EXHIBIT 10.34
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (including all the terms included therein, the
"Agreement") is made as of February 2, 2004 by and between Xxxx Xxxxxx
("Employee") and Genius Products, Inc., a Nevada corporation ("Employer" or
"Company"), located at 000 Xxxxx Xxxxx Xx, Xxxxx 000, Xxxxxx Xxxxx, Xxxxxxxxxx
00000.
WITNESSETH:
WHEREAS, Employer would like to engage the services of Employee for Employee's
executive skills as a chief executive officer and related services as requested
by Employer on a full-time basis, and Employee would like to be so engaged;
WHEREAS, Employer and Employee have agreed on terms for such services and
compensation therefor; and
WHEREAS, Employer and Employee wish to enter into a formal written agreement to
document such relationship in order to set forth (a) Employee's services and
compensation therefor, (b) the terms of Employee's employment, including the
"at-will" nature thereof, (c) Employer's exclusive ownership of all proprietary
information relating to Employer, (d) certain confidentiality matters, and (e)
the manner in which proprietary information produced or acquired by Employee
during such relationship shall be handled and made the sole property of
Employer;
NOW, THEREFORE, in consideration of the foregoing and in exchange for the
promises and other good consideration set forth below, Employee and Employer
agree as follows:
1. SERVICES; TITLE. Employee shall operate as a member of Employer's management
team and provide such management and planning responsibilities and other
services as Employer shall reasonably request to be performed (together, the
"Services") on a full-time basis and shall devote substantially all of
Employee's work efforts to the business and operations of Employer. Employee
shall report directly to the chief executive officer and president of Employer.
Employee's title, subject to change by Company at any time, shall be "Chief
Operating Officer."
2. COMPENSATION, BENEFITS AND REVIEWS. Subject to all the other terms of this
Agreement, in connection with Employee's performance of the Services, Employer
shall:
(a) pay Employee's salary by check twice per month in equal
installments in accordance with Employer's regular salary payment schedule,
which shall be paid at the rate (before deductions for advances and deductions
made at Employee's request, if any, and for deductions required by federal,
state and local law) of $173,000 per year.
(b) pay Employee a one-time $20,000 signing bonus for entering into
this Agreement.
(c) at the sole option of Company, pay Employee a year-end performance
bonus in the form of cash or shares of Genius Products, Inc. Common Stock.
(d) grant an option to Employee in the form of ANNEX B hereto (the
"Options") to purchase 150,000 shares of Genius Products, Inc. Common Stock, the
terms (including, without limitation, the option price and the time of vesting
of the shares issuable pursuant thereto) of which Options shall be governed by
the face thereof except to the extent such terms are superseded by Employer's
stock option plan currently in effect, a copy of which is attached hereto as
ANNEX C. The Options shall be priced at the closing ask price on the date of
issuance.
(e) grant Employee the option to participate in all of the benefit
plans offered by Employer to its Employees generally, including without
limitation, insurance plans, 401(k) and other savings plans, Section 125
(cafeteria) and similar pre-tax expense plans, etc. Employee understands that
Employer has only a Blue Cross PPO health plan which does not go into effect
until 90 days after the Employee's first complete day of service to Employer
under this Agreement and no other benefit plan as of the date of this Agreement.
(f) grant Employee private health care insurance for Employee and
Employee's dependents or a subsidy of $680 per month if Employee maintains his
own health care insurance, a cellular telephone allowance of up to $200 per
month based on actual usage, computers and similar devices, an automobile
allowance of $2,250 per quarterly period commencing after Employee's first year
of service, and such other benefits as Employer shall determine to provide to
any of its most senior executives from time to time (in each case subject to
adjustment by the mutual consent of Employer and Employee and payable quarterly
in cash or, at the sole option of Employer, in the form of Employer common stock
valued based on the average price thereof during the immediately preceding
quarterly period).
(g) reimburse Employee for all reasonable travel, meals, lodging,
communications, entertainment and other business expenses incurred by Employee
in connection with Employee's performance under this Agreement.
(h) grant Employee four (4) weeks' vacation with pay for each
twelve-month period, taken at times agreed with Employer.
