EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into as of the 1 day of June, 1999
between Xxxxxxx Xxxxxxx (the "Employee") and TTR Technologies Inc., a Delaware
company (the "Company").
W I T N E S S E T H
WHEREAS, the Company is wishes to employ the Employee in accordance with
the terms and conditions of this Agreement, and the Employee wishes to be so
employed.
NOW THEREFORE the parties hereto agree as follows:
1. Employment. With effect from the effective date (as defined in section 2),
the Company hereby engages Employee to serve as Chief Operating Officer who
shall perform such duties, undertake such responsibilities and exercise such
authority as the Board of Directors or the Chief Executive Officer of the
Company shall designate and shall report to the Chief Executive Officer. The
Employee shall devote his full time to the affairs of the Company as required
without any right or entitlement to additional or overtime compensation except
as expressly provided herein.
2. Term.
2.1 Employee's employment under this Agreement shall commence not later
than June 1, 1999 (the "Effective Date") and, unless otherwise provided, shall
end on the earlier of (i) the death or disability (as defined herein ) of the
Employee, (ii) termination of Employee's employment by Company with cause (as
defined herein); (iii) after one year from the Effective Date (the "initial
term"), (vi) termination of Employee's employment without cause by the Company
or Employee upon 90 days prior written notice any time. After the expiration of
such initial term (other than for reasons set forth in clauses (i), (ii) and
(vi) this Agreement shall automatically be renewed for an additional one (1)
year periods on the same terms and conditions set forth herein (unless mutually
agreed otherwise).
Notwithstanding the foregoing, in the event that Company or Employee shall have
terminated this Agreement without cause, upon the request of the Company the
Employee shall vacate his position and the premises on a date specified by the
Company which is earlier than the end of the notice period specified in (vi)
above upon payment to Employee, in one lump sum on the effective date of
termination, the amount of pro rata Gross Salary payable under Section 3.1 from
the effective date of termination until the end of such notice period.
2.2 For the purpose of this paragraph 2, "disability" shall mean any
physical or mental illness or injury as a result of which Employee remains
absent from work for a period of two (2) successive months, or an aggregate of
two (2) months in any twelve (12) month period. Disability shall occur at the
end of any such period.
2.3 For the purpose of this paragraph 2, "cause" shall exist if Employee
(i) breaches any of the material terms or conditions of this Agreement; (ii)
substantially fails to perform the Employee's areas of responsibility set forth
herein, (iii) engages in willful misconduct or acts in bad faith with respect to
the Company, in connection with and related to the employment
hereunder, (iv) is convicted of a felony, (v) fails to comply with the
instructions of the Company's Board; provided that with respect to clauses (i)
and (ii), if Employee has cured any such condition within 15 days following
delivery of the advance notice, then "cause" shall be deemed not to exist. For
purposes of this Paragraph 2, "advance notice" shall constitute a written notice
delivered to Employee that sets forth with particularity the facts and
circumstances relied upon by the Company as the basis for cause.
3. Compensation
3.1 During the term hereof, and subject to the performance of the services
required to be performed hereunder by Employee, the Company shall pay to the
Employee for all services rendered hereunder, as salary, payable not less often
than once per month and in accordance with the Company's normal and reasonable
payroll practices, a monthly gross amount equal to U.S. $5000 (the "Gross
Salary") payable in NIS (according to the representative rate of exchange at the
Company's bank on the date of payment) or US dollars, less required employee
deductions under law.
3.2 The Company and the Employee will obtain and maintain Manager's
Insurance (Bituach Menahalim) under Israeli law for the benefit of the Employee
in the customary form in Israel. Each of the Company and the Employee shall
contribute toward the premiums payable in respect of such insurance those
amounts which would be recognized under applicable law, but in no event shall
such contributed amounts be more than thirteen and one third percent (13 1/3%)
of each monthly Gross Salary payment from the Company and five percent (5 %) of
such amount from the Employee. In Addition, the Company shall pay 2.5% of each
monthly Gross Salary payment for Disability Insurance in Israel. It is hereby
agreed that provided Employee is not terminated under section 2.3 (iii or iv),
he shall be entitled upon termination or expiration of this Agreement to the
amount paid by the Company (13 1/3%) hereunder, and to the extent available,
(and without derogating from section 2.1 above) such payment shall be in lieu
and in full and final substitution of any severance pay required under law.
3.3 The Company and the Employee shall maintain an advancement fund under
Israeli law (keren Heshtamlut) for exclusive benefit of the Employee. The
Company shall contribute to such fund an amount equal to 7-1/2% of each monthly
Gross Salary payment and the employee shall contribute to such fund an amount
equal to 2-1/2% of each monthly Gross Salary payment. The Employee hereby
instructs the Company to transfer to such advancement fund the amount of the
Employee's and the Company's contribution from each monthly Gross Salary
payment.
3.4 Company shall provide Employee with use of automobile and Company
shall pay for registration, gas, maintenance and insurance; and shall provide
the Employee with a cell phone and pay for its maintenance and use.
3.5 Options. (i) Employee shall be issued options to acquire up to 235,000
shares of Common Stock ("Options") of the Company exercisable at par value of
the shares. At the option of the Company, these Options may be issued from and
pursuant to a Company employee stock option plan or otherwise. Such Options
shall vest in the Employee equally over three (3) years, so long as Employee
remains in the employ of the Company and in accordance with the terms and
subject to Employee executing the Company's standard
Employee Stock Option Plan. The options shall vest in the Employee pro-rata to
the number of complete months which Employee was employed hereunder.
