EXHIBIT 99.1
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made as of June 14, 2005, by and
between Xxxxx Xxxxx ("Employee") and Genius Products, Inc., a Delaware
corporation ("Employer"), located at 000 Xxxxx Xxxxx Xx, Xxxxx 000, Xxxxxx
Xxxxx, Xxxxxxxxxx 00000.
INTRODUCTION:
Employer would like to engage the services of Employee for Employee's skills as
an executive vice president and 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;
and
Employer and Employee wish to enter into a formal written agreement to document
the employment 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;
THEREFORE, in consideration of the foregoing and in exchange for the promises
set forth below, Employee and Employer agree as follows:
1. SERVICES; TITLE. Employee shall be employed as a member of the Employer's
management team and provide such services as Employer shall reasonably request
to be performed (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's title, subject to change by Company at any time, shall be
"Executive Vice President and Chief Financial Officer."
2. COMPENSATION, BENEFITS AND REVIEWS. Subject to all the other terms of this
Agreement, in connection with 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 $225,000 per year.
(b) At the sole discretion of Company, pay Employee a year-end
performance bonus consistent with the bonus plan held by the Company's Chief
Executive Officer. The bonus shall be in the form of cash.
(c) grant options to Employee in the form of EXHIBIT A to purchase
900,000 shares of Genius Products, Inc. Common Stock. The Options shall be
priced at an exercise price that is the closing price per share on the first
date of hire and shall vest as follows:
180,000 shares at first-year anniversary of hire date
180,000 shares at second-year anniversary of hire date
180,000 shares at third-year anniversary of hire date
180,000 shares at four-year anniversary of hire date
180,000 shares at five-year anniversary of hire date
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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 EXHIBIT B.
(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, holidays, sick leave, etc., which
may be amended from time to time in Employer's discretion. Employee understands
that Employer has only a Blue Cross PPO health plan and no other benefit plan as
of the date of this Agreement.
(e) Grant Employee health insurance for Employee and Employee's
dependents, computers and similar devices, and such other benefits as Employer
shall determine to provide to any of its employees from time to time (in each
case subject to adjustment by the mutual consent of Employer and Employee and
payable quarterly in cash or, at the sole option of Employer, in the form of
Employer common stock valued based on the average price thereof during the
immediately preceding quarterly period).
(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. Unused vacation shall
accrue to a maximum of two times the annual accrual (for example a maximum
accrual of six (6) weeks if employee earns three (3) weeks vacation per year.
3. TERM AND TERMINATION. The term of this Agreement may be terminated "at will"
by Employer at any time and for any reason or for no reason. In the event
Employee shall be terminated by Employer without "Cause," Employer shall provide
Employee with the compensation required by clauses (a) and (e) of Paragraph 2 of
this Agreement as of the termination date for a six (6) month period (the
"Severance Period") following the date of such termination ("Severance") 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 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. 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) Gross negligence or willful misconduct, iv) a
material breach of this Agreement, (v) a violation of Employers policies and
procedures, and specifically a violation of Employer's sexual harassment and/or
anti-discrimination policies, or a violation of Employer's trade secrets policy,
or use or disclosure of Employer's trade secrets for personal gain. If Employee
shall die during the term of this Agreement, no Severance shall be owed.
(a) In the event of a Corporate Transaction or Change in Control, all
stock options, restricted stock or other stock based awards granted to Employee
shall, immediately prior to the specified effective date of such Corporate
Transaction or Change in Control, automatically become fully vested and
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exercisable and be released from any repurchase or forfeiture rights (other than
repurchase rights exercisable at fair market value), provided further that with
respect to Employee's stock options, the options shall remain exercisable until
the earlier of (i) the expiration of the option term or (ii) five (5) years
after the date of the Corporate Transaction or Change in Control.
(b) For purposes of this Agreement, "Corporate Transaction" means any
of the following transactions: (i) a merger or consolidation in which Employer
is not the surviving entity, except for a transaction the principal purpose of
which is to change the state in which Employer is incorporated; (ii) the sale,
transfer or other disposition of all or substantially all of the assets of
Employer; (iii) the liquidation or dissolution of Employer involving all or
substantially all Employer's assets; (iv) any reverse merger or series of
related transactions culminating in a reverse merger (including, but not limited
to, a tender offer followed by a reverse merger) in which Employer is the
surviving entity but in which securities possessing more than forty percent
(40%) of the total combined voting power of Employer's outstanding securities
are transferred to a person or persons different from those who held such
securities immediately prior to such merger or the initial transaction
culminating in such merger; or (v) acquisition in a single or series of related
transactions by any person or related group of persons (other than Employer or
by a Employer-sponsored employee benefit plan) of beneficial ownership (within
the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of Employer's
outstanding securities.
