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Exhibit 10.4
GENIUS PRODUCTS, INC.
RESALE AND VOTING AGREEMENT
THIS RESALE AND VOTING AGREEMENT (this "Agreement") is made as
of March
21, 2005 by and among GENIUS PRODUCTS, INC., a Delaware
corporation (the
"Company"), and the Investor (as defined below).
RECITALS
A. The Company is issuing to American Vantage Companies, a
Nevada
corporation ("AVC"), on the date hereof (i) 7,000,000 shares of
Company Common
Stock (the "Initial Shares") and (ii) warrants to purchase in
the aggregate
1,400,000 shares of Company Common Stock (the "Warrants"), in
connection with
that certain Agreement and Plan of Merger, dated March 21, 2005
(the "Merger
Agreement"), to which each of the Company and AVC are
parties.
B. The obligations of the Company and AVC to consummate the
transactions
contemplated by the Merger Agreement are conditioned, among
other things, upon
the execution and delivery of this Agreement by each of
them.
NOW, THEREFORE, in consideration of the mutual premises and
covenants set
forth herein, the parties hereto agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined
herein
that are defined in the Merger Agreement shall have the meanings
given such
terms in the Merger Agreement. In addition, for purposes of this
Agreement:
"Affiliate" has the meaning specified in Rule 13e-3
promulgated
under the Securities Exchange Act of 1934, as amended.
"Company" has the meaning shown above.
"Company Common Stock" means the Company's common stock, par
value
$0.0001 per share.
"Expiration Date" means, with respect to any Investor, the
earlier
of (i) the date on which such Investor ceases to constructively
or beneficially
own less than 5% of the issued and outstanding shares of Company
Common Stock or
(ii) March 21, 2010.
"Investor Shares" means (a) the Initial Shares issued to AVC on
the
date hereof, (b) any shares of Company Common Stock issued upon
exercise of any
of the Warrants (the "Warrant Shares") and (c) any securities
distributed in
respect of the Initial Shares or the Warrant Shares prior to the
Expiration Date
by reason of a stock dividend, split-up, recapitalization,
reclassification,
combination, merger, exchange of shares or otherwise.
"Investor" means AVC and its Affiliates.
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"QIB" means a qualified institutional buyer, as such term is
defined
Rule 144A under the Securities Act of 1933, as amended, but who
are not required
to file as an investment adviser under the Investment Advisers
Act of 1940
pursuant to SEC Release No. IA-2333.
"Transfer Restrictions" has the meaning specified in Section
2.2.
2. Resale Agreement.
2.1 Agreement. The Investor agrees that, except in compliance
with
the Transfer Restrictions or with the prior written consent of
the Company, from
the date hereof through the Expiration Date, Investor will not
(a) offer,
pledge, sell, contract to sell, sell any option or contract to
purchase,
purchase any option or contract to sell, grant any option, right
or warrant to
purchase, or otherwise transfer or dispose of, directly or
indirectly, any of
the Investor Shares or Warrants, or any securities convertible
into or
exercisable or exchangeable for any of the Investor Shares or
Warrants, or (b)
enter into any swap or other arrangement that transfers to
another, in whole or
in part, any of the economic consequences of ownership of any of
the Investor
Shares or Warrants, whether any such transaction described in
clause (a) or (b)
above (in each case, a "Sale") is to be settled by delivery of
any Investor
Shares or Warrants, other securities, in cash or otherwise.
2.2 Transfer Restrictions. For purposes of this Section 2,
the
"Transfer Restrictions" are as follows:
(a) Sales in open market transactions, including sales
pursuant to an effective registration statement or Rule 144, may
only be made
(i) at a price per share that is no less than 85% of the volume
weighted-average
closing price per share of the Company Common Stock on its
primary trading
market or exchange during the ten (10) trading days prior to the
date that the
Investor agrees to make such sale; and (ii) in such volume that,
when combined
with all other sales of Investor Shares during the immediately
preceding ten
(10) trading days, is no more than 15% of the aggregate volume
of trading in
Company Common Stock on all exchanges during the ten (10)
trading days
immediately preceding the date of such sale.
