EXHIBIT 99.3
SEPARATION
AND
RETENTION AGREEMENT
This Separation and Retention Agreement ("Agreement") is entered into
by and between Xxxx Xxxxxx ("Xxxxxx") and Genius Products, Inc. ("Genius" or the
"Company"} (collectively the "Parties").
RECITALS
Xxxxxx was employed by the Company as President pursuant to a written
employment agreement dated January 3, 2002, and amended October 31, 2003 (the
"employment relationship").
The Company and Xxxxxx have mutually agreed that Xxxxxx 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 this retention 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 Xxxxxx xxxxxxxxx for twelve months, totaling TWO
HUNDRED SEVENTEEN THOUSAND TWO HUNDRED FIFTY DOLLARS ($217,250.00), subject to
standard payroll deductions and withholdings, payable in accordance with regular
company payroll practice, and on the same terms and conditions Xxxxxx received
his salary, beginning at the conclusion of this Agreement, and other
consideration contained in the Confidential Settlement Agreement and Mutual
Release of Claims signed by the parties this date.
2. RETENTION AGREEMENT
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Xxxxxx shall serve as an employee to the Company under the terms
specified below.
(a) Retention Services
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Xxxxxx agrees to provide retention services to the Company as an
employee in matters related only to the company's music and/or catalog business.
* Be available to Genius Products management for up to 40 hours per
week as needed during the Retention Period. Xxxxxx shall be on vacation, and
excused from performing any services under this Agreement between August 15 and
22, 2005, inclusive. Xxxxxx agrees to exercise the highest degree of
professionalism and utilize his expertise and creative talents in performing
these services. Xxxxxx agrees to make himself available to perform such services
throughout the Retention Period. In order to assist the delivery of Xxxxxx'x
services, the Company agrees to reimburse Xxxxxx'x pre-approved reasonable
expenses, if any.
(b) Term
----
(1) The employment relationship shall commence on the
Separation Date and for a period of sixty (60) days. (the "Retention Period").
(2) The Retention Period may be earlier terminated by the
Company for Cause. For the purposes of this Section 3, "Cause" shall be defined
as (i) Xxxxxx'x material failure, neglect, or refusal to perform his duties
hereunder as Consultant to the Company; (ii) Xxxxxx'x failure to be available to
assist the Company and its attorneys on a full-time basis (forty [40] hours per
week} upon request as needed during normal business hours for matters related to
the music or catalog business; (iii) gross negligence; (iv) fraud; (v) entering
into any arrangement with or providing any services to any company, business, or
person other than the Company that produces or markets children's or infant's
videos or music; and/or (vi) violation of the confidentiality provisions of the
Release to which this Agreement is attached as Exhibit "A." If the Retention
Period is terminated by the Company for cause, no further payments will be due
under this Agreement. Should the Retention Period be terminated the Company
without cause before September 9, 2005, the Company will pay Xxxxxx for the time
remaining (i.e., if the Retention Period is terminated one week before the
termination date, the Company will pay Xxxxxx his salary as outlined in this
Agreement for one week).
(3) The Retention Period may be earlier terminated by Xxxxxx
by voluntarily terminating his relationship with the Company upon notifying the
Company, in writing, at least ten (10) business days in advance. Upon such early
termination of the Retention Period as set forth in 2(b)(2) and/or (3), above,
the Company's obligation to pay Xxxxxx any further salary shall cease
immediately. The Retention Period shall not expire before the expiration of its
term for any reason other than a reason set forth in this Section 3.
(4) In the event that Xxxxxx dies or becomes permanently
physically or mentally disabled during the Retention Period, and provided the
Retention Period has not been terminated for cause by the Company or voluntarily
by Xxxxxx, or as a result of Employee's violation of Paragraph 6 and/or 8 and/or
10 of this Agreement, any salary earned and unpaid on that date shall be paid to
Xxxxxx'x beneficiary or representative. In the event Xxxxxx dies or becomes
permanently physically or mentally disabled either during or after the Retention
Period and provided the Retention Period has not been terminated as a result of
Paragraph 3(b)(4), 6 or 8 of this Agreement, any Stock Options which have vested
may be exercised by Xxxxxx'x beneficiary or representative. Beneficiary means
such person or persons designated by Xxxxxx to receive any salary and/or
exercise his Stock Options in accordance with this paragraph. The designation of
the beneficiary shall be made in a writing signed by Xxxxxx and in a form
acceptable to the Company. Xxxxxx may revoke and re-designate the beneficiary at
any time.
(c) Salary and Benefits
-------------------
(1) Salary
------
During the Retention Period, Xxxxxx shall receive $18,104.16 per month,
in accordance with the Company's regular payroll practices ("Consulting Fees").
In addition, Xxxxxx will receive as additional compensation, a commission of two
percent (2%) {of all sales of music by
the Company during the Third Quarter of the current fiscal year, which have been
received and approved by the Company. Xxxxxx specifically waives any claim under
the "procuring cause doctrine," or for any commissions on sales received by the
Company after the Retention Period ends.
{2) Taxes and Withholding
The Company will withhold from the salary an appropriate amount for
taxes, social security or other payroll deductions Xxxxxx acknowledges that he
will be entirely responsible for payment of any taxes on his income.
(d) Health Insurance Coverage
-------------------------
During the Retention Period, Xxxxxx will continue on the Company's
medical plan on the same(.) basis as for other employees.
(e) Other Compensation/Benefits
---------------------------
During the Retention Period, Xxxxxx shall receive only participation in
the Company's Section 401(K) plan, health insurance, life insurance, and
disability insurance.
Xxxxxx agrees he shall not receive any right to vacation (or accrual of
vacation.) sick leave, PTO, automobile allowance, or holiday pay during the
Retention Period.
3. LIMITATIONS ON AUTHORITY
------------------------
Xxxxxx shall have no responsibilities or authority as a consultant to
the Company other than as provided for above. During the Retention Period only,
Xxxxxx may represent himself as former President of the Company, and the Company
will represent Xxxxxx as its former President., Xxxxxx shall not have the
authority, nor shall he, sign any contracts for and on behalf of the Company
during the Retention Period.
4. OTHER WORK ACTIVITIES
---------------------
In order to protect the trade secrets and confidential and proprietary
information of the Company, Xxxxxx agrees that, during the Retention 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 competion 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 Xxxxxx obtains such employment; and (ii) such employment or work
involves a business in which the Company plans to engage as of the Separation
Date, but only if Xxxxxx 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. Xxxxxx agrees to notify the
Company, in writing, at least ten (10) business days before engaging in any
work, during the Retention Period for any business
purpose other than work for the Company. In the event that Xxxxxx is informed by
the Company that any such work constitutes Competitive Activity, and he
subsequently engages in such Competitive Activity, and he subsequently engages
in such Competitive Activity, the Retention Period shall end immediately and all
obligations by the Company to pay salary shall end immediately. Such Competitive
Activity shall be considered a material breach of this Agreement.
5. NON-SOLICITATION
----------------
Xxxxxx agrees that during the Retention Period, and for one (1) year
following the termination of the Retention 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 Xxxxxx is actively seeking
employment or by whom Xxxxxx is subsequently employed.
6. COMPANY PROPERTY
----------------
On or the end of the Retention Period, Xxxxxx 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
-----------------------------------
Xxxxxx 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 Xxxxxx'x
possession during his employment with the Company will be returned to Employer
on or before the end of the Retention Period- Xxxxxx agrees not to disclose to
an 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. Xxxxxx 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. Xxxxxx 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. Xxxxxx further understands and agrees that the
use of any trade secret, confidential or proprietary information belonging to
the Company shall be a material breach of this Agreement.
8. NON-DISPARAGEMENT
-----------------
Xxxxxx 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 Xxxxxx and the Company and shall not be publicized or disclosed in any manner
whatsoever. Notwithstanding the prohibition in the preceding sentence: (i)
Xxxxxx 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), Xxxxxx 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 Xxxx Xxxxxx:
0000 Xxx0xxxxx Xxxxx
Xxx Xxxxx, XX 00000
11. SEVERABILITY
------------
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 he 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.
13. COMPLETE AGREEMENT
------------------
This Agreement constitutes the entire agreement between Xxxxxx 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 will. This
Agreement may be changed only upon the mutual written consent of the Company and
Xxxxxx. 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 Xxxxxx'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 scale not be 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 Xxxxxx and the Company, and their respective successors, assigns,
heirs, executors and administrators, except that Xxxxxx 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. ATTORNEYS' FEES
---------------
If either party hereto brings any action to enforce their rights
hereunder, the prevailing party in any such action shall he entitled to recover
their reasonable attorneys' fees and costs incurred in connection with such
action.
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 attorneys.
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 rule 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
be governed and interpreted in accordance with the laws of the State of
California, including all matters of construction, validity, performance and
enforcement, without regard to California's conflict of laves rules.
21. WAIVER OF BREACH; SPECIFIC PERFORMANCE
--------------------------------------
The waiver by the Company or Xxxxxx of a breach of 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 or 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. ELECTION OF COUNTERPARTS; FACSIMILE SIGNATURES
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This Agreement may he executed in counterparts, and it-so executed and
delivered, all of-the counterparts together shall constitute one and the same
Agreement.
23. MISCELLANEOUS PROVISIONS
------------------------
(a) The Parties represent that the have read this Agreement and full
understand all of its terms; that they have conferred with their attorneys_ of
have knowingly and voluntarily chosen not to confer with their attorneys about
this Agreement; that they have executed this 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: 7/29, 2005 /s/ Xxxx Xxxxxx
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XXXX XXXXXX
DATED: 7/29, 2005 GENIUS PRODUCTS, INC.
/s/ signature
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By:
Its:
