EMPLOYMENT AGREEMENT
Made and entered in Tel-Aviv, on 13 of June 2000
Between:
MULTIMEDIA K.I.D - INTELLIGENCE IN EDUCATION LTD.
Of 23 Haluzat hapardesanut Street
Petah Tikva
("THE COMPANY") ON THE ONE PART
and
XXXXXXXXX XXXXXX
00 Xxx Xxxxxx
Xxxxx Xxxx
("THE EMPLOYEE" ) ON THE OTHER PART
WHEREAS: The employee is a senior executive, experienced and knowledgeable
in the management of large scale companies,
Whereas: The Employee declares that he has the ability and know-how required
in order to suitably function as the company's Chief Executive
Officer (CEO) and President, and
WHEREAS: The company wishes to employ the employee in that capacity, and
the Employee wishes to be employed by the company in that capacity,
and
Whereas: The parties wish to set forth the terms and conditions of the
Employee's employment by the company,
Now therefore, the parties hereby agree and stipulate as following:
1. PREAMBLE
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1.1. The preamble to this agreement constitutes an integral part thereof.
1.2. The Articles headings are for convenience reasons only, and are not to
be used for the purpose of the interpretation of this agreement.
2. EMPLOYEE'S UNDERTAKINGS
-----------------------
2.1. It is hereby agreed that the Employee's obligations towards the
company shall be, inter alia, as following:
2.2. To carry out his duties in accordance with the general guidelines he
shall receive from the company's Board of Directors ("THE BOARD") from
time to time, and to devote all his time, efforts and attention to the
performance of his duties.
2.3. To serve the company in a loyal and integral manner and to do his
utmost in order to represent the company's best interests.
2.4. Not to accept any other position as an employee of any third party,
regardless of the compensation he may or may not receive from said
third party, without the company's written consent.
2.5. Not to disclose any professional information and/or other information
pertaining to the Employee's position and duties and/or information
that has come to his attention as a result of his employment by the
company, to any third party, throughout the term of this agreement and
at all times thereafter.
2.6. It is mutually agreed that any and all patents, invention and/or
copyright work, developed by the Employee during his employment by the
company and relating to his employment by the company, shall be the
exclusive property of the company, and the Employee hereby waives any
and all right and/or claim of any kind or sort, arising out of the
above.
2.7. The Employee shall report directly to the board, shall follow the
board's instructions according to the provision of the company's
Memorandum and Articles of Association, and supply the board with all
information required by the board.
2.8. The parties confirm and agree, that the Company undertakes to cause
that the Company's parent company, Multimedia Kid Inc. ("Jenkon"),
shall appoint Employee as Jenkon's CEO and President. It is hereby
agreed, that the appointment of Employee as Jenkon's CEO and President
is subject to the approval of the Board of Directors of Multimedia Kid
Inc. The company undertakes to obtain such approval.
2.9. All of Employee's undertakings under this agreement shall apply,
mutatis mutandis, to Employee's position in Jenkon, and the company
and Multimedia Kid shall divide between them, at a rate decided
between Multimedia Kid and the Company, the obligation to pay
Employees salary and other compensation under this agreement. Without
derogation from the above, Employee shall not be entitled to any
additional payment and/or compensation, other than as stated in this
agreement, for serving as Jenkon's CEO.
3. PERSONAL AGREEMENT
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3.1. This agreement is a personal and specific agreement, that sets up the
relations between the Employee and the company, and exclusively
defines the terms of the Employee's employment by the company, subject
to the provisions of the Israeli Law.
3.2. The Employee hereby states and declares that the term of his
employment, his salary, and all other benefits under this agreement,
replace and come instead of any and all rights granted to him under
law, collective agreement, collective arrangement, extension order,
etc. The Employee hereby waives any and all claim or demand for any
benefit and/or payment due to him under the provisions of all above
statutes.
3.3. Should the Employee initiate in future legal proceedings against the
company, demanding benefits and/or payments due to him under the
provisions of all above statutes, which are not included in this
agreement, the company shall be entitled to deduct and/or set-off all
the Employee's demands from any and all financial benefits awarded the
employee under this agreement, which the company is not legally
obligated to pay.
