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                                                                    EXHIBIT 10.7


                         VIRTUAL TECHNOLOGY CORPORATION
                      
                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into by
and between Virtual Technology Corporation, a Minnesota corporation ("the
Company"), and John Harvatine (the "Employee"), effective as of the 4th day of
January, 1999.

                                R E C I T A L S :

         WHEREAS, as of the date of this Agreement, the Company is engaged
primarily in the business of selling computer equipment; and

         WHEREAS, Employee desires to become employed hereunder by the Company
in a confidential relationship wherein Employee, in the course of Employee's
employment with the Company, will continue to become familiar with and aware of
information as to the Company's business plan, acquisition candidates,
prospective customers, specific manner of doing business, including the
processes, techniques and trade secrets utilized by the Company and future plans
with respect thereto, all of which will be established and maintained at great
expense to the Company; this information is a trade secret and constitutes the
valuable goodwill of the Company.

         NOW, THEREFORE, in consideration of the mutual promises, terms,
covenants and conditions set forth herein and the performance of each, the
parties hereto hereby agree as follows:

1.       EMPLOYMENT AND DUTIES.

         (a) The Company hereby employs Employee as Chief Financial Officer of
Virtual Technology Corporation. As such, Employee shall have responsibilities,
duties and authority reasonably accorded to and expected of such an officer of
the Company and will report directly to the President of VTC. Employee hereby
accepts this employment upon the terms and conditions herein contained and,
subject to Section 1(c) hereof, agrees to devote Employee's full business time,
attention and efforts to promote and further the business of the Company.

         (b) Employee shall faithfully adhere to, execute and fulfill all
policies established by the President.

         (c) Employee shall not, during the term of his employment hereunder, be
engaged in any other business activity pursued for gain, profit or other
pecuniary advantage if such activity interferes with Employee's duties and
responsibilities hereunder. The foregoing limitations shall not be construed as
prohibiting Employee from making personal investments in such form or manner as
will neither require Employee's services in the operation or affairs of the
companies or enterprises in which such investments are made nor violate the
terms of Section 4 hereof.


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2.       COMPENSATION.

         For all services rendered by Employee, the Company shall compensate
Employee as follows:

         (a) BASE SALARY. The base salary payable to Employee shall be $100,000
per year, payable on a regular basis in accordance with the Company's standard
payroll procedures but not less than monthly. Commencing in February 2000, and
on at least an annual basis, the President of VTC and the Company and Board of
Directors of the Company will review Employee's performance and may make
increases to such base salary if, in its discretion, any such increase is
warranted. Such recommended increase would, in all likelihood, require approval
by the Board or a duly constituted committee thereof. In no event shall
Employee's base salary be reduced.

         (b) INCENTIVE BONUS PLAN. For 1999, Employee shall be entitled to a 
bonus of $25,000, payable in cash, upon attainment of to be determined Key
Management Objectives for the Company. The 1999 bonus shall be payable by 
March 2000.

         For 2000 and subsequent years, Employee and the President of VTC and
the Company and Board shall develop, as soon as practicable, a written Incentive
Bonus Plan setting forth the criteria and performance standards under which
Employee will be eligible to receive a year-end bonus award.

         (c) EXECUTIVE PERQUISITES, BENEFITS AND OTHER COMPENSATION. Employee
shall be entitled to receive additional benefits and compensation from the
Company in such form and to such extent as specified below:

         (i) Employee shall be eligible to participate in Company health
insurance plans in the same manner as other Company senior management.

         (ii) Reimbursement for all business travel and other out-of-pocket
expenses reasonably incurred by Employee in the performance of Employee's
services pursuant to this Agreement. All reimbursable expenses shall be
appropriately documented in reasonable detail by Employee upon submission of any
request for reimbursement, and in a format and manner consistent with the
Company's expense reporting policy.

         (iii) A $400 per month car allowance.

