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.
(i) 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.
(ii) 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.
(iii) 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.
(iv) 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
2
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.
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
3
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:
(i) 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.
(ii) 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.
(iii) 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.
(iv) 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.
4
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.
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
5
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.
If the Arbitrator does not rule that the Executive was terminated for
Cause, the Executive
6
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"):
(i) 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;
(ii) 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;
(iii) 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.
7
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.
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.
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.
8
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, and shall take appropriate
measures to ensure that persons acting on his behalf are bound by a like
9
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
11
negotiations in good faith do not result in a settlement of any such
controversy, dispute or claim, 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:
(i) 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.
(ii) 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.
(iii) 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.
(iv) 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.
(v) 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 by the Arbitrator).
12
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.
(vi) 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.
(vii) 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.
(viii) 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.
(ix) 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.
(x) 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 X. Xxxxxxx
_________________________
Name: Xxxx X. Xxxxxxx
______________________
Its: Chairman & President
_________________________
/s/XXXXXX X. XXXXX
_____________________________
XXXXXX X. XXXXX
15
By: /s/ Xxxx X. Xxxxxxx
__________________________
Name: Xxxx X. Xxxxxxx
__________________________
Its: Chairman & President
__________________________
Accepted this ____ day of July, 1998.
/s/ Xxxxxx X. Xxxxx
_________________________________________
Xxxxxx X. Xxxxx
"Optionee"
Memorandum
24
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 6, 1998.
TTR INC.
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 6,
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
17
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).
(c) If the performance standards set forth in the
Term Sheet attached to this Agreement are met, then 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.
(f) 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
18
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.
(g) 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 (e) 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 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.
19
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 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
20
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
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
21
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.
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 one-half (50%) of 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
22
shall be made by 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.
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.
23
By:_____________________________
Name:___________________________
Its:____________________________
Accepted this ____ day of July, 1998.
-----------------------------------------
Xxxxxx X. Xxxxx
"Optionee"
Memorandum
24
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
25
EXHIBIT C
to Employment Agreement between TTR, Inc. and Xxxxxx X. Xxxxx
dated July 6, 1998.
TTR, INC.
BENEFITS TO BE PROVIDED OR MADE AVAILABLE TO EXECUTIVE
26