4. WORK HOURS
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4.1. The Employee hereby states and confirms that he is employed by the
company at a managerial position, on a full time basis. The Employee
further states and declares that his employment by the company
involves a high degree of personal trust and faithfulness that makes
it impossible for the company to oversee and control the Employee's
working hours. Subsequently, it is therefore agreed by the parties,
that the provisions of the Israeli Times of Work and Rest Law 1951,
shall not apply to the employment of the Employee, and that the
Employee shall not be entitled to any additional remuneration or
compensation for the work performed while employed by the company,
including work performed during rest days or overtime.
5. COMPENSATION
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5.1. As full compensation for all services rendered, and work and efforts
invested by the Employee on the company's behalf, the company shall
pay the Employee the following payments:
5.2. A monthly gross salary of 56,500 NIS, which will be paid no later than
the 9th day of every month ("THE SALARY"). The Salary shall be indexed
to the Israeli Consumer Price Index published by the Israeli Central
Bureau of Statistics ("the Index"). The base index shall be the index
known at the time of the signing of this agreement. Each salary shall
be increased, by the ratio received by dividing the Index known at the
time of payment of each salary, by the base Index.
5.3. The Employee shall be entitled to 23 days of annual leave. The date of
the annual leave shall be decided by the company, in co-ordination,
whenever possible, with the wishes of the Employee. Unused vacation
days of any year may be carried over to the following years, provided
that the Employee shall not be permitted to be absent from work on
vacation for more than 30 working days in any particular calendar
year.
5.4. Notwithstanding the foregoing, with respect to any year, if the number
of vacation days carried forward from prior years plus the 23 vacation
days with respect to such year would exceed 70 days (the number of
vacation days in excess of 70 being referred to as "Excess Vacation
Days"), the Employee must either use the Excess Vacation Days during
such year or be paid by the Company at the end of such year for any
Excess Vacation Days which are not so used. The Company shall pay the
Employee for Excess Vacation Days based on the Salary as then in
effect. Any Excess Vacation Days for which the Employee receives
payment in accordance with this Section shall be deemed cancelled.
Unused vacation days may be added to the Prior Notice Period pursuant
to this agreement
5.5. The Employee shall be entitled to an annual convalescence payment for
10 (ten) convalescence day ("Dmei Havra'a"). Additionally, the
Employee shall be entitled to a maximum of 30 (thirty) days sick pay
in any one calendar year in the event that the Employee is absent from
work due to sickness Unused sick pay days of any year may be carried
over to the following years, up to a maximum of 180 days. Any sick
payment day in excess of 180 days, will automatically expire, and the
Employee shall not be entitled to payment due to said excess sick pay
days.
5.6. All other social benefits shall be as per the provisions of the
relevant labour laws in force at the time of this agreement.
5.7. The Employee shall bear, and the company shall deduct from the
Employee's monthly salary, Income Tax, Social Security Payments,
Health Insurance payments, and any and all other obligatory payments
imposed by law on Employees in Israel, which the Employee shall be
obligated under law to pay.
5.8. The Company shall insure Employee under an "Manager's Insurance
Scheme" currently maintained on behalf of the employee, number
______________ (hereinafter referred to as the "MANAGERS INSURANCE")
as follows: (i) the Company shall pay an amount equal to 5% of
Employee's Salary towards the Managers Insurance for Employee's
benefit and shall deduct 5% from Employee's Salary and pay such amount
towards the Managers Insurance for Employee's
benefit (the various components of the Managers Insurance shall be
fixed at the discretion of Employee); and (ii) the Company shall pay
an amount of 2.5% of Employee's Monthly Salary towards disability
insurance and (iii) the Company shall pay an amount equal to 8-1/3% of
Employee's Salary towards a fund for severance compensation which
shall be payable to Employee upon Termination of this agreement. The
Insurance Policy shall include an automatic ownership transfer clause,
which will transfer the policy to the ownership of the Employee
immediately upon termination of this agreement.
