Exhibit 10.9
AGREEMENT
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THIS AGREEMENT made and entered into as of the 29th day of April,
1997, by and between Ringer Corporation, a Minnesota corporation (the
"Company"), and Xxxx X. Xxxxxxxxxxx, an individual resident of North Oaks,
Minnesota ("Executive").
WHEREAS, Executive is employed by the Company; and
WHEREAS, as an inducement to Executive to remain in the employment of
the Company, the Company wishes to sell to Executive shares of the Company's
common stock so that Executive will have a significant vested interest in the
successful and profitable operation of the Company; and
WHEREAS, Executive desires to purchase shares of the Company's common
stock on the terms and provisions set forth in this agreement; and
WHEREAS, as an inducement to the Company to sell shares of its common
stock to him on the terms set forth in this agreement, Executive is willing to
modify the terms of his currently outstanding options to purchase shares of the
Company's common stock; and
WHEREAS, the Company and Executive desire to establish a mechanism for
the purchase and sale of the shares of the Company stock owned by Executive in
the event that Executive leaves the employment of the Company.
NOW THEREFORE, in consideration of the premises, the respective
undertakings of the parties set forth below and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Company and Executive agree as follows:
1. Stock Subscription. Executive agrees to purchase from the
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Company, and the Company hereby agrees to sell to Executive, in accordance with
the terms of this agreement, a total of fifty thousand (50,000) shares of the
Company's common stock (the "Shares").
2. Purchase Price and Manner of Payment. The total purchase price
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for the Shares shall be Sixty-five Thousand Six Hundred Twenty-five Dollars
($65,625), which amount will be payable to the Company contemporaneously with
the execution of this agreement by delivery to the Company of Executive's
promissory note (the "Promissory Note") in such amount, which Promissory Note
shall be in the identical form of the attached exhibit A.
3. Delivery of Shares. Upon receipt from Executive of the
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Promissory Note, the Company shall issue and deliver to Executive a duly
authorized and executed stock certificate representing the Shares. So long as
Executive is not in default in the payment of principal or interest on the
Promissory Note, the Shares shall be entitled to full voting rights and to share
in all dividends payable on shares of the Company's common stock.
4. Stock Pledge. To secure the full performance of Executive's
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obligation to the Company under the Promissory Note, Executive hereby grants to
the Company a security interest in the
Shares. Such security interest shall be evidenced by a stock pledge agreement in
the identical form of the attached exhibit B.
5. Investment Representation. Executive hereby represents and
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agrees that the Shares are being acquired pursuant to this agreement for
investment purposes and not with the view toward the distribution or sale
thereof in a public offering within the meaning of the federal Securities Act of
1933. Executive acknowledges that the Shares will not be registered under either
the federal or applicable state securities law, and that the Company will be
relying upon the foregoing investment representation in selling the Shares to
Executive. Executive acknowledges that the transferability of the Shares will
be subject to restrictions imposed by all applicable federal and state security
laws and agrees that the certificates evidencing the Shares may be imprinted
with an appropriate legend setting forth these restrictions on transferability.
6. Retention Bonus Commitments. As an inducement to Executive to
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remain in the full-time employment of the Company, the Company agrees to make
the following bonus payments to Executive:
(a) The Company shall make a cash bonus payment to Executive on each
of the first through the fifth anniversary dates of the date of this
agreement if, but only if, Executive is employed by the Company on such
anniversary date. The amount of each such annual bonus payment shall be
equal to the sum of (i) the amount of the payment due from Executive on the
Promissory Note on such anniversary date, plus (ii) such additional amount
as shall be equal to the lesser of (1) the actual federal and state income
taxes and federal Medicare taxes that will be payable by Executive on such
bonus payment (including amounts payable pursuant to this subpart (ii)), or
(2) the amount that would be payable pursuant to subpart (ii)(1) if the
combined federal and state tax rate was fifty percent (50%).
(b) In the event that (i) the Company is sold, (ii) a controlling
interest in the Company is acquired by a third party, or (iii) Executive's
employment with the Company is terminated without "cause" on or before
February 10, 2000, the Company shall make a one-time bonus payment to
Executive within fifteen (15) days after the date of sale, acquisition or
termination. Such bonus payment shall be equal to the applicable percentage
(as set forth below) of the outstanding balance of principal and accrued
interest owing by Executive under the Promissory Note on the date of sale
or termination:
Date of Sale or Termination Applicable Percentage
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Before 4/29/98 33 1/3%
After 4/28/98
and before 4/29/99 66 2/3%
After 4/28/99
and before 4/29/2000 100%
Such bonus payment shall be made as an offset to the next payments due and
owing by Executive under the Promissory Note.
