EXHIBIT 99.4
CONFIDENTIAL SETTLEMENT AGREEMENT
AND
MUTUAL RELEASE OF CLAIMS
This Settlement Agreement and Mutual Release of Claims ("Agreement") is
entered into by and between Xxxxx Xxxxxxx ("Xxxxxxx" or "Employee") and Genius
Products, Inc. and any and all predecessor or successor entities thereof and its
and their affiliates, any and all holding, parent or subsidiary entities and any
predecessor or successor entities thereof, any other merged entities, and all
present, former and future directors, officers, representatives, agents,
principals, administrators, agents, partners and employees, stockholders,
predecessors and successors and/or assigns, insurers, attorneys, and any
fiduciaries of any employee benefits plan (all collectively referred to as
"Genius" or "Employer") (collectively the "Parties").
1. TERMINATION OF EMPLOYMENT. Employee has voluntarily resigned from
employment with Employer, effective July 28, 2005 (the "Resignation Date").
Employer will consider Employee's termination to be a resignation. Upon
execution of this Agreement, Employee will be paid all salary through the
resignation date and thirteen weeks' accrued vacation.
2. SETTLEMENT AMOUNT AND CONSIDERATION TO EMPLOYEE. In consideration of
and in return for the covenants and promises contained in this Agreement, and as
full and final compensation to Employee for all services as an employee:
A. Employee shall receive from Employer, severance for twelve
months, totaling TWO HUNDRED FORTY FOUR THOUSAND SEVEN HUNDRED FIFTY DOLLARS
($244,750.00), subject to standard payroll deductions and withholdings, payable
in accordance with regular company payroll practice, and on the same terms and
conditions Xxxxxxx received his salary, beginning with the first regular payday
after the Resignation Date. Employee is responsible for any and all tax
liability that does or may result from his receipt of this payment. Employee
acknowledges and agrees that Employer has made no representation as to
Employee's tax liability.
B. Employee will retain any award of stock options previously
vested and unvested as of the resignation date, and retain the ability to
exercise same pursuant to the applicable stock option agreement(s). Employee
will receive 261,000 additional vested stock options, which shall be granted as
of the Resignation Date. Such options shall be granted pursuant to the 2004
Stock Incentive Plan, shall have a strike price of the fair market value of the
Employer's common stock on the Resignation Xxxx and shall be exercisable for
five (5) years from date of grant. Any and all unvested stock options shall vest
immediately upon the resignation date. A schedule of current Stock Options
ownership is attached to this Agreement as Exhibit "A."
C. Employee shall have health insurance paid for by the
Company (whether group health insurance or COBRA benefits) for twelve (12)
months beginning on the resignation date, subject to the same terms and
conditions he and/or his family received health insurance benefits before the
resignation date. The Company shall have the sole discretion to decide
whether to allow Employee to remain on group insurance, or require Employee to
elect COBRA benefits.
D. Employee acknowledges and agrees that the payment provided
coupled with the payments made under the Separation and Consulting Agreement
signed by the Parties effective July 28, 2005, is not otherwise due or owing to
Employee under any employment agreement (oral or written) between Employer and
Employee, policy or practice of Employer, or requirement under state or federal
law.
E. Employer warrants and Employee acknowledges that the
agreements described under this Paragraph 2 and 3 constitute full payment of any
and all claims or every nature and kind arising out of or relating in any way to
Employee's employment by Employer or the resignation thereof, benefits owed, or
any other claims as outlined below.
F. Employee acknowledges that he has shared all concerns and
issues that he is aware of to the Employee's management and that to his
knowledge, Employer has taken reasonable and appropriate steps to address all
such issues and concerns.
G. Employer shall reimburse Employee's reasonable legal fees
and expenses in connection with the negotiation and execution of this Agreement
and the Retention Agreement, in an amount not to exceed $3,0O0.0O.
H. Employer waives any right that may exist to repurchase any
shares of Employer's stock held by Employee. Upon written request of Employee,
Employer shall file a Prospectus Supplement with the Securities and Exchange
Commission, and any other documentation necessary to facilitate lawful sales of
Employer's securities held by Employee.
3. CONSULTING AGREEMENT. Employee is to be hired as a consultant for
Genius beginning July 29, 2005 (the "Consulting Period"), as detailed in the
Separation and Consulting Agreement attached hereto as Exhibit "B."
