hereto is unavailable for any
reason.
Article 7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
Section 7.1 PARTICIPATION. No Person may participate in any registration
hereunder which is underwritten unless that Person (i) agrees to sell the
Person's securities on the basis provided in any underwriting arrangements
approved by the Person or Persons entitled hereunder to approve the
arrangements (including, without limitation, pursuant to the terms of any
overallotment or "green shoe" option requested by the managing
underwriter(s), provided that no holder of Registrable Securities will be
required to sell more than the number of Registrable Securities that the
holder has requested the Company to include in any registration), (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the
terms of the underwriting arrangements, and (iii) cooperates with the
Company's reasonable requests in connection with the registration or
qualification (it being understood that the Company's failure to perform its
obligations hereunder, which failure is caused by the Person's failure to
cooperate, will not constitute a breach by the Company of this Agreement).
The Person shall not be required to provide for indemnification obligations
on the part of the Person that are greater than its obligations pursuant to
Section 6.2.
Section 7.2 NOTICE. Each Person who is participating in any registration
hereunder agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 4.1(e) above, the
Person will forthwith discontinue the disposition of its Registrable
Securities pursuant to the Registration Statement until such Person's receipt
of the copies of a supplemented or amended prospectus as contemplated by
Section 4.1(e). In the event the Company shall give any such notice, the
applicable time period mentioned in Section 4.1(b) during which a
Registration Statement is to remain effective shall be extended by the number
of days during the period from and including the date of the giving of the
notice pursuant to this Section to and including the date when each seller of
a Registrable Security covered by the Registration Statement shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 4.1(e).
Article 8. RULE 144 REPORTING.
Section 8.1 RULE 144 REPORTING. With a view to making available the benefits
of certain rules and regulations of the Commission which may permit the sale
of the Restricted Securities to the public without registration, the Company
agrees to:
(a) make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act, at all times;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act at any time; and
(c) so long as any Shareholder owns any Restricted Securities, furnish to the
Shareholder forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of Rule 144, and of the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and any other reports and documents so filed
as the Shareholder may reasonably request in availing itself of any rule or
regulation of the Commission allowing the Shareholder to sell any such
securities without registration.
Article 9. MISCELLANEOUS.
Section 9.1 NO INCONSISTENT AGREEMENTS. Subject to Section 2.6, the Company
will not hereafter enter into any agreement with respect to its securities
which is inconsistent with or violates the rights granted to the holders of
Registrable Securities in this Agreement.
Section 9.2 ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Company will
not take any action, or permit any change to occur, with respect to its
securities which would materially and adversely affect the ability of the
holders of Registrable Securities to include the Registrable Securities in a
registration or qualification for sale by prospectus undertaken pursuant to
this Agreement or which would adversely affect the marketability of the
Registrable Securities in any registration or qualification (including,
without limitation, effecting a share split or a combination of shares).
Section 9.3 REMEDIES. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of
this Agreement and that any party hereto shall have the right to injunctive
relief, in addition to all of its other rights and remedies at law or in
equity, to enforce the provisions of this Agreement; provided, however, that
no Shareholder shall have any right to an injunction to prevent the filing or
effectiveness of any Registration Statement of the Company.
Section 9.4 AMENDMENTS AND WAIVERS. Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company, NLAG and holders of a majority of the
Registrable Securities and provided, however, that in the event that an
amendment or waiver would treat a holder or group of holders of Registrable
Securities in a manner different from any other holders of Registrable
Securities, then the amendment or waiver will require the consent of the
holder or the holders of a majority of the Registrable Securities of the
group adversely treated. Notwithstanding the foregoing, the parties to this
Agreement agree that this Agreement and the Schedule of Shareholders attached
hereto shall be amended without further action on their part to add as
Shareholders any purchaser of Series B Shares who acquires such shares upon
exercise of the Option granted to NLAG or its designees pursuant to the
Preferred Stock and Warrant Purchase Agreement among the Company, NLAG and
the Shareholders dated April 25, 2002, as amended by the First Amendment to
Preferred Stock and Warrant Purchase Agreement dated May 17, 2002 or (ii)
exercise of the Warrant granted to GTH or its designees pursuant to the
Warrant Agreement between the Company and GTH. Upon each purchase of such
shares, the Company shall cause the Schedule of Shareholders to be amended to
add such purchaser as a Shareholder and shall cause an appropriate amendment
to this Agreement to be prepared, substantially in the form attached hereto
as Exhibit A, and such amendment shall become effective upon execution of
such amendment by the person purchasing such shares.
Section 9.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns. In addition, and whether or not any
express assignment shall have been made, the provisions of this Agreement
which are for the benefit of the holders of the Registrable Securities (or
any portion thereof) as such shall be for the benefit of and enforceable by
any subsequent holder of any Registrable Securities (or of such portion
thereof), subject to the provisions respecting the minimum numbers or
percentages of shares of Registrable Securities (or of such portion thereof)
required in order to be entitled to certain rights, or take certain actions,
contained herein.
Section 9.6 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in the manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision or the effectiveness or validity of any provision
in any other jurisdiction, and this Agreement shall be reformed, construed
and enforced in the jurisdiction as if the invalid, illegal or unenforceable
provision had never been contained herein.
Section 9.7 COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all counterparts taken together will constitute one
and the same Agreement.
Section 9.8 DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
Section 9.9 GOVERNING LAW. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of California without
regard to the principles of conflicts of law thereof.
Section 9.10 NOTICES. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed effectively given: (i) upon personal
delivery to the party to be notified, (ii) when sent by confirmed telex or
facsimile if sent during normal business hours of the recipient; if not, then
on the next business day, (iii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or
(iv) one (1) day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt.
All notices shall be addressed to the Company at its principal office, to
NLAG at 000 Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxxxx, Xxxxxxx 00000,
Attention: Xxxxxxx X. Xxxxxx, to each Shareholder at the address of such
Shareholder appearing on the books of the Company or to such other address as
the Company, NLAG or each Shareholder shall have furnished to the other in
writing.
IN WITNESS WHEREOF, the undersigned have set their hands and seals as
of the above date.
J2 COMMUNICATIONS
By:
------------------------------------
Xxxxx X. Xxxxxxx, President
"SHAREHOLDERS"
----------------------------------------
Xxxxxx X. Xxxxxx
----------------------------------------
Xxxx Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxx Xxxxxx
DC INVESTMENTS, LLC
By:
------------------------------------
Xxxxxxx X. Xxxxxx, Managing Member
NATIONAL LAMPOON ACQUISITION GROUP, LLC
By:
------------------------------------
Xxxxxx X. Xxxxxx, Managing Member
GTH CAPITAL, INC.
By:
------------------------------------
Xxx Xxxxx, Chief Operating Officer
SCHEDULE OF SHAREHOLDERS
NAME Address
Xxxxxxx X. Xxxxxx 000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx XX 00000
Xxxxxx X. Xxxxxx 00 Xxxx 0xx Xxxxxx
Xxxxxxxxxxxx XX 00000
Xxxx Xxxxxx 00 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx XX 00000
Xxxxxx Xxxxxx 000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx Xxxx XX 00000
DC Investments, LLC 000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx XX 00000
EXHIBIT A
AMENDMENT TO AND AGREEMENT TO JOIN IN AND BE BOUND BY
REGISTRATION RIGHTS AGREEMENT
THE UNDERSIGNED, in consideration of the opportunity to join as a Shareholder
under and be bound by the Registration Rights Agreement (the "AGREEMENT") by
and among J2 Communications (the "COMPANY"), National Lampoon Acquisition
Group LLC, and certain shareholders of the Company dated May 17, 2002, hereby
acknowledges receipt of a copy of the Agreement, acknowledges the opportunity
to review the terms and provisions of the Agreement, and agrees to join in
and be bound by the terms of the Agreement as a Shareholder (as that term is
defined in the Agreement).
DATED as of the ____ day of __________, 2002.
-----------------------------------
Signature
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Printed Name
04103.0001 #331131