         (iv) Commencing in 1999, three weeks paid (at the Employee's then
current base salary rate) vacation per year, to be scheduled in increments at
such time or times as is agreeable to Employee and the Company. The Employee may
carry over unused vacation time for a period of up to six (6) months into the
following year.

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         (v) The Company shall provide Employee with other executive perquisites
as may be available to or deemed appropriate for Employee by the Board and
participation in all other Company-wide employee benefits as available from time
to time.

         (vi) Employee shall be eligible to participate in the Company's Stock
Participation Program on the same terms as other Company senior management, as
defined by the Company's Board of Directors, to be implemented during the first
quarter of fiscal 2000.

3.       OPTIONS.

         The Company hereby grants to Employee options under and subject to the
Company's 1999 Long-Term Incentive Plan to acquire of the Company's Common
Stock, no par value pursuant to the following:

----------------------------------------------------------------------
Grant Date       Quantity       Strike Price    Vesting Date
----------------------------------------------------------------------
4/19/99          62,500         $4.875          immediately
----------------------------------------------------------------------
4/19/99          62,500         $4.875          1/04/00
----------------------------------------------------------------------
4/19/99          62,500         $4.875          1/04/01
----------------------------------------------------------------------
4/19/99          62,500         $4.875          1/04/02
----------------------------------------------------------------------

         Except as otherwise provided by the Incentive Plan or this Agreement,
Employee must continue in the employ of the Company through the applicable
vesting date (whether the vesting occurs upon the lapse or time in order to vest
in the options for such vesting date. Vested options shall be exercisable for
the shorter of (i) ninety (90) days after Employee terminates employment with
the Company or (ii) five (5) years from the date of this Agreement. To the
fullest extent possible, the options shall be treated as "incentive options"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").

         Employee acknowledges that the options are not transferrable except as
provided by Section 15.4 of the Incentive Plan and that the shares of Common
Stock underlying such options have not been registered under the Securities Act
of 1933, as amended (the "Act"), or any state securities laws. Accordingly, the
shares underlying the options may not be sold or otherwise transferred without
registration under the Act or an exemption therefrom. The Company will place a
restrictive legend on any certificate representing shares acquired by Employee
upon exercise of the options, and a "stop transfer order" with any transfer
agent of the Company's securities, barring the sale or other transfer of the
Employee's shares without registration under the Act or an exemption therefrom.

         This Agreement shall constitute the "Award Agreement" referred to in
Section 6.2 of the Incentive Plan.

4.       NON-COMPETITION.

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         (a) Employee will not, during (i) the period of Employee's employment
with the Company and (ii) conditioned upon the Company's continued payment of
Employee's base salary in effect at the time of Employee's termination of
employment, for a period of ninety (90) days immediately following the
termination of Employee's employment under this Agreement, for any reason
whatsoever, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, persons, entity, company, business,
partnership, corporation, limited liability company or limited liability
partnership of whatever nature:

         (i) engage, as an officer, director, shareholder, owner, partner, joint
venturer or in a managerial capacity, whether as an employee, independent
contractor, consultant or advisor or as a sales representative, in any
computer-related sales business in direct competition with the Company or any
subsidiary of the Company, within the state of Minnesota, including any
territory serviced by the Company or any of its subsidiaries (the "Territory");

         (ii) call upon any person who is, at that time, within the Territory,
an employee of the Company (including the subsidiaries thereof) in a managerial
capacity for the purpose or with the intent of enticing such employee away from
or out of the employ of the Company (including the subsidiaries thereof);

         (iii) call upon any person or entity which is, at that time, or which
has been, within one (1) year prior to that time, a customer of the Company
(including the respective subsidiaries thereof) within the Territory for the
purpose of soliciting or selling products or services in direct competition with
the Company or any subsidiary of the Company within the Territory; or

         (iv) call upon any prospective acquisition candidate, on Employee's own
behalf or on behalf of any competitor, which candidate was, to Employee's actual
knowledge after due inquiry, either called upon by the Company (including the
respective subsidiaries thereof) or for which the Company made an acquisition
analysis, for the purpose of acquiring such entity.

         Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit Employee from acquiring as a passive investment not more than two
percent (2%) of the capital stock of a competing business, whose stock is traded
on a national securities exchange or over-the-counter, or from engaging in the
sports promotion business so long as such activities do not compete with the
Company's activities.

         (b) Because of the difficulty of measuring economic losses to the
Company as a result of a breach of the foregoing covenants, and because of the
immediate and irreparable damage that could be caused to the Company for which
it would have no other adequate remedy, Employee agrees that the foregoing
covenants may be enforced by the Company in the event of breach by him, by
injunctions and restraining orders.

         (c) It is agreed by the parties that the foregoing covenants in this
Section 4 impose a reasonable restraint on Employee in light of the activities
and business of the Company (including the Company's subsidiaries) on the date
of the execution of this Agreement and the current plans of 



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the Company (including the Company's subsidiaries); but it is also the intent of
the Company and Employee that such covenants be construed and enforced in
accordance with the changing activities, business and locations of the Company
(including the Company's subsidiaries) throughout the term of this Agreement,
whether before or after the date of termination of the employment of Employee.
For example, if, during the term of this Agreement, the Company (including the
Company's subsidiaries) engages in new and different activities, enters a new
business or establishes new locations for its current activities or business in
addition to or other than the activities or business enumerated under the
Recitals above or the locations currently established therefor, then Employee
will be precluded from soliciting the customers or employees of such new
activities or business or from such new location and from directly competing
with such new business within 250 miles of its then-established operating
location(s) through the term of this Agreement.

         It is further agreed by the parties hereto that, in the event that
Employee shall cease to be employed hereunder, and shall enter into a business
or pursue other activities not in competition with the Company (including the
Company's subsidiaries), or similar activities, or business in locations the
operation of which, under such circumstances, does not violate clause (i) of
this Section 4, and in any event such new business, activities or location are
not in violation of this Section 4 or of Employee's obligations under this
Section 4, if any, Employee shall not be chargeable with a violation of this
Section 4 if the Company (including the Company's subsidiaries) shall thereafter
enter the same, similar or a competitive (i) business, (ii) course of activities
or (iii) location, as applicable.

         (d) The covenants in this Section 4 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall be reformed in accordance therewith.

         (e) All of the covenants in this Section 4 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of such covenants. It is specifically
agreed that the period of 90 days following termination of employment stated at
the beginning of this Section 4, during which the agreements and covenants of
Employee made in this Section 4 shall be effective, shall be computed by
excluding from such computation any time during which Employee is in violation
of any provision of this Section 4.

5.       TERM;  TERMINATION;  RIGHTS ON TERMINATION.

         The term of this Agreement shall begin on the date hereof and continue
for one (1) year, and, unless terminated sooner as herein provided, shall
continue thereafter on a year-to-year basis on the same terms and conditions
contained herein in effect as of the time of renewal. As used 



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herein, the word "Term" shall mean (i) during the one-year period referred to
in the preceding sentence, such three-year period and (ii) during any one-year
renewal pursuant to the terms hereof, such one-year period. This Agreement and
Employee's employment may be terminated in any one of the following ways:

         (a) DEATH. The death of Employee shall immediately terminate this
Agreement with no severance compensation due to Employee's estate other than
accrued base salary and any declared, but unpaid, bonuses through the date of
termination and reimbursement of expenses. Further, Employee's estate shall have
the right to exercise any options which are vested as of the date of the
Employee's death to the same extent as Employee could had he not died.

