TTR TECHNOLOGIES, INC.
1841 Broadway
New York, New York 10023
Notice of Annual Meeting of Stockholders
------------------------
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of TTR
TECHNOLOGIES, INC. (the "Company") will be held in New York City, New York, at
10 A.M., on December 21, 1999, at ______________________, New York, New York,
10022, for the following purposes:
(i) for the election of directors of the Company to hold office until the
next annual meeting of the stockholders and until their respective successors
shall have been duly chosen and qualified,
(ii) to amend the Certificate of Incorporation of the Company to increase
the number of shares of Common Stock that the Company is authorized to issue
from time to time,
(iii) to increase the total number of shares of Common Stock reserved for
issuance upon exercise of stock options granted under the 1996 Incentive Stock
Option Plan to 1,500,000 shares,
(iv) to ratify the selection of Brightman Almagor & Co, a member of
Deloitte Touche Tohmatsu, as independent public accountants of the Company for
the year ending December 31, 1999, and
(v) to transact such other business as may properly come before the
meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on November 5, 1999
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the Annual Meeting or any adjournment thereof.
If you do not expect to be personally present at the meeting but wish your
stock to be voted for the business to be transacted thereat, the Board of
Directors requests that you complete, sign and date the enclosed proxy and
promptly return it by mail in the enclosed postage paid envelope provided.
By Order of the Board of Directors
M.D. Tokayer
Chairman of the Board
November __, 1999
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND PROMPTLY RETURN IT IN THE
ENVELOPE PROVIDED. NO POSTAGE IS NECESSARY IF MAILED IN THE UNITED STATES.
<PAGE>
2
TTR TECHNOLOGIES, INC.
1841 Broadway
New York, New York, 10023
------------------------
PROXY STATEMENT
For the Annual Meeting of Stockholders
to be held on December 21, 1999
------------------------
Introduction
This Proxy Statement is sent to shareholders of TTR Technologies, Inc., a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Annual Meeting
of Stockholders of the Company to be held at ___________________________, New
York, New York, 10022, on Tuesday, December 21, 1999 at 10:00 a.m., and any
adjournment(s) thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders. Solicitation of proxies may be made in person or
by mail, telephone, or telecopy by directors, officers, and employees of the
Company. The Company may also engage the services of others to solicit proxies
in person or by telephone or telecopy. In addition, the Company may also request
banking institutions, brokerage firms, custodians, nominees, and fiduciaries to
forward solicitation material to the beneficial owners of common stock of the
Company held of record by such persons, and the Company will reimburse such
persons for the costs related to such services. The Company will pay the cost of
the solicitation of proxies. This Proxy Statement is being mailed to
stockholders on or about November ___, 1999.
Annual Report
Enclosed is the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1998, including audited financial statements. Such Annual
Report on Form 10-KSB does not form any part of the material for the
solicitation of proxies.
Revocation of Proxy
Any shareholder returning the accompanying proxy may revoke such proxy at
any time prior to its exercise by filing with the Secretary of the Company (i) a
duly executed copy bearing a later date or (ii) a written instrument revoking
the proxy or (iii) personally appearing at the scheduled meeting.
Voting Rights
All voting rights are vested exclusively in the holders of the Common
Stock of the Company. Only stockholders of record at the close of business on
November 5, 1999 will be entitled to receive notice of and to vote at the
meeting. As of November 5, 1999, the Company had outstanding a total of
10,902,944 shares of Common Stock. Each holder of Stock is entitled to one vote
for each share held.
Stock Ownership of Management and Certain
Beneficial Holders
The following table sets forth certain information, as of November 5,
1999, concerning the ownership of the Common Stock by (a) each person who, to
the best of the Company's
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3
knowledge, beneficially owned on that date more than 5% of the outstanding
Common Stock, (b) each of the Company's directors and (c) all current directors,
officers and significant employees of the Company as a group. Except as
otherwise indicated, the stockholders listed in the table have the sole voting
and investment power with respect to the shares indicated.
Name and Address of Shares of Common Stock Percent of Class (1)(2)
Beneficial Owner Beneficially Owned (1)
Machtec Ltd. 1,200,000 11.00%
Marc D. Tokayer 618,547 (3) 5.67%
c/o TTR Technologies Ltd.