3. TERM AND TERMINATION. The term of this Agreement is one (1) year from
Employee's first complete day of service to Employer under this Agreement unless
(i) earlier terminated by Employer in Employer's sole discretion or (ii)
extended by an additional one (1) year period at the Employer's discretion based
upon Employer's review of Employee's performance during his first year of
employment. The term of this Agreement may be terminated "at will" by Employer
at any time and for any reason or for no reason. Following the first three (3)
months of Employee's service, In the event Employee shall be terminated by
Employer without "Cause" (as defined below) Employer shall provide Employee with
the compensation required by clauses (a) and (b) of Paragraph 2 of this
Agreement as of the termination date for half of the term remaining in the
Agreement, in any case not to exceed six (6) months (the "Severance Period")
following the date of such termination, plus all accrued but unpaid salary and
vacation time to the date of termination, with the salary portion of all such
compensation payable in cash in a lump sum (less deductions required by law) due
immediately upon such termination. Upon termination of Employee's employment
with Employer for Cause, Employer shall be under no further obligation to
Employee for salary or other compensation except to pay all accrued but unpaid
salary and accrued vacation time to the date of termination thereof and to
continue Employee's benefits under Paragraph 2 for a period of thirty (30) days.
For purposes of this Agreement, "Cause" shall mean (i) conviction of a felony,
or a misdemeanor where imprisonment is imposed, or (ii) Employee's entering into
any arrangement with or providing of any services to any company, business or
person that produces or markets children's or infant's video or music other than
Genius Products, Inc. and its controlled or controlling affiliates and
successors. If Employee shall die during the term of this Agreement, Employer
shall provide to Employee's heirs or personal representatives the same
compensation Employer would have paid under this Paragraph 3 to Employee if
Employee had been terminated without cause on the day before the date of
Employee's death.
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4. CONFIDENTIALITY OF TERMS; TERMINATION CERTIFICATE. Employee covenants and
agrees that, other than acknowledging the existence of an independent Employee
relationship between Employer and Employee and as otherwise required by law,
Employee shall not at any time divulge, directly or indirectly, any of the terms
of this Agreement to any person or entity other than Employee's legal counsel.
Upon the termination of Employee's engagement under this Agreement for any
reason whatsoever, Employee agrees to sign, date and deliver to Employer a
"Termination Certificate" in the form of ANNEX A hereto and to deliver and take
all other action necessary to transfer promptly to Employer all records,
materials, equipment, drawings, documents and data of any nature pertaining to
any invention, trade secret or confidential information of Employer or to
Employee's engagement, and Employee will not take with Employee any description
containing or pertaining to any confidential information, knowledge or data of
Employer that Employee may produce or obtain during the course of Employee's
engagement under this Agreement. This Paragraph 4 shall survive indefinitely any
termination of this Agreement or Employee's engagement hereunder.
5. NONDISCLOSURE. Employee agrees to keep confidential and not to disclose or
make any use of (except for the benefit of Employer), at any time, either during
or subsequent to Employee's engagement under this Agreement, any trade secrets,
confidential information, knowledge, data or other information of Employer
relating to products, processes, know-how, designs, formulas, test data,
customer lists, business plans, marketing plans and strategies, pricing
strategies or other subject matters pertaining to any business or future
business of Employer or any of its clients, customers, Employees, licensees or
affiliates, which Employee may produce, obtain or otherwise acquire or become
aware of during the course of Employee's engagement under this Agreement.
Employee further agrees not to deliver, reproduce or in any way allow any such
trade secrets, confidential information, knowledge, data or other information,
or any documentation relating thereto, to be delivered or used by any third
party without specific direction or consent of a duly authorized officer of
Employer. This Paragraph 5 shall survive indefinitely any termination of this
Agreement or Employee's engagement hereunder and shall be read in addition to,
and shall not reduce the restrictions of this Agreement on Employee or limit
Employer's rights in any way with respect to, any other agreement between
Employee and Employer.
6. WORK FOR HIRE; OWNERSHIP OF INTELLECTUAL PROPERTY. Employee understands and
agrees that all of Employee's work and the results thereof in connection with
the Employer and the Services, whether made solely by Employee or jointly with
others, during the period of Employee's association with Employer, that relate
in any manner to the actual or anticipated business, work, activities, research
or development of Employer or its affiliates, or that result from or are
suggested by any task assigned to Employee or any activity performed by Employee
on behalf of Employer, shall be the sole property of the Employer, and, to the
extent necessary to ensure that all such property shall belong solely to the
Employer, Employee by Employee's execution of this Agreement transfers to the
Employer any and all right and interest Employee may possess in such
intellectual property and other assets created in connection with Employee's
employment by Employer and that may be acquired by Employee during the term of
this Agreement from any source that relates, directly or indirectly, to
Employer's business and future business, in each case without restriction of any
kind. Employee also agrees to take any and all actions requested by Employer to
preserve Employer's rights with respect to any of the foregoing. This Paragraph
6 shall survive indefinitely any termination of this Agreement or Employee's
engagement hereunder and shall be read in addition to, and shall not reduce the
restrictions of this Agreement on Employee or limit Employer's rights in any way
with respect to, any other agreement between Employee and Employer.
