Contract
EXHIBIT
4.01
THIS NOTE
AND THE INDEBTEDNESS EVIDENCED HEREBY ARE AND SHALL AT ALL TIMES BE AND REMAIN
SUBORDINATED IN RIGHT OF PAYMENT TO THE PRIOR PAYMENT IN FULL OF THE SENIOR
SECURED OBLIGATIONS OWING TO THE SG LENDERS (AS DEFINED HEREIN).
5% SUBORDINATED UNSECURED
PROMISSORY NOTE
$_____________ February
17, 2009
FOR VALUE
RECEIVED, GENIUS PRODUCTS,
LLC (together with its successors and, if permitted, assigns, hereinafter
called the “Obligor”), does
hereby promise to pay in accordance with the terms of this instrument, to the
order of _____________ (together with its successors and permitted assigns, the
“Holder”) at
_____________________, or at such other address designated in writing by notice
to the Obligor by the Holder, the principal sum of ____________________ Dollars
($____________) (the “Principal Amount”),
plus interest, payable in accordance with the terms and conditions
hereof.
This Note is one of several
notes aggregating up to Nine Million Five Hundred Thousand Dollars ($9,500,000)
in principal amount that may be issued pursuant to the Note and Warrant Purchase
Agreement, dated as of February 17, 2009 (as amended, modified or supplemented,
the “Purchase
Agreement”), by and among the Obligor, Genius Products, Inc., a Delaware
corporation (the “Company”), the Holder
and certain other parties (collectively, as the same may be amended or modified
from time to time, the “Notes”).
1.
Payment,
Prepayment.
(a) Subject
to the terms and conditions of this Note, including the Extension (as defined
below) and the subordination provisions under the Senior Secured Obligations
owing to the SG Lenders, and subject to this Note being earlier accelerated
pursuant to the terms hereof, the Principal Amount of this Note shall be due and
payable in full to the Holder on December 31, 2010 (the “Maturity
Date”).
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(b) The
Principal Amount of this Note and accrued interest may be prepaid at the
election of the Obligor at any time in whole or in part, without penalty or
premium, provided, however, Obligor shall not make any Distribution with respect
to this Note until and unless the Senior Secured Obligations owing to the SG
Lenders have been Paid in Full or consent to such Distribution is received in
writing from the SG Lenders. Any such prepayment will be applied
first to interest accrued on this Note and second, if the amount of prepayment
exceeds the amount of all such accrued interest, to the payment of the Principal
Amount.
(c) Subject
to clause (b) above, the Obligor agrees that it shall not make any payments
(including, without limitation, prepayments) of principal and interest, fees or
other charges (or redemption, purchase, retirement, defeasance, sinking fund or
similar payment) under that certain 5% Subordinated Unsecured Promissory Note,
dated December 31, 2008, issued by the obligor in favor of The Xxxxxxxxx Company
Holdings LLC (or its assigns) in the principal amount of $20,000,000 (as the
same may be amended or modified from time to time, the “TWC Note”) unless the
Obligor makes concurrent pro rata payments or prepayments under the Notes;
provided, however, that this clause (c) shall not apply to (i) payments made
under the TWC Note with the proceeds from the sale of the Notes, and (ii)
payments made upon maturity of the TWC Note if, and only if, the Maturity Date
of this Note has been extended in accordance with clause (d)
below. For so long as this Note is outstanding, the Obligor shall not
amend or modify the TWC Note in a manner adverse to the holders of the Notes,
including, without limitation, any change to the principal amount, interest rate
or maturity date of the TWC Note, or exchange the TWC Note for (or replace the
TWC Note with) other debt of the Obligor, without the prior written consent of a
Majority in Interest.
(d) The
Obligor may at its option and in its sole discretion extend the Maturity Date
until December 31, 2011 (the “Extension”) provided, that, no later than December
31, 2010, the Obligor or its subsidiaries have entered into a distribution
agreement (including any extension of a distribution agreement) with The
Xxxxxxxxx Company LLC or its affiliates (collectively, “TWC”), relating to the
distribution of feature film and direct-to-video releases owned or controlled by
TWC, on substantially similar terms (or terms more favorable to the Obligor) as
the current distribution agreement between the Obligor and TWC, which by its
terms does not expire prior to December 31, 2011 (as the same may be
amended or modified from time to time, the “TWC Distribution
Agreement”), and such agreement is effective at the time of such
extension.
(e) Payments
under this Note shall be made in U.S. dollars in immediately available
funds.
(f) If any
payment on this Note becomes due and payable on a Saturday, Sunday or other date
on which commercial banks are authorized or required by law to close, the
maturity thereof shall be extended to the next succeeding business day, and with
respect to payments of principal, interest thereon shall be payable at the
applicable rate during such extension.
(g) The
Obligor agrees to pay all costs and expenses incurred by the Holder in
connection with the collection of any amounts due under this Note, including
reasonable attorneys’ fees.
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(h) Except
with respect to the Senior Secured Obligations, this Note ranks pari passu with all other
Notes and other unsecured notes now or hereafter
issued. In addition, Xxxxxxx agrees that it shall not make
any payments or prepayments of principal and interest under any Note unless the
Obligor makes concurrent pro rata payments or prepayments under all of the
Notes.
2.
Interest.
(a) Except as set forth in clause (b)
below, any amount due and outstanding hereunder (including, without limitation,
the Principal Amount) shall accrue interest at a rate of five percent (5%) per
annum, which accrual shall commence as of the date hereof and continue until the
Principal Amount is paid. Accrued interest shall be payable in full
on the Maturity Date.
(b) During the period of the Extension,
if any, any amount due and outstanding hereunder (including, without limitation,
the Principal Amount) shall accrue interest at a rate of ten percent (10%) per
annum.
(c) Interest shall be calculated on the
basis of the actual number of days elapsed over a year of 360 days and shall
accrue daily. Presentment for payment, notice of dishonor, protest
and notice of protest are hereby waived.
3.
Events of
Default. Upon the occurrence of any of the following
events:
(a) default
shall be made in the payment of any principal of or interest on this Note, on a
date which such payment shall be payable;
(b) (i) the
Obligor shall commence (or petition to commence) any lawsuit, proceeding or
other action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it as bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debtors, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or any
substantial part of its assets, or the Obligor shall make a general assignment
for the benefit of its creditors; or (ii) there shall be commenced against the
Obligor a proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such adjudication
or appointment, or (B) remains undismissed, undischarged or unbonded for a
period of 30 days; or (iii) there shall be commenced against the Obligor a
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged or stayed or bonded pending appeal
within 60 days from the entry thereof; or (iv) the Obligor shall authorize or
take any action in furtherance of, or acquiescence in, any of the acts set forth
in clause (i), (ii) or (iii) above; or (v) the Obligor shall generally be unable
to, or shall admit in writing its inability to, pay its debts as they become
due; or (vi) the business of the Obligor shall cease; or (vii) the TWC
Distribution Agreement is terminated during the term of the Extension; or (viii)
the Obligor fails to make any payment of principal, interest or any other amount
payable under the TWC Note or the SG Credit Agreement as it falls due or any
such debt is accelerated; or (ix) the Obligor or the Company materially breaches
any representation, warranty, covenant or other term or condition of any
Transaction Document, except in the case of a breach of a covenant of any
Transaction Document which is curable, only if such breach remains uncured for a
period of at least five (5) Business Days; then, and in any such event set forth
in clauses (a) and (b) of this Section 3, Holder may, at its option (A) declare
all amounts of the Principal Amount outstanding under this Note to be forthwith
due and payable, together with any accrued interest hereunder, whereupon this
Note shall become forthwith due and payable, without presentment, diligence,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived, anything contained herein to the contrary notwithstanding;
provided, that
with respect to Events of Default under this Section 3(b)(i) through and
including (iv), this Note shall automatically become immediately due and payable
with respect to the Principal Amount outstanding under this Note, together with
any accrued interest hereunder, and (B) exercise any and all other remedies
provided hereunder or available at law or in equity upon the occurrence and
continuation of an Event of Default. The Obligor shall pay all
out-of-pocket expenses incurred by the Holder (or its successors and assigns)
after a Default, including the fees, charges, and disbursements of any counsel
or consultants engaged by Xxxxxx to enforce the terms of this Note.
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Each
event specified in this Section 3 is an “Event of Default,”
provided there
has been satisfied any requirement in connection with such event for the giving
of notice, or the lapse of time, or the happening of any further condition,
event or act, and such event, whether or not any such requirement has been
satisfied, is a “Default.”
