Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement") dated as of May 2, 2002, between Xxxxxx
Xxxxx ("Employee") and TTR Technologies, Inc, a Delaware corporation, or any of
its current or future subsidiaries, affiliates, successors or assigns
(collectively, the "Company").
WHEREAS, the parties hereto desire to enter into this Agreement in order
to set forth the terms pursuant to which the Company will employ Employee and
Employee will serve as an officer and employee of the Company;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements set forth herein, and other valuable consideration, the parties
hereto, intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT PERIOD; REPRESENTATION
(a) The Company agrees to employ Employee, and Employee hereby agrees to
such employment, subject to the terms and conditions set forth in this
Agreement.
(b) Employee represents that his material compliance with the terms of
this Agreement and his performance as an executive of the Company does not and
shall not breach any agreement to keep in confidence information acquired by
Employee in confidence or in trust prior to employment by the Company. Employee
has not entered into, and agrees not to enter into, any agreement, either
written or oral, in conflict herewith.
(c) Employee acknowledges that this Agreement contains non-competition,
non-disclosure and proprietary information provisions, and Employee agrees to
comply with these provisions. Employee understands that entering into and
complying with these provisions is a condition to Employee 's continued
employment with the Company and that failure to comply with the terms and
conditions of these provisions may result in termination "for cause" under this
Agreement and in other damages to the Company.
2. TERM
The employment of Employee by the Company shall commence on May 13, 2002
(the "Start Date") and continue for the period of three (3) years from the Start
Date, unless Employee's employment is otherwise terminated earlier by the
Company or Employee in accordance with Section 6 hereof (the "Initial Term").
3. POSITIONS AND DUTIES
(a) Upon the commencement of the Initial Term, Employee shall occupy the
position and perform the duties of Chief Executive Officer of the Company on a
full-time basis. In his capacity as Chief Executive Officer, Employee shall
report directly to, and be responsible to, the Board of Directors of the Company
(the "Board"). Subject to the direction and authority of the Board, and in
consultation with the Company's President, Employee shall have general
supervision, and control over and responsibility for, the day to day operations
of the Company, and within this context, have decision-making authority
regarding the hiring, termination and direction of activities of Company
employees. In addition, Employee shall perform such other duties and
responsibilities as are consistent with the position described above which
relate to the business of Company, or of any affiliates or subsidiaries of the
Company, or any business ventures in which Company, its affiliates or
subsidiaries may
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participate and as are reasonably and lawfully assigned to him from time to time
by the Board .
(b) The Company shall maintain an office located in New York City which
shall be Employee's principal place of work, unless otherwise agreed to by
Employee in writing.
(c) Except as set forth herein, Employee shall devote 100% of his working
time, attention and energies to the business of the Company and shall assume and
perform such further reasonable and lawful responsibilities and duties as may be
assigned or directed by the Board.
(d) Except as set forth herein, Employee agrees that he will at all times
devote his reasonable best efforts, skill and ability to: promote the Company's
interests and work with the Board and the other executives of the Company.
(e) Employee will be allowed to remain a Special Limited Partner of Atlas
FRG and CalCat, LLC and to advise these entities with respect to possible
transactions unrelated to the Company and in the capacity of an advisor, so long
as this advisory does not in any way interfere with employee's duties as Chief
Executive Officer of the Company. Employee will not directly or indirectly
engage in any business or perform any services that is competitive in any manner
with the business of or services provided by the Company or in any manner
constitutes a conflict of interest. Subject to the limitations contained in the
prior sentence, nothing in this Agreement will prevent Employee from (i)
rendering services to relatives, charitable or community organizations and from
managing his personal investments in such manner as shall not interfere with the
performance of Employee of his duties hereunder; (ii) serving on the boards of
directors or the advisory boards of two (2) other entities (and such other board
services as Employee undertakes at the Company's request); (iii) owning no more
than two percent (2%) of the equity securities of a corporation whose stock is
listed on a national stock exchange or continuing to own shares of stock of
BYOBroadcast, Inc., Ovos Films, Inc., Burly Bear Network, Inc. and Ibehavior,
Inc.; provided, however, that such services or activities provided for in
Sections 3(e)(i) and (ii) are not rendered to any business which is competitive
with that of the Company, in no way interfere with the performance of Employee
of his duties hereunder, and Employee promptly notifies the Board of Directors
of the Company prior to engaging in such services.