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7. NON-COMPETE. During the term of this Agreement and for eighteen (18) months
following the termination of the Agreement, Employee shall not (i) enter into
any arrangement with or provide any services to any company, business or person
that produces or markets children's or infant's video or music; (ii) represent,
sell or assist in developing any products that directly compete with Employer's
current products or any products Employer is planning to develop for sale to its
customers or licensees; (iii) call on, solicit, or take away any of Employer's
customers or potential customers Employee became aware of as a result of
performing services under this Agreement; or (iv) solicit or hire away any of
Employer's employees or contractors Employee became aware of as a result of
performing services under this Agreement.
8. NO PARTNERSHIP; NOT ASSIGNABLE BY EMPLOYEE. This Agreement is between
Employee, as such, and Employer, as at-will employer, and shall not form or be
deemed to form a partnership or joint venture. Employer's rights, benefits,
duties and obligations under this Agreement shall inure to its successors and
assigns. Employee's rights, obligations and duties under this Agreement are
personal to Employee and may not be assigned.
9. TRADE SECRETS OF OTHERS: Employee represents that Employee's performance of
all the terms of this Agreement and as the Employer's Employee does not and will
not breach any agreement to keep in confidence any proprietary information,
knowledge or data acquired by Employee in confidence or in trust prior to
Employee's engagement under this Agreement, and Employee will not disclose to
Employer or induce Employer to use any confidential or proprietary information
or material belonging to any other person or entity. Employee agrees not to
enter into any agreement, either written or oral, in conflict with this
Paragraph 9.
10. EMPLOYEE'S REPRESENTATIONS AND WARRANTIES. Employee represents, warrants,
covenants, understands and agrees that: (i) Employee is free to enter into this
Agreement; (ii) Employee is not obligated or a party to any engagement,
commitment or agreement with any person or entity that will, does or could
conflict with or interfere with Employee's full and faithful performance of this
Agreement, nor does Employee have any commitment, engagement or agreement of any
kind requiring Employee to render services or preventing or restricting Employee
from rendering services or respecting the disposition of any rights or assets
that Employee has or may hereafter acquire or create in connection with the
Services and the results thereof; (iii) other than as required by law, Employee
shall not at any time divulge, directly or indirectly, any of the terms of this
Agreement to any person or entity other than Employee's legal counsel; (iv)
Employee shall not use any material or content of any kind in connection with
Employer's products, software or website that is copyrighted or owned or
licensed by a party other than Employer or that would or could infringe the
rights of any other party; (v) Employee shall not use in the course of
Employee's performance under this Agreement, and shall not disclose to Employer,
any confidential information belonging, in part or in whole, to any third party;
(vi) EMPLOYEE UNDERSTANDS ALL OF THE TERMS OF THIS "AT WILL" EMPLOYMENT
AGREEMENT, AND HAS REVIEWED THIS AGREEMENT FULLY AND IN DETAIL PRIOR TO AGREEING
TO EACH AND ALL OF THE PROVISIONS HEREOF; and (vii) no statement,
representation, promise, or inducement has been made to Employee, in connection
with the terms of this Agreement, the execution hereof or otherwise, except as
is expressly set forth in this Agreement.
11. GOVERNING LAW; ARBITRATION. This Agreement shall be subject to and construed
in accordance with the laws of the State of California applicable to agreements
entered into and to be performed fully therein and without giving effect to
conflicts of laws principles thereof. In the event of any dispute in connection
with the Services or this Agreement that cannot be resolved privately between
the parties, resolution of such dispute shall be through binding arbitration
conducted in the County of San Diego, California under the rules of the American
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Arbitration Association then in effect that are not contrary to the provisions
of this Agreement. Any arbitration shall be conducted in accordance with the
provisions of the California Code of Civil Procedure, Part 3, Title 9
(commencing with Section 1280). The parties may obtain discovery in aid of the
arbitration in accordance with California Code of Civil Procedure Section
1283.05; provided, however, that (i) the Arbitrator's permission shall not be
required to take a discovery deposition, and (ii) discovery by means of
interrogatories and requests for admission shall not be permitted. Nothing
contained in this Paragraph 11 shall limit either party's right to seek
temporary restraining orders or injunctive or other equitable relief in
connection with this Agreement. EMPLOYEE UNDERSTANDS THAT BY AGREEING TO
ARBITRATION IN THE EVENT OF A DISPUTE BETWEEN EMPLOYER AND EMPLOYEE, EMPLOYEE IS
EXPRESSLY WAIVING EMPLOYEE'S RIGHT TO REQUEST A TRIAL BY JURY IN A COURT OF LAW.