2 Hanagar Street
Kfar Saba, Israel
Baruch Sollish 170,000 (4) 1.38%
c/o TTR Ltd.
2 Hanagar Street
Kfar Saba, Israel
Emanuel Kronitz 52,222 (5) *
c/o TTR Ltd.
2 Hanagar Street
Kfar Saba, Israel
All directors and officers
as a group (3 persons) 820,769 7.49% (6)
* Indicates less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission ("SEC") and generally includes voting or
investment power with respect to securities. In accordance with SEC rules,
shares which may be acquired upon exercise of stock options which are currently
exercisable or which become exercisable within 60 days after the date of the
information in the table are deemed to be beneficially owned by the optionee.
Except as indicated by footnote, and subject to community property laws where
applicable, to our knowledge, the persons or entities named in the table above
are believed to have sole voting and investment power with respect to all shares
of common stock shown as beneficially owned by them.
(2) For purposes of calculating the percentage of outstanding shares held by
each person named below, any shares which such person has the right to acquire
within 60 days after the date of the information in the table are deemed to be
outstanding, but not for the purpose of calculating the percentage ownership of
any other person.
(3) Includes 324,274 shares held by the Tokayer Family Trust (the "Trust"). The
wife of Mr. Tokayer is the trustee for the Trust and the income beneficiaries of
the trust are Mr. Tokayer's children. Mr. Tokayer does not have or share any
voting power or investment power with respect to the securities held by the
Trust, and accordingly, disclaims beneficial ownership of all such securities.
(4) Includes 70,000 shares issuable upon exercise of options see "Certain
Relationships and Related Transactions".
(5) Represents shares issuable upon exercise of options. See "Certain
Relationships and Related Transactions".
(6) See Notes 3, 4 & 5 above.
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4
EXECUTIVE COMPENSATION
The following table sets forth all compensation earned by the Company's
Chairman of the Board of Directors and President, and the other two most highly
compensated executive officers of the Company whose total annual salaries and
bonuses exceeded $100,000 for the year ended December 31, 1998 (the "Named
Executive Officers"):
Summary Compensation Table:
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- ----------------------
Awards
------
Restricted Securities
---------------------
Name and Stock Underlying
Principal Position Year Salary Bonus Other Awards Options(#)
- ------------------ ---- ------ ----- ----- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Marc D. Tokayer 1998 $64,430 $12,019 $14,423(1) -- --
Chairman and 1997 $73,850 $ 7,647 $26,307(1) -- --
President 1996 $74,939 $12,867 $19,278(1) -- --
Baruch Sollish 1998 $91,678 $42,105 $13,927(1) -- --
Vice-President- 1997 $99,931 $50,000(2) $24,875(1) -- --
Research & 1996 $69,517 -- $14,037(1) -- --
Development
Steven L. Barsh 1998 93,334(4) -- -- -- 250,000(5)
Former Chief
Executive Officer(3) 1996 -- -- -- -- --
1995 -- -- -- -- --
</TABLE>
----------
(1) Includes contributions to insurance premiums, car allowance and car
expenses.
(2) In consideration of Dr. Sollish's waiver of incentive bonus payments
due to him under his employment agreement based on the Company's revenues
of certain products, Dr. Sollish received in 1997 a one-time bonus payment
of $50,000.
(3) Mr. Barsh's employment commenced in July 1998 and terminated as of
January 1, 1999. See "Employment Agreements."
(4) Reflects a reduction in annual salary from $210,000 to $170,000 in
October 1998. See "Certain Relationships and Related Transactions".
(5) Reflects the exchange on October 20, 1998 of 250,000 options granted
under the 1996 Stock Option Plan at an exercise price per share of $2
15/16 for 250,000 non-plan options with an exercise price per share of
$15/16. In July 1999 such options were exchanged for 150,000 shares of
common stock. See "Certain Relationships and Related Transactions".
For information concerning the compensation of Emanuel Kronitz, Chief
Operating Officer, See "Employment Agreements."