(f) Employee acknowledges and agrees that he is required to observe all
the lawful rules and policies of the Company generally applicable to senior
executives to the extent they are not inconsistent with the terms of this
Agreement.
(g) The Company shall indemnify Employee to the fullest extent permitted
by law, as amended from time to time, for all amounts (including, without
limitation, judgments, fines, settlement payments, expenses and attorney's fees)
incurred or paid by Employee in connection with any action, suit, investigation
or proceeding arising out of or relating to the performance by Employee of
services for, or the acting by Employee as a director, officer or employee of,
the Company, or any other person or enterprise at the Company's request,
provided that Employee acted in good faith, for a purpose which he reasonably
believed to be in the best interests of the Company and, in criminal actions or
proceedings, in addition, had no reasonable cause to believe that his conduct
was unlawful.
4. COMPENSATION AND BENEFITS
For the full and faithful performance of the services to be rendered by
Employee, in consideration of Employee's obligations under this Agreement,
provided Employee is not in material breach of this Agreement and that Employee
is employed by the Company as of each
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relevant payment date, and it being understood and agreed by Employee and the
Company that Employee would not be entitled to the full compensation package and
benefits without his absolute commitment to comply with his undertakings set
forth in this Agreement, the Company shall pay to Employee and Employee shall be
entitled to receive:
(a) Base Salary
Company will pay to Employee during the term of his employment under this
Agreement, a base salary at the annual rate of Two Hundred Forty-Thousand
Dollars ($240,000) per annum less required deductions for state and federal
withholding tax, social security and other employee taxes. (said amounts
hereinafter referred to as the "Base Salary"). Any Base Salary payable hereunder
shall be paid in regular intervals in accordance with the Company's payroll
practices, but no less frequently than once each month. Provided that gross
revenues of the Company have surpassed the Base Salary since each of the
previous anniversaries of this Agreement, the Base Salary shall be increased by
10% for each subsequent year of employment during the Initial Term.
(b) Incentive Compensation
(i) Signing Bonus. Upon execution of this agreement, the
Company shall loan the employee the sum of $100,000 at an interest
rate of 4% and a term of three years. At the end of each calendar
year commencing on December 31, 2002 and continuing through December
31, 2004, the company will forgive 33.3% annually of the
indebtedness to be treated as non-employee compensation for federal
income tax purposes. The indebtedness will be evidenced by an
unsecured promissory note containing the above terms. The remainder
of the indebtedness shall become immediately repayable if the
Employee terminates this agreement without Good Reason or Employee
is terminated for Cause, with the exception of Cause as defined by
Section 6 (c) viii, in which case the indebtedness shall be forgiven
in the same manner as if the Employee remained employed at the
company for three years.
(ii) Automobile Expense. Employee has the right to spend
up to ten-thousand dollars ($10,000) each year on automobile
expenses which shall include lease costs, insurance, gasoline and
upkeep. Automobile leases will be in the name of the company and be
billed directly to the company. Invoices for above costs shall be
provided to the Company against which the Company shall reimburse
Employee.
(iii) Company Plans. Employee shall be eligible to
participate, on terms no less favorable than those afforded to other
executives of the Company, in any incentive compensation plan that
may hereafter be adopted by the Company for its executives and
management employees from time to time. Such participation shall be
subject to the terms of the applicable plans, generally applicable
policies of the Company, applicable law and the discretion of the
Board of Directors. Nothing contained in this Agreement shall be
construed to create any obligation on the part of the Company to
establish any such plan or to maintain the effectiveness of any such
plan which may be in effect from time to time.