12. ENTIRE AGREEMENT; MODIFICATION; WAIVER; CONSTRUCTION GENERALLY. This
Agreement constitutes the entire agreement between Employer and Employee
relating to the subject matter hereof, and, other than as expressly set forth in
the last sentence of each of Paragraphs 5, 6 and 7 solely for the benefit of
Employer, supersedes all prior agreements, if any, whether oral, written or
unwritten, pertaining thereto. Other than the agreements expressly contemplated
by this Agreement, there is no separate agreement, contract or understanding,
express or implied, of any kind or with respect to any subject matter between
Employer and Employee, and none shall be deemed to exist under any
circumstances. No provision of this Agreement shall be construed strictly
against any party hereto, including, without limitation, the drafter hereof or
thereof. Neither this Agreement nor any provision hereof may be amended, waived
or modified in any way other than by a writing executed by the party against
whom such amendment, waiver or modification would be enforced. No failure to
exercise, and no delay in exercising and no course of dealing with respect to
any right hereunder shall operate as a waiver thereof. Nor shall a waiver by any
party hereto of a breach of any provision herein be deemed a waiver of any
subsequent breach. The rights and remedies provided by this Agreement are
cumulative, and the exercise of any right or remedy by either party hereto (or
by its successor), whether pursuant to this Agreement, to any other agreement,
or to law, shall not preclude or waive its right to exercise any or all other
rights and remedies. The headings or titles of the several paragraphs of this
Agreement are inserted solely for convenience and are not a part of, nor shall
they be used or referred to in the construction of, any provision of this
Agreement. Words in the singular number shall include the plural, and vice
versa. Whenever examples are used in this Agreement with the words "including,"
"for example," "any," "e.g.," "such as," "etc." or any derivation thereof, such
examples are intended to be illustrative and not in limitation thereof. All
references to the masculine, feminine or neuter genders shall mean and include
all genders.
IN WITNESS WHEREOF, each of the undersigned has set forth its signature as of
the date first set forth above.
EMPLOYER:
Genius Products, Inc., a Nevada corporation
By: /S/ XXXXX XXXXXXX
------------------------------------------
Xxxxx Xxxxxxx, Authorized Officer
EMPLOYEE:
/S/ XXXX X. XXXXXX 2/13/04
---------------------------------------------
Xxxx Xxxxxx
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ANNEX A
TERMINATION CERTIFICATE
-----------------------
This is to certify that undersigned does not have in the undersigned's
possession, nor has undersigned failed to return, any customer information,
records, files, programs, documents, data, specifications, drawings, blueprints,
reproductions, sketches, notes, reports, proposals, or copies of them, or other
documents or materials, equipment, or other property or asset belonging to
Genius Products, Inc. ("Employer"), its successors and assigns.
Undersigned further certify that undersigned has fully complied with and will
continue to comply with all the terms of the Employment Agreement dated as of
__________________, 200__ between Employer and the undersigned (the
"Agreement").
Undersigned further agree that, in compliance with the Agreement, undersigned
will preserve as confidential all any trade secrets, confidential information,
knowledge, data or other information of Employer relating to products,
processes, know-how, designs, formulas, test data, customer lists, business
plans, marketing plans and strategies, pricing strategies or other subject
matters pertaining to any business of Employer or any of its clients, customers,
Employees, licensees or affiliates, that Employee produced, obtained or
otherwise acquired or became aware of during the course of Employee's engagement
under the Agreement.
EMPLOYEE:
-------------------------------
Date: __________________________
ANNEX B
[STOCK OPTION AGREEMENT]
STOCK OPTION AGREEMENT
SECOND AMENDED AND RESTATED
2000 NON-QUALIFIED STOCK OPTION PLAN
This Stock Option Agreement is dated as of February 2, 2004, between
Genius Products, Inc. (the "COMPANY") and Xxxx Xxxxxx (the "GRANTEE").