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5
Options Granted During Year Ended December 31, 1998
Option Grants in 1998
The following table sets forth certain information concerning the
individual option grants during the year ended December 31, 1998, to each of the
Named Executive Officers:
Number of Percentage of
Securities Total Options
Underlying Granted to Exercise
Options Employees in Price Per Expiration
Name Granted (#) 1997 Share Date
- ----------------- ----------- ------------- ----------- ----------
Stevn L. Barsh 250,000(1) 86% $0.93(1)(2) 2007
(1) Reflects the exchange on October 20, 1998 of 250,000 options granted
under the 1996 Stock Option Plan at an exercise price of $2 15/16 per
share for 250,000 non-plan options with an exercise price of $15/16 per
share. In July 1999 such options were exchanged for 150,000 shares of our
common stock. See "Certain Relationships and Related Transactions."
(2) Based on the closing price of the common stock ($.93) on October 20,
1998, as reported on the OTC Electronic Bulletin Board.
Aggregated Option and Warrant Exercises in 1998 and Year End Option Values
The following table provides certain information regarding stock option
ownership and exercises by the Named Executive Officers, as well as the number
and assumed value of exercisable options held by those persons at December 31,
1998:
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Shares Number of Un-exercised In-the-money
Acquired Options at December 31, Options at Dec. 31,
on Value 1997 1997(1)
Name Exercise Realized Exercised/Unexercised Exercised/Unexercised
----------- -------- ------------------------ -------------------
<S> <C> <C> <C> <C> <C>
Stevn L. Barsh -- -- 250,000 0 $48,750
</TABLE>
(1) Based upon the difference between the exercise price of such options
($.93) and the closing price of the common stock ($1.125) on December 31,
1998, as reported on the OTC Electronic Bulletin Board.
See "Employment Agreements" for a discussion of such options
<PAGE>
6
Stock Option Plans
1996 Stock Incentive Option Plan. The Company's current policy is that all
full time key employees be considered annually for the possible grant of stock
options, depending upon employee performance. The criteria for the awards are
experience, uniqueness of contribution and level of performance shown during the
year. Stock options are intended to improve loyalty to the company and help make
each employee aware of the importance of our business success.
The Company has adopted our 1996 Incentive and Non-Qualified Stock Option
Plan (the "1996 Option Plan"). The 1996 Option Plan provides for the grant to
qualified employees (including officers and directors) of options to purchase
shares of common stock. To date, a total of 750,000 shares of common stock have
been reserved for issuance upon exercise of stock options granted under the 1996
Option Plan.
The 1996 Option Plan is administered by a Stock Option Committee of the
Board of Directors. The Committee consists of Mr. Tokayer. Members of the
Committee are not eligible for awards. The Committee has discretion to select
the optionee and to establish the terms and conditions of each option, subject
to the provisions of the 1996 Option Plan. Options granted under the 1996 Option
Plan may be non-qualified stock options or Incentive Stock Options (an option
which qualifies under Section 422 of the Internal Revenue Code) but in any case
the exercise price of incentive stock options granted may not be less than 100%
of the fair market value of the common stock as of the date of grant (110% of
the fair market value if the grant is an Incentive Stock Option to an employee
who owns more than 10% of the outstanding common stock). Options may not be
exercised more than 10 years after the grant (five years if the grant is an
Incentive Stock Option to any employee who owns more than 10% of the outstanding
common stock). The Committee may, in its discretion (i) accelerate the date or
dates on which all or any particular option or options granted under the 1996
Stock Plan may be exercised, or (ii) extend the dates during which all, or any
particular, option or options granted under the 1996 Stock Plan may be
exercised, provided, that no such extension will be permitted if it would cause
the 1996 Option Plan to fail to comply with Section 422 of the Code or with Rule
16b-3 of the Securities and Exchange Act of 1934, as amended. Except as
otherwise determined by the Committee at the date of the grant of the option,
and subject to the provisions of the 1996 Option Plan, an optionee may exercise
an option at any time within one year (or within such lesser period as may be
specified in the applicable option agreement) following termination of the
optionee's employment or other relationship with the Company if such termination
was due to the death or Disability (as defined) of the optionee but in no event
later than the expiration date of the Option. Except as otherwise determined by
the Board of Directors or the Committee at the date of the grant of an Option,
if the termination of the optionee's employment or other relationship is for any
other reason the Option will expire immediately upon such termination. Options
granted under the 1996 Option Plan are not transferable and may be exercised
only by the respective grantees during their lifetimes or by their heirs,
executors or administrators in the event of death. Under the 1996 Option Plan,
shares subject to canceled or terminated options are reserved for subsequently
granted options. The number of options outstanding and the exercise price
thereof are subject to adjustment in the case of certain transactions such as
mergers, recapitalizations, stock splits or stock dividends.
