Exhibit 10.1
TERMINATION AND SETTLEMENT AGREEMENT
TERMINATION AND SETTLEMENT AGREEMENT made as of the 10th day of September
2002 (the "Effective Date"), by and between TTR Technologies, Inc., a Delaware
corporation with offices at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX ("TTR Inc."), TTR
Technologies, Ltd, a company organized under the laws of Israel, with offices at
0 Xxxxxxxx Xxxxxx, Xxxx Xxxx Industrial Zone, Israel ("TTR Ltd"; together with
TTR Inc., the "Companies") and Xxxx X. Xxxxxxx residing in Petach Tikvah, Israel
("MDT").
WHEREAS, MDT currently serves as TTR Ltd.'s General Manager and TTR Inc.'s
President, under that certain restated and amended employment agreement between
TTR Inc., TTR Ltd. and MDT, entered into as of May 6, 2002, (hereinafter, the
"Employment Agreement") and concurrently serves as Chairman of the Board of
Directors of both TTR Ltd and TTR Inc;
WHEREAS, the Companies and MDT desire to terminate MDT's employment under
the Employment Agreement and his service on the Companies' Boards of Directors,
all on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the terms and conditions hereafter set
forth the adequacy and sufficiency of which are hereby acknowledged, the parties
agree hereafter as follows:
1. Resignation of Positions by MDT. Subject to the terms and conditions
set forth herein, by his execution of this Agreement, MDT hereby resigns from
his positions as TTR Ltd.'s General Manager and TTR Inc.'s President, and as a
director of each of TTR Ltd. and TTR Inc., and from any and all other offices he
has held at the Companies and/or any of its affiliates and subsidiaries
including, without limitation, directorships and executive management positions.
The parties acknowledge and agree that MDT's signature to this Agreement
shall serve as adequate and complete legal notice of his resignation as a
director, officer, employee, and member of management, both to each of the
respective Board of Directors of the Companies and to all applicable affiliates
and subsidiaries.
The parties acknowledge and agree that the Companies' signature to this
Agreement shall serve as its acceptance of MDT's resignation from these
capacities, and of its responsibility to provide timely notification of such
resignation to the Companies' Boards of Directors, to the Companies' affiliates
and subsidiaries, and to all authorities to whom such resignation must be
reported by law. MDT agrees to execute any reasonably necessary document to
facilitate and effect any notification of his resignation of positions with the
Companies. TTR Ltd. shall forthwith file the necessary instruments with the
Israeli registrar of Companies to remove MDT as a director of TTR Ltd. and
appoint an appropriate replacement director.
2. Company Property. Except as otherwise herein provided, on or before the
Effective Date, MDT shall return to Companies all TTR Ltd and TTR Inc property
then in his possession.
3. Financial Terms Relating to Termination of Employment. Subject to the
terms and conditions set forth herein and in consideration of the resignations
and releases contained herein, the Companies hereby agree as follows
(collectively, the "Settlement Amount"):
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(a) Upon execution and delivery by MDT of this Agreement, TTR Ltd.
shall remit to MDT any outstanding salary payments due and payable through
the Effective Date under Section 3.06 of the Employment Agreement
(Termination by Executive without Good Reason), less deductions and
withholdings under Israeli or other applicable law customarily made by TTR
Ltd. and/or required by law, and, by his signature below, MDT hereby
waives any claim to any other payments (other than salary) due under the
Employment Agreement;
(b) Upon execution and delivery by MDT of this Agreement, TTR Ltd.
