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EMPLOYMENT AGREEMENT
This Employment Agreement (the "AGREEMENT") is made effective as of July 31st,
2000 , by and between MULTIMEDIA K.I.D INC , a Delaware Corporation (the
"COMPANY"), and Clifford DeGroot ("the "EMPLOYEE").
WITNESSETH
WHEREAS: The employee is experienced in filling the position of a Chief
Financial Officer of a publicly traded company ("CFO"), and
WHEREAS: The Employee declares that he has the ability and know-how required in
order to satisfactorily serve as the company's CFO,
WHEREAS: The company wishes to employ the employee in the capacity of CFO,
and the Employee wishes to be employed by the company in that capacity, and
WHEREAS the parties hereto desire to provide for the employment of the Employee
by the Company on the terms and conditions hereinafter set forth
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
1. EMPLOYMENT AND TERM
1.1. The Company hereby hires Employee, and the Employee hereby agrees to
be hired by the Company, as the Company's CFO and/or such other
management position(s) as the Board of Directors may determine,
subject to the consent of Employee .
1.2. Subject to the terms and conditions herein contained, this agreement
shall commence as of July 31st, 2000 (the "EFFECTIVE DATE"), and will
continue for a period of one (1) year, unless and until terminated in
accordance with Section 5 below (the "TERM").
1.3. During the term of this agreement, Employee will devote his full time
and use his best efforts to the business of the Company.
1.4. Employee shall perform his duties hereunder primarily in the New-York
metropolitan area, it being understood that Employee's duties
hereunder may require travel. Employee shall not be required to
relocate without his consent.
1.5. It is understood that employee would relocate from his current
residence in Portland, Oregon. The Company shall pay all relocation
expenses of employee and his family, up to a maximum of $ 17,000
(seventeen thousand Dollars), provided that the Employee provides the
Company with suitable documentation of such relocation expenses.
2. DUTIES
2.1. Employee shall perform his duties diligently, faithfully and to the
best of his ability and in accordance with sound business practices.
The Employee shall perform his duties pursuant to the direction and
control of the Company's CEO and any other person designated by the
CEO of the Company, and shall report to the CEO or any committee
thereof as and when requested thereby.
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2.2. The Employee shall devote all his business time and attention to his
duties and responsibilities hereunder, subject to paid vacation and
holidays as hereinafter set forth.
3. COMPENSATION
3.1. The Employee shall receive a monthly salary of US $ 10,416 (ten
thousand, four hundred and sixteen Dollars) .("The "Base Salary"),
payable in accordance with the standard payroll practices of the
Company.
4. ADDITIONAL BENEFITS; VACATIONS
4.1. During the Term, the Employee shall be entitled to 21 vacation days
per calendar year. The time in which the Employee shall use said
vacation days shall be coordinated with the Company's CEO, consistent
with the Employee's duties and responsibilities hereunder. Unused
vacation days of any year may be carried over to the following years,
provided that the Employee shall not be permitted to carry over more
than 15 vacation days. If the number of vacation days carried forward
from prior years plus the 15 vacation days with respect to such year
would exceed 30 days, any Excess Vacation Days shall be deemed
cancelled. Unused vacation days will be added to the Notice Period
under this agreement.
4.2. Company-paid health, life, disability and/or dental insurance (all on
such terms and with such insurers as the Company shall offer to its
other executive officers); and
4.3. The Company will reimburse the Employee for reasonable business
expenses incurred by the Employee in the performance of services for
the Company hereunder, provided that the Employee provides the Company
with suitable documentation of such business expenses.
4.4. The Company shall reimburse Employee for reasonable expenses incurred
by Employee due to the use of the Employee's car, for the execution of
employee's undertakings under this agreement, including gas and
repairs.