As of November 5, 1999, 583,700 options to purchase shares of common stock
were outstanding under the 1996 Option Plan.
Non-Executive Directors Stock Option Plan. The Company adopted the 1998
Non-Executive Director Stock Option Plan in July 1998 to provide an incentive
for attracting and retaining on our Board the service of qualified individuals
who are not otherwise employed by the Company or any subsidiary.
<PAGE>
7
The Directors Plan is administered by the Board of Directors. The Company
reserved 25,000 shares of common stock under the Directors Plan for issuance
upon the exercise of stock options. Options are exercisable upon the date of
grant and expire five years from the date of grant. Upon termination of any
director, the options expire within two months of such termination. The exercise
price of the option will be the fair market value of the Common Stock on the
date of the grant of the option. The number of options and prices at which they
are exercisable are subject to adjustment in the case of certain transactions
such as mergers, recapitalizations, stock splits or stock dividends. No options
may be granted under the Directors Plan after July 2008. As of November 5, 1999,
no options were outstanding under the Directors Plan.
Employment Agreements
TTR Technologies, Ltd., the Company's wholly-owned Israeli subsidiary
("TTR Israel") Israel entered into an employment agreement in August 1994 with
Marc Tokayer, pursuant to which Mr. Tokayer is employed as its General Manager
for a term which is automatically renewable from year to year unless either
party gives notice of termination at least 90 days prior to the current
expiration date. Mr. Tokayer currently receives an annual salary of $74,232,
subject to increase and the grant of a bonus in the Board's discretion. If Mr.
Tokayer is terminated for other than engaging in willful misconduct or acts of
bad faith or conviction of a felony, he shall be entitled to continue to receive
his salary and benefits for an additional 12 months subject to certain
limitations.
The Company signed an employment agreement with Emanuel Kronitz as of June
1, 1999, pursuant to which Mr. Kronitz is employed as our Chief Operating
Officer. The agreement is for a term of one year and is automatically renewable
for additional one year terms, unless terminated by either party upon 90 days
prior notice. Mr. Kronitz is paid a monthly salary of $5,000 plus benefits and
was granted options under the 1996 Option Plan to purchase 235,000 shares of our
common stock, at an exercise price of $0.01 per share, which options vest in
equal monthly installments over three years.
TTR Israel entered into an employment agreement with Dr. Baruch Sollish in
December 1994, pursuant to which Dr. Sollish is employed as Director of Product
Research and Development of TTR Israel. The agreement is renewable from
year-to-year, subject to termination by either party on not less than 60 days
notice prior to the end of any calendar year. Dr. Sollish receives an annual
base salary of $91,678 subject to increase and the grant of a performance bonus
in the Board's discretion. In March 1997, in consideration of Dr. Sollish's
waiver of certain incentive bonus payments due payable to him under the
agreement based on revenues from certain products, Dr. Sollish received a
one-time bonus payment of $50,000.
Each of the executives with an agreement has agreed to certain customary
confidentiality and non-compete provisions that prohibit him from competing with
the Company for one year, or soliciting our employees for one year, following
the termination of his employment.
Report on Repricing of Options
In connection with the termination of Steven Barsh as the Company's Chief
Executive Officer, the Board of Directors approved the exchange of 250,000
options granted to Mr. Barsh under the 1996 Stock Option Plan at an exercise
price of $2 15/16 per share, the fair market value of the common stock on the
date of the original grant, for 250,000 immediately exercisable, non-plan
options with an exercise price of $15/16 per share, the fair market value of the
common stock on October 20, 1998, the effective date of the exchange. In
approving the
<PAGE>
8
exchange and the repricing of the non-plan options granted in exchange for the
plan options surrendered, the Board based the repricing on a comparison of the
fair market value of the common stock on the date of the original grant to its
fair market value on the date of the exchange and on the desirability of
effecting a settlement with Mr. Barsh. See "Certain Relationships and Related
Transactions."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1998 Mr. Tokayer and The Tokayer Family Trust waived their rights
to 750,000 shares of Common Stock which had been placed in escrow and were
subject to release upon our achieving certain revenue or stock price levels.
