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EXHIBIT 12.1
EMPLOYMENT AND NON-COMPETE AGREEMENT
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This Employment and Non-Compete Agreement ("Agreement") is made this 27th day
of March, 1997 by and between Norcom Resources, Incorporated, a Minnesota
corporation with its principal office located at 000 Xxxx Xxx Xxxx, Xxxxx
000, Xxxxx, XX 00000 (the "Employer") and Xxxxxxx X. Xxxxxxxx (the
"Employee").
WHEREAS, Employer is in the business of buying and selling of used
mainframe computers, related peripherals and services for and to the
wholesale and retail markets; and,
WHEREAS, Employer desires to retain the services of the Employee; and,
WHEREAS, Employee is willing to be employed by the Employer.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
1. CAPACITY. Employee shall serve the Employer as its President.
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2. BEST EFFORTS OF EMPLOYEE. During his employment hereunder,
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the Employee shall, subject to the direction and supervision of the Chairman
of the Board and Board of Directors, devote his full business time, best
efforts, business judgment, skill and knowledge to the advancement of the
Employer's interests and to the discharge of his duties and responsibilities
hereunder. Such duties shall be provided at Eagan, Minnesota and other such
places as the needs, business or opportunities of the Employer may require
from time to time. He shall not engage in any other business activity which
would interfere with the performance of his full-time duties for Employer;
provided, however, that nothing herein shall be construed as preventing the
Employee from:
a. investing his assets in a manner which shall not require
any material services on his part in the operations or affairs of the
companies or other entities in which such investments are made;
b. serving on the Board of Directors of any company, provided
he receives the approval in writing from the Chief Executive Officer and
Board of Directors, and provided that he shall not be required to render any
material services with respect to the operations or affairs of any such
company; or
c. engaging in religious, charitable or other community or
non-profit activities which does not impair his ability to fulfill his duties
and responsibilities under this Agreement.
3. COMPENSATION OF EMPLOYEE. As compensation for the services
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provided by Employee under this Agreement, Employer will pay Employee twelve
thousand five hundred dollars ($12,500.00) per month in accordance with
Employer's normal payroll practices.
Employee shall, in addition to such base compensation, be
eligible to participate in a bonus plan. The total amount in the plan shall
be an amount equal to ten percent (10%) of the pre-tax earnings in excess of
four hundred thousand dollars ($400,000.00). This amount is to be paid in
restricted shares of common stock, with registration rights as provided for
in Section 10 of the
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Agreement of Sale, of ACT. The distribution of the bonus among the
participants; the officers and employees of Norcom Resources,
Incorporated shall be determined by Xxxxxxx X. Xxxxxxxx and Xxxx X. Xxxxx.
The Employee shall also be entitled to participate in any and all
employee benefit plans, medical insurance plans, life insurance plans,
disability income plans and other benefit plans, from time to time, in effect
for executives of the Employer. Such participation shall be subject to the
terms of the applicable plan documents, generally applicable Corporation
policies and the discretion of the Board of Directors or any administrative
or other committee provided for in, or contemplated by, such plan. In
addition, the Employee shall be entitled to receive benefits which are the
same or substantially similar to those which are currently being provided to
the other Executives by the Employer.
In addition to the above, Employee, on the third anniversary of
this Agreement, shall receive stock options for forty thousand (40,000)
shares of ACT stock. The option exercise price shall be fixed at a price of
$.50 below the value applicable under Section 1.2(a) of this Agreement For
Sale. The shares shall have demand registration rights. ACT reserves the
right to require the execution of appropriate documentation at that time.
4. TERMINATION OF EMPLOYMENT. Upon termination of the
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Agreement, payments under this Agreement shall cease; provided, however, that
the Employee shall be entitled to payments for periods or partial periods
that occurred prior to the date of termination and for which the Employee has
not yet been paid.
5. REIMBURSEMENT FOR EXPENSES. In accordance with the
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Employer's policy, the Employee will be reimbursed for all "out-of-pocket"
and other direct business expenses (exclusive of commuting costs) upon
presentation of appropriate receipts and documentation.
Employer shall make lease payments to GMAC of four hundred
sixteen and 48/100ths dollars ($416.48) per month for the benefit of
Employee. Such payments shall continue until the end of the original lease
term of twenty-nine (29) months. Employer shall have no obligation to
Employee beyond such lease payment.
