\ue000
Item\ue000 1.01\ue000\ue000\ue000\ue000\ue000\ue000\ue000\ue000\ue000\ue000 Entry\ue000 into\ue000 a\ue000 Material\ue000 Definitive\ue000 Agreement.
Purchase\ue000 and\ue000 Sale\ue000 Agreement
On\ue000 January\ue000 1,\ue000 2009\ue000 (the\ue000 \u201cClosing\ue000 Date\u201d),\ue000 Genius\ue000 Products,\ue000 Inc.\ue000 (the\ue000 \u201cCompany\u201d),\ue000 Genius\ue000 Products,\ue000 LLC\ue000 (the\ue000 \u201cDistributor\u201d),\ue000 The\ue000 Weinstein
Company\ue000 Holdings\ue000 LLC\ue000 (\u201cTWC\ue000 Holdings\u201d),\ue000 Weinstein\ue000 GP\ue000 Holdings\ue000 LLC\ue000 (\u201cWeinstein\ue000 GP\ue000 Holdings\u201d),\ue000 W-G\ue000 Holding\ue000 Corp.\ue000 (\u201cW-G\ue000 Holding\u201d
and,\ue000 collectively\ue000 with\ue000 TWC\ue000 Holdings\ue000 and\ue000 Weinstein\ue000 GP\ue000 Holdings,\ue000 the\ue000 \u201cTWC\ue000 Parties\u201d),\ue000 Quadrant\ue000 Management,\ue000 Inc.\ue000 (\u201cQuadrant\u201d)\ue000 and\ue000 GNPR
Investments\ue000 LLC,\ue000 an\ue000 affiliate\ue000 of\ue000 Quadrant\ue000 (\u201cGNPR\ue000 Investments\u201d),\ue000 entered\ue000 into\ue000 a\ue000 Purchase\ue000 and\ue000 Sale\ue000 Agreement\ue000 (the\ue000 \u201cPurchase\ue000 Agreement\u201d)\ue000 in
connection\ue000 with\ue000 the\ue000 restructuring\ue000 of\ue000 the\ue000 Distributor\u2019s\ue000 distribution\ue000 relationship\ue000 with\ue000 The\ue000 Weinstein\ue000 Company\ue000 LLC\ue000 (\u201cTWC\u201d)\ue000 and\ue000 the\ue000 sale\ue000 by\ue000 the
TWC\ue000 Parties\ue000 of\ue000 substantially\ue000 all\ue000 of\ue000 their\ue000 respective\ue000 shares\ue000 and\ue000 ownership\ue000 interests\ue000 in\ue000 the\ue000 Company\ue000 and\ue000 the\ue000 Distributor\ue000 (the\ue000 \u201cQuadrant
Transaction\u201d).
Pursuant\ue000 to\ue000 the\ue000 Purchase\ue000 Agreement\ue000 and\ue000 effective\ue000 as\ue000 of\ue000 the\ue000 Closing\ue000 Date,\ue000 the\ue000 Distributor\ue000 and\ue000 TWC\ue000 agreed\ue000 to\ue000 settle\ue000 all\ue000 monetary\ue000 obligations
owing\ue000 to\ue000 TWC\ue000 by\ue000 Genius\ue000 on\ue000 an\ue000 accrued\ue000 basis\ue000 for\ue000 all\ue000 distribution\ue000 activity\ue000 through\ue000 September\ue000 30,\ue000 2008\ue000 pursuant\ue000 to\ue000 the\ue000 Distribution\ue000 Agreement
between\ue000 the\ue000 Distributor\ue000 and\ue000 TWC\ue000 (as\ue000 amended,\ue000 the\ue000 \u201cTWC\ue000 Distribution\ue000 Agreement\u201d).\ue000 \ue000 In\ue000 connection\ue000 with\ue000 such\ue000 settlement,\ue000 (i)\ue000 the\ue000 Distributor
issued\ue000 to\ue000 TWC\ue000 a\ue000 promissory\ue000 note\ue000 in\ue000 the\ue000 principal\ue000 amount\ue000 of\ue000 $20\ue000 million\ue000 (the\ue000 \u201cTWC\ue000 Note\u201d),\ue000 which\ue000 is\ue000 payable\ue000 on\ue000 January\ue000 1,\ue000 2011\ue000 and\ue000 accrues
interest\ue000 at\ue000 a\ue000 rate\ue000 of\ue000 5%\ue000 per\ue000 annum,\ue000 (ii)\ue000 the\ue000 Distributor\ue000 agreed\ue000 to\ue000 pay\ue000 to\ue000 TWC\ue000 up\ue000 to\ue000 an\ue000 additional\ue000 $43.3\ue000 million,\ue000 \ue000 from\ue000 the\ue000 Closing\ue000 Date\ue000 through