5. TERMINATION OF EMPLOYMENT
5.1. This Agreement may be terminated in accordance with the following
provisions:
5.2. Each party may terminate this agreement, for any cause and/or reason,
by giving the other party a thirty (30) days Prior Notice, in Writing,
of said party's intention to terminate the agreement ("the Prior
Notice"). The Prior Notice shall become effective , and the agreement
shall terminate, on the end of the 30th day from the date the Prior
Notice has been received by the other party. Without derogation from
the above, if the company terminates this agreement, during the first
12 months commencing on the signing of this agreement ("THE FIRST
YEAR"), for any reason other than disability or "Cause" as defined
below, this agreement shall terminate at the end of the Prior Notice
period, but the Company shall continue to pay employee, after such
termination, the monthly salary to which the employee would have been
entitled had termination not occurred, for the lesser of: (I) six (6)
months after termination of this agreement, or (ii) until the end of
the first year, provided that, in no event shall the Prior Notice
given to Employee fall short of three (3) months, and in addition, the
company shall provide for a minimum vesting of fifty (50%) percent of
options granted under this agreement
5.3. If the Employee shall be unable to perform his duties hereunder by
reason of Disability, the Company shall pay the Employee his Base
Salary as then in effect until the last day of the
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month during which the Company provided notice of the Disability to
the Employee, at which time the Company shall have no further
obligations hereunder to compensate the Employee pursuant to this
Agreement, except as may be required by applicable law. The term
"Disability" shall mean that the Employee shall be unable for a period
of four (4) consecutive weeks or two (2) months in any twelve (12)
month period, because of a physical or mental illness or condition, to
substantially render the services required hereunder, with or without
reasonable accommodation.
5.4. This Agreement may be terminated immediately, at the option of the
Company for "Cause" (as hereinafter defined), effective as of the date
on which the Company gives notice of termination to the Employee. The
term "Cause" shall mean any of the following events:
5.4.1. fraud, misappropriation or embezzlement of funds or property by
the Employee involving the Company or an Affiliated Company;
5.4.2. the conviction of the Employee in any jurisdiction for any crime
which constitutes a felony, or for a crime which constitutes a
misdemeanor that involves fraud or moral turpitude and that
results in a material loss to the Company or an Affiliated
Company, or their respective businesses or reputation;
5.4.3. the Employee's willful misconduct in, or willful neglect of, the
performance of his duties and responsibilities hereunder other
than by reason of illness or disability, or the Employee's
repeated willful violation of any reasonable specific written
directions of the Company's CEO and/or Board , provided the
Company gives written notice and 7 days to cure, and the Employee
does not cure said violation during the 7 days period, or
5.4.4. the Employee's material breach of the agreements and covenants
relating to confidentiality and/or non-competition; or 5.4.5.
"Affiliated Companies" shall mean all entities that are direct or
indirect subsidiaries of the Company and all entities with
which the Company has a significant joint venture.
5.5. If this Agreement is terminated by the Company for Cause, the Employee
shall only be entitled to payment of Base Salary and continuation of
benefits due, until the date the Notice for Cause has been given.
5.6. Unless this agreement will be terminated for cause, Employee shall
continue working for the duration of the Prior Notice period.
5.7. Except as provided above, upon any termination of this Agreement, the
Company shall have no obligations owing to the Employee, or any of his
executors, heirs, personal representatives or assigns.
6. CONFIDENTIAL INFORMATION:
The Employee covenants and agrees that:
6.1. During the Term of this agreement and thereafter, he will keep secret
and retain in the strictest confidence all information about business
and financial matters (including, without limitation, all ideas,
materials, data, methods or plans developed, information relating to
costs, profits, budgets and plans for future development, strategy,
methods of operation and marketing concepts, information relating to
the Company's or its' customers' financial affairs, accounts, customer
lists, marketing plans, business or acquisitions strategies, pricing,
) of the Company and any Affiliated Companies, their respective
employment policies and plans, and any other trade secrets and
proprietary information relating to the Company, any Affiliated
Companies or their respective operations, business and financial
affairs, other than information which is otherwise generally available
to the public other than as a result of a disclosure by the
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Employee and other than information which was already known to the
Employee prior to his relationship with the Company (collectively, the
"Confidential Information"), and, for such time as the Company or any
Affiliated Company is operating, not disclose any Confidential
Information to anyone outside of the Company or an Affiliated Company,
either during or after the term of his employment by the Company or an
Affiliated Company, except (i) in the course of performing his duties
hereunder, (ii) with the Company's express prior written consent or
(iii) as required by law or court order.
6.2. The Employee will surrender to the Company within ten (10) days after
the termination of his employment hereunder, or at any time the
Company may so request, all memoranda, notes, records, reports, lists
and other documents containing, describing or relating to Confidential
Information, together with all copies thereof, obtained by him or
entrusted to him during the course of his employment by the Company or
an Affiliated Company or otherwise in his possession at the time of
such termination or request.
6.3. Employee acknowledges and agrees that the Company's Confidential
Information is a valuable, special and unique asset of the Company
which is extremely important in a highly competitive business such as
the educational software and hardware area. Employee acknowledges that
the disclosure of any Confidential Information may cause substantial
injury and loss to the Company. Employee acknowledges that the Company
retains a proprietary interest in its Confidential Information that
persists beyond the termination of Employee's employment by the
Company. Employee further acknowledges that the preservation and
protection of the Confidential Information is an essential part of
Employee's employment by and business relationship with the Company
and that Employee has a duty of fidelity and trust to the Company in
handling the Confidential Information.
