EXHIBIT 10.24
AWARD NUMBER: ___________
GENIUS PRODUCTS, INC. 2004 STOCK INCENTIVE PLAN
STOCK OPTION AWARD AGREEMENT
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1. GRANT OF OPTION. Genius Products, Inc., a Nevada corporation (the
"Company"), hereby grants to the Grantee (the "Grantee") named in the Notice of
Stock Option Award (the "Notice"), an option (the "Option") to purchase the
Total Number of Shares of Common Stock subject to the Option (the "Shares") set
forth in the Notice, at the Exercise Price per Share set forth in the Notice
(the "Exercise Price") subject to the terms and provisions of the Notice, this
Stock Option Award Agreement (the "Option Agreement") and the Company's 2004
Stock Incentive Plan, as amended from time to time (the "Plan"), which are
incorporated herein by reference. Unless otherwise defined herein, the terms
defined in the Plan shall have the same defined meanings in this Option
Agreement.
If designated in the Notice as an Incentive Stock Option, the Option is
intended to qualify as an Incentive Stock Option as defined in Section 422 of
the Code. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as Incentive
Stock Options which become exercisable for the first time by the Grantee during
any calendar year (under all plans of the Company or any Parent or Subsidiary of
the Company) exceeds $100,000, such excess Options, to the extent of the Shares
covered thereby in excess of the foregoing limitation, shall be treated as
Non-Qualified Stock Options. For this purpose, Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the date the Option with respect
to such Shares is awarded.
2. EXERCISE OF OPTION.
(a) RIGHT TO EXERCISE. The Option shall be exercisable during its
term in accordance with the Vesting Schedule set out in the Notice and with the
applicable provisions of the Plan and this Option Agreement. The Option shall be
subject to the provisions of Section 11 of the Plan relating to the
exercisability or termination of the Option in the event of a Corporate
Transaction or Change in Control. The Grantee shall be subject to reasonable
limitations on the number of requested exercises during any monthly or weekly
period as determined by the Administrator. In no event shall the Company issue
fractional Shares.
(b) METHOD OF EXERCISE. The Option shall be exercisable by
delivery of an exercise notice (a form of which is attached as Exhibit A) or by
such other procedure as specified from time to time by the Administrator which
shall state the election to exercise the Option, the whole number of Shares in
respect of which the Option is being exercised, and such other provisions as may
be required by the Administrator. The exercise notice shall be delivered in
person, by certified mail, or by such other method (including electronic
transmission) as determined from time to time by the Administrator to the
Company accompanied by payment of the Exercise Price. The Option shall be deemed
to be exercised upon receipt by the Company of such notice accompanied by the
Exercise Price, which, to the extent selected, shall be deemed to be satisfied
by use of the broker-dealer sale and remittance procedure to pay the Exercise
Price provided in Section 3(d), below.
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(c) TAXES. No Shares will be delivered to the Grantee or other
person pursuant to the exercise of the Option until the Grantee or other person
has made arrangements acceptable to the Administrator for the satisfaction of
applicable income tax and employment tax withholding obligations, including,
without limitation, such other tax obligations of the Grantee incident to the
receipt of Shares or the disqualifying disposition of Shares received on
exercise of an Incentive Stock Option. Upon exercise of the Option, the Company
or the Grantee's employer may offset or withhold (from any amount owed by the
Company or the Grantee's employer to the Grantee) or collect from the Grantee or
other person an amount sufficient to satisfy such tax obligations and/or the
employer's withholding obligations.
3. METHOD OF PAYMENT. Payment of the Exercise Price shall be made by
any of the following, or a combination thereof, at the election of the Grantee;
provided, however, that such exercise method does not then violate any
Applicable Law:
(a) cash;
(b) check;
(c) with the Company's agreement, by surrender of Shares or
delivery of a properly executed form of attestation of ownership of Shares as
the Administrator may require which have a Fair Market Value on the date of
surrender or attestation equal to the aggregate Exercise Price of the Shares as
to which the Option is being exercised; provided, however, that Shares acquired
under the Plan or any other equity compensation plan or agreement of the Company
must have been held by the Grantee for a period of more than six (6) months; or
(d) payment through a broker-dealer sale and remittance procedure
pursuant to which the Grantee (i) shall provide written instructions to a
Company-designated brokerage firm to effect the immediate sale of some or all of
the purchased Shares and remit to the Company sufficient funds to cover the
aggregate exercise price payable for the purchased Shares, and (ii) shall
provide written directives to the Company to deliver the certificates for the
purchased Shares directly to such brokerage firm in order to complete the sale
transaction.
4. RESTRICTIONS ON EXERCISE. The Option may not be exercised if the
issuance of the Shares subject to the Option upon such exercise would constitute
a violation of any Applicable Laws.