(c) Stock Options
Employee shall be granted, pursuant to the TTR Technologies, Inc. Employee
Stock Option Plan (the "Plan") and the stock option agreement (the "Stock Option
Agreement") memorializing such grant, incentive stock options (the "Options") to
purchase Five-hundred and fifty thousand shares (550,000) at the closing market
price on the execution date of this agreement. The Options shall vest in full in
three (3) years as follows. One third of the Options shall vest upon the first
anniversary of this Agreement and thereafter the remainder
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of the Options shall vest in eight equal installments on a quarterly basis;
provided, however, that in the event of a Change of Control, 100% of the
unvested Options shall vest immediately prior to the closing of such
transaction. For purposes hereof, "Change in Control" shall mean (i) the
effective time of a consolidation of the Company with, or merger of the Company
with or into, another corporation or other business organization in which the
shares of the stock of the Company are converted into or otherwise exchanged for
less than fifty percent (50%) of the shares of a resulting or surviving
corporation, (ii) the closing of a sale or conveyance of all or substantially
all of the assets of the Company, or (iii) an acquisition in a transaction or a
series of related transactions by a person or group (as defined in Rule
13d-5(b)(1) of the Securities Act of 1934, as amended) of more than a majority
of the outstanding voting stock of the Company. Notwithstanding the above, in
the event of any discrepancy between this paragraph 4 (c) and the Change of
Control provisions in the Plan as currently drafted, the Plan will take
precedence
(d) Benefits
Employee shall be entitled to participate in any employee benefit plans,
medical insurance plans, life insurance plans, disability insurance plans,
retirement plans, 401(k) and other benefit plans which are available to any
other executives of the Company. Such participation shall be subject to the
terms of the applicable plan documents, generally applicable policies of the
Company, and applicable law.
(e) Expense Reimbursement
The Company shall promptly pay the reasonable, business-related expenses
incurred by Employee in the performance of his duties hereunder, including,
without limitation, those incurred in connection with business related travel,
telecommunications and entertainment, or, if such expenses are paid directly by
Employee, shall promptly reimburse the Employee for such payment, provided that
Employee has properly accounted therefore in accordance with Company policy.
(f) Vacation
Employee shall be entitled to three (3) weeks paid vacation in accordance
with the Company's vacation policies for its executives, as in effect from time
to time, but in no event less than three (3) weeks per year. The timing and
duration of any vacation shall be taken at such time so as not to interfere with
Employee's responsibilities and commitment to the company .
Employee shall also be entitled to all paid holidays given by the Company
to its employees. The Employee shall not be entitled to accumulate unused
vacation or sick leave or other fringe benefits from year to year without the
written consent of the Company, unless the accumulation of any such unused leave
and/or fringe benefit is necessitated by the Company's actions or otherwise
caused by Employee's performance of Employee's job-related duties at the
Company.
5. BOARD SEAT; TITLE.
After 180 days of employment at the Company, the Board of Directors of the
Company shall elect the Employee to the Board of Directors of the Company. The
termination of Employee's employment hereunder for any reason shall
automatically be deemed as Employee's resignation from the Board without any
further action, except when the Board shall, in writing, request a continuation
of duty as a Director in its sole discretion. Neither the change to Employee's
title and position nor his service as a member of the Board of Directors shall
affect the amount of his compensation provided for in Section 4 of this
Agreement.
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6. TERMINATION.
