Exhibit 10.3
AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") entered into as of
May 27, 2002, between Xxxxxx Xxxxx ("Employee") and TTR Technologies, Inc, a
Delaware corporation (collectively, the "Company").
WHEREAS, Employee and the Company entered into an employment agreement
dated as of November 5, 2001, pursuant to which Employee was originally hired as
the Company's Vice President of Corporate Strategy (the "Original Agreement");
WHEREAS, Employee in April 2002 Employee was designated as the Company's
Chief Operating Officer and also elected to the Company's board of directors
(the "BOD");
WHEREAS, in connection with the Employee's designation in his new
capacity, desire to amend and restate the Original Agreement in its entirety,
all on the terms and conditions set forth herein;
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 under this Agreement shall become effective as of May 27,
2002 (the "Effective Date") and continue for the period of three (3) years from
the Effective 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 Operating Officer of the Company on a
full-time basis. In his capacity as Chief Operating Officer, Employee shall
report directly to, and be responsible to, the Chief Executive Officer of the
Company, or such other Company officer as shall be designated by the Chief
Executive
Officer. Employee shall perform 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 participate and as are assigned to
him from time to time by the Chief Executive Officer.
(b) The Company shall maintain an office located in New York which shall
be Employee's principal place of work, unless otherwise agreed to by Employee in
writing.
(c) 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) 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
Chief Executive Officer and the other executives of the Company.
(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 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 One Hundred Seventy-Thousand
Dollars ($170,000) 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. Subject to review at the
end of each year of employment, commencing on the first anniversary of the
Effective Date, Employee's Base Salary may, at the discretion of the Chief
Executive Officer, be increased for the succeeding employment year, but in event
more than 10% for each such subsequent year of employment during the Initial
Term.
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(b) Incentive Compensation
(i) Automobile Expense. Employee shall be entitled to an automobile
allowance not exceeding ten-thousand dollars ($10,000) a year, which shall
include lease payments, 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.
(ii) 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 Chief Executive
Officer. 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
In connection with Employee's employment under the Original Agreement, the
Company granted to Employee, pursuant to the Company's 2000 Equity Incentive
Plan (the "Plan") and the stock option agreement memorializing such grant,
incentive stock options (the "Options") to purchase two-hundred and fifty
thousand shares (250,000) of the Company's Common Stock, par value $0.001
(hereinafter, the "Common Stock") at the price of one-dollar and sixty-six cents
($1.66). In conjunction with Employee's execution of this Agreement, the Company
will submit to the Compensation Committee of the BOD its recommendation that the
Options vest in full as follows: Options with respect to Ninety-thousand
(90,000) shares of Common Stock to vest on January 1, 2003; Options with respect
to Forty-thousand (40,000) shares of Common Stock to vest on August 1, 2003;
Options with respect to Forty-Thousand (40,000) shares of Common Stock to vest
on March 1, 2004; Options with respect to Forty-Thousand (40,000) shares of
Common Stock to vest on October 1, 2004; and Options with respect to
Forty-Thousand (40,000) shares of Common Stock to vest on May 26, 2005
(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 as determined by the
Chief Executive Officer.
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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.
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 (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; (iv) the failure of
Employee to substantially 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 Chief Executive Officer or the BOD; 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; 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.
(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 following: (i)
the assignment of Employee to duties materially and substantially inconsistent
with Employee's authorities, duties and responsibilities; (ii) 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
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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. Notwithstanding
anything to the contrary contained herein, in the event that the Company
requests that Employee vacate the premises immediately upon the furnishing of
the Notice Period, then the amounts payable under this Section 6(f) shall be
subsumed under the payments payable under Section 7(c) such that Employee will
not be entitled to the amount otherwise payable in respect of the Notice Period.
(e) The termination of Employee's employment hereunder for any reason
shall automatically be deemed as Employee's resignation from the BOD without any
further action.
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.
(c) If at anytime during the Initial Term Employee's employment is
terminated by Employee pursuant to Section 6(d) or by the Company pursuant to
Section 6(f) hereof, then, Employee's Base Salary and benefits shall continue
(in the customary manner in which Company has paid the base salary and benefits)
for a period of (i) six (6) months following such termination in the event that
such termination becomes effective on or before November 1, 2002 (ii) 12 months
following such termination in the event that such termination becomes effective
after November 1, 2002; provided, that, if the amount otherwise payable through
the remainder of the Initial Term is less than the six (6) or twelve (12) month
period, as the case may be, herein specified, then, notwithstanding anything to
the contrary contained herein, Employee shall be paid Base Salary and benefits
as herein provided for such lesser period . In addition, subject to the
provisions of this Agreement, the Company shall reimburse Employee for all
outstanding reimbursable expenses.
