EMPLOYMENT AGREEMENT
between
TTR INC.
and
XXXXXX X. XXXXX
Employment Agreement ("Agreement") dated as of July 6, 1998 between
Xxxxxx X. Xxxxx, residing at 000 Xxxxxxx Xxx, Xxxxxx Xxxxxxx, XX 00000 (the
"Executive") and TTR Inc., a Delaware corporation (the "Company"), with its
principal executive offices at The Columbus Circle Building, 0000 Xxxxxxxx, 00xx
xxxxx, Xxx Xxxx, XX 00000.
WHEREAS, the Company desires to employ the Executive as its Chief
Executive Officer, and the Executive desires to accept such employment, upon the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the agreements and covenants
contained herein, the Executive and the Company hereby agree as follows:
ARTICLE I.
Employment
Section 1.01 Position; Responsibilities.
(One) The Company hereby employs the Executive commencing on July
22, 1998 (the "Effective Date") in accordance with the terms
and conditions herein. The employment hereunder shall be for a
term of eighteen (18) months (the "Term") and shall be
terminable by either party on the terms and subject to the
conditions set forth in this Agreement. After expiration of
the initial Term, this Agreement shall be automatically
renewed for additional one year terms, unless either party
shall send notice of termination to the other party at least
ninety (90) days before the end of the initial Term or any
renewal term.
(Two) The Board of Directors of the Company has elected Executive as
Chief Executive Officer of the Company, effective upon the
Effective Date. The Executive's responsibilities from and
after the Effective Date shall include all matters customarily
associated with the position of Chief Executive Officer,
including, without limitation, subject to direction by the
Board (as defined below), or the President of the Company (the
"Company President"), currently Xx. Xxxx X. Xxxxxxx, those
related to engaging and terminating employees, establishing
appropriate personnel and employment policies and benefits,
negotiating and entering into contracts, finance, and
financial reporting. The Executive shall perform such duties
and services consistent with his position as may be assigned
to him from time to time by the Company President. The
Executive shall report to the Company President.
(Three) It is the intention of the Board of Directors of the Company
(hereinafter the "Board") that the Executive serve on the
Board, in accordance with and subject to the terms and
conditions set forth in this Agreement. In addition, Executive
shall serve as a member on any nominating committee appointed
by the Board to nominate outside directors to serve on the
Board. In the event that Executive's employment hereunder
shall for any reason whatsoever terminate, then Executive's
membership on the Board shall, without any further action on
the part of the Company, Board or Executive, forthwith
terminate, subject to the requirements of the Company's
By-laws. Executive acknowledges and agrees that the Company's
By-laws currently provide for a Board comprised of no more
than three (3) individuals and that Executive's designation
and election to serve on the Board are subject to the approval
by the Company's shareholders of a proposal, to be considered
at the Company's next annual meeting of its shareholders, to
repeal the existing By-laws and adopt new proposed By-laws
that will enable the Board to fix the number of directors and
fill vacancies. The Company and the Board will use their best
efforts to obtain such approval.
(Four) The Company will maintain a United States office in New York
City, where Executive will perform his duties and
responsibilities, and such office will be adequately staffed
for that purpose. The parties acknowledge and agree that (i)
in the performance of his services hereunder Executive need
not be present in the New York City office on a daily basis
but only as is warranted by the exercise of reasonable
judgment for the promotion of the Company's business, and (ii)
the nature of the Executive's duties under this Agreement will
also require substantial domestic and international travel.
Section 1.02 Performance of Duties. The Executive shall duly and
faithfully perform all of the duties assigned to him to the best of his
abilities, and Executive's services to the Company shall be full-time and
exclusive, it being understood that the Executive may engage in the activities
set forth on Schedule I annexed hereto provided that the same shall not
otherwise constitute a breach of Executive's obligations or covenants hereunder
or materially impair or materially interfere with the performance of Executive's
responsibilities hereunder.
Section 1.03 Representation and Warranty of Company. The Company hereby
represents and warrants to Executive that it has received all authorizations
necessary for the execution and performance of the Agreement on the terms and
conditions set forth herein.
Section 1.04 Representation and Warranty of Executive. The Executive
represents and warrants to the Company that the execution and delivery of this
Agreement and the fulfillment of the terms hereof (i) will not constitute a
breach of any agreement or other instrument to which Executive is party, and
(ii) does not require the consent of any person. Additionally, the Executive
represents and warrants to the Company that he shall not utilize during the term
of his employment any proprietary information of any third party, including
prior employers of the Executive.
Section 1.05 Termination of Xxxxx Technology Ventures, Inc. Services
Agreement. The parties acknowledge and agree that effective upon the Effective
Date, the Services Agreement between the Company and Xxxxx Technology Ventures,
Inc. ("BTV") will be terminated. The Company shall pay to BTV all expense
reimbursements, upon evidence of appropriate receipts, and unpaid invoices for
services provided up to and including the termination date. BTV shall have no
obligation to destroy or return any Confidential Information of the Company as
defined under the Services Agreement, and any such Confidential Information
shall be transferred to or remain in the possession of Executive, and same shall
be subject to the provisions of this Agreement.
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ARTICLE II.
Compensation
Section 2.01 General. The Company shall compensate the Executive for
all of his services under this Agreement, as set forth below.
Section 2.02 Salary. The Executive's minimum annual salary ("Base
Salary") commencing on the Effective Date, shall be at the rate of $210,000 and
shall be payable in bi-weekly or other installments in accordance with the
Company's normal payment schedule for senior management. The Base Salary shall
be subject to annual review commencing at the end of 1999 and at the end of each
year thereafter, if the Executive is employed by the Company at that time, and
may be increased (but not decreased) for subsequent years.
Section 2.03 Stock Option. The Executive shall be entitled to
participate in the Company's existing Incentive Stock Option Plan (1996)
(hereinafter, the "1996 Plan") and shall be granted an option under the 1996
Plan to purchase shares of the Company's Common Stock, on the terms and
conditions set forth on the attached Option Agreement (the "Option"). The Option
is for the purchase of an aggregate of 250,000 Shares of common stock of the
Company. The Option is exercisable at $2 and 15/16 per Share (which is the Fair
Market Value per Share on the date of grant as defined in the 1996 Plan). The
Option vests over five years, as to 20% of the number of Shares covered thereby
during each year, prorated for each completed month of employment, and the
Option expires ten years from the date on which the Board approved the 1996
Plan. The terms of the Option are as set forth in the Option Agreement attached
as Exhibit A, and is otherwise subject to all other provisions of the 1996 Plan.
In the event that the Company shall approve or adopt any other stock
option plan, bonus plan or other compensation program ("Incentive Programs")
that the Company may hereafter establish for senior management, Executive shall
be entitled to participate in such Incentive Programs, and the Option granted
above may be issued and made subject to any stock option plan adopted as part of
any such Incentive Programs (in lieu of Executive participating in the 1996
Plan), provided that the terms and conditions of the Option are no less
favorable to Executive than those to which he is entitled under the 1996 Plan.
Section 2.04 Fringe Benefits. The Executive shall be entitled to
participate in all employee benefit plans, including retirement programs, if
any, group health care plans and Incentive Programs established for senior
management. Executive shall be entitled to such participation on a basis no less
favorable to the Executive than is made available to other senior management of
the Company and its affiliates. A list of all of the benefits to be provided to
Executive, and the benefit plans in which Executive will be a participant or
beneficiary at the date of commencement of this Agreement, is attached to this
Agreement as Exhibit B. In addition to the foregoing, the Executive shall be
entitled to receive the following:
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(One) Vacation, Sick Leave and Personal Days. The Executive shall be
entitled to an aggregate of 20 business days of paid vacation
per contract year. In addition, the Executive shall be
entitled to paid sick leave until such date as the Executive
becomes entitled to receive long term disability benefits
under any disability insurance policy provided by the Company
or the date that Executive is terminated under this Agreement
by reason of disability. Vacation days shall be prorated for
any portion of a year to the date of termination. The
Executive shall consult with the Company President regarding
the timing of any vacation extending for a period of more than
10 consecutive business days. In addition to the foregoing,
the Executive shall be entitled to paid vacation for the
following legal holidays in the United States: New Year's,
President's Day, Memorial Day, July 4, Labor Day, Thanksgiving
Day (Thursday and Friday), and Christmas; and during the
holidays of Rosh Hashana, Yom Kippur, first two days and last
two days of Succot, Passover and Shavuot. Vacation days may
not be carried forward or accumulated for use by Executive
more than one year following the year in which such vacation
was earned.
(Two) Expense Reimbursements. The Company shall reimburse the
Executive promptly for all reasonable and proper expenses
incurred by him, in promoting the business of the Company and
the performance of his duties hereunder, upon presentation by
Executive of receipts or other appropriate evidence of
expenses incurred. The Company and Executive acknowledge and
agree that the Company will reimburse the Executive's
reasonable expenses and conference fees for attendance at
seminars, conferences and education courses that are relevant
to the Company's business and Executive's duties and
responsibilities under this Agreement.
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(Three) Travel. Executive shall be entitled to fly business class in
any flight, or combination of flights to get to one
destination, of a duration of over five (5) hours.
(Four) Mobile Communication. The Company will provide Executive with,
or reimburse any reasonable expense incurred by Executive with
respect to, suitable tele-communications and computer
equipment used by Executive in the performance of his duties
and responsibilities under this Agreement.
Section 2.05 Withholding. The Base Salary and all other payments to the
Executive for his services to the Company shall be subject to all withholding
and deductions required by federal, state or local law, including those
authorized by the Executive but not otherwise required by law.
Section 2.06 Expense Reimbursement. The Company shall pay to Executive,
within five (5) business days after signing of this Agreement, a non-accountable
expense allowance of $10,000 for the purpose of reimbursing Executive for costs
and expenses incurred by Executive in the negotiation and execution of this
Agreement, including, but not limited to, travel, lodging, meals,
telecommunications charges, and attorney's fees and costs.
ARTICLE III.
Termination of Employment
Section 3.01 Events of Termination. Executive may terminate his
employment hereunder at any time for any reason by delivering to the Company 90
days' advance written notice of termination.
In addition, Executive may resign and terminate his employment
hereunder for "Good Reason" (which shall also be deemed a termination by the
Company other than for Cause). For purposes of this Agreement, "Good Reason"
means (i) the failure to elect and continue, except as otherwise provided in
this Agreement, Executive as Chief Executive Officer and a member of the Board,
or, except with respect to the Company 1998 annual meeting of shareholders, to
nominate Executive for re-election as a member of the Board (except where a
majority of the sitting directors vote against the nomination of Executive for
such re-election for reasons related to the best interests of the Company), (ii)
the failure to assign Executive duties, authorities, responsibilities and
reporting requirements that are in the aggregate substantially consistent with
his position, or if the scope of Executive's duties and responsibilities as
Chief Executive Officer of the Company are in the aggregate materially reduced,
except for any reduction in duties and responsibilities due to Executive's
illness or disability, provided, that, Good Reason shall not exist where a
majority of the sitting directors on the Board determine that certain duties and
functions which may otherwise have been assigned to the Executive are to be
assigned to an employee, consultant or agent of the Company other than Executive
for bona fide reasons related to the conduct of the Company's business or where
the failure to assign duties and responsibilities consistent with Executive's
position and any material reduction in the scope of Executive's responsibilities
are warranted, in the reasonable judgment of the Board, by Executive's
performance, (iii) a material reduction in or a material delay in the payment of
Executive's total cash compensation and benefits from those required to be
provided in accordance with the provisions of this Agreement, or a breach by the
Company of any other material provision of this Agreement or the Options
referred to in Section 2.03 where the Company has failed to cure such breach
within 10 business days following receipt of written notice from Executive
detailing the basis of the alleged breach, (iv) a requirement by the Company or
the Board that Executive be based outside of the greater New York City area
(which shall include New Jersey), other than on travel reasonably required to
carry out Executive's obligations under this Agreement, or (v) the failure of
the Company to obtain the assumption in writing of its obligations to perform
this Agreement by any successor to all or substantially all of the assets of the
Company at or before consummation of a merger, consolidation, sale or similar
transaction.
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Executive shall remit to the Board in writing notice of the existence
of Good Reason, specifying in reasonable detail the basis therefor, not later
than three months from the occurrence of the event which Executive is deeming as
Good Reason. Within 10 business days following the Company's receipt of
Executive's notice relating to Good Reason, the Executive and the entire Board
shall confer in a good-faith attempt to reach an amicable resolution of any
outstanding issue. In the event that the parties shall fail to reach such
amicable resolution, the parties jointly shall promptly refer this matter to an
Arbitrator in the manner prescribed below. Pending determination of the
Arbitrator as herein provided, at the option of Executive and upon notice to the
Company, Executive may continue in the employ of the Company. In any event,
pending a determination by the Arbitrator, no payments shall be due Executive
under Section 3.02 (i) or (ii) hereof until the conclusion of the arbitration
proceeding or further proceeding contemplated by Section 5.04 hereof and only if
an award is rendered by the Arbitrator in favor of Executive. If the Arbitrator
finds that the Executive does not have Good Reason for terminating his
employment with the Company then the Company may consider the notice of Good
Reason received from Executive as termination by Executive without Good Reason
as of the date of original receipt thereof (unless the Executive has elected to
continue in the employ of the Company during such arbitration proceeding, in
which case the date of termination shall be deemed to be the date of receipt of
the Arbitrator's determination).
The Company shall have the right to terminate for "Cause" upon notice
to the Executive only in the event of (a) a failure by the Executive (other than
any such failure resulting from Executive's incapacity due to physical or mental
illness or injury) substantially to perform his duties hereunder (not including,
however, failure to meet performance targets), or (b) a failure by the Executive
to substantially comply with the direct lawful and proper instructions of the
Board which causes material harm or loss to the Company or which in the
reasonable opinion of the Board is likely to cause material harm or loss to the
Company, or (c) Executive's illegal or unethical acts or conduct which causes
material harm or loss to the Company or otherwise brings notoriety to the
Company or has a material adverse effect on the name or public image of the
Company, provided, however that with respect to clauses (a), (b) and (c) the
foregoing shall not constitute "Cause" if Executive, after being notified in
writing by the Company of the particular acts or circumstances of such material
breach, cures such failure within 30 days after receipt of such notice (if such
failure is reasonably susceptible to cure).
Termination by the Company for Cause shall not be effective until and
unless (i) notice of intention to terminate for Cause has been given by the
Company within three months after the Board learns of the act, failure or event
constituting "Cause" and (ii) the Board has resolved to terminate Executive for
Cause after Executive has been given notice of the particular acts or
circumstances which are the basis for the termination for Cause and has been
afforded at least 10 business days notice of the meeting at which such
resolution is to be voted upon and an opportunity to present his position in
writing and the Company has given notice of termination to Executive within
three days thereafter (and the Executive's termination of employment shall be
effective immediately upon receipt of such notice but shall not be deemed a
termination of employment for Cause unless and until all of the conditions set
forth in clauses (i) through (iii) hereof have occurred), and (iii) if Executive
has commenced an arbitration in the manner prescribed below within 15 days after
such notice of termination, disputing the Company's right under this Agreement
to terminate for Cause, the Arbitrator shall thereafter have determined that the
Executive was terminated for Cause; provided, however, that (a) Company may
suspend the Executive with pay at any time during the period commencing with the
giving of notice to Executive under clause (i) above until final notice of
termination is given under clause (ii) above; and (b) payments due Executive
under Section 3.02 hereof shall not be payable until such time as the Arbitrator
shall have determined that the Executive was terminated without Cause. If
Executive or his representative fails to file a demand for arbitration with the
American Arbitration Association and file the requisite fees pursuant to Rule 4
of the National Rules for the Resolution of Employment Disputes effective June
1, 1996 within 20 days of receipt of notice of termination from the Board, and
diligently pursue such proceeding in accordance with the procedures set forth in
Section 5.04 hereof, such termination shall be conclusively presumed to have
been for Cause.
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If the Arbitrator does not rule that the Executive was terminated for
Cause, the Executive shall be treated as having been terminated without Cause
and Executive shall have the rights provided under Section 3.02 below with
respect to a termination without Cause.
For all purposes of this Agreement and the Option Agreement attached
hereto as Exhibit A, "Good Reason" and "Cause" shall have the applicable defined
meaning as set forth above in this Section 3.01.
Section 3.02 Severance Package. In the event the Executive's employment
under this Agreement is terminated by the Company other than for "Cause" (a
termination due to the Executive's death or disability, or notice by the Company
of non-renewal of this Agreement, shall be treated for purposes of this
Agreement as a termination by the Company other than for Cause) or by the
Executive for "Good Reason", then the Executive shall be entitled to receive, in
addition to all amounts of Base Salary, earned but unpaid incentive or bonus
compensation under any Incentive Programs (prorated for any partial year), and
other benefits due or payable to him through the date of termination, the
following ("Severance Package"):
(a) in the event that such termination occurs at any time
following the first anniversary of the Effective Date of this
Agreement, an amount, which shall be payable in one lump sum
within 90 days of the date of determination that the
Executive's termination is (x) other than for Cause, or (y)
for Good Reason, as applicable, equal to one year's Base
Salary based on the Base Salary then in effect; provided,
that, if such termination occurs at any time prior to the
first anniversary of the Effective Date of this Agreement,
then the amount payable hereunder shall be equal to one-half
(1/2) of one year's Base Salary, plus, in either case, an
amount equal to the value of all benefits (other than Base
Salary, expense reimbursement and medical insurance benefits)
that would be provided to Executive for the Base Salary
continuation period (one year or one-half year, as the case
may be) including but not limited to amounts due to Executive
under any Incentive Programs at the rate paid or otherwise
provided to Executive for the preceding contract year;
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(b) so long as Executive remains in the employ of the Company for
at least six months following the Effective Date, the
immediate vesting of the Options granted pursuant to Section
2.03 hereof which would have vested by the end of the contract
year in which Executive's employment is terminated, and,
following timely exercise of any such Options, the Executive
shall receive title to the Shares issued in respect of such
Options free and clear of any lien, claim or encumbrance by,
through or under the Company;
(c) in the event that such termination takes place after the end
of the sixth month following the Effective Date of this
Agreement, Company paid medical insurance benefits available
to all other senior executives of the Company during the
12-month period subsequent to termination of employment shall
be paid by the Company, and thereafter all COBRA rights
available to the Executive shall be paid by the Executive, but
COBRA rights shall be measured from the termination date.
During any delays permitted by Section 3.01 for arbitration to
determine whether the Executive's termination by the Company was other than for
"Cause" or by the Executive for "Good Reason," if a transaction is agreed to
which would constitute a Change of Control event as defined in this Agreement,
the Company will include appropriate provisions protective of the Executive's
rights hereunder as if the arbitration were resolved favorably to the Executive,
but subject to such a favorable resolution. For the purposes of this Agreement
""Change of Control"" means any agreement, transfer, conveyance, assignment,
acquisition, merger or other transaction which results in, directly or
indirectly, any entity acquiring (or obtaining the right to acquire) ownership
of all or substantially all of the assets of the Company or ownership of or
voting power with respect to 50% or more of the common stock (or other ownership
interests) in the Company or any parent or parents of the Company, directly or
indirectly.
Section 3.03 Rights on Termination for Cause or Without Good Reason. No
Severance Package shall be due or owing to the Executive in the event that the
Company shall terminate the Executive's employment for "Cause" or in the event
that the Executive shall terminate his employment with the Company for reasons
other than "Good Reason"; provided, however that Executive shall in all events
be paid all accrued but unpaid Base Salary earned, but unpaid incentive or bonus
compensation under any Incentive Programs (prorated for any partial year), and
other benefits due or payable to him through the date of termination. In
addition, in the event that the Company shall terminate the Executive's
employment for "Cause" or in the event that the Executive shall terminate his
employment with the Company for reasons other than "Good Reason", then except as
provided in the following two sentences, all unvested Options then held by
Executive shall automatically be forfeited (subject, however, to any contrary
determination of the Board in its sole discretion). No forfeiture of unvested
Options shall occur until 15 days after the later of (i) the conclusion of any
arbitration proceeding or further proceeding contemplated by Section 3.01 hereof
or, (ii) if no arbitration proceeding is commenced, until the time for
commencing such a proceeding has lapsed (the later of such two dates being
referred to herein as the "Forfeiture Date"), but no additional service-based or
time-based vesting shall occur with respect to any such Options following the
date Executive's employment is deemed terminated under Section 3.01. Executive
may exercise vested Options at any time as permitted under the Option Agreement.
In all other respects, the terms of the grant of any such Options shall govern.
8
Section 3.04 Disability. For purposes of this Agreement "disability"
shall mean any physical or mental illness or injury as a result of which
Executive remains absent from work for a period of six (6) successive months, or
an aggregate of 180 days in any twelve (12) month period.
Disability shall occur at the end of any such period.
Section 3.05 Cooperation of Executive. During the period following
notice of termination until the effective date of termination by either party
for whatever reason, the Executive shall cooperate with the Company and use
reasonable efforts to assist the integration into the Company the person or
persons who will assume the Executive's responsibilities.
Section 3.06 Resignation from the Board. Upon the termination for
whatsoever reason of Executive's employment hereunder, Executive shall be deemed
to have resigned forthwith from his position on the Board of Directors, subject
to compliance with the Company's By-laws.
ARTICLE IV.
Non-competition; Confidential Information; Development Rights
Section 4.01 Other Business Ventures. During the term of the
Executive's employment hereunder, and for a period of twelve (12) months
following the date on which Executive's termination of employment with the
Company becomes effective, the Executive shall not, without the prior written
approval of the Board, directly or indirectly engage in, represent, be connected
with or have a financial interest in any business which is or, to the best of
his knowledge, is about to become engaged in the design, development,
production, sale or distribution of any product or component that directly
competes with a product or component (i) then being designed, produced, sold or
distributed by the Company or any of its affiliates, or (ii) to which the
Company or any of its affiliates shall then have proprietary rights to sell or
distribute (hereinafter the ""Company's Business""); provided, however, that
nothing herein contained shall be deemed to prohibit the Executive from (i)
being a passive investor owning up to 5% of any class of outstanding securities
of any company whose stock is publicly traded, or (ii) being an owner, officer,
director or trustee of family businesses or partnerships not engaged in the
Company's Business.
Executive acknowledges that the restricted period of time and the
geographical location specified under this section 4.01 are reasonable, in view
of the nature of the business in which the Company is engaged and Executive'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.
Section 4.02 Confidential Information. Except (i) in the course of his
employment with the Company, or (ii) as he may be required pursuant to any law
or court order or similar process, the Executive shall not at any time during or
after the term of the Executive's employment hereunder, directly or indirectly
disclose or use any Confidential Information (as defined below) or proprietary
data with respect to the Company. The term "Confidential 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. Confidential Information shall
not include information that (a) was already known to or independently developed
by the Executive 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
or known generally in the Company's industry except as a result of breach of
this Agreement by the Executive, (c) shall have been received by the Executive
from another person or entity having no obligation to the Company, or (d) is
approved in writing by the Company for release by the Executive.
The Executive agrees to disclose the Information only to persons
necessary in connection with Executive's work with the Company as determined by
the Executive in good faith. The Executive agrees to prevent the unauthorized
disclosure by him of the Confidential Information,
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and shall take appropriate measures to ensure that persons acting on his behalf
are bound by a like covenant or other duty of secrecy.
The Executive acknowledges and agrees that the Confidential Information
furnished to him hereunder is and shall remain proprietary to the Company.
Unless otherwise required by statute or government rule or regulation, and
excluding Executive's personal financial and business records, all copies of the
Confidential Information shall be returned to the Company immediately upon
request without retaining copies thereof.
Section 4.03 Hiring of Company Employees. During the term of the
Executive's employment hereunder, and for a period of twelve (12) months
following the date on which Executive's termination of employment with the
Company becomes effective, the Executive 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
Executive's knowledge was employed by the Company or its affiliates ("Company
Employee") at any time during the period commencing six 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.
Section 4.04 Development Rights. The Executive 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 Executive's efforts during his employment with the Company
shall be the sole property of the Company. Executive 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.
ARTICLE V.
Miscellaneous
Section 5.01 Notices. All notices, requests or other communications
provided for in this Agreement shall be made, if to the Company, to the Chairman
of the Board of TTR, and if to the Executive, to his address on the books of the
Company (or to such other address as the Company or Executive may give to the
other for purposes of notice hereunder).
Notices given to Executive shall be sent to:
Xxxxxx X. Xxxxx
000 Xxxxxxx Xxx
Xxxxxx Xxxxxxx, XX 00000
10
With a copy to:
Xxxxxxxx Xxxxxxx Chicco Foxman Oxholm & Xxxxx
0000 Xxxxxx Xx. - 0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Notices given to the Company shall be sent to:
TTR, Inc.
Xxx Xxxxxxxx Xxxxxx Xxxx. - 00xx Xxxxx
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx.
With a copy to:
Aboudi & Xxxxxxxxxx
000 Xxxxxxxxxx Xxxx.
Xxx Xxxx 00000, Xxxxxx
All notices, requests or other communications provided for in this
Agreement shall be made in writing either (a) by personal delivery to the party
entitled thereto, (b) by facsimile or electronic mail with confirmation of
receipt, (c) by mailing in the United States mails to the last known address of
the party entitled thereto or (d) by express courier service. The notice,
request or other communication shall be deemed to be received upon personal
delivery, upon confirmation of receipt of facsimile or electronic mail
transmission or upon receipt by the party entitled thereto if by United States
mail or express courier service; provided, however, that if a notice, request or
other communication is not received during regular business hours, it shall be
deemed to be received on the next succeeding business day of the Company.
Section 5.02 Assignment and Succession. The rights and obligations of
the Company under this Agreement shall inure to the benefit of and be binding
upon its successors and assigns. The Executive's rights and obligations
hereunder are personal and may not be assigned; provided, however that in the
event of the termination of the Executive's employment due to the Executive's
death or disability, the Executive's legal representative shall have the right
to receive the Severance Package as set forth in Section 3.02 above.
Section 5.03 Headings. The Article, Section , paragraph and
subparagraph headings are for convenience of reference only and shall not define
or limit the provisions hereof.
Section 5.04 Arbitration. In the event of any controversy, dispute or
claim arising out of or related to this Agreement or the Executive's employment
by the Company, the parties shall negotiate in good faith in an attempt to reach
a mutually acceptable settlement of such dispute. If negotiations in good faith
do not result in a settlement of any such controversy, dispute or claim,
11
it shall be finally settled by expedited arbitration in accordance with the
National Rules of the American Arbitration Association governing employment
disputes, except to the extent deemed modified by the following:
(One) The Arbitrator shall be determined from a list of names of
five impartial arbitrators each of whom shall be an attorney
experienced in arbitration matters concerning executive
employment disputes, supplied by the American Arbitration
Association (the "Association") chosen by Executive and the
Company each in turn striking a name from the list until one
name remains.
(Two) The expenses of the arbitration shall be borne equally by each
party; and each party shall bear its own legal fees and
expenses, except that the Arbitrator shall have authority to
award to the prevailing party his or its reasonable attorney's
fees and expenses if an award is rendered by the Arbitrator in
such party's favor.
(Three) The Arbitrator shall determine whether and to what extent any
party shall be entitled to damages under this Agreement. No
party shall be entitled to punitive damages, and each party
waives all such rights if any.
(Four) Each party shall prepare a submission and proposed finding
with such affidavits, memoranda of law, exhibits and other
documents as are appropriate to support the position taken by
such party. The Arbitrator shall take such evidence in the
hearing or request further submissions that the Arbitrator
believes would be necessary to evaluate the submission or the
credibility of the evidence, provided that the Arbitrator will
use every effort to avoid a general hearing. The Arbitrator
shall render a decision in writing, providing the reasons and
support therefor. Such determination by the Arbitrator is
intended to constitute an award and will be an award entitled
to full recognition under Article 75 of the New York Civil
Practice Law and Rules.
(Five) Subject to subparagraph (d) above, the Arbitrator shall have
the authority to award any remedy or relief provided for in
this Agreement, in addition to any other remedy or relief
(including provisional remedies and relief) that a court of
competent jurisdiction could order or grant. In addition, the
Arbitrator shall have the authority to decide issues relating
to the interpretation, meaning or performance of this
Agreement even if such decision would constitute an advisory
opinion in a court proceeding or if the issues would otherwise
not be ripe for resolution in a court proceeding, and any such
decision shall bind the parties in their continuing
performance of this Agreement. The Arbitrator's written
decision shall be rendered within sixty days of the submission
by both parties, or if the Arbitrator determines to hold a
hearing, then within sixty days of the hearing. The decision
reached by the Arbitrator shall be final and binding upon the
parties as to the matter in dispute. To the extent that the
relief or remedy granted by the Arbitrator is relief or remedy
on which a court could enter judgment, a judgment upon the
award rendered by the Arbitrator shall be entered in any court
having jurisdiction thereof (unless in the case of an award of
damages, the full amount of the award is paid within 15 days
of its determination
12
by the Arbitrator). Otherwise, the award shall be binding on
the parties in connection with their continuing performance of
this Agreement and in any subsequent arbitration or judicial
proceedings between the parties.
(Six) The arbitration shall take place in New York City or in the
locale of the Company's office in the United States where
Executive is based, as elected by the party commencing
arbitration.
(Seven) The arbitration proceeding and all filing, testimony,
documents and information relating to or presented during the
arbitration proceeding shall be disclosed exclusively for the
purpose of facilitating the arbitration process and for no
other purpose and shall be deemed to be information subject to
the confidentiality provisions of this Agreement.
(Eight) The parties shall continue performing their respective
obligations under this Agreement notwithstanding the existence
of a dispute while the dispute is being resolved unless and
until such obligations are terminated or expire in accordance
with the provisions hereof.
(Nine) The parties may obtain an exchange of information including
depositions, interrogatories, production of documents,
exchange of summaries of testimony or exchange of statements
of position, and the Arbitrator shall limit such disclosure to
avoid unnecessary burden to the parties and shall schedule
promptly all discovery and other procedural steps and
otherwise assume case management initiative and control to
effect an efficient and expeditious resolution of the Dispute.
At any oral hearing of evidence in connection with an
arbitration proceeding, each party and its counsel shall have
the right to examine its witness and to cross-examine the
witnesses of the other party who testify at the hearing.
(Ten) Notwithstanding the dispute resolution procedures contained in
this Section 5.04, either party may apply to any court having
jurisdiction (i) to enforce this Agreement to arbitrate, (ii)
to seek provisional injunctive relief so as to maintain the
status quo until the arbitration award is rendered or the
Dispute is otherwise resolved, or (iii) to challenge or vacate
any final judgment, award or decision of the Arbitrator that
does not comport with the express provisions of this Section
5.04.
Section 5.05 Invalidity. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect under any law, the
validity, legality or enforceability of the remaining provisions hereof shall
not in any way be affected or impaired.
Section 5.06 Waivers. No omission or delay by either party hereto in
exercising any right, power or privilege hereunder shall impair such right,
power or privilege, nor shall any single or partial exercise of any such right,
power or privilege, preclude any further exercise thereof, or the exercise of
any other right, power or privilege.
Section 5.07 Counterparts. This Agreement may be executed in multiple
counterparts,
13
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
Section 5.08 Entire Agreement. This Agreement contains the entire
understanding of the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof. No representation, promise
or inducement has been made by either party hereto that is not embodied in this
Agreement and neither party shall be bound by or liable for any alleged
representation, promise or inducement not set forth herein. This Agreement may
not be amended, except by a written instrument hereafter signed by each of the
parties hereto.
Section 5.09 Interpretation. The parties hereto acknowledge and agree
that each party and its or his counsel reviewed and negotiated the terms and
provisions of this Agreement and have contributed to its drafting. Accordingly,
(i) the rules of construction to the effect that any ambiguities are resolved
against the drafting party shall not be employed in the interpretation of this
Agreement, and (ii) the terms and provisions of this Agreement shall be
construed fairly as to all parties hereto and not in favor of or against any
party regardless of which party was generally responsible for the preparation of
this Agreement.
Section 5.10 Governing Law. This Agreement and the performance hereof
shall be construed and governed in accordance with the internal laws of the
State of New York without reference to principles of conflict of laws.
14
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed
by its duly authorized officer and the Executive has signed this Agreement as of
the day and year first above written.
TTR INC.
By /s/ XXXX XXXXXXX
------------------------
Name: Xxxx Xxxxxxx
Its: Chairman &
President
/s/ XXXXXX XXXXX
---------------------------
XXXXXX X. XXXXX
15
Schedule I
Other Business-related Activities of the Executive
Executive may continue to own and operate Xxxxx Technology Ventures,
Inc. (""Xxxxx Inc.""). The Executive shall not materially increase the scope or
breadth of the activities currently engaged in by Xxxxx Inc. beyond those
presently existing or incidental thereto without the prior written consent of
the Company. The Executive shall refer exclusively to the Company any business
opportunity in the line of the Company's business of which he shall become
aware.
The Executive shall have the right to appear or participate in any
trade, industry, professional, business or other forum, conference or meeting;
provided, however, that Executive shall disclose that he is affiliated with, and
appearing solely on behalf of, the Company.
The Executive shall have the right to participate in charitable,
religious and civic activities; provided, however, that such activities do not
materially impair or materially interfere with the performance of his duties and
responsibilities on behalf of the Company.
16
Exhibit A
to Employment Agreement between TTR, Inc. and Xxxxxx X. Xxxxx dated July 1,
1998.
TTR INC.
INCENTIVE STOCK OPTION AGREEMENT
[SENT SEPARATELY]
17
ATTACHMENT A
TO OPTION AGREEMENT BETWEEN TTR, INC. AND XXXXXX X. XXXXX DATED JULY __, 1998.
TERM SHEET
XXXXXX X. XXXXX
PERFORMANCE STANDARDS FOR ACCELERATION OF OPTIONS
1. All defined terms used in this Term Sheet and not defined in the
Employment Agreement and/or Option Agreement between TTR, Inc. and
Xxxxxx X. Xxxxx ("Executive") dated July __, 1998 (the "Employment
Agreement") shall have the meaning specified in the TTR, Inc. Stock
Option Plan (the "Plan").
2. This Term Sheet shall apply to 250,000 Shares under Option.
3. [to be inserted at a later date as provided for in the Employment
Agreement]
Notice and all other "Miscellaneous" provisions of Article V of the
Employment Agreement shall be equally applicable to this Term Sheet.
Date: _______________
TTR, Inc.
By:__________________________
Its:__________________________
-----------------------------
Xxxxxx X. Xxxxx
18
Exhibit C
to Employment Agreement between TTR, Inc. and Xxxxxx X. Xxxxx dated July 1,
1998.
TTR, INC.
BENEFITS TO BE PROVIDED OR MADE AVAILABLE TO EXECUTIVE
19
Exhibit A
to Employment Agreement between TTR, Inc. and Xxxxxx X. Xxxxx dated Jul y6,
1998.
TTR INC.
NON-QUALIFIED INCENTIVE STOCK OPTION AGREEMENT
TTR Inc., a corporation organized under the laws of Delaware (the
"Company"), hereby grants to Xxxxxx X. Xxxxx (the "Optionee") as of July __,
1998 (the "Option Date"), pursuant to the provisions of the TTR Inc. Stock
Option Plan (the "Plan"), an incentive stock option (the "Option") to purchase
from the Company 250,000 Shares, at the price of $2 and 15/16 per Share upon and
subject to the terms and conditions set forth below. References to employment by
the Company shall include employment by a subsidiary or affiliate of the
Company.
Capitalized terms not defined herein or in the Employment Agreement
entered into between Optionee and the Company dated July 6, 1998 (the
"Employment Agreement") shall have the meanings specified in the Plan.
1. Option Subject to Acceptance of Agreement.
The Option may not be exercised unless the Optionee shall accept this
Agreement by executing it in the space provided below and returning such
original execution copy to the Company.
2. Time and Manner of Exercise of Option.
2.1. Maximum Term of Option. In no event may the option be
exercised, in whole or in part, after ten years from the date on which
the Board approved the Plan (the "Expiration Date").
2.2. Exercise of Option.
(a) The Option shall become exercisable as to one-fifth of
the number of Shares subject to the Option during each year of
employment, prorated over the number of complete months which
Optionee is employed by the Company, and otherwise as provided
below in this Section 2.2. Notwithstanding the foregoing, in the
event that the Optionee resigns (other than for Good Reason) or
is terminated for Cause, as defined in the Employment Agreement,
prior to the first anniversary of the date of grant none of the
Shares exercisable under the Option shall vest in the Optionee.
(b) If the Optionee's employment by the Company terminates
for Cause, the Option, to the extent not then vested, shall
terminate automatically on the effective date of the Optionee's
termination of employment for Cause. For purposes of this Section
2.2, Optionee shall only be deemed terminated by the Company for
Cause if his termination for Cause has become effective under and
pursuant to the Employment Agreement (but, as provided in the
Employment Agreement, only upon the conclusion of an arbitration
proceeding, if it is timely commenced in accordance with such
Agreement).
20
(c) If the performance standards set forth in the Term Sheet
attached to this Agreement are met, then that all or a portion of
the Option shall be accelerated and become fully vested and
exercisable to the extent provided for in such Term Sheet. If the
Term Sheet has not been completed and attached at the time of the
delivery of this Option Agreement to the Optionee, this Option
Agreement will be fully valid, enforceable and binding, and the
Company and the Optionee will act in good faith to agree upon a
Term Sheet and attach such Term Sheet to this Agreement within
the ninety (90) day period following delivery of this Option
Agreement to the Optionee.
(d) If there is a Change of Control, as defined in the
Employment Agreement, whereby shareholders of the Company
generally will be entitled to exchange or sell their shares, or
otherwise be entitled to participate in such event, then in such
case, the Option shall be accelerated and become fully vested and
exercisable, and may be exercised by the Optionee or the
Optionee's Legal Representative, so that Optionee may participate
in such event as a shareholder of the Company with respect to the
Shares that would be issued upon exericise of the Option.
(e) If (i) the Optionee's employment by the Company is
terminated by the Company other than for "Cause" within the
meaning of Section 2.2(b) hereof (a termination due to Optionee's
death or disability, as defined in the Employment Agreement, or
notice by the Company of non-renewal of the Employment Agreement,
shall be treated for purposes of this Agreement as a termination
by the Company other than for "Cause") , or (ii) the Optionee's
employment by the Company is terminated by the Optionee for "Good
Reason" as determined in accordance with the provisions of the
Employment Agreement, then in any such case, that portion of the
Option which would have vested on the next succeeding anniversary
of the date of grant but for the specified event shall be
accelerated and become fully vested and exercisable, and may
thereafter be exercised by the Optionee or the Optionee's Legal
Representative until and including the Expiration Date.
(d) If the Optionee's employment by the Company is treated
(after giving effect to any arbitration proceeding) as having
been terminated by the Optionee without Good Reason under the
Employment Agreement, the Option shall be exercisable only to the
extent it is exercisable on the effective date of the Optionee's
termination of employment and may thereafter be exercised by the
Optionee or the Optionee's Legal Representative until and
including the earlier of (i) the date which is three months after
the effective date of the Optionee's termination of employment or
service (or, if later, the date which is 15 days after the
Arbitrator's determination that Optionee's employment was
terminated by the Optionee without Good Reason) and (ii) the
Expiration Date.
(e) If the Optionee dies at any time prior to the Expiration
Date following termination of employment for a reason giving
Optionee the right to exercise until the Expiration Date under
paragraph (c) above, the Option shall be exercisable by the
Optionee's Legal Representative or Permitted Transferees, as the
case may be, until and including the Expiration Date.
2.3 Method of Exercise. Subject to the limitations set forth in
this Agreement, the Option may be exercised by the Optionee (1) by
giving written notice to the Company specifying the number of whole
Shares to be purchased and accompanied by payment therefor in full (or
arrangement made for such payment to the Company's
21
satisfaction) either (i) in cash or by bank or certified check, (ii)
previously owned whole Shares (which the Optionee has held for at
least six months prior to the delivery of such Shares or which the
Optionee purchased on the open market and for which the Optionee has
good title, free and clear of all liens and encumbrances) having a
fair market value, determined as of the date of exercise, equal to the
aggregate purchase price payable pursuant to the Option by reason of
such exercise, (iii) a promissory note bearing interest as provided
for in the Plan, (iv) in cash by a broker-dealer acceptable to the
Company to whom the Optionee has submitted an irrevocable notice of
exercise or (v) a combination of (i), (ii) and (iii), and (2) by
executing such documents as the Company may reasonably request. Any
fraction of a Share which would be required to pay such purchase price
shall be disregarded and the remaining amount due shall be paid in
cash by the Optionee. No certificate representing a Share shall be
delivered until the full purchase therefor has been paid.
2.4 Termination of Option.
(a) In no event may the Option be exercised after it
terminates as set forth in this Section 2.4. The Option shall
terminate, to the extent not exercised pursuant to Section 2.3 or
earlier terminated pursuant to Section 2.2, on the Expiration
Date.
(b) In the event that rights to purchase all or a portion of
the Shares subject to the Option expire or are exercised,
cancelled or forfeited, the Optionee shall promptly return this
Agreement to the Company upon the Company's request for full or
partial cancellation, as the case may be. Such cancellation shall
be effective regardless of whether the Optionee returns this
Agreement. If the Optionee continues to have rights to purchase
Shares hereunder, the Company shall, within 10 days of the
Optionee's delivery of this Agreement to the Company, either (i)
xxxx this Agreement to indicate the extent to which the Option
has expired or been exercised, cancelled or forfeited or (ii)
issue to the Optionee a substitute option agreement applicable to
such rights, which agreement shall otherwise be identical to this
Agreement in form and substance.
3. Additional Terms and Conditions of Option.
3.1. Nontransferability of Option. The Option may not be
transferred by the Optionee other than (i) by will or the laws of
descent and distribution or pursuant to beneficiary designation
procedures approved by the Company or (ii) as otherwise permitted
under Rule 16b-3 under the Exchange Act (to the extent applicable).
Except to the extent permitted by the foregoing sentence, during the
Optionee's lifetime the Option is exercisable only by the Optionee or
the Optionee's Legal Representative. Except as permitted by the
foregoing, the Option may not be sold, transferred, assigned, pledged,
hypothecated, voluntarily encumbered or otherwise disposed of (whether
by operation of law or otherwise) or be subject to execution,
attachment or similar process.
3.2. Investment Representation. The Optionee hereby represents
and covenants that (a) any Shares purchased upon exercise of the
Option will be purchased for investment and not with a view to the
distribution thereof within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"), unless such purchase has been
registered under the Securities Act and any applicable state
securities laws; (b) any subsequent sale of any such Shares shall be
made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant
to an exemption from registration under
22
the Securities Act and such state securities laws; and (c) if
requested by the Company, the Optionee shall submit a written
statement, in form satisfactory to the Company, to the effect that
such representation (x) is true and correct as of the date of purchase
of any Shares hereunder or (y) is true and correct as of the date of
any sale of any such Shares, as applicable. As a further condition
precedent to any exercise of the Option, the Optionee shall comply
with all regulations and requirements of any regulatory authority
having control of or supervision over the issuance or delivery of the
Shares.
3.3. Withholding Taxes.
(a) As a condition precedent to the delivery of Shares upon
exercise of the Option, the Optionee shall, upon request by the
Company, pay to the Company in addition to the purchase price of the
Shares, such amount of cash as the Company may be required, under all
applicable federal, state, local or other laws or regulations, to
withhold and pay over as income or other withholding taxes (the
"Required Tax Payments") with respect to such exercise of the Option.
If the Optionee shall fail to advance the Required Tax Payments after
request by the Company, the Company may, in its discretion, deduct any
Required Tax Payments from any amount then or thereafter payable by
the Company to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to
advance the Required Tax Payments by any of the following means: (1) a
cash payment to the Company pursuant to Section 3.3(a), (2) delivery
to the Company of previously owned whole Shares (which the Optionee
has held for at least six months prior to the delivery of such Shares
or which the Optionee purchased on the open market and for which the
Optionee has good title, free and clear of all liens and encumbrances)
having a fair market value, determined as of the date the obligation
to withhold or pay taxes first arises in connection with the Option
(the "Tax Date"), equal to the Required Tax Payments, (3) a cash
payment by a broker-dealer acceptable to the Company to whom the
Optionee has submitted an irrevocable notice of exercise or (4) any
combination of (1) and (2). Shares to be delivered may not have a Fair
Market Value in excess of the minimum amount of the Required Tax
Payments. Any fraction of a Share which would be required to satisfy
any such obligation shall be disregarded and the remaining amount due
shall be paid in cash by the Optionee. No certificate representing a
Share shall be delivered until the Required Tax Payments have been
satisfied in full.
(c) Unless the Committee otherwise determines, if the Optionee is
subject to Section 16 of the Exchange Act, the Optionee may deliver to
the Company previously owned whole Shares in accordance with Section
3.3(b), but only if such delivery is in connection with the delivery
of Shares in payment of the exercise price of the option.