Employee's services shall terminate upon the first to occur of the
following events:
(a) The expiration of the Initial Term or any renewal term, if applicable;
(b) Upon Employee's date of death or the date Employee is given written
notice that he has been determined to be disabled by the Company. For purposes
of this Agreement, Employee shall be deemed to be disabled if Employee, as a
result of illness or incapacity, shall be unable to perform substantially his
required duties for a period of sixty (60) consecutive days or an aggregate of
ninety (90) days in any twelve (12) month period ("Incapacity"). Termination of
Employee's employment by the Company due to Incapacity shall be communicated to
Employee by written notice to Employee and shall be effective on the tenth (10)
day after receipt of such notice by Employee, unless Employee returns to
full-time performance of his required duties before such tenth (10th) day;
(c) On the date Employee is terminated by the Company for "Cause." For
purposes of this Agreement, Cause shall be defined as: (i) Employee's conviction
of, or plea of nolo contendere, to any felony or to a crime involving moral
depravity or fraud; (ii) Employee's commission of an act of dishonesty or fraud
or breach of fiduciary duty or act that has a material adverse effect on the
name or public image of the Company, as determined by the Board provided the
Board affords the Employee the opportunity to personally appear before the Board
in order to state his case prior to the Board voting to so terminate the
Employee; (iii) Employee's commission of an act of willful misconduct or gross
negligence, as determined by the Board provided the Employee shall have the
opportunity to state his case before the Board prior to the Board taking such
decision to so terminate the Employee and provided the Board is acting in good
faith, as fiduciaries on behalf of the shareholders ; (iv) the continued failure
of Employee to perform his duties under this Agreement; (v) the material breach
of any of Employee's material obligations under this Agreement or the Employee
Confidentiality, Invention Assignment and Non-Competition Agreement annexed
hereto as Exhibit A; (vi) the failure of Employee to follow a lawful directive
of the Board; or (vii) excessive absenteeism, chronic alcoholism or any other
form of addiction that prevents Employee from performing the essential functions
of his position with or without a reasonable accommodation; or (viii) failure to
satisfy Performance Milestones (as defined below); provided, however, that the
Company may terminate Employee's employment for Cause, as to ( (iv) or (v)
above, only after failure by Employee to correct or cure, or to commence or to
continue to pursue the correction or curing of, such conduct or omission within
ten (10) days after receipt by Employee of written notice by the Company of each
specific claim of any such misconduct or failure. For purposes of this section 6
(c) viii, Performance Milestones shall mean the entry by the Company, by no
later than the first anniversary of the Start Date, into two legally binding,
written, commercial, revenue bearing agreements for the sale or license of its
products with major music labels or their subsidiaries;
(d) On the date Employee terminates his employment with the Company for
Good Reason (as defined below) by giving the Board of Directors of the Company
thirty (30) calendar days written notice of intent to terminate, ("Notice
Period") which notice sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for such Good Reason termination. For
the purposes of this Agreement, "Good Reason" shall mean, without Employee's
express written consent, the occurrence of any one or more of the
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following: (i) the assignment of Employee to duties materially and substantially
inconsistent with Employee's authorities, duties, responsibilities and status
(including offices (or removal therefrom), titles, and reporting requirements as
set forth hereunder, or a material and substantial reduction or alteration in
the nature or status of Employee's authorities, duties, or responsibilities,
except for any reduction in duties and responsibilities due to Employee's
illness or disability; provided that subject to the Board having included the
Employee in its slate for any proxy the failure of the Employee to be elected to
the Board by the shareholders of the Company or the removal of the Employee from
the Board through the vote of the shareholders of the Company shall not be
considered Good Reason hereunder; (ii) a reduction by the Company in Employee's
base salary, incentive compensation or benefits; (iii) the failure of the
Company to obtain a satisfactory agreement from any successor to the Company to
assume and agree to perform this Agreement; or (iv) the breach by the Company of
any of its material obligations under this Agreement;
(e) On the date Employee terminates his employment without Good Reason,
provided that Employee shall give the Company thirty (30) days written notice
prior to such date of his intention to terminate his employment ("Notice
Period"); or
(f) On the date the Company terminates Employee's employment for any
reason, other than a reason set forth in Sections 6(b) or 6(c), provided that
the Company shall give Employee thirty (30) days written notice prior to such
date of its intention to terminate Employee's employment ("Notice Period").
