Exhibit 10.7
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated December 5, 1997, by and between Ringer
Corporation, a Minnesota corporation (the "Company"), and Xxxx X. Xxxxxxxxxxx,
an individual resident of Minnesota ("Executive").
WHEREAS, the Company wishes to employ Executive to render services for
the Company on the terms and conditions set forth in this agreement, and
Executive wishes to be retained and employed by the Company on such terms and
conditions.
NOW, THEREFORE, in consideration of the premises and the respective
undertakings of the Company and Executive set forth below, the Company and
Executive agree as follows:
1. Employment. The Company hereby employs Executive, and Executive
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accepts such employment and agrees to perform services for the Company, for the
period and upon the other terms and conditions set forth in this agreement.
2. Term. The term of Executive's employment hereunder shall
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commence on the date of this agreement and shall continue until terminated in
accordance with section 8 of this agreement (the "Termination Date").
3. Position and Duties.
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3.01 Service with Company. During the term of this agreement,
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Executive agrees to perform such reasonable employment duties as the Board of
Directors of the Company shall assign to him from time to time. Executive shall
have the title of Executive Vice President and Chief Financial Officer.
Executive also agrees to serve, for any period for which he is elected, as an
officer or director of the Company; provided, however, that Executive shall not
be entitled to any additional compensation for serving as an officer or
director.
3.02 Performance of Duties. Executive agrees to serve the
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Company faithfully and to the best of his ability and to devote his full time,
attention and efforts to the business and affairs of the Company during the term
of this agreement. Executive represents to the Company that he is under no
contractual commitments inconsistent with his obligations set forth in this
agreement, and that during the term of this agreement, he will not render or
perform services for any other corporation, firm, entity or person which are
inconsistent with the provisions of this agreement.
4. Compensation.
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4.01 Base Salary. As base compensation for all services to be
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rendered by Executive under this agreement during the first year of the term of
this agreement, the Company shall pay to Executive a base salary of $125,000,
which salary shall be paid on a semi-monthly basis in accordance with the
Company's normal payroll procedures and policies. The base salary payable to
Executive during each subsequent year during the term of this agreement shall be
established by the Compensation Committee of the Company's Board of Directors
following an annual performance review.
4.02 Incentive Compensation. In addition to the compensation
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described in section 4.01, Executive shall be eligible to participate in an
executive compensation incentive plan that provides for aggregate bonus payments
of up to 30% of base salary based on a combination of personal and business
performance objectives that are established by the Company's Board of Directors.
4.03 Participation in Benefit Plans. Executive shall be entitled
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to participate in all employee benefit plans or programs of the Company to the
extent that his position, title, tenure, salary, age, health and other
qualifications make him eligible to participate. The Company does not guarantee
the adoption or continuance of any particular employee benefit plan or program
during the term of this agreement, and Executive's participation in any such
plan or program shall be subject to the provisions, rules and regulations
applicable thereto.
4.04 Expenses. The Company will pay or reimburse Executive for
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all reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his duties under this agreement, subject to the presentment of
appropriate vouchers in accordance with the Company's normal policies for
expense verification.
5. Confidential Information. Except as permitted or directed by the
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Company's Board of Directors, during the term of this agreement or at any time
thereafter, Executive shall not divulge, furnish or make accessible to anyone or
use in any way (other than in the ordinary course of the business of the
Company) any confidential or secret knowledge or information of the Company
which Executive has acquired or become acquainted with or will acquire or become
acquainted with prior to the termination of the period of his employment by the
Company (including employment by the Company or any affiliated companies prior
to the date of this agreement), whether developed by Executive or by others,
concerning any trade secrets, confidential or secret designs, processes,
formulae, plans, devices or material (whether or not patented or patentable)
directly or indirectly useful in any aspect of the business of the Company, any
customer or supplier lists of the Company, any confidential or secret
development or research work of the Company, or any other confidential
information or secret aspects of the business of the Company. Executive
acknowledges that the above-described knowledge or information constitutes a
unique and valuable asset of the Company and represents a substantial investment
of time and expense by the Company and its predecessors, and that any disclosure
or other use of such knowledge or information other than for the sole benefit of
the Company would be wrongful
and would cause irreparable harm to the Company. Both during and after the term
of this agreement, Executive will refrain from any acts or omissions that would
reduce the value of such knowledge or information to the Company. The foregoing
obligations of confidentiality, however, shall not apply to any knowledge or
information which is now published or which subsequently becomes generally
publicly known in the form in which it was obtained from the Company, other than
as a direct or indirect result of the breach of this agreement by Executive.
6. Ventures. If, during the term of this agreement, Executive is
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engaged in or associated with the planning or implementing of any project,
program or venture involving the Company and a third party or parties, all
rights in such project, program or venture shall belong to the Company. Except
as formally approved by the Company's Board of Directors, Executive shall not be
entitled to any interest in such project, program or venture or to any
commission, finder's fee or other compensation in connection therewith other
than the salary to be paid to Executive as provided in this agreement.