6.4. Employee shall not, during the term of this Agreement and for a two
(2) year period thereafter, without the prior written consent of the
Company in each instance or as otherwise may be required by law or
legal process, disclose to anyone any Confidential Information of the
Company, or utilize such Confidential information for Employee's own
benefit, or for the benefit of any third party, until such time, if
ever, as such Confidential Information becomes general public
knowledge (unless caused by any act of Employee in violation of this
Agreement), and all memoranda, records or other documents compiled by
Employee or made available during the term of this Agreement
pertaining to the business of the Company or any Confidential
Information shall be the property of the Company and shall be
delivered to the Company on the termination of Employee's employment
or at any other time, immediately upon request by the Company.
6.5. Employee agrees and acknowledges that Employee's services hereunder
are of a special, unique, extraordinary character, that Employee's
employment with the Company places Employee in a position of
confidence and trust and that Employee's services hereunder
necessarily will require the disclosure to Employee of Confidential
Information of the Company. Employee consequently agrees that it is
reasonable and necessary for the protection of the goodwill and
business of the Company that Employee make the covenants contained
herein and that Company is relying upon and is induced by the
agreements made by Employee in this paragraph. Accordingly, Employee
agrees that during the term of this Agreement and for a two (2) year
period thereafter, Employee shall not, except on behalf of the
Company, directly or indirectly, and regardless of the reason for the
cessation of Employee's employment (i) attempt in any manner to
persuade any third party to cease to do business, or to reduce the
amount of business which any such party customarily has done or
contemplates doing, with the Company, whether or not the relationship
between the Company and such third party was originally established in
whole or in part through Employee's efforts; or (ii) on Employee's own
behalf or otherwise, hire, solicit, seek to hire, or offer employment
to any person who is, during any such time period, an employee of or
independent contractor with the Company, or in any other manner
attempt, directly or indirectly, to influence, induce or encourage any
such person to leave the employ of, or terminate or diminish such
person's business relationship with, the Company. As used in this
paragraph, the verb 'employ' shall include its variations, for
example, retain or engage; and the "Company" shall include Multimedia
K.I.D., Inc. and each of its direct or indirect subsidiaries.
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6.6. The covenants of Employee set forth in this Section 6 are made in
consideration of the payments made to Employee pursuant to this
Agreement, the receipt, adequacy and sufficiency of which are
acknowledged by Employee, and such covenants have been made by
Employee to induce the Company to enter into this Agreement.
7. NON COMPETITION
7.1. The Employee covenants and agrees that during the Term and for 18
months after the termination of the Employee's employment hereunder
for any reason whatsoever:
7.1.1. he will not compete with the Company or any Affiliated Company by
engaging in the development, marketing or sale of any product,
service and/or technology which directly competes with the
Company's or any Affiliated Company's products, services and/or
technology with which the Employee was involved during the Term,
or in any other activity that directly competes with the
Company's or any Affiliated Company's products, services and/or
technology with which the Employee was involved during the Term,
including (without limitation) as an employee, owner,
shareholder, director or officer of any entity which is engaged
in any such development, marketing or sale or such other
activity.
7.2. Nothing contained in this Section shall prohibit the Employee from
owning as a passive investment not more than two (2%) percent of the
outstanding amount of any class of stock or other securities of any
Company or entity any of whose stock or other securities are publicly
held and traded on a national securities exchange or on a recognized
over-the-counter market.
8. ENFORCEMENT.
8.1. It is agreed by the Employee that any breach or threatened breach by
the Employee of any provision of Sections 6 or 7 hereof cannot be
remedied solely by damages. In the event of a breach or threatened
breach by the Employee of any of the provisions of Sections 6 or 7
hereof, the Company or any Affiliated Company shall be entitled to
seek injunctive relief restraining the Employee and any business,
firm, partnership, individual, Company or other entity participating
in such breach or attempted breach. Nothing contained herein shall be
constructed to prohibit the Company or any Affiliated Company from
pursuing any other remedies available at law or in equity for such
breach or threatened breach, including, without limitation, the
recovery of damages.
