Exhibit 10.8
AGREEMENT
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AGREEMENT, made and entered into as of the 29th day of April, 1997, by
and between Ringer Corporation, a Minnesota corporation (the "Company"), and
Xxxxxxx Xxxxxxxx, an individual resident of Eden Prairie, 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 one hundred fifty thousand (150,000)
shares of the Company's common stock (the "Shares").
2. Purchase Price and Manner of Payment. The total purchase
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price for the Shares shall be One Hundred Ninety-six Thousand Eight Hundred
Seventy-five Dollars ($196,875), 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
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to 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 third 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
April 29, 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.
(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
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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
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this 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. Executive and the Company hereby agree to
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amend in its entirety the Incentive Stock Option Agreement, dated September 23,
1992, between the Company and Executive by entering into an amended agreement
which shall be in the identical form of the attached exhibit C. Executive and
the Company hereby agree to amend in its entirety the Incentive Stock Option
Agreement, dated January 31, 1995, between the Company and Executive by entering
into an amended agreement which shall be in the identical form of the attached
exhibit D.
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 4/29/98 150,000
After 4/28 and before 4/29/99 100,000
After 4/28/99 and before 4/29/2000 50,000
After 4/28/2000 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.
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
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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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Xxxxxx X. Xxxxxx, Authorized Signatory
[the "Company"]
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Xxxxxxx Xxxxxxxx
["Executive"]
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Exhibit A
PROMISSORY NOTE
$196,875.00 Bloomington, Minnesota
April 29, 1997
FOR VALUE RECEIVED, Xxxxxxx Xxxxxxxx, an individual resident of Eden
Prairie, 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 One Hundred Ninety-six
Thousand Eight Hundred Seventy-five and no/100 Dollars ($196,875.00), plus
simple interest on the outstanding principal balance at the rate of five and
91/100 percent (5.91%) per annum.
The principal amount of this promissory note shall be paid in three (3)
equal annual installments of Sixty-five Thousand Six Hundred Twenty-five and
no/100 Dollars ($65,625.00) 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
150,000 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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Xxxxxxx Xxxxxxxx
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STOCK PLEDGE AGREEMENT
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AGREEMENT, made this 29th day of April, 1997 by and between Xxxxxxx
Xxxxxxxx, an individual resident of the state of Minnesota ("Pledgor"), and
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, one hundred fifty thousand
(150,000) 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 time
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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 will
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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 receive and
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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.
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2.2 Voting. Unless and until a default is declared by Company pursuant to
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section 5, Pledgor shall be entitled to vote the Pledged Shares.
2.3 Assignment, Etc. Except as provided or specifically permitted herein,
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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.
3. Legend. The certificates representing the Pledged Shares shall bear
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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 appoints
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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 the
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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.
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6. Release of Collateral. At such time as the Promissory Note has been
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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
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 time or
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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 to the
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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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Xxxxxx X. Xxxxxx, Authorized
Signatory
[the "Company"]
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Xxxxxxx Xxxxxxxx
["Pledgor"]
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