February\ue000 2010,\ue000 subject\ue000 to\ue000 the\ue000 satisfaction\ue000 by\ue000 TWC\ue000 of\ue000 certain\ue000 conditions\ue000 set\ue000 forth\ue000 in\ue000 the\ue000 Purchase\ue000 Agreement\ue000 and\ue000 (iii)\ue000 the\ue000 Distributor\ue000 agreed\ue000 to
pay\ue000 to\ue000 TWC\ue000 a\ue000 further\ue000 amount\ue000 to\ue000 the\ue000 extent\ue000 the\ue000 estimate\ue000 of\ue000 amounts\ue000 payable\ue000 from\ue000 October\ue000 through\ue000 and\ue000 including\ue000 December\ue000 2008\ue000 is\ue000 less\ue000 than
the\ue000 actual\ue000 amounts\ue000 determined\ue000 to\ue000 be\ue000 payable\ue000 for\ue000 such\ue000 period,\ue000 based\ue000 on\ue000 the\ue000 monthly\ue000 accounting\ue000 statements\ue000 for\ue000 such\ue000 periods\ue000 and\ue000 subject\ue000 to
audit\ue000 by\ue000 TWC\ue000 (to\ue000 the\ue000 extent\ue000 such\ue000 estimate\ue000 exceeds\ue000 the\ue000 actual\ue000 amounts\ue000 determined\ue000 to\ue000 be\ue000 payable\ue000 for\ue000 such\ue000 period,\ue000 such\ue000 excess\ue000 may\ue000 be\ue000 offset\ue000 by
the\ue000 Distributor\ue000 against\ue000 future\ue000 amounts\ue000 owed\ue000 to\ue000 TWC)\ue000 Subject\ue000 to\ue000 the\ue000 Distributor\u2019s\ue000 satisfaction\ue000 of\ue000 the\ue000 aforementioned\ue000 payment\ue000 obligations,\ue000 all
remaining\ue000 amounts\ue000 owed\ue000 by\ue000 the\ue000 Distributor\ue000 to\ue000 TWC\ue000 through\ue000 December\ue000 31,\ue000 2008\ue000 shall\ue000 be\ue000 reduced\ue000 to\ue000 zero\ue000 and\ue000 shall\ue000 be\ue000 extinguished.
Also\ue000 pursuant\ue000 to\ue000 the\ue000 Purchase\ue000 Agreement\ue000 and\ue000 effective\ue000 as\ue000 of\ue000 the\ue000 Closing\ue000 Date,\ue000 (i)\ue000 the\ue000 TWC\ue000 Parties\ue000 sold\ue000 to\ue000 GNPR\ue000 Investments\ue000 an\ue000 aggregate\ue000 of
122,010,252\ue000 Class\ue000 W\ue000 Units\ue000 of\ue000 the\ue000 Distributor\ue000 (representing\ue000 a\ue000 60%\ue000 ownership\ue000 interest\ue000 in\ue000 the\ue000 Distributor)\ue000 and\ue000 the\ue000 TWC\ue000 Note\ue000 for\ue000 $20\ue000 million,\ue000 and
(ii)\ue000 the\ue000 TWC\ue000 Parties\ue000 sold\ue000 to\ue000 the\ue000 Company\ue000 an\ue000 aggregate\ue000 of\ue000 100\ue000 shares\ue000 of\ue000 the\ue000 Company\u2019s\ue000 Series\ue000 W\ue000 Preferred\ue000 Stock\ue000 (representing\ue000 100%\ue000 of\ue000 the
issued\ue000 and\ue000 outstanding\ue000 shares\ue000 of\ue000 such\ue000 Series\ue000 W\ue000 Preferred\ue000 Stock).\ue000 \ue000 Immediately\ue000 following\ue000 the\ue000 Closing\ue000 Date,\ue000 the\ue000 TWC\ue000 Parties\ue000 collectively
retained\ue000 20,335,042\ue000 Class\ue000 W\ue000 Units\ue000 of\ue000 the\ue000 Distributor,\ue000 representing\ue000 a\ue000 10%\ue000 ownership\ue000 interest\ue000 in\ue000 the\ue000 Distributor;\ue000 provided\ue000 that\ue000 in\ue000 connection
with\ue000 such\ue000 sale,\ue000 the\ue000 TWC\ue000 Parties\ue000 transferred\ue000 to\ue000 the\ue000 applicable\ue000 purchaser\ue000 all\ue000 of\ue000 its\ue000 rights\ue000 to\ue000 assert\ue000 any\ue000 management,\ue000 control\ue000 or\ue000 voting\ue000 rights\ue000 over
the\ue000 Distributor.