7. Noncompetition Covenant.
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7.01 Agreement Not to Compete. Executive agrees that, during the
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period of his employment by the Company and for a period of one (1) year after
the termination of such employment (whether such termination is occasioned by
Executive or the Company), he shall not, directly or indirectly, engage in
competition with the Company in any manner or capacity (e.g., as an advisor,
principal, agent, partner, officer, director, stockholder, employee, member of
any association, or otherwise) in any phase of the business which the Company is
conducting during the period of Executive's employment with the Company,
including the design, development, manufacture, distribution, marketing, leasing
or selling of accessories, devices, or systems related to the products or
services being sold by the Company.
7.02 Geographic Extent of Covenant. The obligations of Executive
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under section 7.01 shall apply to any geographic area in which the Company or
its affiliates:
(a) have engaged in business during the term of this agreement
through production, promotional, sales or marketing
activity, or otherwise, or
(b) have otherwise established its goodwill, business
reputation, or any customer or supplier relations.
7.03 Limitation on Covenant. Ownership by Executive, as a
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passive investment, of an immaterial amount of the outstanding shares of capital
stock of any corporation listed on a national securities exchange or publicly
traded in the over-the-counter market shall not constitute a breach of this
section 7.
7.04 Indirect Competition. Executive further agrees that, during
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the term of this agreement, he will not, directly or indirectly, assist or
encourage any other person in carrying out, directly or indirectly, any activity
that would be prohibited by the above provisions
of this section 7 if such activity were carried out by Executive, either
directly or indirectly; and in particular Executive agrees that he will not,
directly or indirectly, induce any employee of the Company to carry out,
directly or indirectly, any such activity. Executive further agrees that,
Executive will not hire, directly or indirectly, any individual who is an
employee of the Company or its affiliates at the time of termination.
8. Termination.
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8.01 Termination by the Company. This agreement may be
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terminated by the Company at any time upon the occurrence of any of the
following events:
(a) Executive shall die, or
(b) The Board of Directors of the Company has determined (with
Executive abstaining from such determination if he is then
a member of the Board of Directors) that Executive has
become disabled, or
(c) The Board of Directors of the Company shall notify
Executive that the agreement is being terminated for
"cause", or
(d) Either the Company or Executive elects to terminate this
agreement (which election may be made with or without
cause) and gives the other party at least sixty (60) days
prior written notice of such election.
For purposes of this section 8.01, the term "cause" shall mean:
(i) Executive has breached the provisions of section 5 or 7 of
this agreement in any material respect, or
(ii) Executive has engaged in willful and material misconduct,
including willful and material failure to perform his
duties as an officer or employee of the Company or its
affiliates or excessive absenteeism unrelated to illness or
vacation, or
(iii) Executive has committed fraud, misappropriation or
embezzlement in connection with the Company's or its
affiliates' business, or
(iv) Executive has been convicted or has pleaded guilty or nolo
contendere to criminal misconduct constituting a gross
misdemeanor or a felony, or
(v) Executive's use of narcotics, liquor or illicit drug has
had a detrimental effect on the performance of his
employment
responsibilities.
Notwithstanding any termination of this agreement, Executive, in
consideration of his employment hereunder to the date of such termination, shall
remain bound by the provisions of this agreement which specifically relate to
periods, activities or obligations upon or subsequent to the termination of
Executive's employment.
8.02 Severance Payments. (a) If Executive's employment with
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the Company is terminated by the Company pursuant to subsection 8.01(d), the
Company shall use its best efforts to assist Executive in obtaining new
employment and, in furtherance of such commitment, shall provide Executive with
up to $12,000 in out-placement services. Subject to the provisions of
subsection (b) of this section 8.02, in such event, the Company shall also pay
to Executive, as severance pay, (i) his base monthly salary for a period of
twelve (12) months after the date of termination of employment, and (ii) an
amount equal to the average bonus paid to Executive for the three (3) years
immediately prior to the year of termination of employment, and shall continue
to provide health insurance benefits for Executive (or, at the Company's option,
to reimburse Executive for the cost to him of maintaining comparable health
insurance benefits) for a period of twelve (12) months after the date of
termination of employment. The base salary payments shall continue to be made
on a monthly basis. The bonus payment shall be paid to Executive in one (l)
lump sum within thirty (30) days after the date of termination.
(b) Notwithstanding the provisions of subpart (a) of this section
8.02, if Executive subsequently obtains other full-time employment, the amount
of the compensation he receives from such other employment from and after the
date which is six (6) months after the date of termination of employment shall
be offset against the Company's obligations under this section 8.02.
(c) If Executive voluntarily leaves the employment of the
Company, or his employment is terminated pursuant to subsection 8.01(a), 8.01(b)
or 8.01(c), his right to base salary and benefits shall immediately terminate,
except as may otherwise be required by applicable law.