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
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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. Confidentiality
8.1 The term "Information" as used in this section means any and all
confidential and proprietary information including but not limited to any and
all specifications, formulae, prototypes, software design plans, computer
programs, and any and all records, data, methods, techniques, processes and
projections, plans, marketing information, materials, financial statements,
memoranda, analyses, notes, and other data and information (in whatever form),
as well as improvements and know-how related thereto, relating to the Company or
its products. Information shall not include information that (a) was already
known to or independently developed by the Employee prior to its disclosure as
demonstrated by reasonable and tangible evidence satisfactory to the Company;
(b) shall have appeared in any printed publication or patent or shall have
become part of the public knowledge except as a result of breach of this
Agreement by the Employee or similar agreements by other Company employees (c)
shall have been received by the Employee from another person or entity having no
obligation of confidentiality to the Company or (d) is approved in writing by
the Company for release by the Employee.
8.2 Subject to the provisions of Section 8.3 below, the Employee agrees to
hold in trust and confidence all Information disclosed to Employee and further
agrees not to exploit or disclose the Information to any other person or entity
or use the Information directly or indirectly for any purpose other than for
Employee's work with the Company, unless otherwise consented to in writing by
the Company.
8.3 The Employee agrees to disclose the Information only to persons
necessary in connection with Employee's work with the Company or who have
undertaken the same confidentiality obligations set forth herein in favor of the
Company. The Employee agrees to assume full responsibility for the
confidentiality of the Information disclosed to Employee and to prevent its
unauthorized disclosure, and shall take appropriate measures to ensure that such
persons acting on his behalf are bound by a like covenant of secrecy.
8.4 The Employee acknowledges and agrees that the Information furnished
hereunder is and shall remain proprietary to the Company. Unless otherwise
required by statute or government rule or regulation, all copies of the
Information, shall be returned to the Company immediately upon request without
retaining copies thereof.
9. Non-Compete; Poaching,; Development Rights
9.1 Unless otherwise expressly consented to in writing by the Company,
Employee will not, directly or indirectly, for his own account or as an
employee, officer, director, consultant, joint venturer, shareholder, investor,
or otherwise (except as an investor in a corporation whose stock is publicly
traded and in which the Employee holds less than 5% of the outstanding shares)
interest him/herself or engage, directly or indirectly, in the design,
development, production, sale or distribution of any product or component that
directly or indirectly competes with a product or component (i) being designed,
produced, sold or distributed by the Company or any of its affiliates (ii) or to
which the Company or any of its affiliates shall then have proprietary rights;
provided such affiliates operate in a field directly
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related to the business of the Company or involve distribution or promoting of
the Company's products or technology.
9.2 Hiring of Company Employees. During the term of the Employee's
employment hereunder, and for a period of twelve (12) months following the date
on which Employee's termination of employment with the Company becomes
effective, the Employee shall not, except in the course of the performance of
his duties hereunder or with the prior approval of the Board, in any way
directly or indirectly, with respect to any person who to the Employee's
knowledge was employed by the Company or its affiliates ("Company Employee") at
any time during the period commencing 12 months prior to the date of the hiring
of such Company Employee, hire or cause to be hired any Company Employee, or
contract the services of any closely held private corporation or other entity in
which such Company Employee is an officer or director or holds a 25% or greater
equity ownership interest.
9.3 Employee's undertakings herein under section 9 shall be binding upon
Employee's successors, heirs or assigns, and shall continue until the later of
(i) the expiration of one year from the date of execution of this Agreement or
(ii) the expiration of one year from the date the Employee last represented
him/herself as an employee, agent or representative of the Company or any of its
affiliates, subsidiaries or successors.
9.4 Employee acknowledges that the restricted period of time specified
under this section 9 are reasonable, in view of the nature of the business in
which the Company is engaged and Employee's knowledge of the Company's business
and products. If such a period of time or geographical location should be
determined to be unreasonable in any judicial proceeding, then the period of
time and area of restriction shall be reduced so that this Agreement may be
enforced in such an area and during such a period of time as shall be determined
to be reasonable by such judicial proceeding.
9.5 Development Rights. The Employee agrees and declares that all
proprietary information including but not limited to trade secrets, know-how,
patents and other rights in connection therewith developed by or with the
contribution of Employee's efforts during his employment with the Company shall
be the sole property of the Company. Employee shall keep and maintain adequate
and current records (in the form of notes, sketches, drawings and in any other
form that may be required by the Company) of all such proprietary information
developed by Employee. Employee shall at Company's request do all things and
execute all documents as Company may reasonably require to vest in Company the
rights and protection herein referred to. It is hereby acknowledged and agreed
that the Base Salary payable under this Agreement also constitutes sufficient
consideration for the Employee's obligation hereunder
10. 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 the Company with all information
known to him
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related to such claims, controversies, disputes or complaints and appearing and
giving testimony in any forum.
11. 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).
12. INTEGRATION
This Agreement constitutes 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.
13. 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.
14. 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.
15. 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
c/o TTR Technologies, Inc.
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 100
If to the Company:
TTR Technologies, Inc
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
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.
16. 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.
17. 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.
18. HEADINGS
The headings have been inserted for convenience only and are not to be
considered when construing the provisions of this Agreement.
19. 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/ Xxxxxx X. Xxxxx
----------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
Date: May 27, 2002
EMPLOYEE
/s/ Xxxxxx Xxxxx
--------------------------------
Xxxxxx Xxxxx
Date: May 27, 2002
--------------------------
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