SERVICES AGREEMENT
Exhibit
10.8
THIS
SERVICES AGREEMENT (this “Agreement”)
is
entered into as of July 21, 2006, by and between Genius Products, Inc., a
Delaware corporation (the “Company”),
and
Genius Products, LLC, a Delaware limited liability company (the “Distributor”).
Capitalized terms not otherwise defined in this Agreement are defined in that
certain Master Contribution Agreement, dated as of December 5, 2005, as amended
(the “Contribution
Agreement”),
by
and among the Company, The Xxxxxxxxx Company LLC, a Delaware limited liability
company (“TWC”),
and
The Xxxxxxxxx Company Holdings LLC.
RECITALS
A. The
Company, TWC and the Distributor have entered into the Contribution Agreement,
pursuant to which the Company will contribute substantially all of its assets
to
the Distributor.
B. Following
the completion of the transactions contemplated by the Contribution Agreement,
the Company will continue as a publicly-traded company and serve as the managing
member of the Distributor, and will therefore require certain accounting, legal,
administrative and other services.
C. The
parties desire that the Distributor provide these services to the Company.
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the parties agree as follows:
1. Services.
The
Company hereby appoints the Distributor to render certain services to or on
behalf of the Company as contemplated herein. Unless otherwise instructed by
the
Company, the Distributor shall provide to the Company, in a timely, efficient
and workmanlike manner, such services as shall be reasonably necessary or
appropriate to enable the Company to (i) serve as the managing member of the
Distributor and perform
its obligations as managing member under and in the manner contemplated in
the
Contribution Agreement, Limited Liability Company Agreement and Registration
Rights Agreement, (ii) continue
as a public reporting company following the Closing, and (iii) comply with
all
other legal, regulatory and contractual obligations and requirements applicable
to the Company in connection with the foregoing, including without limitation
the following services (each, a “Service”,
and
collectively, the “Services”):
| (a) |
Furnishing
the time and services of individuals who will serve as the officers
and
employees of the Company, in such capacities and with such duties
as
determined by the Board of Directors of the Company (the “Board”);
|
| (b) |
Maintaining
the Company’s status as a public reporting company with publicly traded
securities, including without limitation (i) preparing public filings
and
registration statements; (ii) registering securities of the Company
for
public sale as approved by the Board; (iii) arranging for audit and
related services of the Company’s financial statements;
(iv) communicating with and providing reports to the shareholders of
the Company; and (v) handling investor and public relations;
|
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| (c) |
Providing
accounting and bookkeeping services for the Company;
|
| (d) |
Coordinating
and conducting financing activities by the Company in furtherance
of the
business of the Distributor;
|
| (e) |
Providing
insurance to the Company and insurance and employee benefits to the
officers, directors and employees of the Company, on such terms and
in
such amounts as approved by the Board, including without limitation
directors and officers liability insurance and errors and omissions
liability insurance;
|
| (f) |
Paying
fees to directors of the Company for their service on the Board,
in such
amounts as are approved by the Board or a designated committee thereof;
|
| (g) |
Managing
the cash and assets of the Company;
|
| (h) |
Paying
taxes, governmental fees and similar charges related to maintaining
the
Company’s good standing and qualification to do business in various
jurisdictions;
|
| (i) |
Providing
for, supervising and directing (i) the preparation, review and filing
of
all federal, state and other required tax returns of the Company,
(ii)
requests for assistance on tax related matters from the Company,
and (iii)
all activities of the Company’s outside tax preparer; provided,
that except as otherwise provided in Section 1(h), any liability
for taxes
of the Company shall be the sole responsibility of the Company, and
provided
further,
that all tax matters shall be determined by the Company in its absolute
and sole discretion except as otherwise agreed to in the Contribution
Agreement and the LLC Operating Agreement of the Distributor;
|
| (j) |
Providing
use of such facilities and telecommunications and data services as
are
reasonably required by the Company;
|
| (k) |
Paying
and defending against claims for loss, damage, expense or liability
against the Company or any of its officers, directors, employees
or
agents, other than to the extent arising out of or related to (i)
any
breach of any representation, warranty, covenant or agreement of
the
Company under the Master Contribution Agreement, the Limited Liability
Company Agreement or the Registration Rights Agreement, (ii) any
Excluded
Liability, or (iii) Retained Asset or activities relating to the
foregoing;
|
| (l) |
Complying
with any contract, agreement or other obligation to which the Company
is
or may become a party (and which is approved in accordance with the
Contribution Agreement or the Limited Liability Company Agreement),
other
than any contract, agreement or other obligation relating to any
(i)
breach of any representation, warranty, covenant or agreement of
the
Company under the Master Contribution Agreement, the Limited Liability
Company Agreement or the Registration Rights Agreement, (ii) Excluded
Liability,(iii)Retained Asset or (iv) Unassigned Contract (or activities
relating to the foregoing);
|
2
| (m) |
Furnishing
and/or paying for all
reasonable and customary third party legal, accounting, audit and
other
services in support or furtherance of any of the Services; and
|
| (n) |
Such
other Services as are mutually agreed by the Company and Distributor
(subject to the Limited Liability Company Agreement) .