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(c) The bonus payments described in this section 6 shall be subject
to all required tax withholdings, but shall be excluded from Executive's
compensation for purposes of calculating severance or change of control
payments under other benefits/compensation plans made available to
Executive by the Company.
7. Insurance. As soon as practicable following the date of this
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agreement, the Company shall obtain and, until the Promissory Note is paid in
full, shall pay the premium costs of, a term life insurance policy and
disability benefits policy which would pay benefits to Executive or his
designated beneficiary in such amounts as would enable them to make all payments
due and owing on the Promissory Note after the death or disability of Executive.
This insurance commitment shall be subject to the availability of such insurance
policies at commercially-reasonable premium rates.
8. Stock Options. The two (2) separate Incentive Stock Option
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Agreements, dated October 1, 1994, and the Incentive Stock Option Agreement,
dated February 9, 1995, between the Company and Executive, shall be amended by
(a) reducing the number of options granted to Executive pursuant to such
agreements from 86,000 to 50,000 and (b) reducing the option exercise prices
from $1.9375 and $2.1275 to $1.3125 per share, and by otherwise restating such
agreements. Executive and the Company shall enter into a modified incentive
stock option agreement, in the form attached to this agreement as exhibit C, to
effectuate such amendments. Executive waives all rights to receive the
incentive stock option that was approved by the Company's Board of Directors in
November, 1996, and such stock option shall be terminated in all respects and
shall be of no force and effect.
9. Option to Repurchase the Shares Upon Termination of Employment.
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In the event that Executive's employment with the Company is voluntarily
terminated by Executive or is terminated by the Company for "cause", the
Company shall have the irrevocable right and option (the "Option") to purchase
from Executive, or Executive's heirs, successors or assigns, and Executive, on
behalf of his heirs, successors and assigns, agrees to sell to the Company upon
the exercise of the Option that number of the Shares as is determinable from the
following schedule:
Date of Termination Shares Subject to Repurchase
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Prior to 4/29/98 50,000
After 4/28/98 and
before 4/29/99 40,000
After 4/28/99 and
before 4/29/2000 30,000
After 4/28/2000 and
before 4/29/2001 20,000
After 4/28/2001 and
before 4/29/2002 10,000
After 4/28/2002 0
The Company shall exercise the Option, if at all, by delivering a
written notice of exercise to Executive or Executive's personal representative,
as the case may be, within sixty (60) days after the date of termination of
Executive's employment with the Company.
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The purchase price for the Shares that are repurchased by the Company
pursuant to the exercise of the Option, shall be the per share amount paid by
Executive for such shares pursuant to this agreement. The Company shall make
payment of the purchase price for any shares reacquired pursuant to the exercise
of the Option by offsetting and reducing the outstanding principal balance, and
any accrued interest on, of the Promissory Note. The balance of the purchase
price owing to the Executive, if any, shall be paid by delivering to Executive
or Executive's representative, as the case may be, within sixty (60) days of the
date of termination of Executive's employment with the Company, the Company's
check in the amount of the balance of such purchase price.
Upon receipt of such payment from the Company, Executive or his
personal representative, as the case may be, shall deliver to the Company for
cancellation the stock certificates evidencing the Shares being repurchased by
the Company, which certificate shall be duly endorsed for cancellation by the
Company.
The certificates evidencing the Shares shall be legended to disclose
the existence of the repurchase rights set forth in this section 9.
10. Condition to Sale of Shares. Executive understands that the sale
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of the shares to him on the terms contemplated by this agreement is subject to
the approval of the Company's shareholders in accordance with the applicable
rules of the NASD. The Company agrees to submit the sale of the shares to
Executive to the shareholders for approval at the next annual shareholders'
meeting. In the event that such shareholder approval is not received, the
Company will provide Executive with another mutually-acceptable compensation
package to replace the compensation program contemplated by this agreement.
11. Miscellaneous. This agreement shall be binding upon, shall inure
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to the benefit of and shall be enforceable against the Company and Executive and
their respective heirs, successors and assigns. This agreement shall in all
respects be governed, enforced and interpreted in accordance with the laws of
the state of Minnesota.
IN WITNESS WHEREOF, the Company and Executive have executed this
agreement as of the date set forth in the first paragraph.
