EXHIBIT 10.03
GENIUS PRODUCTS,
INC.
COMMON STOCK
WARRANT
Warrant No. N-___
Original
Issue Date: February 17, 2009
GENIUS PRODUCTS, INC. , a Delaware corporation (the
“Company” ), hereby certifies that, for value
received, _______________ or his registered assigns (the
“Holder” ) is entitled to purchase from the
Company up to a total of ____________ shares of Common Stock (each
such share, a “Warrant Share” and all such
shares, the “Warrant Shares” ) for the price of
$0.0001 per share, at any time and from time to time from and after
the earlier of (i) the Authorized Shares Date and (ii) the
consummation of a Fundamental Transaction and through and including
February 17, 2014 (the “Expiration Date” ), and
subject to the terms and conditions set forth
below. This Warrant is one of several warrants
aggregating up to 1,984,587,356 Warrant Shares (the “Total
Warrant Shares” ) issuable pursuant to the Purchase
Agreement (as defined below).
1. Definitions . As used
in this Warrant, the following terms shall have the respective
definitions set forth in this Section 1. Capitalized
terms that are used and not defined in this Warrant that are
defined in the Purchase Agreement shall have the respective
definitions set forth in the Purchase Agreement.
“Authorized Shares Date”
shall have the meaning set forth in
Section 4(b).
“Business Day”
means any day except Saturday,
Sunday and any day that is a federal legal holiday in the United
States or a day on which banking institutions in the State of New
York are authorized or required by law or other government action
to close.
“Common Stock”
means the common stock of the
Company, par value $0.0001 per share, and any securities into which
such common stock may hereafter be reclassified.
“Exercise Price”
means $0.0001, subject to adjustment
in accordance with Section 9.
“Fundamental Transaction”
means any of the following: (1) the
Company effects any merger or consolidation of the Company with or
into another Person, (2) the Company effects any sale of all or
substantially all of its assets in one or a series of related
transactions, (3) any tender offer or exchange offer (whether by
the Company or another Person) is completed pursuant to which
holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property, (4) the Company
effects any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property,
or (5) any liquidation, dissolution or winding up of the
Company.
“New York Courts”
means the state and federal courts
sitting in the City of New York, Borough of Manhattan.
“Purchase Agreement”
means that certain Note and Warrant
Purchase Agreement, dated as of February 17, 2009, to which the
Company and the original Holder are parties.
“Trading Day”
means (i) a day on which the Common
Stock is traded on a Trading Market (other than the OTC Bulletin
Board), or (ii) if the Common Stock is not listed on a Trading
Market (other than the OTC Bulletin Board), a day on which the
Common Stock is traded in the over-the-counter market, as reported
by the OTC Bulletin Board, or (iii) if the Common Stock is not
quoted on any Trading Market, a day on which the Common Stock is
quoted in the over-the-counter market as reported by the Pink
Sheets, LLC (or any similar organization or agency succeeding to
its functions of reporting prices); provided, that in the event
that the Common Stock is not listed or quoted as set forth in (i),
(ii) and (iii) hereof, then Trading Day shall mean a Business
Day.
2. Registration of
Warrant . The Company shall register this Warrant
upon records to be maintained by the Company for that purpose (the
“Warrant Register” ), in the name of the record
Holder hereof from time to time. The Company may deem
and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent
actual notice to the contrary.
3. Registration of
Transfers . The Company shall register the transfer
of any portion of this Warrant in the Warrant Register, upon
surrender of this Warrant, with the Form of Assignment attached
hereto duly completed and signed, to the Company at its address
specified herein. Upon any such registration or
transfer, a new Warrant to purchase Common Stock, in substantially
the form of this Warrant (any such new Warrant, a “New
Warrant” ), evidencing the portion of this Warrant so
transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so
transferred, if any, shall be issued to the transferring Holder.
The acceptance of the New Warrant by the transferee thereof shall
be deemed the acceptance by such transferee of all of the rights
and obligations of a holder of a Warrant.
4. Exercise and Duration of
Warrants .
(a) Exercise
Procedures . This Warrant shall be exercisable by
the registered Holder at any time and from time to time on or after
the earlier of (i) the Authorized Shares Date and (ii) the
consummation of a Fundamental Transaction through and including the
Expiration Date. At 6:30 p.m., New York City time on the
Expiration Date, the portion of this Warrant not exercised prior
thereto shall be and become void and of no value. The
Company may not call or redeem any portion of this Warrant without
the prior written consent of the affected
Holder. Notwithstanding anything to the contrary herein,
if the Authorized Shares Date has not occurred by June 30, 2009,
then the Expiration Date shall be extended for each day thereafter
that the Authorized Shares Date has not occurred.
(b) Mandatory
Exercise . At the earliest time that the Company has
a sufficient number of authorized and unreserved shares of Common
Stock to permit (A) the exercise of all (and not less than all) of
the Total Warrant Shares and (B) the conversion of all (and not
less than all) outstanding shares of the Company’s Series A
Interim Convertible Preferred Stock into Common Stock in accordance
with its terms (the “ Authorized Shares Date ”),
the Company shall provide at least ten (10) days’ prior
written notice of such event (including the notice contemplated
under Section 9(e) to the extent there is an adjustment to the
Exercise Price and/or the number of Warrant Shares), and upon the
expiration of the period set forth therein, all of the Warrant
Shares shall be deemed exercised for the maximum number of shares
of Common Stock for which this Warrant is exercisable pursuant to
the cashless exercise provisions of Section 10(b)
hereof. If the Holder desires to exercise this Warrant
for cash, the Holder may so notify the Company prior to the
expiration of the period set forth in such written notice, and the
Holder may then exercise this Warrant for cash on or prior to the
expiration of such period.
