EXHIBIT 99.5
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement ("Agreement") is made effective as of August 23, 2004
("Effective Date"), by and between Xxxxxx X. Xxxxxxx ("Employee") and Genius
Products, Inc., a Nevada corporation ("Employer" or "Company"), located at 000
Xxxxx Xxxxx Xx, Xxxxx 000, Xxxxxx Xxxxx, Xxxxxxxxxx 00000:
Employer would like to engage the services of Employee for Employee's skills as
a Chief Financial Officer and related services as requested by Employer on a
full-time basis, and Employee would like to be so engaged;
Employer and Employee have agreed on terms for such services and compensation
therefor; and
Employer and Employee wish to enter into this Agreement to document the
relationship in order to set forth (a) Employee's services and compensation, (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;
In consideration of the foregoing and in exchange for the promises and other
good consideration contained in this Agreement, 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 Employer at any time, shall be "Chief
Financial Officer".
2. COMPENSATION, BENEFITS AND REVIEWS. Subject to all the other terms of this
Agreement, for 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 $160,000 per year commencing as of August 23, 2004.
(b) at the sole option of Employer, pay Employee a year-end performance
bonus in the form of cash or shares of Genius Products, Inc. Common Stock.
(c) grant an option to Employee in the form of ANNEX B hereto (the
"Options") to purchase 75,000 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 an exercise price that is the weighted
average of the closing price per share of the Employer's stock for the three
weeks prior to the Effective Date and shall vest on the one-year anniversary of
the grant date.
(d) 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 and no other benefit plan as of
the date of this Agreement.
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(e) grant Employee private health care insurance for Employee and
Employee's dependents, a cellular telephone, computers and similar devices, and
such other benefits as Employer shall determine to provide to any of its
employees from time to time. Employer shall pay directly to Employee the
Employer's portion of the cost of private health care insurance until such time
as the Employee becomes eligible for coverage under Employer's Blue Cross PPO
health plan.
(f) 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.
(g) grant Employee three (3) 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
earlier terminated by Employer in Employer's sole discretion. A renewal of this
Agreement will be considered by the Employer at least sixty (60) days before
termination date of the Agreement. The term of this Agreement may be terminated
"at will" by Employer or Employee 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 clause (a) and
clause (e) of Paragraph 2 of this Agreement as of the termination date for a
three (3) month period (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, (iii) any material
breach of this Agreement, or (iv) any act of dishonesty in the performance of
work under this Agreement or related to Genius Products or conflict of interest
with the company. 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.
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.
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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 after 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 relate, 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.
7. NON-COMPETE. During the term of this Agreement and for one (1) year following
the termination of the Agreement, in order to protect the Company's trade
secrets and confidential information, 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 infants' 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.
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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. Other than as set forth in
Paragraph 13 below, 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 EMPLOYMENT AGREEMENT, AND HAS REVIEWED THIS AGREEMENT
FULLY AND IN DETAIL BEFORE AGREEING TO EACH AND ALL OF THE PROVISIONS HEREOF,
UNDERSTANDS THAT EMPLOYER MAY TERMINATE EMPLOYEE "AT WILL" WITH THE ONLY
COMPENSATION OR RECOURSE BEING PROVIDED FOR BY THIS AGREEMENT; 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 by a mutually agreed
arbitrator, and if the parties cannot agree, under the Employment Rules of the
American Arbitration Association then in effect that are not contrary to the
provisions of this Agreement. Employer shall pay the costs of arbitration.
Nothing contained in this Paragraph 11 shall limit either party's right to seek
temporary restraining orders or injunctive or other equitable relief in the
Superior Court, County of San Diego, State of California, 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. Employee shall be
expected to sign Genius Product's Arbitration Policy, which shall prevail in the
event of any conflict with this Agreement, but whether or not signed, this
Arbitration provision shall be effective.