WHEREAS, the Grantee has become an employee of the Company and will
render valuable services; and
WHEREAS, the Company in recognition of such services has granted a
non-qualified option (the "OPTION") to Grantee as set forth therein and herein;
and
WHEREAS, the parties wish to ratify and memorialize the grant and
the terms and conditions by which the Option is governed; and
WHEREAS, the Company has adopted a stock option plan entitled 2000
Second Amended and Restated Non-Qualified Stock Option Plan (the "PLAN")
originally adopted by the board of directors on May 25, 2000, and as amended on
June 12, 2001 and November 20, 2001, under which shares of the Company's common
stock into which the Option is exercisable have been registered with the
Securities and Exchange Commission pursuant to a Form S-8 filed on May 25, 2000,
which will be amended by a subsequent filing to include subsequent amendments to
the plan including an increase in the number of shares subject to the plan;
NOW THEREFORE, in consideration of the mutual covenants set forth
herein, and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, the parties hereby agree as follows:
Section 1. GRANT OF OPTION. The Company hereby confirms the grant to
Grantee of the Option to purchase shares of common stock of the Company (the
"SHARES"), subject to the terms and conditions of this Option Agreement and
those of the Plan (which is incorporated herein by reference), as follows:
DATE OF GRANT NO. OF SHARES EXERCISE PRICE VESTING DATE(S) TERM
------------- ------------- -------------- --------------- ----
February 2, 2004 150,000 $2.55 February 1, 2005 10 years from date
of grant
In the event of a conflict between the terms and conditions of the
Plan and this Option Agreement, the terms and conditions of the Plan shall
prevail. This Option is intended to be treated as a non-statutory
(non-qualified) stock option.
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Section 2. EXERCISE OF OPTION.
(a) RIGHT TO EXERCISE. This Option to purchase Shares
shall be exercisable at any time after the applicable Vesting Date and prior to
the end of the Term, subject to the applicable provisions of the Plan and this
Option Agreement.
(b) METHOD OF EXERCISE. This Option shall be exercisable
by delivery of an exercise notice in the form attached as EXHIBIT A (the
"EXERCISE NOTICE") which shall state the election to exercise the Option, the
number of Shares with respect to which the Option is being exercised, and such
other representations and agreements as may be required by the Company. The
Exercise Notice shall be accompanied by payment of the aggregate Exercise Price
as to all exercised Shares. This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice accompanied by the
aggregate Exercise Price.
(c) COMPLIANCE WITH APPLICABLE LAW. No Shares shall be
issued pursuant to the exercise of an Option unless such issuance and such
exercise complies with all applicable laws. Assuming such compliance, for income
tax purposes the Shares shall be considered transferred to the Grantee on the
date on which the Option is exercised with respect to such Shares.
Section 3. METHOD OF PAYMENT. Payment of the aggregate Exercise
Price shall be by any of the following, or a combination thereof, at the sole
discretion of the Company:
(a) cash or check;
(b) consideration received by the Company under a formal
cashless exercise program adopted by the Company in connection with the Plan; or
(c) surrender of other Shares which, (i) in the case of
Shares acquired upon exercise of an Option, have been owned by the Grantee for
more than six (6) months on the date of surrender, and (ii) have a fair market
value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.
Section 4. NON-TRANSFERABILITY OF OPTION. This Option may not be
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Grantee only by
Grantee. The terms of the Plan and this Option Agreement shall be binding upon
the executors, administrators, heirs, successors and assigns of the Grantee.
Section 5. TERM OF OPTION. This Option may be exercised only prior
to the Expiration Date set out in the Notice of Grant, and may be exercised
during such term only in accordance with the Plan and the terms of this Option.
Section 6. TAX CONSEQUENCES. Set forth below is a brief summary as
of the date of this Option of some of the federal tax consequences of exercise
of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
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(a) EXERCISE OF NON-QUALIFIED STOCK OPTION. There may be
a regular federal income tax liability upon the 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
Grantee is an employee or a former employee, the Company will be required to
withhold from Grantee's compensation or collect from 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 the Shares if such withholding amounts are not
delivered at the time of exercise.
(b) DISPOSITION OF SHARES. In the case of a Non
Qualified Stock Option, if Shares are held for at least one year, any gain
realized on disposition of the Shares will be treated as long-term capital gain
for federal income tax purposes.
Section 7. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated
herein by reference. 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
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 Grantee. This agreement is governed by the internal substantive laws
but not the choice of law rules of California.