Such shares have been returned to treasury and cancelled.
In February 1999, the Company issued to Dr. Sollish 50,000 vested options,
at an exercise price per share of $0.01. In September 1999,the Company issued to
Dr. Sollish 80,000 options from the Company's Option Plan, at an exercise price
per share of $0.01, 20,000 of which were vested upon issuance.
In June 1999, the Company granted 235,000 options under the 1996 Stock
Option Plan to Emanuel Kronitz, our Chief Operating Officer. Subject to Mr.
Kronitz's continued employment with the Company, these options vest in 36 equal
monthly installments and have a nominal exercise price. The Company registered
in October 1999 under the Securities Act of 1933, as amended, 78,333 of the
shares issuable upon exercise of such options, representing the number of shares
expected to vest during the first year of his employment.
Marc D. Tokayer, Chairman of the Board, The Tokayer Family Trust, Baruch
Sollish, Director, and four other stockholders with an aggregate of 1,137,430
shares of common stock, entered into a voting arrangement dated August 10, 1996,
whereby they agreed to vote their respective shares to elect directors and in
support of positions favored by a majority of the shares held among them. This
arrangement was terminated in July 1999.
The Company signed an employment agreement in July 1998 with Mr. Steven L.
Barsh pursuant to which Mr. Barsh was employed as Chief Executive Officer
through January 1999. Under the agreement, Mr. Barsh received an annual salary
of $210,000 and pursuant to the 1996 Stock Option Plan, the Company issued to
him 250,000 stock options which were to vest equally over a five-year period,
and have an exercise price of $2-15/16 per share. In October 1998, Mr. Barsh
agreed to accept $70,000 per annum and to defer payment of the balance owed
until such time as the Company raised $3,000,000. In connection with the salary
adjustment, Mr. Barsh returned the options issued to him, and the Company issued
to Mr. Barsh, on October 20, 1998, non-plan options for 250,000 shares of common
stock, with an exercise price of $15/16 per share. Mr. Barsh resigned effective
February 12, 1999. The employment agreement provided that the Company would owe
Mr. Barsh salary and benefits for six months following his resignation. The
Company also owed Mr. Barsh approximately $40,000 in unreimbursed expenses and
$60,000 in unpaid salary earned prior to his resignation. In consideration of
the waiver by Mr. Barsh of the amounts owed to him and in settlement of a
dispute as to the number of stock options to which he was entitled, in July 1999
the Company issued to Mr. Barsh 150,000 shares of common stock and Mr. Barsh
waived his rights and released his claims to the 250,000 options previously
issued to him, which options have been cancelled.
TTR Israel signed a three-year employment agreement in July 1996 with Arik
Shavit, pursuant to which Mr. Shavit was employed as President and General
Manager. Pursuant to the agreement, Mr. Shavit received an annual salary of
$110,628, subject to adjustment, and was issued options to purchase an aggregate
of 217,473 shares of common stock. The options are
<PAGE>
9
exercisable for a price of $.01 per share until September 2006, subject to a
vesting schedule pursuant to which 72,491 and 48,328 options vested in September
1997 and 1998, respectively, and 48,327 options vest in each of September 1999
and September 2000. Effective December 1, 1998, Mr. Shavit resigned from all
positions he held with the Company and TTR Israel. In connection with his
resignation, the Company signed an agreement pursuant to which Mr. Shavit is to
continue to receive the salary and benefits received at the time of his
resignation through September 1999. Additionally, warrants for 48,326 shares
which would have otherwise vested in September 2000 were terminated. To date,
Mr. Shavit has exercised options for 149,010 shares. Mr. Shavit and the Company
released each other from any claims arising prior to his termination, except
that Mr. Shavit's obligations respecting confidentiality, non-competition and
non-solicitation remain in effect for one year following his termination. In
consideration of Mr. Shavit's waiver of certain amounts owed to him under the
separation agreement, the Company agreed to vest his remaining 40,273 options.