5.9. The Company will reimburse the Employee for reasonable business
expenses incurred by the Employee in the performance of services for
the Company abroad, provided that the Employee provides the Company
with reasonable documentation of such business expenses
5.10. The Company shall pay the full salary of Employee, including
insurance, social benefits and fringe benefits, during the period of
Employee's military reserve service. National Insurance Institute
transfers in connection with such military reserve duty shall be
retained by the Company.
5.11. The company shall open and maintain, an advanced study fund under the
employee's name ("THE STUDY FUND") . The company shall deposit in the
study fund a monthly amount in NIS equivalent to 7.5% of the
Employee's gross salary. The Employee shall deposit a monthly amount
in NIS equivalent to 2.5% of the Employee's gross salary in the study
fund, and hereby gives the company his irrevocable instructions to
deduct 2.5% from the Employe's gross monthly salary and to deposit
this amount in the study fund.
5.12. The employee shall have, for the term of this agreement, the use of a
company's car from group 5-6 ("THE CAR"), as defined by the Income Tax
Regulations. The car shall be put at the exclusive disposal of the
Employee and his immediate family. The company shall bear all costs
and expenditures of the upkeep and maintenance of the car, including
but not limited to, insurance, petrol, repairs, etc. The company shall
not be required to pay any traffic tickets and/or fines levied on the
Employee. The value of the use of the car, including all costs and
expenditures pertaining to the upkeep and maintenance of the car,
shall be grossed up in the Employee's salary. The Employee will
promptly return the car to the Company upon termination of this
agreement, for whatever reason.
6. THE ANNUAL BONUS
----------------
6.1. The employee shall be entitled to a bonus, at the end of each calendar
year (hereinafter: "THE BONUS"). The amount of the bonus shall be the
amount of the Basic Bonus, as defined hereunder, multiplied by the
Employees annual score, as defined hereunder.
6.2. For the purpose of this agreement, "The Basic Bonus" - shall be the
aggregate amount of three (3) Employee's gross monthly salaries.
6.3. The Employee shall be entitled to receive the bonus, provided the
Employee's annual score, as defined hereunder, shall not fall below
70%. In the event the Employees annual score shall be less than 70%,
the Employee will not be entitled to receive any bonus. In the event
the Employee's annual score exceeds 100%, the Employee shall not be
entitled to a Bonus exceeding the amount of the Basic Bonus.
6.4. At the end of each year, the employee shall receive an Annual Score
("THE ANNUAL SCORE") , which will be calculated and depend upon the
following variables. The score shall be on a scale between 0% and
100%.:
6.4.1. 20% of the annual score shall consist of the percentage of annual
sales targets reached by the company, out of the sales targets
set and defined in the company's annual Budget .
6.4.2. 25% of the annual score shall consist of the percentage of the
profitability goals reached by the company, out of the
profitability targets set and defined in the company's annual
Budget .
6.4.3. 30% of the annual score shall consist of the percentage of the
annual amount of orders received by the company, out of
anticipated orders set and defined in the company's annual
Budget.
6.4.4. 10% of the annual score shall consist of the percentage of the
annual quality scores reached by the company, out of anticipated
quality scores set and defined in the company's annual Budget .
6.4.5. 15% of the bonus shall depend on the board's discretion.
6.5. The amount to which the Employee shall be entitled to, as Bonus, under
this agreement, shall be considered as a loan, and shall be used by
the Employee, at the Employee's discretion, for excersing the options
given to the Employee under this agreement. If the Employee decides
not to exercise his options, at any particular year, the amount
considered as loan, shall again be considered as Bonus, and will be
paid to the Employee. The Employee shall bear and the company shall
deduct from the Employee's monthly salary all taxes and/or other
obligatory payments imposed by law deriving from the bonus.
6.6. The Employee shall be entitled to take part and/or to be engaged as a
director (external or otherwise) in any board of directors besides the
board of the company only subject to a written consent signed and
affirmed by the Chairman of the Company's Board of Directors .
6.7. The Company shall place a cellular-phone at the Employees disposal,
for the execution of the employees duties under this agreement. The
company shall bear all costs and expenses related to the cell-phone.