6. CONFIDENTIALITY. Employee recognizes that the Employer has
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and will have inventions, business affairs, products, future plans, trade
secrets, customer lists and other vital information (collectively
"Confidential Information") which are valuable, special and unique assets of
the Employer. The Employee agrees that he will not at any time or in any
manner, either directly or indirectly, divulge, disclose or communicate in
any manner any Confidential Information to any third party without the prior
written consent of the Employer. The Employee will protect the Confidential
Information and treat it as strictly confidential.
In the event of a breach, or threatened breach, by Employee of
his obligations under this Paragraph, the Employee hereby acknowledges and
stipulates that the Employer shall not have an adequate remedy at law, shall
suffer irreparable harm and, therefore, it is mutually agreed and stipulated
by the parties hereto that, in addition to any other remedies at law or in
equity which Employer may have, the Employer shall be entitled to obtain in a
court of law and/or equity (i) a temporary and/or permanent injunction from
disclosing in whole or in part such Confidential Information or (ii) from
providing any services to any party to whom such Confidential Information has
been disclosed, or may be disclosed. Employer shall not be prohibited by
this Paragraph from pursuing other remedies, including a claim for losses and
damages.
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7. VACATION. The Employee shall be entitled to four (4) weeks of
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paid vacation per year. Such vacation shall be taken at a time mutually
convenient to Employer and Employee. Unused vacation may be accumulated, if
not used within the year it is earned, up to a maximum of six (6) weeks.
8. SICK DAYS/PERSONAL BUSINESS. The Employee shall be entitled
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to six (6) paid sick or personal days off due to illness or personal business
each year of employment beginning on the first day of the Employee's
employment.
9. HOLIDAYS. The Employee shall be entitled to the standard
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company holidays.
10. TERM. This Employment Agreement shall have an initial term of
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five (5) years, beginning at the commencement date so indicated at the end of
this Agreement.
11. TERMINATION. Notwithstanding the provisions of Paragraph 10,
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the Employee's employment hereunder shall terminate under the following
circumstances:
a. Death or Permanent Disability. In the event of the
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Employee's death during the Employee's employment hereunder, the Employee's
employment shall terminate on the date of his death or Permanent Disability
(as defined below).
Permanent Disability. For the purposes of this Agreement,
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the term "permanent disability" shall mean the Employee's inability to
perform his duties as prescribed in this Agreement for a period of ninety
(90) days, which, following a written request by either the Employer or the
Employee, shall be determined by agreement between the parties and, if they
cannot agree, by a panel of three (3) physicians, one of whom will be
selected by the Employer, one by the Employee and the third by the first two
so selected. Said panel shall also fix the date of the occurrence of the
permanent disability. Said panel's determination shall be conclusive.
Notwithstanding anything to the contrary set forth herein, the Employee shall
be presumed to be permanently disabled as of the date he is receiving
payments for permanent disability under any disability insurance policies or
under the Social Security Act.
b. Temporary Disability. If, due to physical or mental
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illness, disability or injury, the Employee shall be disabled so as to be
unable to perform substantially all of his duties and responsibilities
hereunder, the Board of Directors may designate another person to act in his
place during the period of such disability. Notwithstanding any such
designation, the Employee shall continue to receive his full salary and
benefits under paragraph 3 of this Agreement until he becomes eligible for
disability income under the Employer disability income plan. In the absence
of a disability income plan at the time of such disability, the Employer
shall pay the Employee benefits equal to those the Employee would have
received if the Employer's current disability income plan were in effect at
such time; provided however, that the Employer's obligations hereunder shall
cease twelve (12) months from the onset of such disability.
c. Termination by the Employer for Cause. The Employee's
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employment hereunder may be terminated for cause, without further liability
on the part of the Employer, by a majority vote of all of the members of the
Board of Directors. Termination for cause shall be based on conduct by the
Employee which the Board of Directors, in good faith, determines could
reasonably be expected to have a material adverse effect on the business,
assets, properties, results of operations, financial condition, personnel or
prospects of the Employer, including, but not limited to:
(i) Deliberate dishonesty of the Employee with respect to
the Employer.
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(ii) Conviction of the Employee of a crime involving moral
turpitude.
(iii) Gross and willful failure to perform a substantial
portion of his duties and responsibilities hereunder.
(iv) Employee's abandonment of his duties hereunder for a
period of more than ninety (90) days. Abandonment by the Employee of duties
hereunder shall be deemed to have occurred if: the Employee ceases to
function and perform duties hereunder, leaves the geographic area in which
the Employer engages in its business, or conducts himself with intentional
disregard of the Employer's interests and its business.