8.2. The agreements of the parties contained in Section 6 are of a special,
unique and extraordinary character; the obligations contained therein
shall therefore be enforceable both at law and in equity, by
injunction and otherwise; and the rights and remedies of the Company
and the Employee hereunder with respect thereto shall be cumulative
and not alternative and shall not be exhausted by any one or more uses
thereof
9. REPRESENTATIONS AND WARRANTIES.
9.1. The Employee represents and warrants to the Company that:
9.2. The Employee has full power and authority to enter into this
Agreement, and this Agreement has been duly and validly executed and
delivered by the Employee and constitutes the legal, valid and binding
obligation of the Employee;
9.3. The execution and delivery of this Agreement by the Employee and his
performance hereunder will not violate any provision of law and will
not conflict with or result in a breach of any judgment, decree,
order, writ, injunction, regulation, ordinance or other similar
document or instrument of any court or governmental authority, and
will not (with or without the giving of notice or lapse of time, or
both) violate or breach any term or condition of, or constitute a
default under, any agreement, document or instrument to which the
Employee is a party or by which he is bound; and
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9.4. The execution and delivery of this agreement by the Employee and his
performance hereunder do not require the consent or approval or any
other person or entity.
10. OPTIONS
10.1. The Employee shall be granted options (the "Options") to acquire
150,000 shares of the company's Common Stock (the "Shares") at a per
share price, in US Dollars, equal to the Company's common stock
closing price on July 31st, 2000 , on the Nasdaq SmallCap market,
under the company's existing Stock Option Plan (the "PLAN") or such
plan as will be adopted by the company's Board of Directors .
10.2. These Options will vest and become exercisable with respect to 25% of
the Shares upon the termination of the first 6 months of the
commencing of this agreement, and with respect to each additional 25%
of the Shares on the last day of each six months thereafter until the
Options are fully vested and exercisable provided that no portion of
the Options will vest after the date on which either party has given
the other party Prior Notice under this agreement.
10.3. The exercise price for the Options shall be payable (and the agreement
evidencing the Options shall specify that the exercise price shall be
payable) by cash or check or by cashless exercise in accordance with
the terms of the Plan. The Options shall expire ten (10) years from
the grant date of vesting of any portion of the option (the
"Expiration Date"), provided that upon termination of this Agreement,
for whatever reason, the portion of the shares, under this agreement,
which have not yet been vested, shall automatically expire, except
that if the option is an incentive stock option, the option shall
terminate ninety (90) days after termination of employment other than
for "cause", or one (1) year of employment if termination is due to
death or disability. The above shall not derogate, in any way, from
the provisions of article 5.2 above.
10.4. The Employee shall pay to the Company or make provisions satisfactory
to the Company for payment of any taxes required by law to be withheld
by the Company in connection with the grant of the Options to or
exercise of the Options by the Employee, and from the payment for, or
the subsequent disposition of, the Shares covered thereby. The
Employee hereby irrevocably authorizes the Company to deduct from any
payment due to him from the Company any amount he owes to the Company
under this Section . The Employee acknowledges that he shall also be
responsible for taxes relating to the Options and the Shares which are
imposed on, and which are the individual responsibility of, the
Employee under applicable law.
10.5. Shares issued to the Employee upon exercise of the Options will be
duly authorized, validly issued, fully paid and non-assessable. The
Company's issuance of the Shares to the Employee will not violate any
pre-emptive rights, rights of first refusal or other similar rights in
favor of other persons.
10.6. . The Employee hereby waives any claim, demand or cause of action he
may have against the Company, anyone acting on its behalf, in
connection with the administration of the Plan, or any Taxation
obligation which may arise, due to the granting of the Option and/or
the vesting of the Option Shares and/or the exercise of any portion of
the Option Shares.
10.7. The Employee acknowledges that he is fully familiar with the
provisions of applicable law concerning the taxation of the Option and
the holding or disposition of the Shares, and agrees that the Option
and the issuance, holding and disposing of the Shares shall be treated
for tax purposes in accordance with such provisions. The filing of all
the necessary tax returns and reports and the payment of any taxes or
other payments due in connection with the issuance of the Options or
the issuance, holding or disposition of the Shares, as well as on
account of any dividends or other benefits that may accrue to the
Employee in connection with the Options or the Shares, will be the
sole responsibility of and be borne exclusively by the Employee. The
Company will be entitled to deduct any taxes due on account of the
Option or the Shares from the Employee's salary or any other payments
due to the Employee from the Company.
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10.8. The Employee agrees to indemnify the Company for any taxes paid or
other payments made by either the Company on account of the Employee
or any actions taken or omitted from being taken by the Company in
good faith hereunder, and waives any claim against the Company or the
Trustee in connection with their action pursuant to this Agreement or
applicable law.