(c) Put Right
. If the Authorized Shares Date has not occurred by June
30, 2009, then the Holder will have the right, at any time and from
time to time prior to the Authorized Shares Date, to require the
Company to purchase all or any portion of this Warrant for a
purchase price, payable in cash within five (5) Business Days after
such request, equal to the Black Scholes value of the portion of
this Warrant to be so purchased on the date of such request
(calculated by the Company using (i) an expected volatility equal
to the lesser of 100% and the 100 day volatility obtained from the
HVT function on Bloomberg Financial Markets as of the trading day
immediately preceding such date (provided that if such information
is not available on Bloomberg, actual volatility will be as
mutually agreed-upon by the Company and holders of a majority in
interest of the Warrants being purchased) and (ii) a time to
expiration equal to the lesser of 260 days and the actual number of
days until expiration of this Warrant).
5. Delivery of
Warrant Shares .
(a) To effect
exercises hereunder, the Holder shall not be required to physically
surrender this Warrant unless the aggregate Warrant Shares
represented by this Warrant is being exercised. Upon
delivery of the Exercise Notice (in the form attached hereto) to
the Company (with the attached Warrant Shares Exercise Log) at its
address for notice set forth herein and upon payment of the
Exercise Price multiplied by the number of Warrant Shares that the
Holder intends to purchase hereunder, the Company shall promptly
(but in no event later than three Trading Days after the Date of
Exercise (as defined herein)) issue and deliver to the Holder, a
certificate for the Warrant Shares issuable upon such exercise,
which, unless otherwise required by the Purchase Agreement, shall
be free of restrictive legends. The Company shall, upon
request of the Holder and subsequent to the date on which a
registration statement covering the resale of the Warrant Shares
has been declared effective by the Securities and Exchange
Commission, use its reasonable best efforts to deliver Warrant
Shares hereunder electronically through the Depository Trust
Corporation or another established clearing corporation performing
similar functions, if available, provided , that, the
Company may, but will not be required to change its transfer agent
if its current transfer agent cannot deliver Warrant Shares
electronically through the Depository Trust
Corporation. A “ Date of Exercise ”
means the date on which the Holder shall have delivered to the
Company: (i) the Exercise Notice (with the Warrant Exercise Log
attached to it), appropriately completed and duly signed and (ii)
if such Holder is not utilizing the cashless exercise provisions
set forth in this Warrant, payment of the Exercise Price for the
number of Warrant Shares so indicated by the Holder to be
purchased.
(b) If by the third
Trading Day after a Date of Exercise the Company fails to deliver
the required number of Warrant Shares in the manner required
pursuant to Section 5(a), then the Holder will have the right to
rescind such exercise.
(c) In addition to any
other right available to the Holder, if by the third Trading Day
after a Date of Exercise the Company fails to deliver the required
number of Warrant Shares in the manner required pursuant to Section
5(a), and if after such third Trading Day and prior to the receipt
of such Warrant Shares, the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Warrant Shares which
the Holder anticipated receiving upon such exercise (a “
Buy-In ”), then the Company shall, within three
Trading Days after the Holder’s request and in the
Holder’s discretion, either (1) pay in cash to the Holder an
amount equal to the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so
purchased (the “ Buy-In Price ”), at which point
the Company’s obligation to deliver such certificate (and to
issue such Common Stock) shall terminate, or (2) promptly honor its
obligation to deliver to the Holder a certificate or certificates
representing such Common Stock and pay cash to the Holder in an
amount by which (x) the Buy-In Price exceeds (y) the amount
obtained by multiplying (A) the number of Warrant Shares that the
Company was required to deliver to the Holder in connection with
the exercise at issue by (B) the closing bid price of the Common
Stock on the Date of Exercise. The Holder shall provide
the Company written notice indicating the amounts payable to the
Holder in respect of the Buy-In.
(d) The
Company’s obligations to issue and deliver Warrant Shares in
accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the
same, any waiver or consent with respect to any provision hereof,
the recovery of any judgment against any Person or any action to
enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the
Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other
Person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Company to the Holder in
connection with the issuance of Warrant Shares. Nothing
herein shall limit a Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity including,
without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to
timely deliver certificates representing Warrant Shares upon
exercise of the Warrant as required pursuant to the terms
hereof.
6. Charges, Taxes and
Expenses . Issuance and delivery of Warrant Shares
upon exercise of this Warrant shall be made without charge to the
Holder for any issue or transfer tax, withholding tax, transfer
agent fee or other incidental tax or expense in respect of the
issuance of such certificates, all of which taxes and expenses
shall be paid by the Company; provided, however, that the Company
shall not be required to pay any tax which may be payable in
respect of any transfer involved in the registration of any
certificates for Warrant Shares or Warrants in a name other than
that of the Holder. The Holder shall be responsible for
all other tax liability that may arise as a result of holding or
transferring this Warrant or receiving Warrant Shares upon exercise
hereof.
7. Replacement of
Warrant . If this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in
exchange and substitution for and upon cancellation hereof, or in
lieu of and substitution for this Warrant, a New Warrant, but only
upon receipt of evidence reasonably satisfactory to the Company of
such loss, theft or destruction and customary and reas
