EXHIBIT ___
SEPARATION
AND
CONSULTING AGREEMENT
This Separation and Consulting Agreement ("Agreement") is entered into by and
between Xxxxx Xxxxxxx ("Xxxxxxx") and Genius Products, Inc. ("Genius" or the
"Company") (collectively the "Parties").
RECITALS
Xxxxxxx was employed by the Company as Chief Executive Officer pursuant
to a written employment agreement dated January 3, 2002, and amended October 31,
2003 (the "employment relationship").
The Company and Xxxxxxx have mutually agreed that Xxxxxxx has resigned
from his employment with the Company, effective July 28, 2005 ("Separation
Date"). In consideration of the resignation, both parties agree to release each
other from any and all claims arising from or related to the employment
relationship and to enter into a consulting arrangement.
THEREFORE, in consideration of the mutual promises and covenants
between the parties, it is agreed by and between the parties as follows:
1. SEVERANCE
---------
The Company will pay Xxxxxxx xxxxxxxxx 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 at the Separation Date, and other consideration
contained in the Settlement Agreement and Mutual Release of Claims signed by the
parties this date.
2. CONSULTING AGREEMENT
--------------------
Xxxxxxx shall serve as a consultant to the Company under the terms
specified below.
(a) Consulting Services
-------------------
Xxxxxxx agrees to provide consulting services to the Company, as an
independent contractor, in any area for which he is qualified by virtue of his
education, experience and training upon request by a duly authorized officer of
the Company. Specifically, such services shall include:
o Provide services as Consultant to the Company as requested, or any
other protects as requested by the Chief Executive Officer, including but not
limited to contract review and strategic planning.
o Be available to Genius Products management as needed, up to 10 hours
per week or as mutually agreed. Xxxxxxx agrees to exercise the highest degree of
professionalism and
utilize his expertise and creative talents in performing these services. Xxxxxxx
agrees to make himself available to perform such consulting services throughout
the Consulting Period. In order to assist the delivery of Xxxxxxx'x consulting
services, the Company agrees to reimburse Xxxxxxx'x pre-approved reasonable
expenses, if any.
(b) Term
----
(1) The consulting relationship shall commence on July 29,
2005, and continue for a minimum of four months, and thereafter terminable by
either party to this Agreement, on sixty (60) days written notice (the
"Consulting Period").
(2) Upon termination of the Consulting Period, the Company's
obligation to pay Xxxxxxx any further Consulting fees shall cease immediately.
(3) In the event that Xxxxxxx dies or becomes permanently
physically or mentally disabled during the Consulting Period, and provided the
Consulting Period has not been terminated, or as a result of Employee's
violation of paragraph 6 and/or 8 and/or 10 of this Agreement, any Consulting
Fees earned and unpaid on that date shall be paid to Xxxxxxx'x beneficiary or
representative. Beneficiary means such person or persons designated by Xxxxxxx
to receive any Consulting Fees and/or exercise his Stock Options in accordance
with this paragraph. The designation of the beneficiary shall be made in a
writing signed by Xxxxxxx and in a form acceptable to the Company. Xxxxxxx may
revoke and re-designate the beneficiary at any time.
(c) Consulting Fees and Benefits
----------------------------
(1) Consulting Fees
---------------
During the Consulting Period, Xxxxxxx shall receive EIGHT THOUSAND FIVE
HUNDRED DOLLARS ($8,500.00) per month, in accordance with the Company's regular
payroll dates ("Consulting Fees"). Consulting Fees for work performed during the
Consulting Period shall he paid every six months of said Period. In the event
the Consulting Period is terminated, all carried but unpaid Consulting Fees
shall be paid as soon as practicable. If the Consulting Period lasts for more
than twelve (l2) months, Consulting Fees shall be payable on a monthly basis
beginning with the thirteenth (13th) month of the Period.