4.
Unconditional
Obligations. The Obligor agrees that its obligations to make
payments of principal and interest as provided for herein are independent
obligations and shall be absolute and unconditional, and shall not be subject to
any defense, counterclaim, setoff or other right, existing or future, which the
Obligor may have against the Holder, any other holder hereof or any other person
or entity.
5.
Subordination.
(a) Obligor covenants and agrees, and
the Holder by its acceptance of this Note (whether upon original issue or upon
transfer or assignment), likewise covenants and agrees, notwithstanding anything
to the contrary contained herein, that the payment of any and all of the
obligations of the Obligor to the Holder evidenced by this Note (the “Subordinated Debt”)
shall be subordinate and subject in right and time of payment, to the extent and
in the manner hereinafter set forth, to the Payment in Full of the Senior
Secured Obligations owing to the SG Lenders.
(b) The Obligor agrees that during any
time that any Proceeding (defined below) involving the Obligor or any of its
Significant Subsidiaries is pending:
(i) All
Senior Secured Obligations shall first be Paid in Full before any Distribution,
whether in cash, securities or other property, shall be made to the Holder on
account of Subordinated Debt.
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(ii) Any
Distribution, whether in cash, securities or other property which would
otherwise, but for the terms of this clause (b), be payable or deliverable in
respect of the Subordinated Debt shall be paid or delivered to the SG Lenders
until Payment in Full of the Senior Secured Obligations. The Holder
irrevocably authorizes, empowers and directs any debtor, debtor in possession,
receiver, trustee, liquidator, custodian, conservator or other Person having
authority, to pay or otherwise deliver all such Distributions, until the Senior
Secured Obligations are Paid in Full, to the SG Lenders. The Holder
also irrevocably authorizes and empowers the SG Lenders until Payment in Full of
the Senior Secured Obligations, in the name of the Holder, to demand, sue for,
collect and receive any and all such Distributions.
(iii) The
Holder agrees not to initiate, prosecute or participate in any claim, action or
other proceeding challenging the enforceability, validity, perfection or
priority of the Senior Secured Obligations or any liens and security interests
securing the Senior Secured Obligations.
(iv) The
Holder agrees to execute, verify, deliver and file any proofs of claim in
respect of the Subordinated Debt requested by the SG Lenders that are consistent
with the terms of this Note until the Senior Secured Obligations are Paid in
Full in connection with any such Proceeding and hereby irrevocably authorizes,
empowers and appoints the SG Lenders, its agent and attorney-in-fact to (i)
execute, verify, deliver and file such proofs of claim and (ii) vote such claim
in any Proceeding; provided, the SG
Lenders shall not have any obligation to execute, verify, deliver and/or file
any such proof of claim or to vote any such claim.
(v) The
Senior Secured Obligations shall continue to be treated as Senior Secured
Obligations and the provisions of this Note shall continue to govern the
relative rights and priorities of the SG Lenders and the Holder even if all or
part of the Senior Secured Obligations or the security interests securing the
Senior Secured Obligations are subordinated, set aside, avoided, invalidated or
disallowed in connection with any such Proceeding, and the applicable provisions
of this Note shall be reinstated if at any time any payment of any of the Senior
Secured Obligations is rescinded or must otherwise be returned by a SG Lender or
any representative of such SG Lender;
(c) Notwithstanding anything to the
contrary contained herein, the Obligor shall not make, and the Holder agrees
that it will not accept, any Distribution with respect to the Subordinated Debt
until the Senior Secured Obligations owing to the SG Lenders are Paid in Full or
consent to such Distribution is received in writing from the SG
Lenders. The failure of the Obligor to make any Distribution with
respect to the Subordinated Debt by reason of the operation of this clause (c)
shall be construed as preventing the occurrence of an Event of Default under this Note.
(d) The Holder agrees that it shall not, without
the prior written consent of the SG Lenders until Payment in Full of all the SG
Obligations, take any Enforcement Action (defined below) with respect to the
Subordinated Debt; provided, that, after
the passage of 180 days from receipt by the SG Lenders of written notice from
Holder that the Obligor has failed to make a payment on any Maturity Date,
Holder shall have the right to commence and pursue judicial proceedings against
the Obligor in order to collect such unpaid principal (together with accrued and
unpaid interest) of this Note. Notwithstanding the foregoing, but
subject to the provisions of clause (b) above, the Holder may file proofs of
claim against the Obligor, and may vote such claims in accordance with this
Note, in any Proceeding involving the Obligor. Any Distributions or
other proceeds of any Enforcement Action obtained by the Holder shall in any
event be held in trust by it for the benefit of the SG Lenders and promptly paid
or delivered to the SG Lenders in the form received until all Senior Secured
Obligations owing to the SG Lenders are Paid in Full.
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(e) The
Holder agrees that if any Distribution on account of the Subordinated Debt not
permitted to be made by the Obligor or accepted by the Obligor under this Note
is made and received by the Holder, such Distribution shall not be effective and
shall not be commingled with any of the assets of the Holder, shall be held in
trust by the Holder for the benefit of the SG Lenders and shall be promptly paid
over to the SG Lenders until the Payment in Full of the Senior Secured
Obligations owing to the SG Lenders, with any necessary endorsement, for
application to the payment of the Senior Secured Obligations owing to the SG
Lenders then remaining unpaid, until all of the Senior Secured Obligations owing
to the SG Lenders are Paid in Full.
(f) Until the Senior Secured
Obligations owing to the SG Lenders have been Paid in Full, any liens and
security interests of the Holder in any property or assets of the Obligor which
may exist in breach of the agreement pursuant to Section 6(b)(vi) hereof shall
be and hereby are subordinated for all purposes and in all respects to the liens
and security interests of SG Lenders in such assets and property, regardless of
the time, manner or order of perfection of any such liens and security
interests. The Holder agrees that it will not at any time, including
without limitation in connection with any Proceeding, contest the validity,
perfection, priority or enforceability of the Senior Secured Obligations owing
to the SG Lenders, or the liens and security interests of SG Lenders in the
collateral securing the Senior Secured Obligations owing to the SG Lenders (the
“Collateral”). In
the event that the Holder shall at any time have any liens or security interests
in any such Collateral, the SG Lenders shall be deemed authorized by the Holder
to file UCC termination statements sufficient to terminate the liens and
security interests in favor of the Holder with respect to such Collateral, and
the Holder shall promptly execute and deliver to SG Lenders such releases and
terminations as SG Lenders shall reasonably request to effect the release of the
liens and security interests of the Holder in such Collateral. In
furtherance of the foregoing, the Holder hereby irrevocably appoints the SG
Lenders until the Payment in Full of the Senior Secured Obligations to the SG
Lenders, its attorney-in-fact, with full authority in the place and stead of the
Holder and in the name of the Holder or otherwise, to execute and deliver any
document or instrument which the Holder may be required to deliver pursuant to
this clause (f).
(g) The Holder agrees that it shall not
sell, assign, pledge, dispose of or otherwise transfer all or any portion of the
Subordinated Debt unless such transferee executes a joinder to this
Agreement. Any purported sale, assignment, pledge, disposition or
other transfer without the execution of such a joinder shall be null and
void
(h) In the event of any sale, transfer
or other disposition (including a casualty loss or taking through eminent domain
or expropriation) of any Collateral, the proceeds resulting therefrom (including
insurance proceeds) shall be applied first to the Senior Secured Obligations
owing to the SG Lenders, in accordance with the terms of the documents
evidencing the Senior Secured Obligations owing to the SG Lenders or as
otherwise consented to by SG Lenders until such time as the Senior Secured
Obligations owing to the SG Lenders are Paid in Full.
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(i) Modifications to Senior
Secured Obligations Owing to the SG Lenders. The SG Lenders
may at any time and from time to time without the consent of or notice to the
Holder, without incurring liability to the Holder and without impairing or
releasing the obligations of the Holder under this Note, change the manner or
place of payment or extend the time of payment of or renew or alter any of the
terms of the Senior Secured Obligations owing to the SG Lenders, or amend or
otherwise modify in any manner any agreement, note, guaranty or other instrument
evidencing or securing or otherwise relating to the Senior Secured Obligations
owing to the SG Lenders. The terms of this Agreement, the
subordination effected hereby, and the rights of the SG Lenders and obligations
of the parties hereto shall not be affected, modified or impaired in any manner
by any such change, extention, renewal, alteration, amendment or other
modification.
(j) Reinstatement. To
the extent that any SG Lender receives payments (whether in cash, property or
securities) on the Senior Secured Obligations owing to the SG Lenders that are
subsequently invalidated, declared to be preferential, set aside and/or required
to be repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause the, to the extent of such
payment or proceeds received, the Senior Secured Obligations owing to the SG
Lenders, or part thereof, intended to be satisfied shall be revived and continue
in full force and effect as if such payments or proceeds had not been received
by such SG Lender.
6.
Amendment;
Waiver.
(a) None of the provisions hereof may
be waived, altered or amended, except by an instrument in writing executed by a
Majority in Interest and the Obligor. In the case of any waiver, the
Obligor and the Holder shall be restored to their former respective positions
and rights hereunder, and any Default or Event of Default waived shall be deemed
to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereon except to the extent expressly provided in such waiver. No
failure to exercise and no delay in exercising, on the part of the Holder or any
other holder hereof, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof of the exercise of any other right, remedy, power or
privilege.
(b) Notwithstanding the foregoing, and
notwithstanding anything to the contrary contained in this Note, the Holder
shall not, without notice to and the prior written consent of the SG Lenders,
until the SG Obligations have been Paid in Full, agree to any amendment,
modification or supplement to this Note the effect of which is to (i) increase
the principal amount of the Subordinated Debt (it being agreed that
capitalization of interest shall not be deemed an amendment, modification or
supplement) or rate of interest on any of the Subordinated Debt, (ii) shorten
the dates upon which payments of Principal or Interest on the Subordinated Debt
are due (it being agreed that any prepayment of Principal or Interest shall be
governed by Section 1 hereof), (iii) change or add any event of default or any
covenant with respect to the Subordinated Debt, (iv) change any redemption or
prepayment provisions of the Subordinated Debt, (v) agree to subordinate the
Subordinated Debt to any debt of the Obligor other than the Senior Secured
Obligations owing to the SG Lenders, (vi) take any liens or security interests
in any assets of the Obligor, (vii) change or amend Section 5 or 6, or (viii)
change or amend any other term of this Note if such change or amendment would
result in an event of default under any of the Senior Secured Obligations,
increase the obligations of the Obligor, confer additional material rights on
the Holder or any other holder of the Subordinated Debt in a manner adverse to
the Obligor or any SG Lender.
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7.
Notices. All
notices, requests and demands to or upon the Obligor or the Holder shall, to be
effective hereunder, be in writing or by electronic mail or facsimile and,
unless otherwise expressly provided herein, be deemed to have been given or made
when delivered by hand, or three (3) days after the same is deposited in the
mail, first class postage prepaid, or, in the case of notice by facsimile, when
properly transmitted, addressed as follows or to such other address as such
party may have hereafter notified to the other and any future holders of this
Note:
|
the
Obligor:
|
Genius
Products, LLC
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0000
Xxxxxxxxxx Xxxx., Xxxxx 000
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Santa
Monica, CA 90404
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Attention: Xxxxxx
Xxxxxxxxxx
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Facsimile:
(000) 000-0000
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E-Mail: xxxxxx.xxxxxxxxxx@xxxxxxxxxxxxxx.xxx
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| with a copy (which shall | Xxxx Xxxxx, LLP | |
| not constitute notice) to: | 000 Xxxxx Xxxxx Xxx., Xxxxx 0000 | |
| Los Angeles, CA 90071 | ||
| Attention: Xxxxx X. Xxxxxxx, Esq. | ||
|
Facsimile:
(000) 000-0000
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E-Mail: xxxxxxxx@xxxxxxxxx.xxx
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the
Holder:
|
__________________________ | |
| __________________________ | ||
| with a copy (which shall | __________________________ | |
| __________________________ |
8.
Transfer of this
Note. This Note and all rights hereunder may be transferred or
assigned by the Holder in whole or in part without the prior written consent of
the Obligor. Each certificate representing this Note transferred in
accordance with this Section 8 shall bear a legend as to the applicable
restrictions on transferability in order to ensure compliance with the
applicable securities laws, unless in the opinion of counsel for the Obligor,
such legend is not required in order to ensure compliance with such
laws. The Obligor may issue stop transfer instructions to its
transfer agent in connection with such restrictions. Transfers of
this Note shall be registered upon registration books maintained for such
purpose by or on behalf of the Obligor. Prior to presentation of this
Note for registration of transfer, the Obligor shall treat the registered holder
hereof as the owner and holder of this Note for the purpose of receiving all
payments of principal and for all other purposes whatsoever, whether or not this
Note shall be overdue and the Obligor shall not be affected by notice to the
contrary. Within three (3) Business Days of delivery to the
Obligor of evidence of transfer of this Note in part and delivery of the
original Note, the Obligor shall issue replacement Notes in the new
amounts.
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9.
Waiver of Jury
Trial. The Obligor and the Holder hereby irrevocably waive all
right to trial by jury in any action, proceeding or counterclaim (whether based
on contract, tort or otherwise) arising out of or relating to this Note or the
actions of the Holder in the negotiation, administration, performance or
enforcement thereof.
10.
Jurisdiction,
Etc. Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York state court or United States federal court sitting
in New York, New York, and any appellate court from any thereof, in any action
or proceeding arising out of or relating to this Note, or for recognition or
enforcement of any judgment, and the Obligor hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York State court or, to
the extent permitted by law, any New York federal court. The Obligor
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Note shall
affect any right that the Holder may otherwise have to bring any action or
proceeding relating to this Note in the courts of any
jurisdiction. The Obligor irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Note in any New York state court
or New York federal court. The Obligor hereby irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such suit, action or proceeding in any such court.
11.
Successors and Assigns;
Third Party Beneficiaries. Subject to the exceptions
specifically set forth in this Note, the terms and conditions of this Note shall
inure to the benefit of and be binding upon the respective executors,
administrators, heirs, successors and assigns of the Holder and the
Obligor. Neither this Note nor any of the rights, interests or
obligations hereunder may be assigned, in whole or in part, by the Obligor
without the prior written consent of a Majority in Interest. A
merger, consolidation or other business combination of the Obligor with or into
Genius Products, Inc. shall not be deemed an assignment of this Note so long as
this Note shall remain outstanding and owing to the entity surviving such
merger, consolidation or other business combination and all the assets and
liabilities of the Obligor and Genius Products, Inc. shall be owned by such
entity. The SG Lenders are intended third party beneficiaries of this
Note and may enforce their rights with respect hereto and payments hereon as if
they were a party to this Note and without regard to an assignment of this
Note.
12.
Replacement of
Note. Upon receipt by the Obligor of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of any Note and (a) in the case of loss, theft or destruction,
of indemnity reasonably satisfactory to it; or (b) in the case of
mutilation, upon surrender thereof, the Obligor, at its expense, will execute
and deliver in lieu thereof a new Note executed in the same manner as the Note
being replaced, in the same principal amount as the unpaid principal amount of
such Note.
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13.
Limitation on
Interest. No provision of this Note shall require the payment
or permit the collection of interest in excess of the maximum rate of interest
that may be charged or collected by the Holder permitted by applicable
law.
14.
Governing
Law. This Note shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York.
15.
Interpretation, Headings,
etc., Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine, or neuter, as the
context requires. Whenever the words “include,” “includes” or
“including” are used in this Note, they shall be deemed followed by the words
“without limitation. Neither this Note nor any uncertainty or
ambiguity herein shall be construed or resolved against Obligor or Holder,
whether under any rule of construction or otherwise. No Party to this
Note shall be considered the draftsman. On the contrary, this Note
has been reviewed, negotiated and accepted by all parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words so as fairly to accomplish the purposes and intentions of all the
parties. The section headings contained in this Note are for
convenience of reference only, do not form a part of this Note and shall not
affect in any way the meaning or interpretation of this Note. All
references in this Note to “Section” or “Article” shall be deemed to be
references to a Section or Article of this Note. All references to
“herein” or “hereof” or “hereunder” and similar phrases shall be broadly
construed to refer to the entire Note and not merely to the specific clause,
section, or article.
16.
No Recourse Against
Others. A past, present or future director, officer, employee
or stockholder, as such, of the Obligor shall not have any liability for any
obligations of the Obligor under this Note. By accepting this Note,
each holder shall waive and release all such liability. The waiver
and release shall be part of the consideration for the issue of the
Note.
17.
Definitions:
(a) “Distribution” shall
mean, with respect to any indebtedness, obligation or security owing by any
Person: (i) any payment or distribution by such Person of cash, securities or
other property, by set-off or otherwise, on account of such indebtedness,
obligation or security, (ii) any redemption, purchase or other acquisition of
such indebtedness, obligation or security by such Person or (iii) the granting
of any lien or security interest to or for the benefit of the holders of such
indebtedness, obligation or security in or upon any property or interests in
property of such Person.
(b) “Enforcement Action”
shall mean (i) to take from or for the account of the Obligor or any other
Person, by set-off or in any other manner, the whole or any part of any moneys
which may now or hereafter be owing by the Obligor with respect to the
Subordinated Debt, (ii) to sue for payment of, or to initiate or participate
with others in any suit, action or proceeding against the Obligor or any other
Person to (x) enforce payment of or to collect the whole or any part of the
Subordinated Debt or (y) commence judicial enforcement of any of the rights and
remedies under this Note or applicable law with respect to the Subordinated
Debt, (iii) to accelerate the Subordinated Debt, (iv) to exercise any put option
or to cause the Obligor to honor any redemption or mandatory prepayment
obligation under this Note or (v) to take any action under the provisions of any
state or federal law, including, without limitation, the Uniform Commercial
Code, or under any contract or agreement, to enforce, foreclose upon, take
possession of or sell any property or assets of the Obligor or any other
Person.
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(c)
“Majority in
Interest” means, as of any relevant date, the holders of Notes
representing more than 50% of the aggregate principal amount of the Notes
outstanding as of such date.
(d) “Paid in Full” or
“Payment in
Full” shall mean the indefeasible payment in full in cash of all Senior
Secured Obligations (except contingent
indemnification obligations).
(e) “Person” shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality
thereof.
(f) “Proceeding” shall
mean any voluntary or involuntary insolvency, bankruptcy, receivership,
custodianship, liquidation, dissolution, reorganization, assignment for the
benefit of creditors, appointment of a custodian, receiver, trustee or other
officer with similar powers or any other proceeding for the liquidation,
dissolution or other winding up of a Person.
(g) “Purchase Agreement”
has the meaning given in the introductory paragraph hereof.
(h) “Senior Secured
Obligations” shall mean all present and future obligations of Obligor to
the SG Lenders under or pursuant to the Credit Agreement (the “SG Credit Agreement”)
dated as of August 10, 2007 by and among the Obligor, the Lenders party thereto,
Société Générale and SG Americas Securities, LLC, as the same has been or may
hereafter be amended (such present and future obligations to include, but not be
limited to, all loans, advances, debts, liabilities and obligations, howsoever
arising, owed or owing by the Obligor to any SG Lender (or in the case of any
Lender Rate Contract, any Affiliate of an SG Lender, as applicable) of every
kind and description (whether or not evidenced by any note or instrument and
whether or not for the payment of money), direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising pursuant to
the terms of the SG Credit Agreement or any of the other Credit Documents
referred to therein, including without limitation all principal, interest
(including interest that accrues after the commencement of any bankruptcy or
other insolvency proceeding by or against the Obligor, whether or not allowed or
allowable), fees, charges, expenses, attorneys’ fees and accountants’ fees
chargeable to and payable by the Obligor thereunder (collectively, the “SG Obligations”);
provided, however, that any obligations owing under the TWC Note (or any debt
issued in exchange for, or as a replacement for, any such obligations) shall
never constitute part of the Senior Secured Obligations hereunder.
(i) “SG Lenders” shall
mean collectively, Société Générale, in its capacity as Administrative Agent and
Collateral Agent for the lenders party to the SG Credit Agreement and the
lenders from time to time party to the SG Credit Agreement (each, a “SG
Lender”).
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(j)
“Significant
Subsidiary” shall mean one or more subsidiaries of the Company which
would be a “significant subsidiary” as defined in Rule 1-02 of Regulation S-X
under the Securities Exchange Act of 1934, as amended.
[Signature
page follows]
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IN
WITNESS WHEREOF, the Obligor has executed this 5% Subordinated Unsecured
Promissory Note as of February 17, 2009.
|
THE
OBLIGOR:
GENIUS
PRODUCTS, LLC
|
|||
|
|
By:
|
Genius Products, Inc., Managing Member | |
| Name: Xxxxxx Xxxxxxxxxx | |||
| Title: Chief Executive Officer | |||
| PURCHASER: | ||
|
By:
|
||
| Name: | ||
| Title: | ||
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