EXHIBIT 10.36
SECURITY AGREEMENT
1. IDENTIFICATION.
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This Security Agreement (the "Agreement"), dated February 6, 2004,
is entered into by and between Genius Products, Inc., a Nevada corporation
("Debtor"), and Wachovia Bank, National Association, as collateral agent acting
in the manner and to the extent described in the Collateral Agent Agreement
defined below (the "Collateral Agent"), for the benefit of the parties
identified on SCHEDULE A hereto (collectively, the "Lenders").
2. RECITALS.
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2.1 The Lenders have made loans to Debtor (the "Loans") in the aggregate
principal amount of ____________________ Dollars ($___________).
2.2 The Loans are evidenced by those certain Secured Promissory Notes
described on Schedule A hereto ("Notes") and executed by Debtor as the
"Borrower" thereof, for the benefit of each individual Lender as the "Holder"
thereof.
2.3 In order to induce Lenders to make the Loans, and as security for
Debtor's performance of its obligations under the Notes and as security for the
repayment of the Loans and any and all other sums due from Debtor to Lender,
including all of the Debtor's obligations arising under the Notes (collectively,
the "Obligations"), Debtor, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, has agreed to grant to the Collateral
Agent, for the benefit of the Lenders, a security interest in the Collateral (as
such term is hereinafter defined), on the terms and conditions hereinafter set
forth.
2.4 The Lenders have appointed Wachovia Bank, National Association, as
Collateral Agent pursuant to that certain Collateral Agent Agreement of even
date herewith ("Collateral Agent Agreement") among the Lenders and Collateral
Agent.
3. GRANT OF GENERAL SECURITY INTEREST IN COLLATERAL.
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3.1 As security for the Obligations, Debtor hereby grants the Collateral
Agent, for the benefit of the Lenders, a first priority security interest in and
first priority lien on the Collateral.
3.2 "Collateral" shall mean all now owned right, title and interest of
Debtor in Debtor's digitally remastered classic movie masters as described in
SCHEDULE B and any and all proceeds arising therefrom.
3.3 The Collateral Agent is hereby specifically authorized, after an Event
of Default, to transfer any Collateral into the name of the Collateral Agent and
to take any and all action deemed advisable to the Collateral Agent to remove
any transfer restrictions affecting the Collateral.
4. PERFECTION OF SECURITY INTEREST.
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Debtor shall deliver to the Collateral Agent UCC-1 Financing Statements
suitable for filing in the State of Nevada ("Financing Statements") relating to
the security interest in and lien on Debtor's right, title and interest in and
to the Collateral. Debtor hereby authorizes the Collateral Agent to file such
Financing Statements at the Debtor's expense, in such filing locations as the
Collateral Agent deems appropriate.
5. DISTRIBUTION ON LIQUIDATION.
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If any sum is paid as a liquidating distribution on or with respect to the
Collateral, Debtor shall deliver same to the Collateral Agent to be applied to
the Obligations then due, in accordance with the terms hereof.
6. FURTHER ACTION BY DEBTOR; COVENANTS AND WARRANTIES.
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6.1 Collateral Agent at all times shall have a perfected, first priority
security interest in the Collateral. Subject to the security interest described
herein and until acceleration of the Obligations following an Event of Default,
Debtor has and will continue to have full title to the Collateral free from any
liens, leases, encumbrances, judgments or other claims. Collateral Agent's
security interest in and lien on the Collateral constitutes and will continue to
constitute a first, prior and indefeasible security interest in favor of
Collateral Agent. Debtor will do all acts and things, and will execute and file
all instruments (including, but not limited to, security agreements, financing
statements, continuation statements, etc.) reasonably requested by Collateral
Agent to establish, maintain and continue the perfected security interest of
Collateral Agent in the Collateral.
6.2 Other than in the ordinary course of business, and except for
Collateral which has become obsolete or is of inconsequential value, Debtor will
not sell, transfer, assign, or pledge the Collateral (or allow any such items to
be sold, transferred, assigned or pledged), or divest itself of any rights
arising in connection with the Collateral, without the prior written consent of
Collateral Agent. The Collateral Agent will at all times ensure that the value
of the Collateral remains equivalent to its value upon the date of execution of
this Agreement. Although proceeds of Collateral are covered by this Security
Agreement, this shall not be construed to mean that Collateral Agent consents to
any sale of the Collateral, except as provided herein.
6.3 Debtor represents and warrants that it is the true and lawful exclusive
owner of the Collateral, free and clear of any liens and encumbrances.
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7. PERFORMANCE BY THE COLLATERAL AGENT.