(2) Stock Options
-------------
As part of the consideration for this Agreement, Xxxxxxx shall receive
a stock option grant, upon execution of this Agreement, or as soon thereafter as
practicable, of options for 150,000 shares of the Company's common stock. Such
grant shall he fully vested on the date of grant and shall have a strike price
equal to the share price of the Company's common stock on the date this
Agreement is executed by Xxxxxxx. The other terms of the grant shall he as
established by the Company's 2004 Stock Incentive Plan. The options referenced
in this provision are in addition to any and all other options to be granted to
Xxxxxxx in connection with the Settlement Agreement and Mutual Release of Claims
between the parties.
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(3) Taxes and Withholding
---------------------
The Company will withhold from the Consulting Fees any amount for
taxes, social security or other payroll deductions. Xxxxxxx acknowledges that
he, as an independent contractor, will be entirely responsible for payment of
any taxes on Consulting Fees, and he hereby indemnifies and holds harmless the
Company from any liability for any taxes, penalties or interest which may be
assessed by any taxing authority.
(d) Insurance Coverage
------------------
During the Consulting Period, Xxxxxxx will continue on the Company's
health, life and disability insurance plans. After the Agreement ends, Xxxxxxx
shall have the right to continue his medical and dental insurance, at Xxxxxxx'x
sole expense, pursuant to the provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") provided, however, that Xxxxxxx timely
elects COBRA continuation. The COBRA period shall be deemed to have commenced
the day after the termination of the Consulting Period.
(e) Other Compensation/Benefits
---------------------------
Except as expressly provided herein, or in the Confidential Settlement
Agreement between the parties, Xxxxxxx acknowledges that he will not receive
(nor is he entitled to) any additional compensation, severance or benefits
(including, but not limited to, vacation (or accrual of vacation), sick leave,
PTO, car allowance, holiday pay or any other benefits provided to employees of
the Company.
3. LIMITATIONS ON AUTHORITY
------------------------
Xxxxxxx shall have no responsibilities or authority as a consultant to
the Company other than as provided for above. During the Consulting Period only,
Xxxxxxx may represent himself as former CEO of the Company, and the Company will
represent Xxxxxxx as its former CEO. Xxxxxxx shall not have the authority, nor
shall he, sign any contracts for and on behalf of the Company during the
Consulting Period.
4. OTHER WORK ACTIVITIES
---------------------
In order to protect the trade secrets and confidential and proprietary
information of the Company, Xxxxxxx agrees that, during the Consulting Period,
he will not obtain employment, perform work for any business entity, or engage
in any other work activity which is in competition, or is preparing to compete,
with the Company ("Competitive Activity"). For purposes of this section,
performing work for a business entity or engaging in a work activity shall be
considered in competition with the Company if (i) such employment or work is in
a business in which the Company is actively involved both on the Separation Date
and at the time Xxxxxxx obtains such employment, performs such work for a
business entity or engages in such other work activity; and (ii) businesses in
which the Company plans to engage as of the Separation Date, but only if Xxxxxxx
was actively involved in developing the strategic plans to engage in such
business. For purposes of this section, the holding of less than five percent
(5%) of the outstanding voting securities of any firm or business organization
in competition with the Company shall not constitute activities or services
precluded by this paragraph. Xxxxxxx agrees
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to notify the Company, in writing, at least ten (10) business days before
engaging in any work for any business purpose other than work for the Company.
In the event that Xxxxxxx is informed by the Company that any such work
constitutes Competitive Activity, and he subsequently engages in such
Competitive Activity, the Consulting Period shall end immediately and all
obligations by the Company to pay Consulting Fees shall end immediately. Such
Competitive Activity shall be considered a material breach of this Agreement.
5. NON-SOLICITATION
----------------
Xxxxxxx agrees that during the Consulting Period, and for one (1) year
following the termination of the Consulting Period, he will not, either directly
or through others, solicit or attempt to solicit any employee, consultant, or
independent contractor of the Company to terminate his or her relationship with
the Company in order to become an employee, consultant or independent contractor
to or for any other person or entity For which Xxxxxxx is actively seeking
employment or by whom Xxxxxxx is subsequently employed.
