EXHIBIT 10.38
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THIS WARRANT HAS BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD, OFFERED FOR SALE OR TRANSFERRED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL THAT THE
TRANSACTION SHALL NOT RESULT IN A VIOLATION OF FEDERAL OR STATE SECURITIES LAWS.
WARRANT TO PURCHASE
__________ SHARES OF COMMON STOCK OF
GENIUS PRODUCTS, INC.
For value received, Genius Products, Inc., a Nevada corporation (the
"Corporation"), hereby grants the following rights to _______________________
and such party's successors and assigns (the "Registered Owner"):
a. ISSUE. Upon tender to the Corporation (in accordance with paragraph
(e) below), the Corporation shall issue to the Registered Owner up
to the number of shares specified in paragraph (b) below of fully
paid and non-assessable shares of Common Stock of the Corporation.
This Warrant may be exercised in whole or in part and at one or more
times. The Corporation represents and warrants that it has the power
and authority to issue this Warrant and that it is a valid and
binding obligation of the Corporation, fully enforceable according
to its terms. The Corporation further represents and warrants that
the shares of Common Stock obtainable by the exercise of this
Warrant have been duly authorized and reserved for issuance.
b. NUMBER OF SHARES. The Registered Owner is entitled to receive shares
of Common Stock of the Corporation upon exercise of this Warrant.
The Corporation shall at all times reserve and hold available
sufficient shares of Common Stock to satisfy all conversion and
purchase rights represented by outstanding convertible securities,
options and warrants, including this Warrant. The Corporation
covenants and agrees that all shares of Common Stock that may be
issued upon the execution of this Warrant shall, upon issuance, be
duly and validly issued, fully paid and non-assessable, and free
from all taxes, liens and charges with respect to the purchase and
the issuance of the shares.
c. EXERCISE PRICE. The exercise price of this Warrant, the price at
which the shares of stock purchasable upon exercise of this Warrant
may be purchased, is US[$1.00/$3.00] per share.
d. EXERCISE PERIOD. This Warrant may be exercised at any time prior to
December 31, 2005, and also at any time prior to (i) a consolidation
or merger of the Corporation with or into one or more other
corporations or other business organizations, (ii) the sale, lease
or transfer of all or substantially all of the assets of the
Corporation or (iii) any other form of corporate reorganization in
which outstanding shares of the Corporation are exchanged for or
converted into cash, securities of another corporation or business
organization, or other property, unless, in each case, the
Corporation's stockholders of record immediately prior to such event
will (by virtue of the securities issued as a part of such event)
hold at least a majority of the voting power of the surviving or
acquiring person immediately following such event. The Corporation
shall provide the Registered Owner fifteen (15) business days' prior
written notice of (1) any such event in the preceding sentence, (2)
if the Corporation desires to declare or pay a dividend upon its
Common Stock payable other than out of earnings, and (3) if the
Corporation distributes pro rata to holders of its Common Stock any
shares of its capital stock, or options to purchase, rights to
subscribe for, or securities convertible into or exchangeable for,
capital stock, or options to purchase or rights to subscribe for
such convertible or exchangeable securities, so that the Registered
Owner may exercise this Warrant within such 15 business-day period.
e. TENDER. The exercise of this Warrant must be accomplished by the
actual delivery of the exercise price and by the actual delivery of
a duly executed exercise form, a copy of which is attached to this
Warrant as Exhibit A, properly executed by the Registered Owner, and
by surrender of this Warrant, in each case to the Corporation. The
exercise form must be delivered, personally, by reputable overnight
courier or by first class mail, to the office of the Corporation at
its principal corporate office, or such other address as the
Corporation may furnish by notice to the Registered Owner from time
to time. If Registered Owner of this Warrant exercises the purchase
rights granted hereunder in part but not in whole, the Corporation
agrees that it will deliver to Registered Owner a replacement
warrant which will entitle Registered Owner thereof to purchase the
number of shares of Common Stock that remain as yet unpurchased
under this Warrant on the terms and condition set forth herein. With
respect to a tender made in response to a notice from the
Corporation described in clause (1), (2) or (3) of paragraph d.
above, the Registered Owner may make the Registered Owner's tender
and exercise of this Warrant (or any portion hereof) conditional on
the actual completion of the action that warranted such notice from
the Corporation in the first place, and in the event such action is
not completed substantially as contemplated in such notice, then
such tender and exercise by may be reversed by the Registered Owner
by delivery of written notice to the Corporation within fifteen (15)
business days of such Registered Owner receiving information that
the contemplated action did not take place.