(d) If Executive's employment by the Company terminates within
six (6) months of the end of any fiscal year of the Company, Executive shall
also be entitled to receive a pro rata portion (based on the number of days of
employment during that fiscal year) of any bonus payment that would have been
payable to him for that fiscal year pursuant to section 4.02 if he had been in
the employ of the Company for the full fiscal year. No bonus will be payable to
Executive with respect to any fiscal year in which he was employed by the
Company for less than six (6) months or with respect to any fiscal year after
the fiscal year in which his employment terminated.
8.03 "Disability" Defined. The Board of Directors may
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determine that Executive has become disabled, for the purpose of this agreement,
(a) if Executive shall qualify, because of illness or incapacity, to begin
receiving disability income insurance payments under any disability income
insurance policy that the Company is then maintaining for the benefit of its
executive-level employees, or (b) if the Company is not then maintaining
disability income
insurance for its executive-level employees, if Executive is unable because of
illness or incapacity, to render normal employment services pursuant to this
agreement for a period of ninety (90) days out of any consecutive 180 day
period.
8.04 Sale Bonus. (a) If, during the term of this agreement,
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(i) the Company sells substantially all of its assets or (ii) a sale or merger
transaction involving the Company occurs under circumstances in which the
members of the Company's Board of Directors at the time of such sale or merger
do not constitute a majority of the Company's Board of Directors after such sale
or merger (a "Sale Event"), the Company shall pay to Executive, as a sale
bonus, an amount equal to the sum of (A) one hundred percent (100%) of his
annual base salary on the date of the Sale Event, and (B) the average bonus paid
to Executive for the three (3) years immediately preceding the date of the Sale
Event (the "Sale Bonus"). The Sale Bonus shall be payable to Executive in cash
in one lump sum concurrently with the closing of the Sale Event.
(b) The Company shall also continue to provide health insurance
benefits for Executive (or, at the Company's option, to reimburse Executive for
the cost to him of maintaining comparable health insurance benefits) for a
period of twelve (12) months after the date of the Sale Event.
8.05 Surrender of Records and Property. Upon termination of his
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employment with the Company, Executive shall deliver promptly to the Company all
records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof, which are the
property of the Company or which relate in any way to the business, products,
practices or techniques of the Company, and all other property, trade secrets
and confidential information of the Company, including, but not limited to, all
documents which in whole or in part contain any trade secrets or confidential
information of the Company, which in any of these cases are in his possession or
under his control.
9. Miscellaneous.
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9.01 Governing Law. This agreement is made under and shall be
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governed by and construed in accordance with the laws of the state of Minnesota.
9.02 Prior Agreements. This agreement contains the entire
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agreement of the parties relating to the subject matter hereof and supersedes
all prior agreements and understandings with respect to such subject matter, and
the parties hereto have made no agreements, representations or warranties
relating to the subject matter of this agreement which are not set forth herein.
9.03 Withholding Taxes. The Company may withhold from any
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benefits payable under this agreement all federal, state, city or other taxes as
shall be required pursuant to any law or governmental regulation or ruling.
9.04 Amendments. No amendment or modification of this agreement
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shall be deemed effective unless made in writing and signed by the parties
hereto.
9.05 No Waiver. No term or condition of this agreement shall be
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deemed to have been waived, nor shall there be any estoppel to enforce any
provisions of this agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
9.06 Severability. To the extent any provision of this agreement
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shall be invalid or unenforceable, it shall be considered deleted from this
agreement and the remainder of such provision and of this agreement shall be
unaffected and shall continue in full force and effect. In furtherance and not
in limitation of the foregoing, should the duration or geographical extent of,
or business activities covered by, any provision of this agreement be in excess
of that which is valid and enforceable under applicable law, then such provision
shall be construed to cover only that duration, extent or activities which may
validly and enforceably be covered. Executive acknowledges the uncertainty of
the law in this respect and expressly stipulates that this agreement be given
the construction which renders its provisions valid and enforceable to the
maximum extent (not exceeding its express terms) possible under applicable law.
9.07 Injunctive Relief. Executive agrees that it would be
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difficult to compensate the Company fully for damages for any violation of the
provisions of this agreement, including without limitation the provisions of
sections 5, 7 and 8.05. Accordingly, Executive specifically agrees that the
Company shall be entitled to temporary and permanent injunctive relief to
enforce the provisions of this agreement and that such relief may be granted
without the necessity of proving actual damages. This provision with respect to
injunctive relief shall not, however, diminish the right of the Company to claim
and recover damages in addition to injunctive relief.
IN WITNESS WHEREOF, Executive and the Company have executed this agreement
as of the date set forth in the first paragraph.
RINGER CORPORATION
By
Xxxxxxx Xxxxxxxx
President/Chief Executive Officer
Xxxx X. Xxxxxxxxxxx