6. COMPANY PROPERTY
----------------
On or before the end of the Consulting Period Xxxxxxx agrees to return
to the Company all Company documents (and all copies thereof) and other Company
property in his possession, or his control, including, but not limited to,
Company files, notes, drawings, records, business plans and forecasts,
Financial information, specifications, computer-recorded information, tangible
property, credit cards, entry cards, identification badges and keys: and, any
materials of any kind which contain OR embody any proprietary or confidential
material of the Company (and all reproductions thereof).
7. PROPRIETARY INFORMATION OBLIGATIONS
-----------------------------------
Xxxxxxx acknowledges that all confidential materials, records and
documents, including, without limitation, all company property, files, e-mails
and other electronic information concerning the Company that have come into
Xxxxxxx'x possession during his employment with the Company will be returned to
Employer on or before the end of the Consulting Period. Xxxxxxx agrees not to
disclose to any person or entity, including any competitor of the Company and
any future employer, any of the Company's trade secrets, attorney-client
communications, or other confidential information. Xxxxxxx acknowledges all the
Company's property obtained during the course of his employment with the Company
has been, or will be, returned to the Company. Xxxxxxx further agrees that he
will not, for any reason, disclose to others for the benefit of anyone other
than the Company any trade secret, confidential or proprietary information,
including, without limitation, information relating to the Company'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, or customer business information. Xxxxxxx further understands and
agrees that the use of any trade secret, confidential or proprietary information
belonging to the Company shall he a material breach of this Agreement.
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8. NON-DISPARAGEMENT
-----------------
Xxxxxxx and the Company agree that neither party will at any time
disparage the other in any manner likely to be harmful to the other party, its
business reputation, or the personal or business reputation of its directors,
shareholders, and employees, provided that each party shall respond accurately
and fully to any question, inquiry, or request for information when required by
legal process.
9. CONFIDENTIALITY
---------------
The provisions of this Agreement shall be held in strictest confidence
by Xxxxxxx and the Company and shall not be publicized or disclosed in any
manner whatsoever. 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 the Company may
disclose the terms of this Agreement to Directors and management level employees
on a need to know basis. In particular (and without limitation), Xxxxxxx agrees
not to discuss this Agreement with present or former Company employees or other
personnel, except to the extent necessary to explain his consulting relationship
with the Company or to carry out his duties under this Agreement.
10. NOTICES
-------
Any notices provided hereunder must be in writing and such notices or
any other written communication shall be deemed effective to have been received
(i) upon delivery in person, (ii) on the fifth (5th) day after mailing by
certified mail, return receipt requested and postage prepaid, or (iii) on the
2nd day after depositing it with a commercial overnight carrier which provides
verification of delivery, as follows:
To the Company:
Genius Products, Inc.
000 Xxxxx Xxxxx Xx Xxxxx, Xxxxx 000
Xxxxxx Xxxxx, XX 00000
To Xxxxx Xxxxxxx:
X.X. Xxx 0000
Xxx Xxx, XX 00000
11. SEVERABILIITY
-------------
If any provision of this Agreement, or part, is held invalid, void or
voidable as against public policy or otherwise, the invalidity shall not affect
other provisions, or parts, which may be
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given effect without the invalid provision or part. To this extent, the
provisions, and parts thereof, of this Agreement are declared to be severable.
12. WAIVER
------
If either party should waive any breach of any provisions of this
Agreement, he, he or it shall not thereby be deemed to have waived any preceding
or succeeding breach of the same or any other provision of this Agreement.
l3. COMPLETE AGREEMENT
------------------
This Agreement constitutes the entire agreement between Xxxxxxx and the
Company and it is the complete, final, and exclusive embodiment of their
agreement with regard to this subject matter. It is entered into without
reliance on any promise or representation, written or oral, other than those
expressly contained herein. Each party has carefully read this Agreement, has
been afforded the opportunity to be advised of its meaning and consequences by
their respective attorneys, and signed the same of their own free wil1. This
Agreement may be changed only upon the mutual written consent of the Company and
Xxxxxxx. This Agreement shall not affect, supersede or release any provisions of
the Settlement Agreement and Mutual Release of Claims, entered into
contemporaneously between the parties; nor shall it affect, supersede or release
any rights or obligations arising from any of the Company's stock option plans,
or any documents pertaining to Xxxxxxx'x stock options, warrants or shares of
the Company stock.