Section 16 Filings
Compliance with Section 16(a) of The Exchange Act. Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires
officers and directors of the Common Stock Company and persons who own more than
ten percent of the Common Stock , to file initial statements of beneficial
ownership (Form 3), and statements of changes in beneficial ownership (Forms 4
or 5), of Common Stock with the Securities and Exchange Commission (the "SEC").
Officers, directors and greater than ten-percent stockholders are required by
SEC regulation to furnish the Company with copies of all such forms they file.
The Company believes that (i) each of Marc D. Tokayer and Baruch Sollish
failed to timely file a Form 3 in connection with their appointment as executive
officers and directors, (ii) the Tokayer Family Trust failed to file a Form 3 to
report its their shareholdings in the Company, (iii) each of Marc D. Tokayer,
Baruch Sollish and the Tokayer Family Trust have failed to file a Form 4 to
reflect the voting agreement among them, (iv) Marc Tokayer and the Tokayer
Family Trust have failed to file Form 4s relating to their waiver with respect
to and the Company's cancellation of 750,000 shares of common stock placed in
escrow, (iv) Messrs. Shavit and Barsh each failed to file a Form 3 to report
their respective appointment as executive officers and, in the case of Mr.
Shavit, as a director, and a Form 4 to report the grant of options to purchase
shares of common stock of the Company. The exchange of such options for stock
and, in the case of Mr. Shavit, a Form 4 relating to the termination of his
employment.
STOCKHOLDER PROPOSALS
Under the rules of the Securities and Exchange Commission, proposals of
security holders intended to be presented at the 2000 Annual Meeting of
Stockholders must be received by the Company, at its principal executive
offices, for inclusion in the Company's proxy statement for that meeting, no
later than March 15, 2000. The Company's Board of Directors will review any
stockholder proposals that are filed as required and will determine whether such
proposals meet applicable criteria for inclusion in its 1999 proxy statement.
Quorum; Voting
The holders of a majority of the issued and outstanding Common stock,
present in person or by proxy, will constitute a quorum for the transaction of
business at the Annual Meeting or any adjournment thereof. Abstentions are
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. Assuming a quorum is present, the
affirmative vote of a majority of the shares present in person or by proxy and
voting on a matter is required for approval.
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10
PROPOSAL NO. 1 - - Election of Directors
The Board of Directors of the Company currently consists of two (2)
members. The two persons named below have been nominated by the Board of
Directors for election to hold office until the next annual meeting and until
their successors are elected and have been qualified. The election of Directors
requires the affirmative vote of a plurality of the shares cast of Common Stock
voting together either present or represented at a meeting by proxy at which a
quorum is present or represented. Abstention and Broker non-votes are counted
for the purposes of determining whether a quorum is present, but do not
represent votes cast with respect to any proposal.
It is the intention of the persons named in the accompanying proxy to vote
FOR the election of the two persons named in the table below as Directors of the
Company, unless authority to do so is withheld. Proxies cannot be voted for a
greater number of persons than the nominees named. If events not now known or
anticipated make any of the nominees unwilling or unable to serve, the proxies
will be voted (in the discretion of the holders of such proxies) for other
nominees not named herein in lieu of those unwilling or unable to serve. The
Board of Directors is not aware of any circumstances likely to cause any nominee
to become unavailable for election.
The following table sets forth the name, age and position of each Director
nominee:
Name Age Position
- ---- --- --------
M.D. Tokayer 42 Chairman of the Board, President, Treasurer
and Director
Baruch Sollish, Ph.D. 52 Vice President - Research and Development,
Chief Technology Officer and Director
Marc. D. Tokayer has been Chairman of the Board of Directors, President,
and Treasurer of the Company since he founded the Company in July, 1994 and
served as Chief Executive Officer of the Company until July 6, 1998. He has
served as President and Chairman of the Board of Directors of TTR Technologies
Ltd., the Company's Israeli subsidiary ("TTR-Israel") since its inception in
December 1994. From September 1992 to July 1994, Mr. Tokayer worked as an
independent consultant primarily in the areas of business applications. From
October 1990 through August 1992, Mr. Tokayer was employed by Yael Ltd., an
Israeli company, where he managed the development of the Central Inventory
Control System.