In\ue000 consideration\ue000 for\ue000 the\ue000 sale\ue000 of\ue000 the\ue000 Series\ue000 W\ue000 Preferred\ue000 Stock,\ue000 the\ue000 Company\ue000 issued\ue000 to\ue000 TWC\ue000 Holdings\ue000 two\ue000 warrants\ue000 (the\ue000 \u201cTWC\ue000 Warrants\u201d)
entitling\ue000 TWC\ue000 Holdings\ue000 to\ue000 purchase\ue000 in\ue000 the\ue000 aggregate\ue000 27,043,636\ue000 shares\ue000 of\ue000 the\ue000 Company\u2019s\ue000 common\ue000 stock\ue000 (representing\ue000 10%\ue000 of\ue000 the\ue000 fully-diluted
shares\ue000 of\ue000 the\ue000 Company\ue000 immediately\ue000 following\ue000 the\ue000 Closing\ue000 Date).\ue000 \ue000 The\ue000 first\ue000 of\ue000 the\ue000 TWC\ue000 Warrants\ue000 has\ue000 a\ue000 term\ue000 of\ue000 six\ue000 (6)\ue000 years,\ue000 entitles\ue000 TWC
Holdings\ue000 to\ue000 purchase,\ue000 for\ue000 an\ue000 exercise\ue000 price\ue000 of\ue000 $0.0001\ue000 per\ue000 share,\ue000 up\ue000 to\ue000 13,521,818\ue000 shares\ue000 of\ue000 the\ue000 Company\u2019s\ue000 common\ue000 stock\ue000 and\ue000 becomes
exercisable\ue000 in\ue000 twelve\ue000 (12)\ue000 equal\ue000 monthly\ue000 installments\ue000 commencing\ue000 on\ue000 January\ue000 1,\ue000 2010.\ue000 \ue000 The\ue000 second\ue000 of\ue000 the\ue000 TWC\ue000 Warrants\ue000 has\ue000 a\ue000 term\ue000 of\ue000 seven
(7)\ue000 years,\ue000 entitles\ue000 TWC\ue000 Holdings\ue000 to\ue000 purchase,\ue000 for\ue000 an\ue000 exercise\ue000 price\ue000 of\ue000 $0.0001\ue000 per\ue000 share,\ue000 up\ue000 to\ue000 13,521,818\ue000 shares\ue000 of\ue000 the\ue000 Company\u2019s\ue000 common
stock\ue000 and\ue000 becomes\ue000 exercisable\ue000 in\ue000 twelve\ue000 (12)\ue000 equal\ue000 monthly\ue000 installments\ue000 commencing\ue000 on\ue000 January\ue000 1,\ue000 2011.\ue000 \ue000 The\ue000 vesting\ue000 of\ue000 shares\ue000 under\ue000 each\ue000 of
the\ue000 TWC\ue000 Warrants\ue000 is\ue000 conditioned\ue000 on\ue000 the\ue000 effectiveness\ue000 of\ue000 the\ue000 amended\ue000 and\ue000 restated\ue000 TWC\ue000 Distribution\ue000 Agreement\ue000 and\ue000 TWC\ue000 continuing\ue000 to\ue000 be
in\ue000 the\ue000 principal\ue000 business\ue000 of\ue000 producing,\ue000 distributing,\ue000 licensing\ue000 and\ue000 acquiring\ue000 theatrical\ue000 motion\ue000 pictures,\ue000 with\ue000 unvested\ue000 shares\ue000 subject\ue000 to
forfeiture\ue000 in\ue000 the\ue000 event\ue000 that\ue000 TWC\ue000 terminates\ue000 such\ue000 agreement\ue000 or\ue000 ceases\ue000 to\ue000 engage\ue000 in\ue000 such\ue000 business\ue000 activities.
\ue000
2
Processed and formatted by SEC Watch - Visit SECWatch.com
Leave a Comment