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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 and 6 solely for the benefit of
Employer, supersedes all previous 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 between Employer and Employee. 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 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 term of this Agreement shall operate as a waiver. No
waiver by any party of a breach of any provision shall 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 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.
[Remainder of page intentionally left blank. Signature page follows.]
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Each of the undersigned has set forth its signature below:
EMPLOYER:
Genius Products, Inc., a Nevada corporation
By: /S/ XXXXX XXXXXXX
---------------------------
Name: XXXXX XXXXXXX
Title: CEO
Date: 08/23/04
EMPLOYEE:
By: /S/ XXXXXX X. XXXXXXX
---------------------------
Name: XXXXXX X. XXXXXXX
Date: 08/23/04
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ANNEX A
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TERMINATION CERTIFICATE
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This is to certify that Employee does not have in the Employee's possession, and
Employee has returned to Employer any and all 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 assets belonging to
Genius Products, Inc. ("Employer"), its successors and assigns.
Employee further certifies that Employee has fully complied with and will
continue to comply with all the terms of the Employment Agreement dated as of
_________,__, 2004, between Employer and the Employee (the "Agreement").
Employee further agrees that, in compliance with the Agreement, Employee 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:
By: _________________________
Name: _________________________
Date: _________________________
ANNEX B
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[STOCK OPTION AGREEMENT]
NON-QUALIFIED STOCK OPTION AGREEMENT
SECOND AMENDED AND RESTATED
2000 STOCK OPTION PLAN
This Non-Qualified Stock Option Agreement is dated as of August 23,
2004 (the "Option Agreement"), and is made by and between Genius Products, Inc.
(the "COMPANY") and Xxxxxx X. Xxxxxxx (the "GRANTEE").
WHEREAS, the Grantee is an officer of the Company and will render
valuable services;
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 of a Form S-8 to include the
current version of the Plan and increasing 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
------------- ------------- -------------- --------------- ----
August 23, 2004 75,000 $1.44 August 23, 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.
Annex B-1
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 hereto 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
payment of 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 of the Option pursuant to the terms of the Plan and this Option
Agreement 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.
Annex B-2
(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 Grantee's residence address.
[Remainder of page intentionally left blank.]
Annex B-3
IN WITNESS WHEREOF, this Stock Option Agreement is executed on behalf
of the Corporation and its duly authorized officer and by Grantee as of the date
first written above.
GRANTEE GENIUS PRODUCTS, INC.
/S/ XXXXXX X. XXXXXXX By: /S/ XXXXX XXXXXXX
--------------------------------- --------------------------
Xxxxxx X. Xxxxxxx Xxxxx Xxxxxxx
Its: Chief Executive Officer
State of Residence: CA
Annex B-4
EXHIBIT A
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[LETTERHEAD OF GRANTEE]
[Date]
Genius Products, Inc.
000 Xxxxx Xxxxx Xx, Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Attention: Corporate Secretary
EXERCISE NOTICE
2000 NON-QUALIFIED STOCK OPTION PLAN
------------------------------------
1. EXERCISE OF OPTION. 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 August 23, 2004 (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. The Grantee is a resident of the State of ____________.
5. The Grantee represents and agrees that if the Grantee is an
"affiliate" (as defined in Rule 144 under the Securities Act of 1933) of the
Corporation at the time the Grantee desires to sell any of the Stock, the
Grantee will be subject to certain restrictions under, and will comply with all
of the requirements of, applicable federal and state securities laws.
6. The foregoing representations and warranties are given on
____________, 200_, at ____________, ___________.
7. 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.
Annex B-5
8. 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.
9. 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 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 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.
_______________________________ By: ________________________________
Signature Name: ______________________________
Title: _____________________________
_______________________________ ____________________________________
Print Name Date received
Annex B-6
ANNEX C
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[STOCK OPTION PLAN - SEE EXHIBIT 10.2 OF THE COMPANY'S FORM 10-KSB,
AMENDMENT #1, FILED WITH THE SEC ON APRIL 30, 2002]