         (b) DISABILITY. If, as a result of incapacity due to physical or mental
illness or injury, as reasonably determined by Employee's physician, Employee
shall have been absent from Employee's full-time duties hereunder for four (4)
consecutive months, then thirty (30) days after receiving written notice (which
notice may occur before or after the end of such four (4) month period, but
which shall not be effective earlier than the last day of such four (4) month
period), the Company may terminate Employee's employment hereunder; provided
that Employee is unable to resume Employee's full-time duties at the conclusion
of such notice period. Also, Employee may terminate Employee's employment
hereunder if his health should become impaired to an extent that makes the
continued performance of Employee's duties hereunder hazardous to Employee's
physical or mental health or life; provided that Employee shall have furnished
the Company with a written statement from a qualified doctor to such effect, and
provided further that, at the Company's request made within thirty (30) days of
the date of such written statement, Employee shall submit to an examination by a
doctor selected by the Company who is reasonably acceptable to Employee or
Employee's doctor and such doctor shall have concurred in the conclusion of
Employee's doctor. In the event this Agreement is terminated by either party as
a result of Employee's disability, Employee shall receive from the Company, in a
lump-sum payment due within ten (10) days of the effective date of termination,
the base salary at the rate then in effect for one (1) year plus payment of any
declared, but unpaid bonuses as of the date of disability and reimbursement of
expenses.

         (c) CAUSE. The Corporation may terminate Executive's employment
immediately upon notice to Executive for "cause," which shall mean (i) a final
non-appealable adjudication in a criminal or civil preceding that Executive has
committed a fraud or a felony relating to or adversely affecting his employment,
or (ii) insubordination or other substantial willful refusal by Executive in
fulfilling his duties and obligations hereunder which Executive fails to remedy
within thirty (30) days after written demand from the Board detailing with
specificity the nature of such breach. In the event that Executive's employment
is terminated hereunder for "cause," the Corporation shall have the following
obligations to Executive in addition to those required by law (i) Base Salary
and the Bonuses pursuant to Section 2 earned by Executive as of the date of
termination, and (ii) Executive shall have 90 days to exercise that portion of
the Stock Option Agreement vested through the time of such termination with all
other rights thereunder being forfeited.


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         (d) WITHOUT CAUSE. The Corporation may terminate Executive's employment
hereunder at any time upon thirty (30) days' notice to Executive, without
"Cause" (as defined above), for any reason or no reason. Upon any such
termination of Executive, Executive shall be entitled as a severance payment to
that number of months' salary as set forth below times the then applicable Base
Salary rate (the "Severance Payment"):

             (i)     if the employment was less than one year (from the
                     Commencement Date), three months' Base Salary;

             (ii)    if the employment was more than one year (from the
                     Commencement Date) but less than two years, six months'
                     Base Salary.

Such payments shall be made in a lump sum payment on the last date of employment
whether or not the Company enforces Executive's non-compete obligations set
forth in Section 4. In addition, the Stock Option Agreement shall remain in full
force and effect with respect to that portion of the Option vested through the
time of such termination in accordance with its terms.

         (e) RESIGNATION. Upon any voluntary termination of employment by
Executive, the Corporation shall have no further obligations (except as required
by law) to Executive except for Base Salary and Bonuses pursuant to Section 2
earned by Executive as of the date of termination and the Stock Option Agreement
shall remain in full force and effect with respect to that portion of the Option
vested through the time of such termination in accordance with its terms.
Notwithstanding the preceding sentence, in the event Executive's resignation is
requested by the Board other than for "cause", such termination shall be deemed
a termination without cause and subject to the provisions of Section 5(d) above.

         (f) CHANGE IN CONTROL OF THE COMPANY. In the event of a "Change in
Control of the Company" (as defined below) during the Term, refer to Section 12
below.

         Upon termination of this Agreement for any reason provided above,
Employee shall be entitled to receive all compensation earned and all benefits
and reimbursements due through the effective date of termination. Additional
compensation subsequent to termination, if any, will be due and payable to
Employee only to the extent and in the manner expressly provided above or in
Section 13 hereof. All other rights and obligations of the Company and Employee
under this Agreement shall cease as of the effective date of termination, except
that the Company's obligations under Section 9 hereof and Employee's obligations
under Sections 4, 6, 7, 8 and 10 hereof shall survive such termination in
accordance with their terms.