3.4 Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off or other similar change in
capitalization or event, or any distribution to holders of Shares other
than a regular cash dividend, the number and class of securities subject to
the Option and the purchase price per security shall be appropriately
adjusted by the Committee without an increase in the aggregate purchase
price. If any adjustment would result in a fractional security being
subject to the Option, the Company shall pay the Optionee, in connection
with the first exercise of the Option, in whole or in part, occurring after
such adjustment, an amount in cash determined by multiplying (i) the
fraction of such security (rounded to
23
the nearest hundredth) by (ii) the excess, if any, of (A) the fair market
value of a Share on the exercise date over (B) the exercise price of the
Option.
3.5. Compliance with Applicable Law. The Option is subject to the
condition that if the listing, registration or qualification of the Shares
subject to the Option upon any securities exchange or under any law, or the
consent or approval of any governmental body, or the taking of any other
action is necessary or desirable as a condition of, or in connection with,
the purchase or delivery of Shares hereunder, the Option may not be
exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained.
The Company agrees to use reasonable efforts to effect or obtain any such
listing, registration, qualification, consent or approval.
3.6. Delivery of Certificates. Upon the exercise of the Option, in
whole or in part, the Company shall deliver or cause to be delivered one or
more certificates representing the number of Shares purchased against full
payment therefor. The Company shall pay all original issue or transfer
taxes and all fees and expenses incident to such delivery, except as
otherwise provided in Section 3.3.
3.7. Option Confers No Rights as Stockholder. The Optionee shall not
be entitled to any privileges of ownership with respect to Shares subject
to the Option unless and until purchased and delivered upon the exercise of
the option, in whole or in part, and the Optionee becomes a stockholder of
record with respect to such delivered Shares; and the Optionee shall not be
considered a stockholder of the Company with respect to any such Shares not
so purchased and delivered.
3.8. Option Confers No Rights to Continued Employment. In no event
shall the granting of the Option or its acceptance by the Optionee give or
be deemed to give the Optionee any right to continued employment by the
Company or any affiliate of the Company.
3.9. Decisions of Board or Committee. The Board or the Committee shall
have the right to resolve all questions which may arise in connection with
the Option or its exercise. Any interpretation, determination or other
action made or taken by the Board or the Committee regarding the Plan or
this Agreement shall be final, binding and conclusive (subject to the
provisions for termination by the Company for Cause and termination by the
Optionee for Good Reason, and arbitration of disputes, as set forth in the
Employment Agreement).
3.10. Company to Reserve Shares. The Company shall at all times prior
to the expiration or termination of the Option reserve or cause to be
reserved and keep or cause to be kept available, either in its treasury or
out of its authorized but unissued Shares, the full number of Shares
subject to the Option from time to time.
3.11. Agreement Subject to the Plan. Except to the extent otherwise
expressly provided herein, this Agreement is subject to the provisions of
the Plan and shall be interpreted in accordance therewith. The Optionee
hereby acknowledges receipt of a copy of the Plan. To the extent of any
inconsistency or conflict between (i) this Agreement or the terms of the
Employment Agreement and (ii) the Plan, upon approval of the Employment
Agreement by the Board the Plan shall be deemed amended in such respects as
to cause the provisions of the Employment Agreement and this Agreement to
take precedence and be fully valid, enforceable, effective, and legally
binding upon the Company.
24
3.12. Gross-Up. In the event that a Change in Control as defined in
the Employment Agreement has occurred, and the aggregate of all payments or
benefits made or provided to the Optionee under this Agreement, the
Employment Agreement and under all other plans and programs of the Company
(the "Aggregate Payment") is determined by the Internal Revenue Service
("IRS") or by the "Auditor" (as hereinafter defined) to constitute a
Parachute Payment, as such term is defined in Section 28OG(b)(2) of the
Internal Revenue Code of 1986, as amended (the "Code"), the Company shall
pay to the Optionee, prior to the time any excise tax imposed by Section
4999 of the Code ("Excise Tax") is payable with respect to such Aggregate
Payment, an additional amount which, after the imposition of all income and
excise taxes thereon, is equal to the Excise Tax on the Aggregate Payment.
In no event shall the Company be obligated to pay the Optionee's income
taxes due with respect to his exercise of the Option or with respect to
payments or benefits received under any plans or programs of the Company.
Unless a determination is made by the IRS, the determination of whether the
Aggregate Payment constitutes a Parachute Payment and, if so, the amount to
be paid to the Executive and the time of payment pursuant to the preceding
sentence of this Section 3.12 shall be made by an a United States national
accounting firm reasonably acceptable to the Company (the "Auditor").
4. Miscellaneous Provisions.
[4.1. Designation as Incentive Stock Option. The Option is hereby
designated as constituting an "incentive stock option" within meaning of
section 422 of the Internal Revenue Code of 1986, as amended (the "Code");
this Agreement shall be interpreted and treated consistently with such
designation. If, for any reason, any part of the Option granted herein is
not qualified to be treated as an incentive stock option at the time of
grant, then as to that portion of the Option only, the Option shall be
deemed a nonstatutory option, subject to and in accordance with the
provisions of the Code.
4.2. Meaning of Certain Terms. (a) As used herein, the term "Legal
Representative" shall include an executor, administrator, legal
representative, beneficiary or similar person and the term "Permitted
Transferee" shall include any transferee (i) pursuant to a transfer
permitted under the Plan and Section 3.1 hereof or (ii) designated pursuant
to beneficiary designation procedures which may be approved by the Company.
4.3. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or
persons who shall, upon the death of the Optionee, acquire any rights
hereunder in accordance with this Agreement or the Plan.
4.4. Notices. All notices, requests or other communications provided
for in this Agreement shall be made in accordance with the notice
provisions in the Employment Agreement.
4.5. Governing Law. The Option, this Agreement, and all determinations
made and actions taken pursuant hereto and thereto, to the extent not
governed by the laws of the United States, shall be governed by the laws of
the State of New York and construed in accordance therewith without giving
effect to principles of conflicts of laws.
4.6. Counterparts. This Agreement may be executed in two counterparts
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
25
4.7 Dispute Resolution. The provisions of Section 5.04 of the
Employment Agreement relating to resolution of disputes shall also apply to
resolution of disputes under this Agreement.
TTR INC.
By /s/ XXXX X. XXXXXXX
--------------------------
Name Xxxx X. Xxxxxxx
Its: Chairman & President
Accepted this 6th day of July, 1998.
/s/ XXXXXX XXXXX
--------------------------
Xxxxxx X. Xxxxx
"Optionee"
Memorandum
26