5. TERMINATION OR CHANGE OF CONTINUOUS SERVICE. In the event the
Grantee's Continuous Service terminates, other than for Cause, the Grantee may,
until the Expiration Date set forth in the Notice, exercise the portion of the
Option that was vested at the date of such termination (the "Termination Date").
In the event of termination of the Grantee's Continuous Service for Cause, the
Grantee's right to exercise the Option shall, except as otherwise determined by
the Administrator, terminate concurrently with the termination of the Grantee's
Continuous Service (also the "Termination Date"). In no event shall the Option
be exercised later than the Expiration Date set forth in the Notice. In the
event of the Grantee's change in status from Employee, Director or Consultant to
any other status of Employee, Director or Consultant, the Option shall remain in
effect and vesting of the Option shall continue only to the extent determined by
the Administrator as of such change in status; provided, however, that with
respect to any Incentive Stock Option that shall remain in effect after a change
in status from Employee to Director or Consultant, such Incentive Stock Option
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shall cease to be treated as an Incentive Stock Option and shall be treated as a
Non-Qualified Stock Option on the day three (3) months and one (1) day following
such change in status. Except as provided in Sections 6 and 7 below, to the
extent that the Option was unvested on the Termination Date, or if the Grantee
does not exercise the vested portion of the Option within the Post-Termination
Exercise Period, the Option shall terminate.
6. DISABILITY OF GRANTEE. In the event the Grantee's Continuous Service
terminates as a result of his or her disability ("Disability"), the Grantee may
at any time prior to the Expiration Date, exercise the portion of the Option
that was vested on the Termination Date; provided, however, that if such
Disability is not a "disability" as such term is defined in Section 22(e)(3) of
the Code and the Option is an Incentive Stock Option, such Incentive Stock
Option shall cease to be treated as an Incentive Stock Option and shall be
treated as a Non-Qualified Stock Option on the day three (3) months and one (1)
day following the Termination Date. To the extent that the Option was unvested
on the Termination Date, or if the Grantee does not exercise the vested portion
of the Option within the time specified herein, the Option shall terminate.
Section 22(e)(3) of the Code provides that an individual is permanently and
totally disabled if he or she is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than twelve (12) months.
7. DEATH OF GRANTEE. In the event of the termination of the Grantee's
Continuous Service as a result of his or her death, or in the event of the
Grantee's death during the Post-Termination Exercise Period or during the period
in which the Option is exercisable following the Grantee's termination of
Continuous Service as a result of his or her Disability, the Grantee's estate,
or a person who acquired the right to exercise the Option by bequest or
inheritance, may exercise the portion of the Option that was vested at the date
of termination at any time prior to the Expiration Date. To the extent that the
Option was unvested on the date of death, or if the vested portion of the Option
is not exercised within the time specified herein, the Option shall terminate.
8. TRANSFERABILITY OF OPTION. The Option, if an Incentive Stock Option,
may not be transferred in any manner other than by will or by the laws of
descent and distribution and may be exercised during the lifetime of the Grantee
only by the Grantee. The Option, if a Non-Qualified Stock Option, may not be
transferred in any manner other than by will or by the laws of descent and
distribution. Notwithstanding the foregoing, the Grantee may designate a
beneficiary of the Grantee's Incentive Stock Option or Non-Qualified Stock
Option in the event of the Grantee's death on a beneficiary designation form
provided by the Administrator. The terms of the Option shall be binding upon the
executors, administrators, heirs, successors and transferees of the Grantee.
9. TERM OF OPTION. The Option must be exercised no later than the
Expiration Date set forth in the Notice or such earlier date as otherwise
provided herein. After the Expiration Date or such earlier date, the Option
shall be of no further force or effect and may not be exercised.
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10. TAX CONSEQUENCES. Set forth below is a brief summary as of the date
of this Option Agreement of some of the federal tax consequences of exercise of
the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE GRANTEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE
SHARES.
(a) EXERCISE OF INCENTIVE STOCK OPTION. If the Option qualifies as
an Incentive Stock Option, there will be no regular federal income tax liability
upon the exercise of the Option, although the excess, if any, of the Fair Market
Value of the Shares on the date of exercise over the Exercise Price will be
treated as income for purposes of the alternative minimum tax for federal tax
purposes and may subject the Grantee to the alternative minimum tax in the year
of exercise. However, the Internal Revenue Service issued proposed regulations
which would subject the Grantee to withholding at the time the Grantee exercises
an Incentive Stock Option for Social Security and Medicare based upon the
excess, if any, of the Fair Market Value of the Shares on the date of exercise
over the Exercise Price. These proposed regulations are subject to further
modification by the Internal Revenue Service and, if adopted, would be effective
only for the exercise of an Incentive Stock Option that occurs two years after
the regulations are issued in final form.