         If termination of Employee's employment arises out of the Company's
failure to pay Employee on a timely basis the amounts to which he is entitled
under this Agreement or as a result of any other material breach of this
Agreement by the Company (including but not limited to a material reduction in
Employee's responsibilities hereunder), as determined by a court of competent
jurisdiction or pursuant to the provisions of Section 16 below, such termination
shall be 



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deemed a termination without cause, and the Company shall pay to Employee
severance compensation pursuant to the applicable provisions of Section 5(d) and
all amounts and damages to which Employee may be entitled as a result of such
breach, including interest thereon and all reasonable legal fees and expenses
and other costs incurred by Employee to enforce Employee's rights hereunder.

         In the event of any termination of Employee's employment for any reason
provided above, Employee shall be under no obligation to seek other employment
and there shall be no offset against any amounts due to Employee under this
Agreement on account of any remuneration attributable to any subsequent
employment that Employee may obtain. Any amounts due under this Section 5 are in
the nature of severance payments, or liquidated damages, or both, and are not in
the nature of a penalty.

6.       RETURN OF COMPANY PROPERTY.

         All records, designs, tradenames and trademarks, service names and
service marks, patents, business plans, financial statements, manuals,
memoranda, customer and other lists and other property delivered to or compiled
by Employee by or on behalf of the Company, or its representatives, vendors or
customers which pertain to the business of the Company shall be and remain the
property of the Company, and be subject at all times to its discretion and
control. Likewise, all correspondence, reports, records, charts, advertising and
marketing materials and other similar data pertaining to the business,
activities or future plans of the Company which is collected by or in the
possession of Employee shall be delivered promptly to the Company without
request by it upon termination of Employee's employment.

7.       INVENTIONS.

         Employee shall disclose promptly to the Company any and all significant
conceptions and ideas for inventions, improvements and valuable discoveries,
whether patentable or not, which are conceived or made by Employee, solely or
jointly with another, during the period of employment, and which are directly
related to the business or activities of the Company and which Employee
conceives as a result of Employee's employment by the Company. Employee hereby
assigns and agrees to assign all of Employee's interests therein to the Company
or its nominee. Whenever requested to do so by the Company, Employee shall
execute any and all applications, assignments or other instruments that the
Company shall deem necessary to apply for and obtain Letters Patent of the
United States or any foreign country or to otherwise protect the Company's
interest therein. Nothing in this Agreement shall apply to an invention for
which no equipment, supplies, facility or trade secret information of the
Company was used and which was developed entirely on Employee's own time and (i)
which does not relate (a) directly to the business of the Company or (b) to the
Company's actual or demonstrably anticipated research or development or (ii)
which does not result from any work performed by Employee for the Company.

8.       TRADE SECRETS.

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         Employee agrees that he will not, other than as required by court
order, during or after the Term of this Agreement with the Company, disclose the
confidential terms of the Company's or its subsidiaries' relationships or
agreements with its significant vendors or customers or any other significant
and material trade secret of the Company or its subsidiaries, whether in
existence or proposed, to any person, firm, partnership, corporation or business
for any reason or purpose whatsoever.


9.       INDEMNIFICATION.

         In connection with any threatened, pending or completed claim, demand,
liability, action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by the Company against Employee), by
reason of the fact that Employee is or was performing services (including an
act, omission or failure to act) under this Agreement, the Company shall
indemnify and hold harmless, to the maximum extent permitted by law, Employee
against all expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement, as actually and reasonably incurred by Employee in
connection therewith. In the event that both Employee and the Company are made a
party to the same third-party action, complaint, suit or proceeding, the Company
agrees to engage competent legal representation reasonably acceptable to
Employee, and Employee agrees to use the same representation; provided that if
counsel selected by the Company shall have a conflict of interest that prevents
such counsel from representing Employee, Employee may engage separate counsel
and the Company shall pay all attorneys' fees of such separate counsel. Further,
while Employee is expected at all times to use Employee's best efforts to
faithfully discharge his duties under this Agreement, Employee cannot be held
liable to the Company for errors or omissions made in good faith where Employee
has not exhibited gross, willful or wanton negligence or misconduct or performed
criminal and fraudulent acts which materially damage the business of the
Company. The Company shall pay, on behalf of Employee upon presentation of
proper invoices, all fees, costs and expenses (including attorneys' fees)
incurred in connection with any matter referenced in this Section 9.