12. RESIGNATION AS OFFICER AND DIRECTOR. In the event that the
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Employee's employment with the Employer is terminated for any reason
whatsoever, the Employee agrees to immediately resign as an Officer and
Director of the Employer.
13. NON-COMPETITION. The Employee acknowledges that he has
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gained, and will gain, extensive and valuable experience and knowledge in the
business conducted by Employer and has had, and will have, extensive contacts
with customers of Employer. Accordingly, the Employee covenants and agrees
with Employer that he shall not compete directly or indirectly with Employer,
either during the term of his employment or during the one (1) year period
immediately thereafter and shall not, during such period, make public
statements in derogation of Employer. For the purposes of this Section 13,
the term "Employer" shall be deemed to include subsidiaries, parents and
affiliates of Employer. Competing directly or indirectly with Employer shall
mean engaging or having a material interest, directly or indirectly, as
owner, employee, officer, director, partner, venturer, stockholder, capital
investor, consultant, agent, principal, advisor or otherwise, either alone or
in association with others, in the operation of any entity engaged in the
business of buying and selling used mainframe computers, related peripherals
and services to the wholesale and retail markets within Minnesota, North
Dakota, South Dakota, Iowa, Montana and Wyoming. Competing directly or
indirectly with Employer, as used in this Agreement, shall be deemed not to
include an ownership interest as an inactive inventor, which, for purposes of
this Agreement, shall mean the beneficial ownership of less than one percent
(1%) of the outstanding shares of any series or class of securities of any
competitor of Employer, which shares are publicly traded in the securities
markets.
In the event that one or more of the provisions contained herein
shall, for any reason, be held too excessively broad as to duration,
geographical scope activity or such provision shall be construed as limiting
and reducing its as determined by a court of competent jurisdiction and shall
be enforceable to the extent compatible with applicable law.
14. RESTRICTION ON AUTHORITY OF EMPLOYEE. Notwithstanding
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anything set forth in this Agreement to the contrary, the Employee, in the
performance of his duties hereunder, shall not take any of the following
actions without the written consent of the Board of Directors:
a. Enter into negotiations or execute documents which would
effect the existing debt level and/or structure or alter, modify or change
any banking relations after such Closing Date.
15. REPRESENTATIONS AND WARRANTIES. The Employee hereby
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represents and warrants that he is free to enter this Agreement and to render
his services pursuant hereto and that neither the execution and delivery of
this Agreement, nor the performance of his duties hereunder, violates the
provisions of any other agreement to which he is a party or by which he is
bound.
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16. DATE OF COMMENCEMENT. This Employment Agreement is effective
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as of the 28th day of March, 1997.
17. NOTICES. All notices required or permitted under this Agreement
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shall be in writing and shall be deemed delivered when delivered in person or
deposited in the United States mail, postage paid, addressed as follows:
Employer: Norcom Resources, Incorporated
000 Xxxx Xxx Xxxx, Xxxxx 000
Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
Chairman of the Board
Employee: Xxxxxxx X. Xxxxxxxx
000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Such addresses may be changed from time to time by either party by providing
written notice in the manner set forth above.
18. ENTIRE AGREEMENT. This Agreement contains the entire
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agreement of the parties and there are no other promises or conditions in any
other agreement, whether oral or written. This Agreement supersedes any
prior written or oral agreements between the parties.
19. AMENDMENT. This Agreement may be modified or amended, if the
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amendment is made in writing and is signed by both parties.
20. SEVERABILITY. If any provision of the Agreement shall be held
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to be invalid or unenforceable for any reason, the remaining provisions shall
continue to be valid and enforceable. If a court finds that any provision of
the Agreement is invalid or unenforceable, but that by limiting such
provision it would become valid and enforceable, then such provision shall be
deemed to be written, construed and enforced as so limited.
21. WAIVER OF CONTRACTUAL RIGHT. This failure of either party
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to enforce any provision of this Agreement shall not be construed as a waiver
or limitation of that party's right to subsequently enforce and compel strict
compliance with every provision of this Agreement.
22. APPLICABLE LAW. This Agreement shall be governed by the laws
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of the State of Minnesota.
23. Agreed to this 27th day of March, 1997.
NORCOM RESOURCES, INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx, its Chairman
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EMPLOYEE
By: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