|
For
the
avoidance of doubt, Distributor shall not be required to perform any activities
under this Agreement related to (i) any breach of any representation, warranty,
covenant or agreement of the Company under the Master Contribution Agreement,
the Limited Liability Company Agreement or the Registration Rights Agreement,
(ii)the Excluded Liabilities or(iii) Retained Assets (or any related activities)
without the approval of Distributor (with the consent of WCO) and an agreement
regarding compensation to the Distributor for such services
2. Reimbursement.
To the
extent that any of the Services are not provided to the Company as contemplated
above, the Company shall have the right to obtain any of the Services itself
and
obtain reimbursement from the Distributor for the reasonable costs thereof,
including internal and external costs and the Company’s reasonable cost of
borrowing to finance such costs. The Company will promptly furnish the
Distributor with a written invoice for such costs as they are incurred, along
with a reasonably detailed itemization of such costs. Such reimbursement will
be
paid by the Distributor in full within 30 days of receipt thereof.
3. Tax
Treatment.
The
Company and Distributor agree to treat (a) any cash reimbursements
hereunder as “guaranteed payments” for tax purposes, within the meaning of
Section 707(c) of the Internal Revenue Code and (b) the provision of
Services hereunder as solely for the benefit of Distributor and therefore
not giving rise to taxable income, or allocations of income by Distributor,
to the Company.
4. Termination.
This
Agreement shall terminate upon the earliest to occur of (i) the written
agreement of the parties to terminate this Agreement, (ii) such time as the
Distributor is dissolved or liquidated, or (iii) such time as the Distributor
ceases to be owned in whole or in part by either of the Company or TWC.
5. Subcontractors.
Nothing
in this Agreement will prevent the Distributor from using subcontractors or
other agents to perform all or any part of the Services hereunder.
6. No
Partnership or Joint Venture; Independent Contractor.
Nothing
contained in this Agreement will constitute or be construed to be or create
a
partnership or joint venture between the parties or their respective successors
or assigns. The parties understand and agree that this Agreement does not make
either of them an agent or legal representative of the other for any purpose
whatsoever. No party is granted, by this Agreement or otherwise, any right
or
authority to assume or create any obligation or responsibilities, express or
implied, on behalf of or in the name of any other party, or to bind any other
party in any manner whatsoever. The Distributor in providing the Services
hereunder will be deemed in all respects the independent contractor of the
Company.
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7. Excused
Performance.
Except
with respect to any party’s obligation to make payments hereunder, in no event
will the Distributor be liable or responsible to the Company for any delay
or
other failure to perform hereunder that is due to: (i) the Company’s delay in
supplying or failure to supply approvals, information, materials, or services
called for or reasonably required under the terms of this Agreement; or (ii)
occurrences or circumstances beyond the Distributor’s reasonable control
(including epidemic, riot, unavailability of resources due to national defense
priorities, war, armed hostilities, strike, walkouts, civil disobedience,
embargo, fire, flood, drought, storm, pestilence, lightning, explosion, power
blackout, earthquake, volcanic eruption or any foreseeable or unforeseeable
act
of God, act of a public enemy, act of terrorism, act of sabotage, or other
natural catastrophe or civil disturbance), in each case during the period and
to
the extent that such extraordinary condition delays, impairs or prevents the
Distributor’s performance (collectively, “Force Majeure Conditions”).
Performance times under this Agreement will be considered extended for a period
of time equivalent to the time lost because of any delay or failure to perform
excusable under this Section 7. If the Distributor claims excusable delay it
will use commercially reasonable efforts to notify the Company of the Force
Majeure Condition and to mitigate the effects of the Force Majeure Condition
giving rise to the delay so as to continue performing as required hereunder
as
expeditiously as reasonably possible.
8. Miscellaneous
(a) Successors
and Assigns.
The
covenants and agreements contained herein shall be binding upon and inure to
the
benefit of the successors and assigns of the respective parties hereto. Neither
party may assign this Agreement without the consent of the other
party.
(b) Notices.
All
notices and other communications required or permitted hereunder shall be in
writing and shall be delivered in accordance with the requirement for notices
under the Contribution Agreement.
(c) Counterparts.
This
Agreement may be executed in counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
This Agreement may be executed by facsimile signature.
(d) No
Continuing Waiver.
The
waiver of either party of any breach of this Agreement shall not operate or
be
construed to be a waiver of any subsequent breach.
(e) Applicable
Law.
This
Agreement shall be construed and enforced in accordance with the laws of the
State of California, without regard to principles of conflicts of laws.
(f) Headings.
All
section headings in this Agreement are for convenience of reference only and
are
not intended to qualify the meaning of any section.
[Signatures
on following page]
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IN
WITNESS WHEREOF, each of the parties has caused this Services Agreement to
be
executed on its behalf as of the date first written above.
|
“The
Company”
GENIUS
PRODUCTS, INC.
By:
/s/ Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President and Chief Executive Officer
|
“Distributor”
GENIUS
PRODUCTS, LLC
By:
/s/ Xxxxxx Xxxxxxxxxx
Name:
Xxxxxx Xxxxxxxxxx
Title:
President and Chief Executive Officer
|
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