RINGER CORPORATION
By
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Xxxxxxx Xxxxxxxx, President & CEO
[the "Company"]
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Xxxx X. Xxxxxxxxxxx
["Executive"]
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Exhibit A
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PROMISSORY NOTE
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$65,625.00 Bloomington, Minnesota
April 29, 1997
FOR VALUE RECEIVED, Xxxx X. Xxxxxxxxxxx, an individual resident of
North Oaks, Minnesota ("Maker"), hereby promises to pay to the order of Ringer
Corporation, a Minnesota corporation or its successors or assigns, as the case
may be ("Payee"), at Bloomington, Minnesota, or such other place as may be
specified in writing by Payee, the principal sum of Sixty-five Thousand Six
Hundred Twenty-five and no/100 Dollars ($65,625.00), plus simple interest on the
outstanding principal balance at the rate of six and one-half percent (6.5%) per
annum.
The principal amount of this promissory note shall be paid in five (5)
equal annual installments of Thirteen Thousand One Hundred Twenty-five and
no/100 Dollars ($13,125.00) each, commencing on April 29, 1998, and continuing
on the same day in each succeeding year, and accrued interest shall be payable
on the same day as principal installments are due. Notwithstanding the
foregoing, this promissory note shall become due and payable in full ninety (90)
days after the date of death of Maker.
Maker shall have the right to prepay all or any part of this
promissory note at any time without penalty or premium, but any such prepayment
shall be applied first to the payment of accrued interest and then to the
installments of principal due hereunder in the inverse order of maturity.
Upon the failure by Maker to make timely payments of any of the
installments of principal or interest due hereunder, which default is not cured
within thirty (30) days after written notice of such nonpayment is delivered to
Maker, Payee may, at Payee's option, declare the unpaid principal amount of this
promissory note and any accrued interest thereon immediately due and payable.
This promissory note is secured by a security interest granted to
Payee in 50,000 shares of Payee's common stock pursuant to a stock pledge
agreement, dated the same date as this promissory note.
Maker hereby waives presentment for payment, notice of dishonor,
protest and notice of protest and, in the event of default hereunder, Maker
agrees to pay all costs of collection, including reasonable attorneys' fees.
This promissory note shall be governed by the laws of the state of Minnesota.
IN WITNESS WHEREOF, Maker has executed this promissory note as of the
date first above written.
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Xxxx X. Xxxxxxxxxxx
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Exhibit B
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STOCK PLEDGE AGREEMENT
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AGREEMENT, made as of the 29th day of April, 1997 by and between Xxxx
X. Xxxxxxxxxxx, an individual resident of the state of Minnesota ("Pledgor"),
Ringer Corporation, a Minnesota corporation ("Company").
WHEREAS, Pledgor and Company have entered into an agreement, dated the
29th day of April, 1997, pursuant to which Pledgor agreed to purchase from
Company, and Company agreed to sell to Pledgor, fifty thousand (50,000) shares
of Company's common stock (the "Pledged Shares"); and
WHEREAS, Pledgor has delivered to Company a promissory note (the
"Promissory Note") in payment of the purchase price for the Pledged Shares; and
WHEREAS, Company has required that Pledgor grant to Company, and
Pledgor is willing to grant to Company, a security interest in the Pledged
Shares as security for the payment by Pledgor of his obligations under the
Promissory Note.
NOW THEREFORE, in consideration of the premises, the respective
covenants of Company and Pledgor set forth below and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Pledgor and Company agree as follows:
1. Pledge of Stock.
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1.1 Pledge. As security for the prompt payment of any amount at any
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time due, whether or not by acceleration, to Company from Pledgor pursuant to
the Promissory Note, Pledgor hereby grants a security interest to Company in the
Pledged Shares.
1.2 Delivery. Immediately upon execution of this agreement, Pledgor
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will deliver to Company the certificates representing all of the Pledged Shares,
which certificates shall be endorsed in blank or with executed stock powers
attached.
2. Rights and Benefits of Pledged Shares.
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2.1 General. Except as provided in section 2.2, Company shall
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receive and hold (by Company or by an agent of Company) the Pledged Shares and
any property (including without limitation monies or securities) distributed or
issued with respect to the Pledged Shares, whether as a dividend, in partial or
complete liquidation, pursuant to a merger or reorganization plan or otherwise.
Pledgor shall cause any securities distributed or issued with respect to the
Pledged Shares to be assigned and transferred to Company and delivered to
Company in the manner provided in section 1.2, and such securities shall be
subject to the terms and conditions of this agreement.
2.2 Voting. Unless and until a default is declared by Company
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pursuant to section 5, Pledgor shall be entitled to vote the Pledged Shares.
2.3 Assignment, Etc. Except as provided or specifically permitted
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herein, Pledgor shall not pledge, sell, assign, transfer or otherwise dispose of
the Pledged Shares without the prior written approval of Company's Board of
Directors.