During such Notice Period, Employee will continue to perform his duties and
responsibilities unless the Company advises Employee otherwise.
7. RIGHTS UPON TERMINATION.
(a) Upon termination of Employee's employment by either party for any
reason, or by virtue of the expiration of the Initial Term or any renewal term,
if applicable, all rights Employee has to payment under this Agreement shall
cease as of the effective date of the termination, and except as expressly
provided herein or as may be provided under any employee benefit plan or as
required by law, Employee shall not be entitled to any additional compensation,
commission, bonus, perquisites, or benefits with the exception of this Section 7
which shall survive termination of this agreement as outlined herein.
(b) Upon termination of Employee's employment (i) by the Company for
Cause, (ii) by the Company for reason of Employee's death or Incapacity or (iii)
by Employee without Good Reason, the Company shall pay to Employee or Employee's
estate or representatives, as the case may be, his Base Salary and any benefits
and outstanding reimbursable expenses accrued and payable to him through the
last day of his actual employment by the Company.
Notwithstanding the above, if Employee's employment is terminated by the
Company pursuant to Section 6 (c) (viii) hereof, the Company shall pay to
Employee his base salary and any benefits accrued and payable to him through six
months from the last day of his actual employment by the Company. A total of
183,333 options for the original one year of service will have vested and an
option to purchase an additional 91,667 shares shall vest over six months,. In
addition, the forgiveness of the loan referenced in Section 4 (b) (i) shall
continue on the same schedule as if the employee's employment had continued for
three years.
(c) If Employee's employment is terminated by Employee pursuant to Section
6(d) or by the Company pursuant to Section 6(f) hereof, (i) the Company shall
pay to Employee his base salary and benefits accrued and payable to him through
the last day of his
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actual employment by the Company, (ii) Employee's base salary and benefits shall
continue (in the customary manner in which Company has paid the base salary and
benefits) for the remainder of the term, unless such termination occurs prior to
six months from the Start Date in which case employee is entitled to payment of
one-year salary less the amount of time worked between 1 day and six months, any
other benefits provided for in section 4 of this agreement for the same period,
183,333 options to vest in accordance with the terms of the Company Stock Option
Plan governing Employee's options and forgiveness of the loan referenced in
Section 4 (b) (i) on the same schedule as if the employee's employment had
continued for three years, (iii) the Company shall pay Employee for all
outstanding reimbursable expenses, and (iv) the Employee's stock options shall
vest in accordance with the terms of the Company Stock Option Plan governing
Employee's options. In order to be eligible for the severance benefits as set
forth in this Section 7(c), Employee must (i) execute and deliver to the Company
a general release, in a form satisfactory to the Company, and (ii) be and remain
in full compliance with his obligations under this Agreement and the
Confidentiality Agreement. In the event Employee breaches any obligation under
this Agreement or the Confidentiality Agreement, any and all payments or
benefits provided for in this Section 7(c) shall cease immediately.
(d) Notwithstanding the foregoing, in the event that this Agreement shall
have been terminated by Employee pursuant to Section 6(d) or Section 6(e) or by
the Company pursuant to Section 6(f) hereof, upon the request of the Company the
Employee shall vacate his position and the Company's premises (if applicable) on
a date specified by the Company which is earlier than the end of the Notice
Period specified above upon payment to Employee, in one lump sum on the
effective date of termination, the base salary and benefits payable until the
end of the Notice Period, from the effective date of termination until the end
of such Notice Period, less required deductions for state and federal
withholding tax, social security and other employee taxes.
8. EMPLOYEE CONFIDENTIALITY, INVENTION ASSIGNMENT AND NON-COMPETITION
AGREEMENT.