releases to MDT all amounts accumulated in MDT's current Bituach Menahalim
and Keren Histalmut policies, and TTR Ltd. (and to the extent necessary,
TTR Inc.) shall take all reasonably necessary actions to cooperate with
MDT in transferring or redeeming MDT's current Bituach Menhalim and Keren
Hishtalmut policies, in accordance with such policies terms and conditions
and applicable law. BY HIS SIGNATURE BELOW, MDT AGREES THAT THE TRANSFER
TO HIM OF SUCH POLICIES IS BEING MADE IN FULL SATISFACTION OF ALL CLAIMS
BY MDT AGAINST THE COMPANIES, AND MDT HEREBY WAIVES ANY RIGHTS HE MAY HAVE
UNDER APPLICABLE LAW OR THE EMPLOYMENT AGREEMENT TO ANY ADDITIONAL AMOUNTS
THAT TTR LTD. OR TTR INC. MAY BE REQUIRED TO PAY, INCLUDING, WITHOUT
LIMITATION, SEVERANCE PAY UNDER ISRAELI LAW OR FURTHER PAYMENTS INTO SUCH
POLICIES, AND FURTHER AGREES THAT HE SHALL HAVE NO RIGHT OR REMEDY AGAINST
TTR LTD. OR TTR INC. FOR ANY SUCH PAYMENTS OR SHORTFALL;
(c) TTR Inc. agrees that the employee stock options heretofore
granted by TTR Inc. to MDT, shall, notwithstanding any agreement to the
contrary between TTR Inc. and MDT, continue to be exercisable through the
duration of the original grant of such options and, upon execution and
delivery by MDT of this Agreement, such options will vest and become
immediately exercisable, all on the terms and conditions applicable to
such grants, including, without limitation, the exercise price thereof,
all in accordance with each of TTR Inc.'s 1996 and 2000 equity incentive
plans and agreements thereunder. TTR Inc. acknowledges that TTR Inc.'s
compensation committee has approved (or upon signature and delivery of
this Agreement by TTR Inc., shall have approved) the extension of the
exercise period of such options;
(d) The Companies shall have an opportunity (at their own expense)
to make a back-up or copy of the database personal laptop used by MDT,
except for MDT's files of a personal nature; and
(e) TTR Ltd. shall lease to MDT the automobile currently used by him
and in his possession in consideration of quarterly lease payments to be
made to the Ltd over a five year period. TTR Ltd. shall forthwith take all
actions and execute instruments necessary or desirable to enter into a
lease relating to such automobile on the terms outlined above.
All taxes, withholdings and deductions payable or due in respect of
MDT's receipt of the Settlement Amount, or any component thereof, if any,
will be borne by MDT. Notwithstanding the foregoing, Companies will deduct
from payments made under the Settlement Amount amounts required to be
withheld in respect of deductions and withholdings under Israeli, United
States other applicable law customarily made by each of TTR Inc. and TTR
Ltd. and/or required by law.
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MDT acknowledges and agrees that the Settlement Amount is being made in
full and final release by MDT of any and all claims, rights or remedies that he
may have under the Employment Agreement or otherwise available under law.
4. Continuing Obligations of MDT. Notwithstanding anything else contained
herein, MDT hereby acknowledges and agrees that the provisions of Article IV of
the Employment Agreement (Confidentiality and Non-compete) shall continue in
full force and effect after the Effective Date of this Agreement, in accordance
with their terms and for the duration specified therein. Nothing contained in
this Agreement shall be construed or interpreted as a waiver by the Companies or
any of its affiliates or subsidiaries of any right or remedy available under
Article IV of the Employment Agreement in the event of a breach occurring after
the Effective Date of this Agreement.