(b) EXERCISE OF INCENTIVE STOCK OPTION FOLLOWING DISABILITY. If
the Grantee's Continuous Service terminates as a result of Disability that is
not permanent and total disability as such term is defined in Section 22(e)(3)
of the Code, to the extent permitted on the date of termination, the Grantee
must exercise an Incentive Stock Option within three (3) months of such
termination for the Incentive Stock Option to be qualified as an Incentive Stock
Option. Section 22(e)(3) of the Code provides that an individual is permanently
and totally disabled if he or she is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than twelve (12) months.
(c) EXERCISE OF NON-QUALIFIED STOCK OPTION. On exercise of a
Non-Qualified Stock Option, the Grantee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the excess,
if any, of the Fair Market Value of the Shares on the date of exercise over the
Exercise Price. If the Grantee is an Employee or a former Employee, the Company
will be required to withhold from the Grantee's compensation or collect from the
Grantee and pay to the applicable taxing authorities an amount in cash equal to
a percentage of this compensation income at the time of exercise, and may refuse
to honor the exercise and refuse to deliver Shares if such withholding amounts
are not delivered at the time of exercise.
(d) DISPOSITION OF SHARES. In the case of a Non-Qualified Stock
Option, if Shares are held for more than one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. In the case of an Incentive Stock Option, if Shares
transferred pursuant to the Option are held for more than one year after receipt
of the Shares and are disposed more than two years after the Date of Award, any
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gain realized on disposition of the Shares also will be treated as capital gain
for federal income tax purposes and subject to the same tax rates and holding
periods that apply to Shares acquired upon exercise of a Non-Qualified Stock
Option. If Shares purchased under an Incentive Stock Option are disposed of
prior to the expiration of such one-year or two-year periods, any gain realized
on such disposition will be treated as compensation income (taxable at ordinary
income rates) to the extent of the difference between the Exercise Price and the
lesser of (i) the Fair Market Value of the Shares on the date of exercise, or
(ii) the sale price of the Shares.
11. ENTIRE AGREEMENT: GOVERNING LAW. The Notice, the Plan and this
Option Agreement constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior undertakings
and agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee's interest except by
means of a writing signed by the Company and the Grantee. Nothing in the Notice,
the Plan and this Option Agreement (except as expressly provided therein) is
intended to confer any rights or remedies on any persons other than the parties.
The Notice, the Plan and this Option Agreement are to be construed in accordance
with and governed by the internal laws of the State of California without giving
effect to any choice of law rule that would cause the application of the laws of
any jurisdiction other than the internal laws of the State of California to the
rights and duties of the parties. Should any provision of the Notice, the Plan
or this Option Agreement be determined by a court of law to be illegal or
unenforceable, such provision shall be enforced to the fullest extent allowed by
law and the other provisions shall nevertheless remain effective and shall
remain enforceable.
12. HEADINGS. The captions used in the Notice and this Option Agreement
are inserted for convenience and shall not be deemed a part of the Option for
construction or interpretation.
13. DISPUTE RESOLUTION. The provisions of this Section 13 shall be the
exclusive means of resolving disputes arising out of or relating to the Notice,
the Plan and this Option Agreement. The Company, the Grantee, and the Grantee's
assignees (the "parties") shall attempt in good faith to resolve any disputes
arising out of or relating to the Notice, the Plan and this Option Agreement by
negotiation between individuals who have authority to settle the controversy.
Negotiations shall be commenced by either party by notice of a written statement
of the party's position and the name and title of the individual who will
represent the party. Within thirty (30) days of the written notification, the
parties shall meet at a mutually acceptable time and place, and thereafter as
often as they reasonably deem necessary, to resolve the dispute. If the dispute
has not been resolved by negotiation, the parties agree that any suit, action,
or proceeding arising out of or relating to the Notice, the Plan or this Option
Agreement shall be brought in the United States District Court for the Southern
District of California (or should such court lack jurisdiction to hear such
action, suit or proceeding, in a California state court in the County of San
Diego) and that the parties shall submit to the jurisdiction of such court. The
parties irrevocably waive, to the fullest extent permitted by law, any objection
the party may have to the laying of venue for any such suit, action or
proceeding brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT
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THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If
any one or more provisions of this Section 13 shall for any reason be held
invalid or unenforceable, it is the specific intent of the parties that such
provisions shall be modified to the minimum extent necessary to make it or its
application valid and enforceable.
14. NOTICES. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery, upon
deposit for delivery by an internationally recognized express mail courier
service or upon deposit in the United States mail by certified mail (if the
parties are within the United States), with postage and fees prepaid, addressed
to the other party at its address as shown in these instruments, or to such
other address as such party may designate in writing from time to time to the
other party.
END OF AGREEMENT
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EXHIBIT A
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GENIUS PRODUCTS, INC. 2004 STOCK INCENTIVE PLAN
EXERCISE NOTICE
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Genius Products, Inc.