4. EMPLOYEE'S RELEASE OF ALL CLAIMS AGAINST EMPLOYER.
A. In consideration of the covenants and other benefits
described herein, which Employee would otherwise not be entitled to except for
signing this Agreement, Employee does hereby unconditionally, irrevocably, and
absolutely release and discharge Employer, and any and all predecessor or
successor entities thereof and its and their affiliates, any and all holding,
parent or subsidiary entities and any predecessor or successor entities thereof,
any other merged entities, and all present, former and future directors,
officers, representatives, agents, principals, administrators, agents, partners
and employees, stockholders, predecessors and successors and/or assigns,
insurers, attorneys, and any fiduciaries of any employee benefits plan from any
and all loss, liability, claims, demands, causes of action or suits of any type,
whether in law or in equity, related directly or indirectly, or in any way
connected with any transaction, affairs, or occurrences between them, including,
without limitation, Employee's employment with Employer and/or the termination
of said employment (whether known or unknown to Employee and including any
continuing effects of any acts or practices before the date of execution of this
Agreement). This Agreement specifically applies, without limitation, to a
release of any and all contract or tort claims, claims for wrongful termination,
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retaliation, employment discrimination, sexual harassment, emotional distress,
fraud, misrepresentation, defamation, interference with prospective economic
advantage, failure to pay wages due or other monies owed, including, without
limitation, severance, overtime compensation, accrued and unused vacation, and
claims arising under Title VII of the Civil Rights Act of 1964, the Americans
with Disabilities Act, the Equal Pay Act, the Fair Labor Standards Act, the
Family and Medical Leave Act, the California Family Rights Act, The Older
Workers' Benefit Protection Act of 1990, the Age Discrimination in Employment
Act, the California Fair Employment and Housing Act, the Occupational Safety and
Health Act, the Xxxxxxxx-Xxxxx Act of 2002, the California Labor Code,
including, without limitation, section 1101, ET-SEQ., any applicable California
Industrial Wage Orders, all as amended, and any other local, state or federal
law, rule, or regulation relating to or affecting Employee's employment by
Employer and/or the termination of said employment. Nothing in this release is
intended to waive Employee's rights to workers' compensation benefits, pension,
or any right to indemnity or defense in the event Employee is named as a
defendant in a lawsuit arising out of his employment for Genius. Employee's
rights to stock options, warrants or stock of Employer shall be governed by the
provisions of this Agreement and/or the Consulting Agreement, and, to the extent
not inconsistent therewith, applicable option agreements, option plans or other
existing written agreements pertaining to stock options, warrants or common
stock of the Employer.
B. Employee irrevocably and absolutely agrees that he will not
prosecute nor allow to be prosecuted on his behalf, in any administrative
agency, whether federal or state, or in any court, whether federal or state, any
claim or demand of any type related to the matters released above, it being the
intention of the Parties that with the execution by Employee of this Agreement,
Employer and any and all predecessor or successor entities thereof and its and
their affiliates, any and all holding, parent or subsidiary entities and any
predecessor or successor entities thereof, any other merged entities, and all
present, former and fixture directors, officers, representatives, agents,
principals, administrators, agents, partners and employees, stockholders,
predecessors and successors and/or assigns, insurers, attorneys, and any
fiduciaries of any employee benefits plan will be irrevocably, absolutely,
unconditionally, and forever discharged of and from all obligations to or on
behalf of Employee related in any way to the matters discharged herein. If
Employee should bring any action arising out of the subject matter covered by
this Agreement, Employee understands and agrees that he will, at the option of
Employer, be considered in breach of this Agreement and shall he required to
immediately return any and all funds received pursuant to this Agreement.
Furthermore, if Employer should prevail concerning any or all of the issues so
presented, Employee shall pay to Employer all of its costs and expenses of
defense, including Employer's attorneys' fees.
5. EMPLOYER'S RELEASE OF ALL CLAIMS AGAINST EMPLOYEE. Employer, for
itself, its predecessor or successor entities thereof and its and their
affiliates, any and all holding, parent or subsidiary entities and any
predecessor or successor entities thereof, any other merged entities, and all
present, former and future directors, officers, representatives, agents,
principals, administrators, agents, partners and employees, stockholders,
predecessors and successors and/or assigns, insurers, attorneys, and any
fiduciaries of any employee benefits plan and each of them, does hereby
unconditionally, irrevocably and absolutely release and discharge Employee, her
heirs, successors, assigns, executors, agents and attorneys from any and all
loss, liability, claims, demands, causes of action or suits of any type, whether
in law and/or in equity, related directly or indirectly, or in any way connected
with any transaction, affairs or occurrences between them to
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date, including, but not limited to, Employee's employment with Employer and/or
the termination of said employment, and Employee's service as a director or
officer of Employer.
6. UNKNOWN CLAIMS. The Parties understand and agree that this Agreement
extends to all claims of every nature, known or unknown, suspected or
unsuspected, past or present, and that any and all rights granted to the Parties
under Section 1542 of the California Civil Code or any analogous federal law or
regulation are hereby expressly waived. Section 1542 provides;
"A general release does not extend to claims which the creditor does
not know of or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially affected his
settlement with the debtor."