5. Indemnification.
TTR Inc. agrees to hold harmless and indemnify MDT as, and in the manner,
permitted by Section 145 of the Delaware General Corporation Law, to the extent
(and only to such extent) that the Companies' directors and officers insurance
or such other insurance as the Companies may have in effect at the time of a
Proceeding (as defined herein) does not provide coverage, or to the extent (and
only such extent) that the Damages (as defined herein) exceed such insurance
policy coverage limits, for the reasonable costs of defense and any and all
losses, claims, damages, liabilities or expenses, including, without limitation,
reasonable attorneys' fees, judgments, fines, excise taxes or penalties, witness
fees, amounts paid in settlement and other expenses incurred in connection with
any Proceeding (the "Damages"), relating to any completed, actual, pending or
threatened action, suit, claim or proceeding, whether civil, criminal,
administrative or investigative (including an action by or in the right of
either of the Companies) and whether formal or informal (each a "Proceeding"),
in which MDT is, was or becomes involved by reason of the fact that MDT was a
director, officer, employee, trustee or agent of either of the Companies or
that, being or having been such a director, officer, employee, trustee or agent,
MDT is or was serving at the request of the Company as a director, officer,
employee, trustee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, whether the basis of such proceeding is an
alleged action (or inaction) by MDT in an official capacity as a director,
officer, employee, trustee or agent or in any other capacity while serving as a
director, officer, employee, trustee or agent; provided, that, the above
indemnification shall not apply with respect to the civil actions entitled (i)
Strum et all v. Xxxx X. Xxxxxxx et all and (ii) Xxxxxxxxx v. Xxxx X. Xxxxxxx, et
all, pending in the United States District for the Southern District of New York
in which MDT is a named defendant, and with respect to any other action of a
substantially similar nature filed brought by or in the name of a shareholder of
TTR Inc. in which MDT is named as a defendant (collectively, the "Affected
Actions") and provided, further, the maximum amount in the aggregate for this
indemnification shall not exceed $25,000, it being understood that, with respect
to the agreement between TTR Ltd. and Xxxxxxx Xxxxxxx ("GT") dated as of the
date hereof with respect to the termination and settlement of GT's association
with TTR Inc. and TTR Ltd. (the "GT Agreement"), any amount specified in Section
6 of the GT Agreement [Indemnification] and not applied to GT's indemnification
as provided in the GT AGreement, may, with GT's consent, be applied to MDT's
indemnification hereunder, it being further understood that the indemnification
for GT under the GT Agreement and MDT hereunder shall not exceed, in the
aggregate for both MDT and GT, $50,000.
6. Releases.
6.1 In consideration of the promises, covenants and releases contained
herein, the adequacy of which is hereby acknowledged, MDT (on his behalf and on
behalf of each of his respective agents, attorneys, heirs, successors,
executors, personal representatives and assigns) does hereby absolutely and
unconditionally waive, release and forever discharge each of the Companies,
their respective affiliates and subsidiaries, their respective past, present and
future officers, directors, shareholders, employees, agents, attorneys,
successors and assigns (hereinafter, the "Companies' Released Parties"), from
any claims, demands, obligations,
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liabilities, rights, causes of action and damages, whether liquidated or
unliquidated, absolute or contingent, known or unknown, from the beginning of
time to the Effective Date of this Agreement, or that arise under the Employment
Agreement or that arise under any body of labor or contract law, including any
claims under Israeli labor laws and regulations, or any claim for wrongful
termination, or claims with respect to any other payment required under Israeli
law. Notwithstanding the foregoing, the rights and obligations set forth in this
Agreement shall remain in full force and effect; nothing hereunder shall be
construed to release any rights accrued to MDT to continue or redeem any
employee welfare benefit plan (including without limitation Betuach Menahalim
and Keren Hishtalmut) during his employment, or to release any rights accrued or
applicable to MDT under any applicable insurance policy, including any officer
and director liability insurance coverage or any errors and omissions coverage;
nothing hereunder shall waive any indemnification rights applicable to MDT as a
former officer and Director of the Companies or shall be construed to waive any
rights MDT has as a shareholder or a holder of options.