Baruch Sollish, Ph.D, has been a Director of the Company since December
1994 and has served as Vice President - - Research and Development and Secretary
of the Company since September 1996. From June 1987 through December 1994, Dr.
Sollish founded and managed Peletronics Ltd., an Israel software company,
engaged primarily in the field of smart cards and software design for personnel
administration, municipal tax authorities and billing procedures at bank
clearance centers. Dr. Sollish hold six United States patents in the fields of
electro optics, ultrasound and electronics and has published and lectured
extensively. Dr. Sollish received a Ph.D. in Electrical Engineering from
Columbia University in 1973.
Certain Information Regarding the Board of Directors
No family relationships exist among the officers or directors of the
Company. All directors hold office until the next annual meeting of stockholders
and the election and
<PAGE>
11
qualification of their successors. Directors receive no cash compensation for
serving on the Board of Directors. Officers are elected by the Board of
Directors and serve at the discretion of the Board.
The Board of Directors has created a Stock Option Committee to administer
the 1996 Incentive Stock Option Plan. This Committee is currently composed of
Marc Tokayer. The Company has no audit or nominating committees.
Board members do not receive any cash compensation for serving on the
Board. Non-employee directors are entitled to receive stock options under the
1998 Non-Executive Directors Stock Option Plan. See ""Stock Option Plans".
During the course of 1998, the Board held 4 meetings.
RECOMMENDATATION AND VOTE
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF ALL OF
THE NOMINEES TO THE BOARD OF DIRECTORS.
PROPOSAL NO. 2 -- Amend the Certificate of Incorporation to Increase the
number of Common Stock that the Company is Authorized to Issue
At the Annual Meeting, the stockholders will be asked to approve an
amendment to the Company's Certificate of Incorporation in the form attached
hereto as Exhibit A to increase the number of Common Stock that the Company is
authorized to issue from time to time from FIFTEEN MILLION (15,000,000) shares
to TWENTY FIVE MILLION (25,000,000) shares. Currently, the number of shares of
Common Stock outstanding is 10,902,944. An increase in the number of shares of
Common Stock that the Company shall be authorized to issue from time to time
will afford the Company the necessary assurance of adequate reserves of commons
stock.
RECOMMENDATION AND VOTE
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL
OF THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
PROPOSAL NO. 3 -- Amend the 1996 Incentive Stock Option Plan
At the Annual Meeting, the stockholders will be asked to approve an
amendment to the Company's 1996 Incentive Stock Option Plan (the "Option Plan")
to increase by SEVEN HUNDRED FIFTY THOUSAND (750,000) the number of shares of
Common Stock reserved for issuance under the Option Plan to ONE MILLION FIVE
HUNDRED THOUSAND (1,500,000) shares.
A copy of the Option Plan is available upon written request to the Company
at 1841 Broadway, New York, New York, 10022 Attention: Secretary. If approved by
stockholders, the amendment will be effective immediately.
The Board of Directors believes that stock options are an important
incentive for attracting, retaining and motivating employees and officers
through the opportunity of equity participation in the Company. The Board of
Directors further believes that stock option grants have been a key element in
the Company's growth. The amendment to increase the number of shares of Common
Stock under the Option Plan is intended to enable the
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Company to continue to have an adequate number of shares of Common Stock
available for the grant of stock options to attract new employees, as well as
retain current employees.
Based on the number of shares remaining under the Option Plan, and the
shares anticipated to be needed for the granting of options to attract and
retain key employees, sufficient shares are not expected to be available for the
grant of stock options without increasing the number of shares available under
the Option Plan.
A description of the Option Plan is furnished above under "Stock Option
Plans".
RECOMMENDATION AND VOTE
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE AMENDMENT TO THE STOCK OPTION PLAN.
PROPOSAL NO. 4 -- Ratification of Independent Public Accountants
The Board of Directors has appointed the firm of Brightman Almagor & Co.,
a member of Deloitte Touche Tohmatsu, as independent auditors to audit the
Company's consolidated financial statements for the fiscal year ending December
31, 1999, subject to ratification by the stockholders.