f. NOTICE TO REGISTERED OWNER. Any and all notices given to the
Registered Owner must be given personally, by reputable overnight
courier or by first class mail, postage prepaid, addressed to the
Registered Owner at the address of the Registered Owner appearing in
the records of the Corporation.
g. RESTRICTED STOCK; REGISTRATION. This Warrant is not a registered
security. The Corporation represents and warrants that this Warrant
is exempt from registration under Section 4(2) of the Securities Act
of 1933, as amended (the "Act"). The Registered Owner represents and
warrants that it is an accredited investor as that term is defined
in Rule 501 under the Act. The shares of Common Stock of the
Corporation (or the shares into which the Common Stock has been
changed or converted) obtained upon exercise of this Warrant shall
not be transferable except upon the conditions stated below, which
are intended to ensure compliance with federal and state securities
laws. The certificates representing these shares of stock, unless
the same are registered prior to the exercise of this Warrant, shall
be stamped or otherwise imprinted with a legend in substantially the
following form:
"THE SECURITIES REPRESENTED IN THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE SOLD, OFFERED FOR SALE OR TRANSFERRED IN THE ABSENCE
2
OF AN EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES
LAWS OR AN OPINION OF COUNSEL THAT THE TRANSACTION SHALL
NOT RESULT IN A VIOLATION OF FEDERAL OR STATE SECURITIES
LAWS."
h. EFFECT OF STOCK CHANGES. If, at any time, or from time to time the
Corporation, by stock dividend, stock split, subdivision, reverse
split, consolidation, reclassification of shares, or otherwise,
changes as a whole its outstanding Common Stock into a different
number or class of shares, then, immediately upon the occurrence of
the change,
(1) the class of shares into which the Common Stock has been
changed shall replace the Common Stock, for the purposes
of this Warrant and the terms and conditions thereof, so
that the Registered Owner shall be entitled to receive,
and shall receive upon exercise of this Warrant, shares
of the class of stock into which the Common Stock had
been changed;
(2) the number of shares received upon the exercise of this
Warrant and the exercise price shall be proportionately
adjusted for such event (for example, if the outstanding
Common Stock of the Corporation is converted into X
stock at a rate of one share of Common Stock into three
shares of X stock, and prior to the change the
Registered Owner was entitled, upon exercise of this
Warrant, to receive 100 shares of Common Stock, then the
registered owner shall, after the change, be entitled to
receive 300 shares of X stock at an exercise price of
[$0.33/$1.00] per share); and
(3) irrespective of any adjustment or change in the number
or class of shares to be received under this Warrant,
this Warrant may continue to express the number and
class of shares to be received upon exercise of this
Warrant as if the number and class of shares to be
received were expressed in this Warrant when it was
initially issued.
i. NOTICE OF ADJUSTMENT. On the happening of an event requiring an
alteration or adjustment of the shares obtainable upon exercise of
this Warrant, the exercise price, or an alteration or adjustment of
their number or designation, the Corporation shall give written
notice to the Registered Owner stating the adjusted number,
designation and kind of securities or other property obtainable upon
exercise of this Warrant as a result of and following such event.
The notice shall set forth in reasonable detail the method of
calculation determining the securities or property obtainable after
such event, and the facts upon which the calculation is based. The
Corporation's Board of Directors, acting in good faith, shall
determine the calculation.
j. CLOSING OF BOOKS. The Corporation will at no time close its transfer
books against the transfer of this Warrant or of any shares of
Common Stock issued or issuable upon the exercise of this Warrant in
any manner that interferes with the timely exercise of the rights
evidenced hereby.
k. NO DILUTION OR IMPAIRMENT. The Corporation shall not undertake or
participate in any action whatsoever for the purpose, or having the
result, of avoiding or seeking to avoid the observance or
3
performance of any of its obligations pursuant to this Warrant, or
diluting, impairing or adversely affecting whatsoever the Registered
Owner's right and entitlement to acquire, by exercise hereof, the
maximum number of shares of Common Stock obtainable upon exercise of
this Warrant in accordance with its terms.
l. REPLACEMENT. Upon receipt by the Corporation of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and, in the case of loss, theft or destruction, or an
indemnity or security reasonably satisfactory to it, and
reimbursement to the Corporation of all reasonable expenses
incidental thereto, and upon surrender and cancellation of this
Warrant, if mutilated, the Corporation will make and deliver a
replacement warrant of like tenor, in lieu of this Warrant.
m. NO FRACTIONAL SHARES. The Corporation shall not be required to issue
any fractional shares of Common Stock, but may, at its option, in
respect of any such fraction make a payment in cash based on the
then-current exercise price.
n. REPRESENTATIONS AND WARRANTIES OF THE REGISTERED OWNER. Registered
Owner hereby represents and warrants to the Corporation and agrees
that:
(1) This Warrant is made with Registered Owner in reliance upon
Registered Owner's representation to the Corporation, which is
confirmed by Registered Owner's acceptance of this Warrant, that
this Warrant and the shares of Common Stock underlying this Warrant
will be acquired for investment for Registered Owner's own account,
not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that Registered Owner has no
present intention of selling, granting any participation in, or
otherwise distributing the same. By acceptance of this Warrant,
Registered Owner further represents that Registered Owner does not
presently have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such
person or to any third person, with respect to all or any portion of
this Warrant or the Common Stock. Registered Owner understands that
subject to the Registered Owner's rights under this Warrant and such
Common Stock, when issued, will not be registered under the
Securities Act, or any state securities laws, and will be issued in
reliance upon available exemptions from registration.
(2) This Warrant may not be transferred. The Common Stock underlying
this Warrant may not be sold, transferred assigned or otherwise
disposed of without an effective registration statement covering the
Common Stock under the Securities Act and any applicable state
securities laws, or an opinion of counsel satisfactory to the
Corporation that registration is not required under the Securities
Act and/or any applicable state securities laws. Registered Owner
may be required to hold such shares of Common Stock indefinitely
unless such shares are subsequently registered under the Securities
Act and/or any applicable state securities laws, or an exemption
from such registration is available. Registered Owner acknowledges
that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including,
but not limited to, the time and manner of sale, the holding period
for this Warrant and the Common Stock underlying this Warrant, and
on requirements relating to the Corporation which are outside of
Registered Owner's control, and which the Corporation is under no
obligation and may not be able to satisfy.
4
(3) Registered Owner shall have no rights as a shareholder with
respect to any shares of Common Stock purchasable under this Warrant
until the date of issuance of a certificate for the Common Stock so
purchased in accordance with the terms hereof. Except as expressly
set forth in this Warrant, no adjustment shall be made for dividends
or other rights for which the record date occurs prior to the date
of such issuance.
(4) Registered Owner has had an opportunity to discuss the
Corporation's business, management, financial affairs and the terms
and conditions of this Warrant with the Corporation's management and
has also had access to all of the Corporation's publicly filed
documents, including, without limitation, the Corporation's most
recent Forms 10-KSB, 10-QSB and 8-K.
o. GOVERNING LAWS. This Warrant shall be construed and enforced in
accordance with and governed by the laws of the State of California
without regard to the choice of law principles thereof.
IN WITNESS WHEREOF, the Corporation has signed this Warrant by its
duly authorized officers effective as of the of , 2003.
Genius Products, Inc.
By:
------------------------------------------
Xxxxx Xxxxxxx, Chief Executive Officer
REGISTERED OWNER:
------------------------------------------
------------------------------------------
SSN:
-----------------------------------------
Address:
-------------------------------------
5
EXHIBIT A
(TO BE COMPLETED AND EXECUTED BY THE REGISTERED OWNER OF THE WARRANT TO
WHICH THIS EXHIBIT IS ATTACHED TO EXERCISE THE WARRANT AND TO RECEIVE
THE STOCK OBTAINABLE UPON EXERCISE OF THE WARRANT.)
GENIUS PRODUCTS, INC.
00000 XX XXXXXX XXXX
XXXXX 000
XXX XXXXX, XX 00000
The undersigned hereby: (1) [irrevocably] [conditionally - THE SUBSCRIPTION MAY
BE MADE CONDITIONAL IF WARRANT EXERCISED IN RESPONSE TO NOTICE OF AN
EXTRAORDINARY TRANSACTION FROM CORPORATION LISTED IN CLAUSE (1), (2) OR (3) OF
PARAGRAPH D. OF THE WARRANT ] subscribes for and offers to purchase shares of
Common Stock of Genius Products, Inc., pursuant to, and in accordance with all
the terms of, the Warrant to which this Exhibit is attached; (2) encloses
payment of US$ for these shares at a price of US$ per share; and (3) requests
that a certificate for the shares be issued in the name of the undersigned and
delivered to the undersigned at the address specified below.
Date: _____________________ Name:
------------------------------
Address:
------------------------------------------
------------------------------------------