Upon termination of this agreement, for whatever purpose, the Employee
shall promptly return the cell-phone to the Company. The Employee
shall promptly inform the company, at the end of each month, of any
personal over-seas calls the Employee has made , with the cellular
-phone, during that month, and shall reimburse the company for all
costs and expenses incurred by Company due to said personal overseas
calls. The company shall be entitled to deduct from Employee's salary,
or any other payment to which Employee may be entitled under this
agreement, all costs and expenses incurred by Company due to said
personal overseas calls
7. TERM AND TERMINATION
--------------------
7.1. This agreement shall commence in three (3) months and one (1) week
from the signing of this agreement. This agreement shall remain in
force, for an unlimited period, until it is terminated by either
party. Each side to this agreement may terminate this agreement by a
Written Prior Notice, of three (3) months ("THE PRIOR NOTICE"). The
agreement shall terminate at the end of the Prior Notice period.
8. This Agreement may be terminated at the option of the Company for
Cause (as hereinafter defined), effective as of the date on which the
Company gives notice to the Employee that it is terminating his
employment.
8.1. The term "Cause" shall mean any of the following events:
8.1.1. fraud, misappropriation or embezzlement of funds or property by
the Employee involving the Company or an Affiliated Company;
8.1.2. 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;
8.1.3. 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 Board of Directors or any committee thereof of
the Company, which directions are consistent with the provisions
of this Agreement; or
8.1.4. the Employee's breach of his undertakings for confidentiality
and non-competition set forth hereunder; or
8.1.5. Employee's performing any other act and/or omission upon the
occurrence of which the Company may dismiss the Employee without
compensation.
"Affiliated Companys" 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.
8.1.6. The Employee had breached this agreement by a material breach,
and did not repair the breach within 5 days from the company's
written notice demanding the repair of said breach.
8.1.7. In the event of the termination of this agreement, for cause,
this agreement shall be terminated immediately, and Employee
shall not be entitled to any Prior Notice period and/or
Orientation Payment under this agreement.
8.2. Upon termination of this agreement, other than for "cause", and
throughout the prior-notice period, the Employee shall leave his
position in an orderly manner, in coordination with the board, and
shall supply his successor with all the assistance and information
required by the successor.
8.3. In the event the company terminates this agreement, other than for
cause, the company shall continue to provide Employee, after the
termination of the 3 months prior notice period, a monthly payment and
terms equal to the amount of Employee's salary at the time the Prior
Notice had been given (including all social benefits, car , cell
phone, etc, but excluding all bonuses and options), for three
consecutive months, in order to assist Employee to adjust to the
termination of this agreement ("THE ORIENTATION PAYMENT"). During the
three months in which the Employee shall be entitled to receive the
orientation payment , the company shall allow employee to continue to
use the Car, cellular- phone .For the avoidance of any doubt - the
Employee shall not be considered as an Employee of the company during
the Orientation Payment period, and shall not be entitled to any
payments relating to Bonus or Options, during the Orientation Payment
period.
8.4. The company shall not pay Employee the Orientation Payment, in case
Employee gives Company Prior Notice.
8.5. All of Employee's rights, for Bonuses and/or Stock Options, under this
agreement, shall terminate immediately upon the giving of Prior
Notice, under this agreement , by one of the parties of this agreement
to the other party.
9. CONFIDENTIALITY AND NON-COMPETITION
-----------------------------------
9.1. The employee undertakes, throughout the term of this agreement, not to
not to have any ownership interest (of record or beneficial) in, or
have any interest, as an employee, salesman, consultant, officer or
director in, or otherwise aid or assist in any manner, any firm,
corporation, partnership, proprietorship, or other business that
engages , whether in Israel or abroad, in any activity and/or business
which is similar to that of the company .
9.2. The Employee undertakes to keep secret and retain in strictest
confidence , and not to use for his or any person's or entity's
benefit, other than the company ,all confidential matters and trade
secrets known to him relating to the business and the operation of the
company, including, without limitation, information regarding software,
systems, customer lists, pricing policies, products development and
manufacture technique and/or methods and/or processes , operational
methods, know-how, inventions and research projects and other business
affairs related to the business and/or operation of the company.