The Parties certify that they have read all of this Agreement,
including the release provisions contained herein and the quoted Civil Code
section, and that they fully understand all the same.
7. CONFIDENTIALITY.
A. The Parties agree and promise that the existence, terms and
conditions of this Agreement (including, but not limited to, the fact and amount
of payment), and all communications relating to this Agreement and its terms
(collectively the "Confidential Matters"), shall not be, and have not been to
the best of their knowledge, described or discussed, or caused to be described
or discussed in any manner, either written or oral, directly or indirectly, with
any person, organization, company or entity other than the Parties' respective
counsel and/or financial advisors. Notwithstanding the prohibition in the
preceding sentence: (i) Xxxxxxx may disclose this Agreement, in confidence, to
his immediate family; (ii) the Parties may disclose this Agreement in confidence
to their respective attorneys, accountants, auditors, tax preparers, and
financial advisors; (iii) the Company may disclose this Agreement as necessary
to fulfill standard or legally required corporate reporting or disclosure
requirements; (iv) the parties may disclose this Agreement insofar as such
disclosure may be necessary to enforce its terms or as otherwise required by
law; and (v) the Company may disclose the terms of this Agreement to Directors
and management level employees on a need to know basis. EMPLOYEE SPECIFICALLY
AGREES NOT TO DISCLOSE THE TERMS OF THIS AGREEMENT TO OTHER CURRENT OR FORMER
EMPLOYEES 0F EMPLOYER.
B. The Parties agree and promise to avoid any and all
publicity with respect to this Agreement and/or any of its terms or conditions
and specifically agree and promise not to describe or discuss the Confidential
Matters with any person or entity. It shall not be a violation for the Parties
to disclose Confidential Matters to their spouses or their professional legal
and tax advisors so long as they maintain the confidentiality.
In the event any person or entity asks Employee or Employer about any
issues relating to Employee's employment with Employer and/or her resignation of
employment, Employee and Employer shall agree to provide an agreed-upon letter
of recommendation and further respond only that "the matter has been resolved,"
and refuse to discuss any such matters further. If Employer receives requests
for employment references regarding Employee, Employer will only provide dates
of employment, salary information, and title to prospective employers, and
neither
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this Agreement nor the events and/or allegations leading up to this Agreement
shall be mentioned. During the pendency of the consultant period, Employee may
represent himself as former CEO for purposes of seeking other employment. Any
requests for employment references shall be directed to Xxxxxx Xxxxxxxxxx.
Nothing in this agreement shall prevent Employer from providing a positive
reference regarding Employee or detailing his accomplishments with Employer. Any
breach of the confidentiality by any of the Parties shall be deemed to be a
material breach of this confidentiality provision by the Party.
C. The Parties agree that the provisions of this section of
this Agreement are to be liberally construed for the purpose of protecting the
confidentiality of the Confidential Matters, and stipulate and agree that any
violation of the provisions of this section of this Agreement shall he deemed to
be a material breach of the Agreement.
D. Nothing in this confidentiality provision shall be
construed as prohibiting any disclosure of information required by law.
8. CONFIDENTIAL INFORMATION, TRADE SECRETS AND COMPANY PROPERTY.
Employee acknowledges that all confidential materials, records and documents,
including, without limitation, all company property, files, e-mails and other
electronic information concerning Employer that have come into Employee's
possession during his employment with Employer will be returned to Employer on
or before the end of the Consulting Period. Employee specifically agrees to
electronically return all work-related e-mails and not retain hard copies or
electronic copies. Employee agrees not to disclose to any person or entity,
including any competitor of Employer and any future employer, any of Employer's
trade secrets or other confidential information. Employee acknowledges all
Employer's property obtained during the course of his employment with Employer
has been returned to employer. Employee further agrees that he will not, for any
reason, disclose to others for the benefit of anyone other than Employer any
trade secret, confidential or proprietary information, including, without
limitation, information relating to Employer's customers, employees,
consultants, affiliates, products, know-how, techniques, intellectual property,
computer systems, programs, policies and procedures, software programs, research
projects, future developments, costs, profits, pricing and/or marketing,
attorney-client communications, customer business information. Employee further
understands and agrees that the use of any trade secret, confidential or
proprietary information belonging to Employer shall be a material breach of this
Agreement.
9. NON-DISPARAGEMENT. The Parties agree not to make and/or publish any
derogatory or adverse statements, written or verbal, which tend to criticize or
discredit the other, except as required by law.
10. FUTURE EMPLOYMENT. Employee agrees that Employer shall not be in
any way obligated to offer employment to Employee or to hire him for any reason,
regardless of the circumstances, at any time on or after the date of this
Agreement. Employee agrees that he shall not apply for nor accept any such
employment, with the exception of the duties and responsibilities he has agreed
to perform as outlined in the Separation and Consulting Agreement effective July
29, 2005. Employee acknowledges that any such application for employment may be
denied and agrees to waive any and all claims arising out of or related to his
application and/or the denial of such employment.