Auditor Change
On June 30, 1998, the Company appointed BDO Almagor & Co. to re-issue a
report on our consolidated financial statements for the year ended December 31,
1997. On July 3, 1998, Schneider Ehrlich & Wengrover LLP (or SE&W) resigned as
our independent auditors by mutual agreement. The decision to change accountants
was approved by the Board of Directors.
During the fiscal years ended December 31, 1997 and 1996 and the period
between January 1, 1998, up to and including the day of its resignation, there
were no disagreements between the Company and SE&W on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedures which if not resolved to SE&W's satisfaction would have caused them
to make reference in connection with their opinion to the subject matter of the
disagreement. SE&W's report on our financial statements for such fiscal years
indicated that substantial doubt exists regarding our ability to continue as a
going concern.
The audit of Brightman Almagor & Co., a member of Deloitte Touche
Tohmatsu, (formerly known as BDO Almagor & Co.) (formerly known as BDO Almagor &
Co.), as our independent accountants did not result in any changes to such
financial statements, and the related audit report of Brightman Almagor & Co., a
member of Deloitte Touche Tohmatsu, also states that substantial doubt exists
regarding our ability to continue as a going concern.
RECOMMENDATION AND VOTE
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE APPROVAL OF THE INDEPENDENT AUDITORS PROPOSAL.
OTHER MATTERS
Management does not intend to present to the meeting any matters other
than matters referred to herein, and as of this date Management does not know of
any matter that will be
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13
presented by other persons named in the attached proxy to vote thereon in
accordance with their best judgment on such matters.
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14
TTR TECHNOLOGIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON December 21, 1999
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Emanuel Kronitz and Marc D. Tokayer, and
each of them, with full power of substitution and power to act alone, as proxies
to vote all the shares of Common Stock which the undersigned would be entitled
to vote if personally present and acting at the Annual Meeting of Stockholders
of TTR TECHNOLOGIES, INC., to be held on December 21, 1999, and at any
adjournment or adjournments thereof, on the matters set forth on the reverse
side and such other matters as may properly come before the meeting.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as name appears hereon, date and return in the
enclosed business reply envelope. Joint owners should each sign personally.
Corporation proxies should be signed by an authorized officer. Executors,
administrators, trustees, etc., should so indicate when signing.
Please provide new address, if applicable.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:
1. Election of Directors: FOR ALL WITH FOR ALL
NOMINEES HOLD EXCEPT
Marc D. Tokayer |_| |_| |_|
Dr. Baruch Sollish |_| |_| |_|
IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE(S), MARK THE
"FOR ALL EXCEPT" BOX ABOVE AND STRIKE A LINE THROUGH THE NAME(S) OF THE
NOMINEE(S) YOU DO NOT WISH TO VOTE FOR. YOUR SHARES WILL BE VOTED FOR THE
REMAINING NOMINEE(S).
2. Approval of the Proposal to
amend the Company's Certificate of
Incorporation as provided in
Exhibit A hereto. FOR AGAINST ABSTAIN
|_| |_| |_|
3. Approval of proposal to amend
the 1996 Option Plan to increase
shares reserved thereunder. FOR AGAINST ABSTAIN
|_| |_| |_|
4. Ratification of the selection
of Brightman Almagor & Co., a
member of Deloitte Touche
Tohmatsu, as independent auditors. FOR AGAINST ABSTAIN
|_| |_| |_|
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IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING. THIS PROXY WHEN PROPERLY EXECUTED WILL
BE VOTED AS DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 2, 3 AND 4 AND FOR THE ELECTION OF
THE PERSONS NOMINATED FOR DIRECTORS.
Mark box at right if an address change has been noted on the reverse side of
this card.
Please be sure to sign and date this Proxy.
Stockholder sign here Co-owner sign here
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16
Exhibit A
Proposed Amendment to the Company's Certificate of Incorporation
The first paragraph of Paragraph 4 of the Certificate of Incorporation is hereby
amended to read as follows:
"4. The aggregate number of shares of stock which the corporation
shall have the authority to issue is 30,000,000, 25,000,000 of which are
shares of Common Stock, each with a par value of $0.001, each entitled to
one vote per share, and 5,000,000 of which are Preferred Stock."