9.3. Employee agrees and undertakes that during the period of his employment
and for a period of 12 months following termination of the employment,
he will not, directly or indirectly, for any purpose or in any place,
employ any person employed by the Company on the date of such
termination or during the preceding twelve months or induce any such
person to leave his employment with the Company.
10. OPTIONS
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10.1. Subject to the consent of the Board of Directors of the Company's
Parent Company, Multimedia Kid Inc (For the purpose of this Section,
Multimedia Kid Inc and the Company, jointly and separately shall be
called : "THE COMPANY"), The Employee shall be granted options (the
"Options") to acquire 200,000 Ordinary Shares (the "SHARES") at a per
share price reflecting a fair market price to be determined by the
Company's Board of directors on or about the date on which the employee
will commence his duties with the Company, under a Stock Option Plan
(the "PLAN") adopted by the Board of Directors of the Company.. The
parties herein agree that to better clarify the "fair market price" and
as an example to such a "fair market price", a price, in NIS, equal to
US $ 3.5 (three and a half US Dollars) reflects a "fair market price"
as of June 13, 2000. The Company undertakes to obtain such Board of
Director's approval for the Plan, to the extent necessary and not
previously obtained, as soon as practicable following the date of this
Agreement, and in any event, prior to the commencement of this
agreement.
10.2. These Options will vest and become exercisable with respect to 33.33%
of the Shares upon the termination of the first 12 months of the
commencing of this agreement, and with respect to each additional
33.33% of the Shares on the last day of each twelve month 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. The Options shall expire ten years from the
date of grant (the "Expiration Date"), subject to the following : 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.
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.
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.
10.11. The provisions of this agreement notwithstanding, in the event that (I)
the company will issue additional stock to a third party, thereby
transferring the control of the company to a third party, which is not
a known holder of a controlling interest in the Parent Company at the
time of the commencing of this agreement, or (ii) in the event the
holders of a controlling interest in the parent Company, existing at
the time of the signing of this agreement, will sell all of the parent
Company's shares in their possession to a third party thereby
transferring the control of the company to a third party, the option
granted under this agreement shall become immediately vested and
excerciseable.
11. INDEMNIFICATION & INSURANCE COVERAGE
------------------------------------
11.1. Throughout the term of the Agreement and for the period of three (3)
years thereafter, the company will maintain an Officers and Directors
Insurance policy for the Employee , and other insurance coverage, on
substantially the same terms and levels that it provides to the
Company's senior Executive Officers, at the company's sole expense.
This insurance shall cover any and all actions committed and/or omitted
by the Employee, in his capacity as an Officer of the Company,
commencing on the commencement of this agreement .
11.2. Employee shall not be liable to the Company for any losses, claims,
damages or liabilities arising from his appointment as Officer and/or
any action and/or failure to act in his capacity as Employee or from
any act or omission performed or omitted by Employee, except for any
losses, claims, damages or liabilities primarily attributable to such
Employee's fraud, gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
11.3. The Company, to the fullest extent permitted by applicable law,
indemnifies and holds Employee harmless (and his respective successors
and assigns) against any losses, claims, damages, liabilities, costs or
expenses (including legal fees, judgements and amounts paid in
settlement) to which the Employee may become subject (i) by reason of
having been a Employee to the Company or (ii) in connection with any
matter arising out of or in connection with this Agreement, unless a
court of competent jurisdiction, in a judgement that has become final
and that is no longer subject to appeal or review, determines that any
such loss, claim, damage,
liability, cost or expense is primarily attributable to Employee's
fraud, gross negligence or willful misconduct.
12. JURISDICTION
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12.1. This agreement shall be governed exclusively by Israeli Law. The
competent Courts in Tel-Aviv shall have sole 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.
IN WITNESS HEREOF, THE PARTIES HAVE EXECUTED THIS EMPLOYMENT AGREEMENT
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The company The Employee