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3. Legend. The certificates representing the Pledged Shares shall
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bear an endorsement in substantially the following form:
"The shares of stock represented by this certificate are pledged
under, and are subject to the terms and conditions of a Stock Pledge
Agreement, dated April 29, 1997, between Ringer Corporation and the
registered owner of this certificate as security for the performance
of the registered owner's obligations under a promissory note to
Ringer Corporation. Such shares cannot be sold, assigned,
transferred, pledged or disposed of except as provided in such Stock
Pledge Agreement."
4. Appointment of Company as Attorney-in-Fact. Pledgor hereby
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appoints and constitutes Company as Pledgor's true and lawful attorney-in-fact
and with full power of substitution in the premises to execute such assignments
and/or endorsements of the Pledged Shares as may be necessary to effect the
rights and remedies which Company has under this agreement in the event of a
default under this agreement.
5. Event of Default. The occurrence of an event of default under
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the Promissory Note constitutes a default under this agreement.
Upon the occurrence of an event of default, Company shall have the
option to declare this agreement in default and thereupon Company is authorized
to exercise and shall have, in addition to the rights and remedies provided in
this agreement and all other applicable rights and remedies, the rights and
remedies of a secured party under the Uniform Commercial Code of the state of
Minnesota and any other applicable laws. In particular, and without limitation,
Company is authorized at its option and without further notice or demand, to
cause the Pledged Shares to be transferred of record to Company or its agent or
nominee and shall be entitled to exercise all rights of ownership in respect to
the Pledged Shares and all property received with respect to the Pledged Shares.
Company shall also have the right to hold and vote the Pledged Shares and, at
its option and upon twenty (20) days' notice in writing to Pledgor of such
default, shall have the right to sell and transfer the Pledged Shares and the
property received with respect to the Pledged Shares or any portion thereof at
any public or private sale, including private placement based upon investment
representations, and for cash or such other consideration as Company shall, in
its sole discretion, determine to be reasonable, and Pledgor shall have no right
or equity of redemption in connection with any such sale; provided, however,
that during such twenty (20) day period Pledgor shall have the right to cure any
default by paying all obligations under the Promissory Note, together with all
expenses incurred by Company including, without limitation, reasonable
attorneys' fees and expenses in obtaining, holding and preparing for sale the
Pledged Shares and the property received with respect to the Pledged Shares and
in arranging for the sale. After deducting the expenses of such sale, including
reasonable attorneys' fees, the proceeds therefrom shall be applied to the
payment of Pledgor's obligations under the Promissory Note and the surplus, if
any, shall be paid to Pledgor.
6. Release of Collateral. At such time as the Promissory Note has
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been paid in full, Company shall deliver the Pledged Shares and any property
distributed with respect to the Pledged Shares to Pledgor in accordance with
Pledgor's written directions, and Pledgor shall thereafter be discharged in full
from any and all obligations under this agreement. Upon receipt by Company of
any payments of principal under the Promissory Note, Company shall deliver to
Pledgor, in accordance with Pledgor's instructions, that number of Pledged
Shares (and any property distributed with respect to such Pledged Shares) as is
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equal to the total Pledged Shares initially subject to this agreement,
multiplied by a fraction, the numerator of which is the amount of the principal
payment and the denominator which is the original principal amount of the
Promissory Note.
7. Delay; Waiver. All rights and remedies of Company under this
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agreement are cumulative and are in addition to, but not in limitation of, any
rights or remedies which it may have under applicable law. No delay on the part
of Company in the exercise of any right or remedy under this agreement shall
operate as a waiver thereof, and no single or partial exercise by Company of any
right or remedy under this agreement shall preclude other or further exercise
thereof or the exercise of any other right or remedy. No waiver by Company of
any right or remedy under this agreement shall be deemed to be or construed as a
further or continuing waiver of such right or remedy or as a waiver of any other
right or remedy.
8. Cooperation. Upon the execution of this agreement and at any
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time or from time to time thereafter, Pledgor and Company agree to cooperate in
carrying out the terms of this agreement, including the execution and delivery
of such further instruments and documents as may be reasonably requested in
order to more effectively carry out the terms and conditions of this agreement.
9. Miscellaneous. This agreement shall be binding upon, and inure
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to the benefit of and be enforceable by Pledgor and Company and their respective
successors and assigns, but this agreement shall not be assignable without
written permission of the other party. The section headings are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this agreement. This agreement shall be governed by, and, construed and
enforced in accordance with, the laws of the state of Minnesota.
IN WITNESS WHEREOF, Pledgor and Company have executed this agreement
as of the date set forth in the first paragraph.
RINGER CORPORATION
By
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Xxxxxxx Xxxxxxxx, President & CEO
[the "Company"]
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Xxxx X. Xxxxxxxxxxx
["Pledgor"]
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