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Exhibit 10.3
ASSIGNMENT, ASSUMPTION AND PLEDGE AGREEMENT
This
Assignment, Assumption and Pledge Agreement (this "Agreement")
is
made and entered into as of March 21, 2005,
by and between Genius Products,
Inc., a Delaware corporation ("Pledgee"),
and American Vantage Companies, a
Nevada corporation ("Pledgor").
WHEREAS,
Pledgee and Pledgor are parties to that certain Agreement and
Plan of Merger dated as of March 21, 2005
(the "Merger Agreement"), pursuant to
which Pledgee will acquire the Company (as
defined in the Merger Agreement);
WHEREAS,
as a further inducement to Pledgor to enter into and consummate
the transactions contemplated by the Merger
Agreement, Pledgee desires to assign
and transfer certain assets to Pledgor,
following the consummation of the
transactions contemplated by the Merger
Agreement;
WHEREAS,
as a further inducement to Pledgee to enter into and consummate
the transactions contemplated by the Merger
Agreement, Pledgee desires to
assign, and Pledgor desires to assume,
certain obligations of the Company, on a
going-forward basis, following the
consummation of the transactions contemplated
by the Merger Agreement;
WHEREAS,
American Vantage Media, Inc. is party to a separate employment
agreement dated as of February 6, 2004 with
each of David J. Bartis ("Bartis")
and Douglas Liman ("Liman") (each an
"Employment Agreement" and collectively,
the "Employment Agreements"); and
WHEREAS,
the execution and delivery of this Agreement by the parties
hereto is a condition to the closing of the
transactions contemplated by the
Merger Agreement.
NOW,
THEREFORE, for and in consideration of the premises and the
mutual
covenants contained herein, and for other
good and valuable consideration, the
receipt, adequacy and legal sufficiency of
which are hereby acknowledged, the
parties do hereby agree as follows:
1.
CAPITALIZED TERMS. Capitalized terms used but not defined herein
shall
have the meanings for such terms that are
set forth in the Merger Agreement.
2. CERTAIN
DEFINITIONS.
(a) "Assignment of Obligations" has the meaning set forth in
Section
3 hereof.
(b) "Certificates" means the certificate or certificates
evidencing
ownership of the Collateral.
(c) "Collateral" means 75,000 shares of Purchaser Common Stock
registered in the name of Pledgor and/or
its Affiliates, which comprises a
portion of the Merger Consideration, to the
extent not released and distributed
by Pledgee to Pledgor in accordance with
Section 10(b) hereof.
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(d) "Default" has the meaning set forth in Section 8 hereof.
(e) "Obligations" has the meaning set forth in Section 3
hereof.
3.
ASSIGNMENT AND ASSUMPTION. Effective as of immediately following
the
Effective Time, (i) Pledgee hereby assigns,
sells, transfers and sets over to
Pledgor all right, title and interest in
and to those assets set forth on
Schedule 1 annexed hereto except for those
Fees (as such term is defined in the
Employment Agreements) relating to such
assets due to Bartis and Liman pursuant
to Section 10 of the Employment Agreements
(collectively, "Participations"),
free and clear of any and all liens or
encumbrances in respect thereof; and (ii)
Pledgee hereby assigns, sells, transfers
and sets over (collectively, the
"Assignment of Obligations") to Pledgor,
Pledgee's obligations and liabilities
set forth on Schedule 2 annexed hereto,
which the parties expressly agree shall
not include any obligations or liabilities
relating to or arising out of the
Participations (collectively, the
"Obligations"), provided that, in no event
shall Pledgor be liable for any Obligation
in respect of (i) Bartis unless and
until Bartis terminates his Employment
Agreement for Good Reason (as such term
is defined in his Employment Agreement)
pursuant to Section 7 thereof and (ii)
Liman unless and until Liman terminates his
Employment Agreement for Good Reason
(as such term is defined in his Employment
Agreement) pursuant to Section 7
thereof. Subject to the above proviso,
Pledgor hereby accepts the Assignment of
Obligations and assumes and agrees to pay
and discharge all of the Obligations
when due from and after the Closing. In the
event that Pledgor fails to pay any
Obligation when it becomes due, and Pledgee
shall pay such amount on behalf of
Pledgor, then Pledgor shall pay the amount
of such Obligation to Pledgee with
such amount carrying interest at a rate of
10.0% per annum from the due date for
such Obligation until satisfied in
accordance with Section 10 of this Agreement.
4. PLEDGE
AND SECURITY INTEREST. To secure Pledgor's obligations to
Pledgee to assume and fully discharge when
due all of the Obligations, Pledgor
hereby pledges the Collateral to Pledgee
and grants to Pledgee a continuing
security interest in the Collateral.
5. DEPOSIT
OF COLLATERAL. Pledgor shall (i) deliver the Certificate(s) to
Pledgee and (ii) deliver stock power(s) in
the form of Exhibit A attached
hereto, duly executed in blank, for the
Collateral to Pledgee.
6.
WARRANTIES AND COVENANTS OF PLEDGOR.
Pledgor
represents, warrants, covenants and agrees as follows:
(a)
Novations. Pledgor shall use its best efforts to seek novations
of all of the Obligations such that Pledgor
is the obligor of record with
respect to all of the Obligations.
Notwithstanding anything herein or in the
Merger Agreement to the contrary and for
the avoidance of doubt, upon and
following the Assignment of Obligations,
Pledgor shall be the primary obligor
with respect to all of the Obligations.
(b) Ownership of Collateral. Pledgor has good, valid marketable
title to the Collateral, free from any
liens, charges, pledges, security
interests, encumbrances, rights to purchase
or other claim or interest of any
kind, other than those granted herein.
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(c) Liens. Pledgor will neither create nor permit the creation
of
any lien charge, pledge, security interest,
encumbrance or other claim or
interest in the Collateral without the
prior written consent of Pledgee.
(d) First-Priority Security Interest. Pledgee will at all times
have
a valid, perfected first-priority security
interest in the Collateral.
(e) Transfers. Pledgor will neither make nor permit any transfer
of
the Collateral without the prior written
consent of Pledgee.
(f) Reimbursement of Expenses. Pledgor will reimburse Pledgee
for
any expenses reasonably incurred by Pledgee
in protecting or realizing on the
Collateral.
(g) Payment of Taxes and Indebtedness. Pledgor shall promptly
pay
all liens, taxes, assessments, or
contributions required by law which may come
due and which are lawfully levied or
assessed with respect to Pledgor, or any of
the Collateral.
7.
EXERCISE OF SHAREHOLDER RIGHTS.
(a) Receipt of Dividends and Distributions. Prior to the
occurrence
of a Default, Pledgor shall have the right
to receive and retain any ordinary
dividends or other distributions paid on
the Collateral.
(b) Right to Vote. Prior to the occurrence of a Default, Pledgor
may
vote the Collateral for all purposes
allowed within the restrictions set by this
Agreement and otherwise imposed by the
Merger Agreement and the agreements
related thereto, including, without
limi