The Company values the protection of its confidential information and
proprietary materials essential to the survival of the Company. Therefore, as a
mandatory condition of Employee's employment, Employee must execute the Employee
Confidentiality, Invention Assignment and Non-Competition Agreement (the
"Confidentiality Agreement"), a copy of which is annexed hereto for Employee's
review and execution, prior to or on Employee's Start Date.
9. COOPERATION FOLLOWING TERMINATION
Employee agrees that, following notice of termination of his employment
until the date of his termination, he shall in good faith cooperate with the
Company in all matters relating to the completion of his pending work on behalf
of the Company and the orderly transition of such work to such other employees
as the Company may designate. Employee further agrees that during and following
the termination of his employment he shall in good faith cooperate with the
Company as to any and all claims, controversies, disputes or complaints over
which he has any knowledge or that may relate to his employment relationship
with the Company; provided, however, that (a) Employee will be reimbursed by the
Company for any out of pocket expenses incurred pursuant to his duties under
this Paragraph 9 and reasonably compensated for his time, and (b) Employee's
obligation to cooperate under this Section 9 shall in no way preclude Employee
from seeking to enforce his rights under this Agreement. Such cooperation
includes, but is not limited to, providing
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the Company with all information known to him related to such claims,
controversies, disputes or complaints and appearing and giving testimony in any
forum.
10. GOVERNING LAW
Except as otherwise explicitly noted, this Agreement shall be governed by
and construed in accordance with the laws of the State of New York (without
giving effect to the conflict of law rules of New York).
11. INTEGRATION
This Agreement, and the attached Confidentiality Agreement, constitute the
entire understanding between the parties hereto relating to the subject matter
hereof, superseding all negotiations, prior discussions, preliminary agreements
and agreements related to the subject matter hereof made prior to the date
hereof.
12. MODIFICATIONS AND AMENDMENTS
This Agreement may be modified or amended only by an instrument in writing
executed by the parties hereto and approved in writing by the Board of
Directors. Such modification or amendment will not become effective until such
approval has been given.
13. SEVERABILITY
If any of the terms or conditions of this Agreement shall be declared void
or unenforceable by any court or administrative body of competent jurisdiction,
such term or condition shall be deemed severable from the remainder of this
Agreement, and the other terms and conditions of this Agreement shall continue
to be valid and enforceable.
14. NOTICE
For the purpose of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given as of the date if delivered in person or by telecopy, on the
next business day, if sent by a nationally recognized overnight courier service,
and on the second business day if mailed by registered mail, return receipt
requested, postage prepaid, in each case addressed as follows:
If to the Employee:
Xxxxxx Xxxxx
000 Xxxx Xxxxxx, 0X
Xxx Xxxx, Xxx Xxxx 00000
If to the Company:
TTR Technologies, Inc
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 100
with a copy to:
Xxxxx Xxxxxx
Aboudi and Xxxxxxxxxx
0 Xxxxxx Xx., Xxx. Xxxx Xxxx Xxxx
ISRAEL
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or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of changes of address shall be
effective upon receipt.
15. WAIVER
The observation or performance of any condition or obligation imposed upon
Employee hereunder may be waived only upon the written consent of the Board of
Directors. Such waiver shall be limited to the terms thereof and shall not
constitute a waiver of any other condition or obligation of the Employee under
this Agreement.
16. ASSIGNMENT
The rights and obligations of the Company in this Agreement shall inure to
its benefit and be binding upon its successors-in-interest (whether by merger,
consolidation, reorganization, sale of stock or assets or otherwise), and the
Company may assign this Agreement to any affiliate. This Agreement, being for
the personal services of Employee, shall not be assignable by Employee.
17. HEADINGS
The headings have been inserted for convenience only and are not to be
considered when construing the provisions of this Agreement.
18. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
counterparts, when taken together, shall constitute but one and the same
agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
TTR Technologies, INC.
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: President
EMPLOYEE
/s/ Xxxxxx Xxxxx
Xxxxxx Xxxxx