10.9. The Option granted to the Employee is not and will not be considered
part of his salary for the purpose of determining the social benefits
to which the Employee is entitled.
10.10. The number of Shares subject to the Options and the exercise price per
share will be subject to adjustment for stock splits, stock dividends
and the like. The Company will provide the Employee with at least 20
days' prior written notice of any acquisition, liquidation or
dissolution of the Company. Appropriate adjustment shall be made to
the Options in the event of any reorganization or recapitalization of
the Company.
11. NOTICES
11.1. All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if delivered by hand,
registered or certified mail (first class postage and fees prepaid,
return receipt requested), telecopier or overnight courier
guaranteeing next-day delivery, as follows:
If to the Company, one copy to:
Multimedia Kid - Intelligence in Education Ltd
23 Halutzat Hapardesanut Street
Petah - Tikva, Israel
Phone: (972) - 3- 930 73 02
Fax - (972) - 3- 934 17 25
Attn: CEO
With a copy to :
Mr. Yitzhak Bachar
Bachar - Presenti Law Offices
17 Marmurek Street,
Tel-Aviv, Israel
Tel - (972) - 3 - 685 00 05
Fax - (972) - 3- 685 40 92
If to the Employee, one copy to:
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and/or to such other persons and addresses as any party shall have specified in
writing to the other by notice as aforesaid.
12. ENTIRE AGREEMENT; AMENDMENT.
12.1. This Agreement constitutes the entire agreement between the Company
and the Employee with respect to the subject matter hereof and
supersedes all prior agreements between such parties with respect to
the subject matter hereof. This Agreement may not be amended, changed,
modified or discharged except by an instrument in writing executed by
or on behalf of the party or parties against whom any amendment,
change, modification or discharge is sought to be enforced.
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13. ASSIGNABILITY.
13.1. This Agreement shall not be assignable by the Employee and any
purported assignment hereof by the Employee shall be null and void.
This Agreement shall be binding upon, and inure to the benefit of, the
Employee and his heirs, executors, administrators and legal
representatives, and the Company and its respective successors and
assigns, provided that this Agreement may be assigned to only (a) a
subsidiary of the Company or (b) an entity which acquires all or
substantially all of the assets of the Company provided that, in the
case of an assignment to an entity described in clause (a), such
assignment does not result in adverse tax or other consequences to the
Employee.
14. SEVERABILITy.
14.1. If any term or provision of this Agreement or the application thereof
to any person, property or circumstance shall to any extent be invalid
or unenforceable, the remainder of this Agreement or the application
of such term or provision to persons, property or circumstances other
than those as to which it is invalid or unenforceable, shall not be
affected thereby, and each term and provision of this Agreement shall
be valid and enforced to the fullest extent permitted by law.
15. NO ASSIGNMENT
15.1. This Agreement is personal in nature and the obligations hereunder
may not be assigned by the Company or by Employee without the prior
written consent of the other party hereto; provided, however, that the
provisions hereof shall inure to the benefit of, and be binding upon
each successor of the Company, whether by merger, consolidation,
transfer of all or substantially all of its assets, or otherwise.
16. GOVERNING LAW.
16.1. This agreement shall be governed exclusively by the law of the state
of New-York, which shall be exclusively applied to any dispute arising
out of this agreement, including but not limited to, its validity,
enforcement, breach and termination. The competent Courts in the state
of New-York shall have exclusive jurisdiction over any dispute arising
under this agreement, including, but not limited to, dispute related
to this agreement, it's validity, interpretation, breach and
termination.
17. COUNTERPARTS.
17.1. This Agreement may be executed in one or more counterparts, each of
which shall be an original, but all of which taken together shall
constitute one and the same instrument.
18. Entire Agreement; Waivers and Amendments
18.1. This Agreement sets forth the entire agreement between the parties
with respect to the terms and conditions of Employee's employment and
any and all matters related thereto, and any and all prior agreements
with respect to any thereof, whether oral or written, are superseded
hereby. Neither this Agreement nor any term or condition hereof,
including, without limitation, the terms and conditions of this
paragraph, may be waived or modified in whole or in part as against
the Company or Employee, as the case may be, except by written
instrument signed by an authorized officer of the Company or by
Employee, as the case may be, expressly stating that it is intended to
operate as a waiver or modification of this Agreement, and any such
written waiver by either party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any
subsequent breach hereof.
19. CAPTIONS.
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19.1. Captions and section headings included in this Agreement are for
convenience only and shall not define or affect the meaning of any
provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
EMPLOYEE:
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COMPANY:
By: __________________________
Title: ________________________
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