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11. NO ADMISSION OF LIABILITY. This Agreement is a compromise and
settlement of all disputed and potentially disputed claims being released, and
therefore this Agreement and the payments provided for in this Agreement do not
constitute an admission of liability on the part of the Parties, or an
admission, directly or by implication, that any of them have violated any law,
rule, regulation, policy or any contractual right or other obligation owed to
any party or to Employee. Employer specifically by this Agreement denies all
allegations of improper or unlawful conduct made by Employee. The Parties merely
intend, by entering into this Agreement, to avoid litigation.
12. NO ASSIGNMENT OR TRANSFER CLAIMS. The Parties represent and warrant
that they have not assigned or transferred to any other person or entity any
rights, claims or causes of action released and discharged, and no other person
or entity has any interest in the matters released and discharged, except as
disclosed by the terms of this Agreement.
13. ENTIRE AGREEMENT. The Parties declare and represent that no
promise, inducement or agreement not expressed in this Agreement or in the
Separation and Consulting Agreement or other documents concerning Employee's
stock options, warrants or shares of stock, has been made to them and that this
Agreement contains the full and entire agreement between the Parties, and that
the terms of this Agreement are contractual and not a mere recital.
14. APPLICABLE LAW. The validity, interpretation, and performance of
this Agreement shall be construed and interpreted according to the law of the
State of California. To that end, this Agreement is binding on the Parties
pursuant to Section 664.6 of the California Code of Civil Procedure, even though
no lawsuit or claim has been filed.
15. MEDIATION OR DISPUTES. Any dispute arising out of this Agreement or
Employee's employment and/or termination of said employment shall be mediated
before the Xxx. Xxxxxxx XxXxxxxx (Ret.) or any other mutually agreed mediator,
before filing suit. The parties shall bear the cost of mediation equally.
16. ATTORNEYS' FEES. In any dispute involving this Agreement, the
prevailing party shall be entitled to attorneys' fees and costs.
17. COMPLETE DEFENSE. This Agreement may be pleaded as a full and
complete defense against any action, suit or proceeding, which may be
prosecuted, instituted or attempted by either of the Parties.
l8. SEVERABILITY. If any provision of this Agreement, or part, is held
invalid, void or voidable against public policy or otherwise, the invalidity
shall not affect other provisions, or parts, which may be given effect without
the invalid provision or part. To this extent, the provisions, and parts
thereof, of this Agreement are declared to be severable.
19. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective heirs, legal
representatives, successors and assigns.
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20. ADEA RELEASE.
A. Employee acknowledges Employer hereby has advised Employee
in writing to discuss this Agreement with an attorney before executing it and
that Employer has provided Employee at least twenty-one (21) days within which
to review and consider this Agreement before signing it.
B. The Parties acknowledge and agree that Employee may revoke
this Agreement for up to seven (7) calendar days following the execution of this
Agreement, and that it shall not become effective or enforceable until the
revocation period has expired. The Parties further acknowledge and agree that
such a revocation must be in writing, addressed to Xxxxxx C, Xxxxxx, Esq., Xxxx,
Xxxxxx & Xxxxxxxx, LLP, 000 Xxxx "X" Xxxxxx, Xxxxx 0000, Xxx Xxxxx, XX 00000,
and received not later than 5:00 p.m. on the seventh (7th) day following
execution of this Agreement by Employee (the Effective Date). If Employee
revokes this Agreement, it shall not be effective or enforceable and Employee
will not receive the monies and benefits described above.
C. If Employee does not revoke this Agreement in the time
frame specified in this section 20, the Agreement shall become effective at
12:01 a.m. on the eighth (8th) day after it is signed by Employee.
21. COUNTERPARTS. This Agreement may be signed in counterparts. A
facsimile signature shall have the same force and effect as an original
signature, and trigger the obligations under this Agreement.
The Parties have read this Agreement and know its contents and fully
understand it. The Parties acknowledge that they have fully discussed this
Agreement with their respective attorneys to the extent desired and fully
understand the consequences of this Agreement. No party is being influenced by
any statement made by or on behalf of any of the other party to this Agreement.
The Parties have relied and are relying solely upon their belief and knowledge
of the nature, extent, effect and consequences relating to this Agreement and/or
upon the advice of their own legal counsel concerning the consequences of this
Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on
the dates shown below.
DATED: July 29, 2005 /S/ XXXXX XXXXXXX
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XXXXX XXXXXXX
DATED: July 29, 2005 GENIUS PRODUCTS, INC.
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/S/ Xxxxxx Xxxxxxxxxx
---------------------------------
By: Xxxxxx Xxxxxxxxxx
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Its: CEO
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