(b) Private Sales to a QIB may only be made (i) to those
entities listed on Schedule A to this Agreement (which has been
provided to the
Company at least one day prior to the date hereof); (ii) at a
price per share
(in the case of Warrants that are detached from Investor Shares
at a price which
when combined with the Warrant exercise price) that is no less
than 85% of the
volume weighted-average closing price per share of the Company
Common Stock on
its primary trading market or exchange during the ten (10)
trading days prior to
the date that the Investor agrees to make such sale; and (iii)
in such volume
(in the case of the Warrants such volume shall include the
shares then issuable
upon exercise of the Warrants) which, when combined with all
other sales of
Investor Shares or Warrants by the Investor to such QIB or its
Affiliates, does
not exceed 3,100,000 shares. The Company agrees that (x) except
as may otherwise
be required by law or judicial process, it will hold Schedule A
and its contents
in strict confidence and will not divulge the names of the
entities listed on
Schedule A to any other party, except for its CEO and CFO,
directors, and such
employees, investment bankers and attorneys with a need to know
the contents of
Schedule A, and (y) until the one-year anniversary of the date
hereof, it will
not contact any party set forth on Schedule A for any debt or
equity financing
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without the prior approval of Jefferies & Company, Inc.,
unless at the time of
such contact (1) such party is a stockholder of the Company and
such contact
relates to a debt or equity financing being offered to all
stockholders of the
Company (e.g., a rights offering) or (2) the Investor then holds
less than 10%
of the Initial Shares.
(c) Private Sales to a non-QIB purchaser may only be made
(i)
at a price per share (in the case of Warrants that are detached
from Investor
Shares at a price which when combined with the Warrant exercise
price) that is
no less than 85% of the volume weighted-average closing price
per share of the
Company Common Stock on its primary trading market or exchange
during the ten
(10) trading days prior to the date that the Investor agrees to
make such sale;
and (ii) in such volume (in the case of the Warrants such volume
shall include
the shares then issuable upon exercise of the Warrants) which,
when combined
with all other sales of Investor Shares or Warrants by the
Investor to such
purchaser or its Affiliates, does not exceed (A) 1,000,000
shares or (B) such
amount which, combined with all other holdings of Company Common
Stock by such
purchaser or its Affiliates, does not exceed 3.0% of the then
issued and
outstanding shares of Company Common Stock. The Investor will be
permitted to
rely on a written representation by the purchaser of its
holdings of Company
Common Stock and that of its Affiliates in complying with the
foregoing
restriction.
(d) Sales (i) may only be made, directly or indirectly, in
accordance with applicable federal and state securities laws or
exemptions to
such laws, and (ii) will not cause the Company to violate any
federal or state
securities laws with respect to the original issuance of
Investor Shares or
Warrants to the Investor. The Investor agrees to indemnify and
hold harmless the
Company, together with its officers, directors, employees and
agents, from and
against any and all losses, claims, actions, damages,
liabilities and expenses
arising out of or resulting from any Sales in violation of this
Section 2.2(d).
(e) Upon a Sale made in accordance with the Transfer
Restrictions, each of the Investor Shares and Warrants subject
to such Sale and
the purchaser/transferee of such Investor Shares and Warrants
shall no longer be
subject to this Agreement.
2.3 Exceptions. The Transfer Restrictions in Section 2.2 shall
not
apply to Sales to an Affiliate of the Investor if such Affiliate
shall have
executed a written agreement, substantially in the form of this
Agreement,
pursuant to which such Affiliate becomes a party to this
Agreement and agrees to
be bound by all the provisions hereof as if such Affiliate were
the Investor.
2.4 Escrowed Shares and Pledged Shares. For so long as any of
the
Escrowed Shares or Pledged Shares are being held pursuant to the
Escrow
Agreement or Assumption Agreement, as applicable, the Investor
agrees not to (a)
offer, pledge, sell, contract to sell, sell any option or
contract to purchase,
purchase any option or contract to sell, grant any option, right
or warrant to
purchase, or otherwise transfer or dispose of, directly or
indirectly, any of
such Escrowed Shares or Pledged Shares or any securities
convertible into or
exercisable or exchangeable for any of them, or (b) enter into
any swap or other
arrangement that transfers to another, in whole or in part, any
of the economic
consequences of ownership of any of such Escrowed Shares or
Pledged Shares,
whether any such transaction described in clause (a) or (b)
above is to be
settled by delivery of any shares of Company Common Stock, other
securities, in
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cash or otherwise.
2.5 Cooperation of the Company in Connection with All Sales.
The
Company shall reasonably cooperate with Investor in the transfer
(each, a
"Transfer") of all Investor Shares and Warrants subject to Sales
made in
accordance with the Transfer Restrictions. Such cooperation
shall include, but
not be limited to, (a) instructing the tr
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