10.      NO PRIOR AGREEMENTS.

         Employee hereby represents and warrants to the Company that the
execution of this Agreement by Employee and his employment by the Company and
the performance of Employee's duties hereunder will not violate or be a breach
of any agreement with a former employer, client or any other person or entity.
Further, Employee agrees to indemnify the Company for any claim, including but
not limited to attorneys' fees and expenses of investigation, by any such third
party that such third party may now have or may hereafter come to have against
the Company based upon or arising out of any noncompetition agreement, invention
or secrecy agreement between Employee and such third party which was in
existence as of the date of this Agreement.

11.      ASSIGNMENT;  BINDING EFFECT.

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         Employee understands that he has been selected for employment by the
Company on the basis of Employee's personal qualifications, experience and
skills. Employee, therefore, shall not assign all or any portion of Employee's
performance under this Agreement. Subject to the preceding two (2) sentences and
the express provisions of Section 12 below, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties hereto and their
respective heirs, legal representatives, successors and assigns.

12.      CHANGE IN CONTROL.

         (a) Unless Employee elects to terminate this Agreement pursuant to (c)
below, Employee understands and acknowledges that the Company may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of the Company hereunder or
that the Company may undergo another type of Change in Control. In the event
such a merger or consolidation or other Change in Control is initiated prior to
the end of the Term, then the provisions of this Section 12 shall be applicable.

         (b) In the event of a pending Change in Control wherein the Company and
Employee have not received written notice at least five (5) business days prior
to the anticipated closing date of the transaction giving rise to the Change in
Control from the successor to all or a substantial portion of the Company's
business and/or assets that such successor is willing as of the closing to
assume and agree to perform the Company's obligations under this Agreement in
the same manner and to the same extent that the Company is hereby required to
perform, then such Change in Control shall be deemed to be a termination of this
Agreement by the Company without cause during the Term and the applicable
portions of Section 5(d) will apply.

         (c) In any Change in Control situation, Employee may elect to terminate
this Agreement by providing written notice to the Company at least five (5)
business days prior to the anticipated closing of the transaction giving rise to
the Change in Control. In such case, the applicable provisions of Section 5(d)
will apply as though the Company had terminated the Agreement without cause
during the Term

         (d) For purposes of applying Section 5 hereof under the circumstances
described in (b) and (c) above, the effective date of termination will be the
closing date of the transaction giving rise to the Change in Control and all
compensation, reimbursements and lump-sum payments due Employee must be paid in
full by the Company at or prior to such closing. Further, Employee will be given
sufficient time and opportunity to elect whether to exercise all or any of
Employee's vested options to purchase the Company Common Stock, including any
options with accelerated vesting under Article 16 of the Incentive Plan, such
that Employee may convert the options to shares of the Company Common Stock at
or prior to the closing of the transaction giving rise to the Change in Control,
if Employee so desires.

         (e) A "Change in Control" shall be deemed to have occurred if:

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         (i) any person or entity, or group of persons or entities acting
together, other than the Company or an employee benefit plan of the Company,
acquires directly or indirectly the Beneficial Ownership (as defined in Section
13(d) of the Securities Exchange Act of 1934, as amended) of any voting security
of the Company and immediately after such acquisition such person, entity or
group is, directly or indirectly, the Beneficial Owner of voting securities
representing 33% or more of the total voting power of all of the
then-outstanding voting securities of the Company and has a larger percentage of
voting securities of the Company than any other person, entity or group holding
voting securities of the Company, unless the transaction pursuant to which such
acquisition is made is approved by at least two-thirds (2/3) of the Board;

