Exhibit 4.1
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 ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
("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 ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
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:
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
"SHAREHOLDERS"
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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DC INVESTMENTS, LLC
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Managing Member
NATIONAL LAMPOON ACQUISITION GROUP, LLC
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Managing Member
GTH CAPITAL, INC.
By:
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▇▇▇ ▇▇▇▇▇, Chief Operating Officer
SCHEDULE OF SHAREHOLDERS
NAME Address
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇
DC Investments, LLC ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
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.
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Signature
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Printed Name