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If Debtor fails to perform any material covenant, agreement, duty or obligation
of Debtor under this Agreement, the Collateral Agent may, after the expiration
of any applicable grace and/or cure period, at any time or times in its
discretion, take action to effect performance of such obligation. No
discretionary right, remedy or power granted to the Collateral Agent under any
part of this Agreement shall be deemed to impose any obligation whatsoever on
the Collateral Agent with respect thereto, such rights, remedies and powers
being solely for the protection of the Collateral Agent.
8. EVENT OF DEFAULT.
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8.1 An event of default ("Event of Default") shall be deemed to have
occurred hereunder upon the occurrence of any event of default as defined in the
Notes. Upon and after any Event of Default, after the expiration of any
applicable grace and/or cure period, , any or all of the Obligations shall, at
the option of the Majority in Interest (as defined in the Collateral Agency
Agreement), become immediately due and payable to the Collateral Agent, for the
benefit of the Lenders, and the Collateral Agent may dispose of Collateral as
provided below. A default by Debtor of any of its obligations pursuant to this
Agreement shall be deemed an Event of Default hereunder and an event of default
as defined in the Obligations.
8.2 If an Event of Default occurs at the Maturity Date as defined in the
Notes, the Lenders have the option to convert the principal loan balance plus
any accrued interest to Genius' common stock at the lower of $1.00 per share or
60% of the bid price on the maturity date of the Notes.
9. DISPOSITION OF COLLATERAL.
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Upon and after any Event of Default which is then continuing,
9.1 The Collateral Agent may exercise its rights with respect to each and
every component of the Collateral, without regard to the existence of any other
security or source of payment for the Obligations. In addition to other rights
and remedies provided for herein or otherwise available to it, the Collateral
Agent shall have all of the rights and remedies of a lender upon default under
the Uniform Commercial Code then in effect in the State of New York.
9.2 If any notice to Debtor of the sale or other disposition of Collateral
is required by then applicable law, fifteen (15) days' prior notice (or, if
longer, the shortest period of time permitted by then applicable law) to Debtor
of the time and place of any public sale of Collateral or of the time after
which any private sale or any other intended disposition is to be made, shall
constitute reasonable notification.
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9.3 All cash proceeds received by the Collateral Agent for the benefit of
the Lenders in respect of any sale, collection or other enforcement or
disposition of Collateral, shall be applied against the Obligations pro rata
among the Lenders in proportion to their interests in the Obligations. Upon
payment in full of all Obligations, Debtor shall be entitled to the return of
all Collateral, including cash, which has not been used or applied toward the
payment of Obligations or used or applied to any and all costs or expenses of
the Collateral Agent incurred in connection with the liquidation of the
Collateral (unless another person is legally entitled thereto). Any assignment
of Collateral by the Collateral Agent to Debtor shall be without representation
or warranty of any nature whatsoever and wholly without recourse. Each Lender
may purchase the Collateral and pay for such purchase by offsetting any sums
owed to such Lender by Debtor arising under the Obligations or any other source.
10. MISCELLANEOUS.
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10.1 NOTICES. Any notice or other communications under the provisions of
this Agreement shall be given in writing and delivered to the recipient in
person, by reputable overnight courier or delivery service, by facsimile machine
(receipt conformed) with a copy sent by first class mail on the date of
transmission, or by registered or certified mail, return receipt requested,
directed to its address set forth below (or to any new address of which a party
hereto shall have informed the others by the giving of notice in the manner
provided herein):
To Debtor: Genius Products, Inc.
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇, CEO
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To Lenders: To the addresses and fax numbers
set forth on SCHEDULE A hereto
To the Collateral Agent: Wachovia Bank, National Association
▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇
Mail Code SC 8358
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change its address by written notice in accordance
with this paragraph.
10.2 TERM; BINDING EFFect. This Agreement shall (a) remain in full force
and effect until payment and satisfaction in full of all of the Obligations; (b)
be binding upon Debtor, and its successors and permitted assigns; and (c) inure
to the benefit of the Collateral Agent, for the benefit of the Lenders and their
respective successors and assigns.
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10.3 CAPTIONS. The captions of Paragraphs, Articles and Sections in this
Agreement have been included for convenience of reference only, and shall not
define or limit the provisions hereof and have no legal or other significance
whatsoever.