14. 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.
15. HEADINGS
--------
The headings of the sections and paragraphs hereof are inserted for
convenience only and shall not he deemed to affect the meaning of such language.
16. SUCCESSORS AND ASSIGNS
----------------------
This Agreement is intended to bind and inure to the benefit of and be
enforceable by Xxxxxxx and the Company, and their respective successors,
assigns, heirs, executors and administrators, except that Xxxxxxx may not assign
any of his duties hereunder and he may not assign any of her rights without the
written consent of the Company.
17. ATTORNEY FEES
-------------
If either party hereto brings any action to enforce their rights
hereunder, the prevailing party in any such action shall be entitled to recover
their reasonable attorneys' fees and costs incurred in connection with such
action.
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18. MEDIATION
---------
In order to ensure rapid and economical resolution of any dispute which
may arise under this Agreement, Employee and the Company agree that before any
lawsuit is filed, any and all disputes or controversies, arising from or
regarding the interpretation, performance, enforcement or termination of this
Agreement shall be mediated in San Diego, California before the Xxx. Xxxxxxx
XxXxxxxx (Xxx.) or any other mutually agreeable arbitrator. The Parties shall
share the cost of mediation equally.
19. AMBIGUITIES
-----------
This Agreement has been reviewed by the parties and their counsel. The
parties have had full opportunity to negotiate the terms and conditions of this
Agreement. Accordingly, the parties expressly waive any common-law or statutory
note of construction that ambiguities should be constructed against the drafter
of this Agreement, and agree, covenant and represent that the language in all
parts of this Agreement shall be in all cases construed as a whole, according to
its fair meaning.
20. CHOICE OF LAW
-------------
This Agreement has been negotiated and executed in the State of
California and is to be performed in San Diego, California. This Agreement shall
he governed and interpreted in accordance with the laws the State of California,
including all matters of construction, validity, performance and enforcement,
without regard to California's conflict of laws rules.
21. WAIVER OF BREACH; SPECIFIC PERFORMANCE
--------------------------------------
The waiver by the Company or Xxxxxxx of a breach or any provision of
this Agreement by the other party shall not operate, or be construed, as a
waiver of any other breach by such other party. Each of the parties to this
Agreement will be entitled to enforce his or its rights under this Agreement
specifically, to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights existing in his or its favor.
The Parties agree and acknowledge that money damages may not be an adequate
remedy for any breach of the provisions of this Agreement and that any party may
in his or its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief in order to
enforce or prevent any violations of the provisions of this Agreement.
22. EXECUTION OF COUNTERPARTS; FACSIMILE SIGNATURES
-----------------------------------------------
This Agreement may be executed in counterparts, and if so executed and
delivered, all of the counterparts together shall constitute one and the same
Agreement.
23. MISCELLANEOUS PROVISIONS
------------------------
(a) The Parties represent that they have read this Agreement and fully
understand all of its terms; that they have conferred with their attorneys, or
have knowingly and voluntarily chosen not to confer with their attorneys about
this Agreement; that they have executed this
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Agreement without coercion or duress of any kind; and that they understand any
rights that they have or may have and sign this Agreement with full knowledge of
such rights.
(b) The Parties acknowledge that no representations, statements, or
promises made by the other party, or by their representative agents or
attorneys, have been relied on in entering into this agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
on the dates indicated below.
DATED: July 29, 2005 /S/ XXXXX XXXXXXX
----------------- ---------------------------------
XXXXX XXXXXXX
DATED: July 29, 2005 GENIUS PRODUCTS, INC.
-----------------
/S/ Xxxxxx Xxxxxxxxxx
---------------------------------
By: Xxxxxx Xxxxxxxxxx
-----------------------------
Its: CEO
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