If the Company sells all or substantially all of its assets, the Employee shall
be entitled to exercise, immediately prior to such sale the Options which have
not yet vested.
(ii) Registration Rights
The Company hereby agrees to include 78.333 of the shares underlying the
Options in the registration statement contemplated by that certain Registration
Rights Agreement, dated as of May 11, 1999, to which the Company and certain
purchasers of the Company's 10% convertible debentures are parties.
(iii) If subsequent to registering the 78,333 shares under the Securities Act of
1933, as amended (the "Act"), pursuant to section 3.5(ii) above, the Company
proposes to register any of its stock or other securities under Act in
connection with the public offering of such securities solely for cash, the
Company shall include the shares underlying the remaining 156,667 of the
Employee's Options (or, in the event that the Company does not complete the
registration referred to in section 3 (ii), 235,000 shares underlying the
Options).
(iv) In the event that there is a managing underwriter of the offering of shares
referred to in the registration statement in section 3(ii) or (iii), the Company
shall not be required to include such shares unless the Employee accepts the
terms of any underwriting as agreed between the Company and the underwriter.
4. Vacation. The Employee shall be entitled to 22 working days of paid vacation
during each fiscal year that this Agreement is in effect to be taken at times as
agreed upon by the parties.
5. Development Rights. The Employee agrees and declares that all proprietary
information including but not limited to trade secrets, know-how, patents and
other rights in connection therewith developed by or with the contribution of
Employee's efforts during his employment with the Company shall be the sole
property of the Company. Upon the Company's request (whenever made), Employee
shall execute and assign to the Company all the rights in the proprietary
information.
6. Secrecy and Nondisclosure The Employee shall treat as secret and confidential
all of the processes, methods, formulas, procedures, techniques, software,
designs, know-how, data, and other information which are not of public knowledge
or record pertaining to the Company's business (existing, potential, and
future), including without limitation all business information relating to
customers and supplies and products of which the employee becomes aware during
and as a result of employment with the Company, and Employee shall not disclose,
use, publish, or in any other manner reveal, directly or indirectly, at any time
during and after the term of this Agreement, any such information detailed
herein.
7. Non-Competition & Poaching
7.1 During the term of this Agreement and for a term of one (1) year after
Employee ceases to be employed by the Company, Employee will not, directly or
indirectly,
for his own account or as an employee, officer, director, partner, joint
venturer, shareholder, investor, consultant or otherwise (except as an investor
in a corporation whose stock is publicly traded and in which Employee holds less
than 5% of the outstanding shares) engage in or contribute his knowledge to any
work or activity that involves a product, process, service or development which
directly competes with the business of the Company, now or hereafter existing.
7.2 Employee acknowledges that the restricted period of time and
geographical location specified under this Section 7 are reasonable, in view of
the nature of the business in which the Company is engaged and Employee's
knowledge of the Company's business and products. If such 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 area and during such period of time
as shall be determined to be reasonable by such judicial proceeding.
7.3 The Employee shall not at any time during the period from the
termination of this Agreement or any extension hereof, to the expiry of six (6)
months, employ or attempt to employ or solicit or endeavor to entice away from
or discourage from being employed by the Company any person who is, or shall at
any time until the termination of this Agreement or any extension hereof, one of
the employees of the Company.
8. Expenses
Employee is authorized to incur reasonable and proper expenses for
promoting the business of the Company including expenses for entertainment,
travel, lodging, and similar items. The Company will reimburse Employee promptly
for all such expenses upon presentation by Employee, of receipts or other
appropriate evidence of expenses.
9. Miscellaneous
9.1 Employee Representations. The Employee 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 he is party, (ii) does not require the consent of any
person, and (iii) shall not utilize during the term of his employment any
proprietary information of any third party, including prior employers of the
Employee.
9.2 Entire Agreement. This Agreement constitutes the entire understanding
and agreement between the parties and supersedes any and all prior discussions
and agreements and correspondence, and may not be amended or modified in any
respect except by a subsequent writing executed by both parties.
9.3 Notices. All notices or other communications required or desired to be
sent to either Party shall be in writing and shall be sent by hand or by
Registered or Certified mail, postage prepaid, return receipt requested, or sent
by telegram or facsimile to the address set forth in the Preamble to this
Agreement or to such other address as the recipient may designate by notice in
accordance with the provisions of this Clause. Any such notice shall have been
deemed to have been delivered if served by hand when delivered, if by Registered
or Certified Mail 48 hours after posting if within the same country or 14 days
if posted from another
country, and by telex or facsimile transmission when dispatched and receipt
confirmed by recipient party.
9.4 Severability. Any term or provision of this Agreement which is found
by a court, tribunal or arbitration panel to be invalid or unenforceable shall
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms or provisions of this
Agreement or affecting the validity or enforceability of any of the other terms
or provisions of this Agreement. In the event that any term or provision of this
Agreement is found to be unenforceable or ineffective, then the reviewing court,
tribunal or arbitration panel may modify such term or provision to the extent
necessary to render it enforceable and the parties agree to be bound by and
perform this Agreement as modified.
9.5 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, USA.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
signed by the date stated above.
TTR Technologies Inc.
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Xxxxxxx Xxxxxxx