Section 8. SUCCESSORS AND ASSIGNS. The Company may assign any of its
rights under this Agreement to single or multiple assignees, and this Agreement
shall inure to the benefit of the successors and assigns of the Company. Subject
to the restrictions on transfer herein set forth, this Agreement shall be
binding upon Grantee and his or her heirs, executors, administrators, successors
and assigns.
Section 9. INTERPRETATION. Any dispute regarding the interpretation
of this Agreement shall be submitted by Grantee or by the Company forthwith to
the Administrator which shall review such dispute at its next regular meeting.
The resolution of such a dispute by the Administrator shall be final and binding
on all parties.
Section 10. RECEIPT OF PLAN. Grantee acknowledges receipt of a copy
of the Plan and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof. Grantee has reviewed the Plan and this Option Agreement
in their entirety, has had an opportunity to obtain the advice of counsel prior
to executing this Option and fully understands all provisions of the Option
Agreement. Grantee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Administrator upon any questions arising
under the Plan or this Option. Grantee further agrees to notify the Company upon
any change in the residence address indicated below.
[Remainder of page intentionally left blank.]
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GRANTEE: GENIUS PRODUCTS, INC.
/S/ XXXX X. XXXXXX /S/ XXXXX XXXXXXX
---------------------------- -----------------------------
Xxxx Xxxxxx 3/1/04 By: Xxxxx Xxxxxxx
Its: Chief Executive Officer
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EXHIBIT A
---------
[LETTERHEAD OF GRANTEE]
[Date]
Genius Products, Inc.
00000 Xx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attention: Corporate Secretary
EXERCISE NOTICE
2000 NON-QUALIFIED STOCK OPTION PLAN
------------------------------------
1. EXERCISE OF OPTION. Effective as of this ___ day of ___________,
_____, the undersigned ("Grantee") hereby elects to exercise Grantee's option to
purchase _________ shares of the Common Stock (the "SHARES") of Genius Products,
Inc. (the "COMPANY") under and pursuant to that certain plan entitled the Second
Amended and Restated 2000 Non-Qualified Stock Option Plan adopted by the Company
originally as of May 25, 2000, and as amended on June 12, 2001, and November 20,
2001 (the "PLAN") and the Stock Option Agreement dated May 6, 2002 (the "OPTION
AGREEMENT").
2. DELIVERY OF PAYMENT. Grantee herewith delivers to the Company the
full purchase price of the Shares, as set forth in the Option Agreement.
3. REPRESENTATIONS OF GRANTEE. Grantee acknowledges that Grantee has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
4. RIGHTS AS SHAREHOLDER. Until the issuance of the Shares (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 shareholder shall exist with respect to the Shares,
notwithstanding the exercise of the Option. The Shares shall be issued to the
Grantee as soon as practicable after the Option is exercised.
5. TAX CONSULTATION. Grantee understands that Grantee may suffer
adverse tax consequences as a result of Grantee's purchase or disposition of the
Shares. Grantee represents that Grantee has consulted with any tax consultants
Grantee deems advisable in connection with the purchase or disposition of the
Shares and that Grantee is not relying on the Company for any tax advice.
6. TRANSFER RESTRICTIONS; STOP-TRANSFER ORDER.
(a) REFUSAL TO TRANSFER. Grantee acknowledges and agrees that the
Company shall not be required (i) to transfer on its books any
Shares that have been sold or otherwise transferred in violation of
any of the provisions of the Stock Option Agreement or the Plan or
(ii) to treat as owner of such Shares or to accord the right to vote
or pay dividends to any purchaser or other transferee to whom such
Shares shall have been so transferred.
(b) STOP-TRANSFER NOTICES. Grantee agrees that, in order to ensure
compliance with the restrictions referred to in the Stock Option
Agreement, the Company may issue appropriate "stop transfer"
instructions to its transfer agent, if any, and that, if the Company
transfers its own securities, it may make appropriate notations to
the same effect in its own records.
Submitted by: Accepted by:
GRANTEE: GENIUS PRODUCTS, INC.
______________________________ __________________________________
Signature Name:_____________________________
Title:____________________________
______________________________ __________________________________
Print Name Date received
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ANNEX C
[STOCK OPTION PLAN - SEE EXHIBIT 10.2 OF THE COMPANY'S FORM 10-KSB,
AMENDMENT #1, FILED WITH THE SEC ON APRIL 30, 2002]