6.2 In consideration of the promises, covenants and releases contained
herein, the adequacy of which is hereby acknowledged, each of the Companies (on
its behalf and on behalf of its affiliates and subsidiaries and each of their
respective, past, present and future officers, directors, employees, attorneys,
agents, successors, executors, and assigns) does hereby absolutely and
unconditionally waive, release and forever discharge MDT (and his agents,
attorneys, heirs, successors, executors, personal representatives and assigns),
from any claims, demands, obligations, liabilities, rights, causes of action and
damages, whether liquidated or unliquidated, absolute or contingent, known or
unknown, from the beginning of time to the Effective Date of this Agreement, or
that arise under any body of labor or contract law, provided, that, this release
shall not apply to any derivative claim or suit by a shareholder of TTR Inc.
Additionally, the foregoing release shall not be construed as a waiver of future
claims by Companies arising from MDT's conduct after the Effective Date of this
Agreement with respect to his obligations to Companies under the confidentiality
and non-competition provisions contained in the Employment Agreement and any
undertakings of MDT pursuant to this Agreement.
7. Non-Disparagement. MDT (on behalf of his heirs and personal
representatives), agrees not to make disparaging remarks concerning the
Companies or their respective businesses or any of their respective employees,
consultants, stockholders, directors, affiliates, subsidiaries or
representatives. Each of the Companies agrees not to make disparaging remarks
concerning MDT. Nothing herein shall be interpreted as affecting either of the
parties' obligations to comply with the specific terms of any valid and
effective subpoena, oral questions, interrogatories, requests for information,
civil investigative demand or order issued by a court of competent jurisdiction
or by a governmental body.
8. Certain Representations of TTR Inc. With respect to the Affected
Actions, TTR Inc. hereby represents to MDT that it will refrain from taking any
action that may interfere with the provision to MDT of insurance coverage by the
insurance carrier under the Companies' Directors And Officers Liability
Insurance policy.
9. Press Release. On or immediately following the Effective Date, TTR Inc.
shall issue a press release in the form attached hereto relating to MDT's
resignation.
10. Reasonable Attorney's Fees. Upon the execution hereof, TTR, Ltd. shall
reimburse MDT the amount of $2,500 for legal fees paid by him in connection with
the negotiation and execution of this Agreement.
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11. Reliance. The parties acknowledge and agree that in the execution of
this Agreement, neither has relied upon any representation by any party or
attorney, except as expressly stated or referred to herein.
12. Headings. Section and subsection headings are not to be considered
part of this Agreement and are included solely for convenience and are not
intended to be full or accurate descriptions of the content thereof.
13. Successors and Assigns. Except as otherwise provided in this
Agreement, all the terms and provisions of this Agreement shall be upon, and
shall inure to the benefit of, the parties hereto and their respective heirs,
personal representatives, successors and assigns.
14. Non-Assignment. By his signature below, MDT represents and warrants
that he has not assigned or otherwise conveyed to any third party any claim
against any of the Companies.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16. Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersedes any prior or contemporaneous understanding or agreement or letters,
written or verbal, among the parties with respect to the subject matter hereof
other than as expressly referenced herein. No supplement, modification or waiver
or termination of this Agreement or any provision hereof shall be binding unless
executed in writing by the parties to be bound thereby.
17. Governing Law, Jurisdiction and Forum. This Agreement, its validity,
construction and effect shall be governed by and construed under the laws of the
State of New York without reference to the principles of conflict of laws. The
parties hereby irrevocably consent to the jurisdiction of the courts of the
State of New York or the appropriate federal court sitting in the State of New
York for all actions, disputes, controversies, differences or questions arising
out of or relating to this Agreement.
18. Representation. Each of MDT and TTR Inc. and TTR Ltd., acknowledges
that they have had the opportunity to consult with legal counsel respecting this
Agreement. Each person executing this Agreement on behalf of a corporation
hereby represents and warrants that he has been authorized to do so by all
necessary corporate action.
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IN WITNESS WHEREOF, each of the parties has set forth its/his signature
as of the date first written above.
TTR Technologies, Inc. TTR Technologies, Ltd.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxx Xxxxx
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Title: Chief Executive Officer Title: Director
/s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx