AMENDMENT TO EMPLOYMENT AGREEMENT
Exhibit
99.4
AMENDMENT
TO EMPLOYMENT AGREEMENT
THIS
AMENDMENT TO EMPLOYMENT AGREEMENT dated as of December 5, 2005 (this
"Amendment"), is entered into by and between Xxxxxx Xxxxxxxxxxx (hereinafter
called "Employee"), and Genius Products, Inc. (hereinafter the "Employer"),
with
reference to the following:
RECITALS
WHEREAS,
Employee and Employer entered into that certain Employment Agreement made as
of
December 2, 2005 (the “Employment Agreement”);
WHEREAS,
Employer and The Xxxxxxxxx Company LLC,
a
Delaware limited liability company and The Xxxxxxxxx Company Holdings LLC (the
“LLC”) and Genius Products, Inc., entered into that certain Master Contribution
Agreement dated December 5, 2005 (the “Contribution Agreement”).
WHEREAS,
Employee and Employer desire by this Amendment to amend the Employment Agreement
in order to, among other things, (a) revise the term of the Employment
Agreement, and (b) further amend, modify and supplement the Employment Agreement
as set forth herein.
NOW,
THEREFORE, in consideration of good and valuable consideration, the receipt
and
sufficiency of which are hereby acknowledged by the parties to this Amendment,
Employee and Employer hereby agree as follows:
1. Recitals.
The
Recitals set forth above are incorporated herein as though set forth in full
herein.
2. Term.
(a)
The
first two sentences of paragraph 3 of the Employment Agreement, starting with
the words, “The term of this Agreement” and ending with the words, “to the date
of termination” are deleted and replaced with the following:
“The
term
of the Employment Agreement shall be for a period of twenty-four (24) months
(“Initial Term”) from the date of the Amendment. Before the expiration of the
Initial Term, Employer shall have the option to extend the Agreement for an
additional twelve months (“Second Term”). Unless the parties enter into a new
contract before the expiration of the Second Term or, if before the expiration
of the initial Term the Employer does not exercise the option to extend the
agreement for the Second Term, then Employee’s employment shall continue on an
“at-will” basis. In the event Employee shall be terminated by Employer without
“Cause” during the Initial Term or during the Second Term (if applicable),
Employer shall provide Employee with the compensation required by clause (a)
of
Paragraph 2 of the Employment Agreement as of the termination date for the
remaining term of the Initial Term, the remaining term of the Second Term,
whichever is applicable (the “Severance Period”) following the date of such
termination (“Severance”) plus all accrued but unpaid salary and vacation time
to the date of termination. In addition to the foregoing Severance, the vesting
of Employee’s stock options shall accelerate as to the number of shares that
would otherwise have vested and been exercisable as of the date that is twelve
(12) months from the date of such termination. In no event will the Severance
Period be longer than Twelve (12) months. The foregoing Severance shall be
reduced by the amount of any other compensation earned by the Employee during
the Severance Period as a result of his or her employment.
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(b)
The
definition of “cause” in the Employment Agreement is deleted and replaced with
the following:
For
purposes of this Agreement, “Cause” shall mean that Employee: has been
repeatedly negligent in the discharge of his or her duties to Employer or has
acted in a manner constituting gross negligence or willful misconduct; has
been
dishonest or committed or engaged in an act of theft, embezzlement or fraud,
a
material breach of confidentiality, an unauthorized disclosure or use of inside
information, customer lists, trade secrets or other confidential information;
has breached a fiduciary duty; has been convicted of, or plead guilty or nolo
contendere to a felony or a misdemeanor (other than minor traffic violations
or
similar offenses) injurious to the reputation, business or assets of Employer
or
an affiliate; has materially breached any of the material provisions of this
Agreement; has engaged in unfair competition with, or otherwise acted
intentionally in a manner injurious to the reputation, business or assets of,
Employer or an affiliate; has materially violated Employer’s 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
policies, or use or disclosure of Employer’s trade secrets for personal gain; or
has improperly induced a vendor or customer to break or terminate any contract
with Employer or an affiliate or induced a principal for whom Employer or an
affiliate acts as agent to terminate such agency relationship.
3.
Stock
Options
(a)
Employer will recommend to the Board of Directors that Employee be granted
75,000
stock
options to vest in equal installments over 5 years. The initial grant of stock
options will be granted on the date of grant. The stock options’ exercise price
will be priced at the closing share price on the date of grant and will be
subject to Employee signing Employer’s form stock option agreement. While
Employer has every belief these stock options will be approved, Employee
acknowledges that this offer of stock options is contingent on Employer’s Board
of Directors’ approval. The Options shall be governed by the stock option plan,
as it may be amended from time to time.
(b)
Notwithstanding Section 2 (c) of the Employee's Employment Agreement with
Employer or any provision of the applicable stock option plan or stock option
agreement between the Employee and Employer, Employee agrees that the
consummation of the transactions contemplated by the Master Contribution
Agreement shall not constitute a Change in Control or Corporate Transaction
for
purposes of the stock option plan, and will not otherwise result in any
accelerated vesting of Employee’s options. Vesting of Employee’s stock options,
other than those described in Section 3(a) above, shall be reset to the
following vesting schedule: (i) twenty-five percent (25%) of Employee’s stock
options will become fully vested upon signing of the Master Contribution
Agreement and (ii) the remaining stock options will vest at the rate of
twenty-five percent (25%) on each anniversary of the date of the signing of
the
Master Contribution Agreement over a period of three (3) years. A schedule
of
Employee’s existing stock options is attached as Exhibit A to this
Amendment.
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4.
At-Will.
(a)
The
sentence in the recital, which reads, “(b) the terms of Employee’s employment,
including the "at-will" nature of the relationship,” is deleted and replaced
with “(b) the terms of the Employee’s employment,”
(b)
The
sentence in paragraph 7, which reads, “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.” is changed to “This Agreement is between Employee
and Employer and shall not form or be deemed to form a partnership or joint
venture.”
(c)
The
sentence in paragraph 9 of the Employment Agreement, which reads, “EMPLOYEE
UNDERSTANDS ALL OF THE TERMS OF THIS “AT WILL” EMPLOYMENT AGREEMENT, AND HAS
REVIEWED THIS AGREEMENT IN DETAIL BEFORE AGREEING TO EACH AND ALL OF THE
PROVISIONS” is changed to “EMPLOYEE UNDERSTANDS ALL OF THE TERMS OF THIS
EMPLOYMENT AGREEMENT, AND HAS REVIEWED THIS AGREEMENT IN DETAIL BEFORE AGREEING
TO EACH AND ALL OF THE PROVISIONS”.
5.
Clause
(e) of paragraph 2 is changed to “Grant Employee health insurance for Employee
and Employee’s dependents, and such other benefits as Employer shall determine
to provide to all of its employees from time to time.”
6.
Nonsolicitation.
Employee
acknowledges that, due to her position with Employer, she will have access
to
confidential information and trade secrets. Accordingly, Employee agrees that
during her employment with Employer and for a period of one (1) year after
termination of his employment with Employer, she shall not directly or
indirectly (i) divert or attempt to divert from Employer, TWC, or Genius
Products LLC any business of any kind, including without limitation the
solicitation of or interference with any of their customers, clients, members,
business partners or suppliers or (ii) solicit, induce, recruit or encourage
any
person employed by Employer, TWC, or Genius Products LLC to terminate his or
her
employment.
7.
Original
Agreement.
Except
as specifically herein amended, the Employment Agreement is and shall remain
in
full force and effect according to the terms thereof. In the event of any
conflict between the Employment Agreement and this Amendment, this Amendment
shall control.
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8.
Entire
Agreement.
This
Amendment coupled with the Employment Agreement contain the
entire agreement between Employer and Employee relating to Employee’s employment
with Employer, and they supersede all previous agreements, whether oral or
written.
9. Counterparts.
This
Amendment may be executed in several counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
agreement.
10.
This
Amendment shall become effective upon Closing of
the
Contribution Agreement, as the term Closing is defined in that agreement. In
the
event the Closing does not occur, then this Agreement will be null and void.
Employee acknowledges and agrees that the Agreement, as amended by this
Amendment, and Employer’s rights and obligations hereunder and thereunder, are
intended to be assigned by Employer to the LLC effective at the Closing of
the
Contribution Agreement, and that from and after such time Employee will be
employed by the LLC pursuant to the terms of the Agreement as amended by this
Amendment.
IN
WITNESS WHEREOF, this Amendment has been executed by the parties as of the
date
first referenced above.
"Employee"
/s/
Xxxxxx Xxxxxxxxxxx
Xxxxxx
Xxxxxxxxxxx
"Employer"
Genius
Products, Inc.
By:
/s/
Xxxxxx Xxxxxxxxxx
Its:
President and Chief Executive Officer
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Exhibit
A: Schedule of Existing Stock Options
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