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