(c) For purposes of this Agreement, "Change of Control." shall mean a
change in ownership or control of Employer effected through either of the
following transactions: (i) a direct or indirect change in ownership or control
of Employer effected through a merger, consolidation or acquisition by any
person or related group of persons (other than an acquisition by Employer or by
a Employer-sponsored employee benefit plan or by a person or persons that
directly or indirectly controls, is controlled by, or is under common control
with, Employer) of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934) of securities possessing more than fifty
percent of the total combined voting power of the outstanding securities of
Employer or Employer's parent company or (ii) a change in the composition of the
Board over a period of thirty-six (36) months or less such that a majority of
the Board members (rounded up to the next whole number) ceases, by reason of one
or more contested elections for Board membership, to be comprised of individuals
who are Continuing Directors (as such term is defined in Employer's 2004 Stock
Incentive Plan.
4. TERMINATION CERTIFICATE. 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 EXHIBIT C, 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 documents 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.
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
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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 employment.
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 employment by 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 relates, directly or indirectly, to Employer's business and future
business. 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 employment.
7. NO PARTNERSHIP; NOT ASSIGNABLE BY EMPLOYEE. This Agreement is between
Employee 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.
8. 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 before
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 8.
9. EMPLOYEE'S REPRESENTATIONS AND WARRANTIES. Employee represents, promises,
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; (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
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"AT WILL" EMPLOYMENT AGREEMENT, AND HAS REVIEWED THIS AGREEMENT IN DETAIL BEFORE
AGREEING TO EACH AND ALL OF THE PROVISIONS; and (vii) no statement,
representation, promise, or inducement has been made to Employee, in connection
with the terms of this Agreement, except as is expressly set forth in this
Agreement.
10. GOVERNING LAW; ARBITRATION. This Agreement shall be subject to and construed
in accordance with the laws of the State of California, and without giving
effect to conflicts of laws principles. In the event of any dispute in
connection with the Services or this Agreement that cannot be resolved privately
between the parties, resolution shall be through binding arbitration conducted
in the County of San Diego, California under the rules of the Judicial
Arbitration and Mediation Service (JAMS) then in effect that are not contrary to
the provisions of this Agreement. Any arbitration shall be conducted in
accordance with the provisions of the California Code of Civil Procedure, Part
3, Title 9 (commencing with Section 1280). The parties may obtain discovery in
aid of the arbitration in accordance with California Code of Civil Procedure
Section 1283.05. Nothing contained in this paragraph 10 shall limit either
party's right to seek temporary restraining orders or injunctive or other
equitable relief in the Superior Court 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.
11. ENTIRE AGREEMENT; MODIFICATION; WAIVER; CONSTRUCTION GENERALLY. This
Agreement constitutes the entire agreement between Employer and Employee
relating to Employee's employment, and supersedes all previous agreements,
whether oral or written. No provision of this Agreement shall be construed
strictly against any party, including, without limitation, the drafter. Neither
this Agreement nor any provision hereof 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 with respect to any right shall operate as a waiver. A
waiver by any party of a breach of any provision shall not be deemed a waiver of
any later breach. The exercise of any right or remedy by either party (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 several paragraphs of this Agreement
are inserted solely for convenience and shall not be used in the construction of
any provision of this Agreement. Words in the singular shall include the plural,
and vice versa. All references to the masculine or feminine shall mean all
genders.
[Remainder of page intentionally left blank. Signature page follows.]
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Each of the parties has set forth Employee's, Employer's or its signature as of
the date first set forth above.
EMPLOYER:
Genius Products, Inc., a Delaware corporation
By: /S/ XXXXXX XXXXXXXXXX
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Print Name: XXXXXX XXXXXXXXXX
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Its: (title) CEO
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EMPLOYEE:
By: /S/ XXXXX XXXXX
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Print Name: XXXXX XXXXX
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