000 Xxxxx Xxxxx Xx, Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attention: Corporate Secretary
1. EXERCISE OF OPTION. Effective as of today, ______________, 20__ the
undersigned (the "Grantee") hereby elects to exercise the Grantee's option to
purchase ___________ shares of the Common Stock (the "Shares") of Genius
Products, Inc. (the "Company") under and pursuant to the Company's 2004 Stock
Incentive Plan, as amended from time to time (the "Plan") and the [ ] Incentive
[ ] Non-Qualified Stock Option Award Agreement (the "Option Agreement") and
Notice of Stock Option Award (the "Notice") dated ______________, 20__. Unless
otherwise defined herein, the terms defined in the Plan shall have the same
defined meanings in this Exercise Notice.
2. REPRESENTATIONS OF THE GRANTEE. The Grantee acknowledges that the
Grantee has received, read and understood the Notice, the Plan and the Option
Agreement and agrees to abide by and be bound by their terms and conditions.
3. RIGHTS AS STOCKHOLDER. Until the stock certificate evidencing such
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the Shares, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 10 of the Plan.
4. DELIVERY OF PAYMENT. The Grantee herewith delivers to the Company
the full Exercise Price for the Shares, which, to the extent selected, shall be
deemed to be satisfied by use of the broker-dealer sale and remittance procedure
to pay the Exercise Price provided in Section 3(d) of the Option Agreement.
5. TAX CONSULTATION. The Grantee understands that the Grantee may
suffer adverse tax consequences as a result of the Grantee's purchase or
disposition of the Shares. The Grantee represents that the Grantee has consulted
with any tax consultants the Grantee deems advisable in connection with the
purchase or disposition of the Shares and that the Grantee is not relying on the
Company for any tax advice.
6. TAXES. The Grantee agrees to satisfy all applicable foreign,
federal, state and local income and employment tax withholding obligations and
herewith delivers to the Company the full amount of such obligations or has made
arrangements acceptable to the Company to satisfy such obligations. In the case
of an Incentive Stock Option, the Grantee also agrees, as partial consideration
for the designation of the Option as an Incentive Stock Option, to notify the
Exhibit A - 1
Company in writing within thirty (30) days of any disposition of any shares
acquired by exercise of the Option if such disposition occurs within two (2)
years from the Date of Award or within one (1) year from the date the Shares
were transferred to the Grantee. If the Company is required to satisfy any
foreign, federal, state or local income or employment tax withholding
obligations as a result of such an early disposition, the Grantee agrees to
satisfy the amount of such withholding in a manner that the Administrator
prescribes.
7. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Exercise Notice to single or multiple assignees, and this agreement
shall inure to the benefit of the successors and assigns of the Company. This
Exercise Notice shall be binding upon the Grantee and his or her heirs,
executors, administrators, successors and assigns.
8. HEADINGS. The captions used in this Exercise Notice are inserted for
convenience and shall not be deemed a part of this agreement for construction or
interpretation.
9. DISPUTE RESOLUTION. The provisions of Section 13 of the Option
Agreement shall be the exclusive means of resolving disputes arising out of or
relating to this Exercise Notice.
10. GOVERNING LAW; SEVERABILITY. This Exercise Notice is to be
construed in accordance with and governed by the internal laws of the State of
California without giving effect to any choice of law rule that would cause the
application of the laws of any jurisdiction other than the internal laws of the
State of California to the rights and duties of the parties. Should any
provision of this Exercise Notice be determined by a court of law to be illegal
or unenforceable, such provision shall be enforced to the fullest extent allowed
by law and the other provisions shall nevertheless remain effective and shall
remain enforceable.
11. NOTICES. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery, upon
deposit for delivery by an internationally recognized express mail courier
service or upon deposit in the United States mail by certified mail (if the
parties are within the United States), with postage and fees prepaid, addressed
to the other party at its address as shown below beneath its signature, or to
such other address as such party may designate in writing from time to time to
the other party.
12. FURTHER INSTRUMENTS. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this agreement.
13. ENTIRE AGREEMENT. The Notice, the Plan and the Option Agreement are
incorporated herein by reference and together with this Exercise Notice
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee's interest except by
means of a writing signed by the Company and the Grantee. Nothing in the Notice,
the Plan, the Option Agreement and this Exercise Notice (except as expressly
provided therein) is intended to confer any rights or remedies on any persons
other than the parties.
Exhibit A - 2
Submitted by: Accepted by:
GRANTEE: GENIUS PRODUCTS, INC.
By:
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(Signature)
Printed Name: Title:
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Address: Address:
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000 Xxxxx Xxxxx Xx, Suite 210
---------------------------------------- Solana Beach, CA 92075
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Exhibit A - 3