10.4 GOVERNING LAW; VENUE; SEVERABILITY. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
regard to principles of conflicts or choice of law, except to the extent that
the perfection of the security interest granted hereby in respect of any item of
Collateral may be governed by the law of another jurisdiction. Any legal action
or proceeding against the Debtor with respect to this Agreement may be brought
in the courts of the State of New York or of the United States for the Southern
District of New York, and, by execution and delivery of this Agreement, the
Debtor hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. The
Debtor hereby irrevocably waives any objection which they may now or hereafter
have to the laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Agreement brought in the aforesaid
courts and hereby further irrevocably waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any such court has
been brought in an inconvenient forum. If any provision of this Agreement, or
the application thereof to any person or circumstance, is held invalid, such
invalidity shall not affect any other provisions which can be given effect
without the invalid provision or application, and to this end the provisions
hereof shall be severable and the remaining, valid provisions shall remain of
full force and effect.
10.5 COUNTERPARTS/EXECUTION. This Agreement may be executed in any number
of counterparts and by the different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. This
Agreement may be executed by facsimile signature and delivered by facsimile
transmission.
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IN WITNESS WHEREOF, the undersigned have executed and delivered this Security
Agreement, as of the date first written above.
"DEBTOR" "THE COLLATERAL AGENT"
GENIUS PRODUCTS, INC., WACHOVIA BANK,
a Nevada corporation NATIONAL ASSOCIATION
By: By:
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▇▇▇▇▇ ▇▇▇▇▇▇▇
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Its: Chief Executive Officer Its:
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APPROVED BY "LENDERS":
- "LENDER"
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By:
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Its:
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- "LENDER"
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By:
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Its:
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- "LENDER"
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By:
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Its:
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- "LENDER"
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By:
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Its:
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SECURITY AGREEMENT - SCHEDULE A
LENDERS PRINCIPAL AMOUNT OF
SECURED PROMISSORY NOTES
[Name $
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Address
Phone/Fax]
[Name $
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Address
Phone/Fax]
[Name $
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Address
Phone/Fax]
[Name $
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Address
Phone/Fax]
[Name $
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Address
Phone/Fax]
[Name $
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Address
Phone/Fax]
[Name $
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Address
Phone/Fax]
[Name $
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Address
Phone/Fax]
SECURITY AGREEMENT - SCHEDULE B
DIGITALLY REMASTERED AMERICAN MOVIE CLASSICS MASTERS
Cult Classics (Coll. 1)
o The Atomic Brain
o The Brain That Wouldn't Die
o Carnival of Souls
o Night Tide
Cult Classics (Coll. 2)
o Dementia
o Frozen Alive
o The Screaming Skull
o ▇▇▇▇▇ ▇▇▇▇▇ Meets Frankenstein's Daughter
▇▇▇▇ ▇▇▇▇▇▇ Classics (Coll. 1)
o The Ape Man
o Devil Bat
o The Human Monster
o White Zombie
▇▇▇▇ ▇▇▇▇▇▇ Classics (Coll. 2)
o The Corpse Vanishes
o Invisible Ghost
o Phantom Ship
o Scared to Death
▇▇▇▇▇ ▇▇▇▇▇▇▇ Classics
o The Ape
o The Ghoul
o The Terror
o ▇▇▇▇ ▇▇▇▇▇ Meets Grueson
▇▇▇▇▇ ▇▇▇▇▇▇ Classics (Coll. 1)
o A Bucket of Blood
o Little Shop of Horrors
o The Terror
o The Wasp Woman
SCHEDULE B (CONTINUED)
▇▇▇▇▇ ▇▇▇▇▇▇ Classics
o Blood On the Sun
o Time of Your Life
o Great Guy
o Something to Sing About
▇▇▇▇▇▇ ▇'▇▇▇▇▇ Classics
o D.O.A.
o Admiral Was a Lady
o The Bigamist
o The Hitch Hiker
▇▇▇▇ ▇▇▇▇▇ Classics
o Amazing Adventure
o His Girl Friday
o ▇▇▇▇▇ Serenade
o Charade
▇▇▇▇▇▇ ▇▇▇▇▇ Classics
o Dark Journey
o Fire Over England
o Sidewalks of London
o Storm in a Tea Cup
▇▇▇▇ ▇▇▇▇▇▇ Classics
o Fighting Caravans
o A Farewell To Arms
o Meet ▇▇▇▇ ▇▇▇
o Stolen Jools
Great Detective Classics
o ▇▇▇▇▇▇ ▇▇▇▇▇ in Mandarin Mystery
o Sherlock ▇▇▇▇▇▇ in the Triumph of Sherlock ▇▇▇▇▇▇
o The Shadow in The Shadow Strikes
o Mr. Moto in Mr. Moto's Last Warning
Acknowledged:
WACHOVIA BANK, NATIONAL ASSOCIATION - "THE COLLATERAL AGENT"
By:
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Its:
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