         (ii) the following individuals no longer constitute a majority of the
members of the Board: (A) the individuals who, as of the first closing date of
the Company's IPO, constitute the Board (the "Original Directors"); (B) the
individuals who thereafter are elected to the Board and whose election, or
nomination for election, to the Board was approved by a vote of at least
two-thirds (2/3) of the Original Directors then still in office (such directors
becoming "Additional Original Directors" immediately following their election);
and (C) the individuals who are elected to the Board and whose election, or
nomination for election, to the Board was approved by a vote of at least
two-thirds (2/3) of the Original Directors and Additional Original Directors
then still in office (such directors also becoming "Additional Original
Directors" immediately following their election);

         (iii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization or reorganization of the Company, a reverse
stock split of outstanding voting securities, or consummation of any such
transaction if stockholder approval is not obtained, other than any such
transaction which would result in at least 75% of the total voting power
represented by the voting securities of the surviving entity outstanding
immediately after such transaction being Beneficially Owned by at least 75% of
the holders of outstanding voting securities of the Company immediately prior to
the transaction, with the voting power of each such continuing holder relative
to other such continuing holders not substantially altered in the transaction;
or

         (iv) the stockholders of the Company shall approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or a substantial portion of the Company's assets (i.e., 50% or
more of the total assets of the Company).

However, in no event shall a "Change in Control" be deemed to have occurred,
with respect to Employee, if Employee is part of a purchasing group which
consummates the Change in Control transaction. Employee shall be deemed "part of
a purchasing group" for purposes of the preceding sentence if Employee is an
equity participant in the purchasing company or group (except for: (i) passive
ownership of less than three percent (3%) of the stock of the purchasing company
or (ii) ownership of equity participation in the purchasing company or group
which is otherwise not significant, as determined prior to the Change in Control
by a majority of the Original and Additional Original Directors). Further, no
event occuring prior to the completion of the Company's IPO shall constitute a
Change of Control hereunder.

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         (f) Employee must be notified in writing by the Company at any time
that the Company or any member of its Board anticipates that a Change in Control
may take place.

         (g) Employee shall be reimbursed by the Company or its successor, on a
grossed up basis, for any excise taxes that Employee incurs under Section 4999
of the Code, as a result of any Change in Control. Such amount will be due and
payable by the Company or its successor within ten (10) days after Employee
delivers a written request for reimbursement accompanied by a copy of Employee's
tax return(s) showing the excise tax actually incurred by Employee.

13.      COMPLETE AGREEMENT.

         This Agreement supersedes any other agreements or understandings,
written or oral, between the Company and Employee, and Employee has no oral
representations, understandings or agreements with the Company or any of its
officers, directors or representatives covering the same subject matter as this
Agreement.

         This written Agreement is the final, complete and exclusive statement
and expression of the agreement between the Company and Employee and of all the
terms of this Agreement, and it cannot be varied, contradicted or supplemented
by evidence of any prior or contemporaneous oral or written agreements. This
written Agreement may not be later modified except by a written instrument
signed by a duly authorized officer of the Company and Employee, and no term of
this Agreement may be waived except by a written instrument signed by the party
waiving the benefit of such term.

14.      NOTICE.

         Whenever any notice is required hereunder, it shall be given in writing
addressed as follows:

         To the Company:            Virtual Technology Corporation
                                    3100 West Lake Street
                                    Suite 400
                                    Minneapolis, MN  55416
g
         To Employee:               John Harvatine



Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party may
change the address for notice by notifying the other party of such change in
accordance with this Section 14.

15.      SEVERABILITY;  HEADINGS.

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<PAGE>   13

         If any portion of this Agreement is held invalid or inoperative, the
other portions of this Agreement shall be deemed valid and operative and, so far
as is reasonable and possible, effect shall be given to the intent manifested by
the portion held invalid or inoperative. The Section headings herein are for
reference purposes only and are not intended in any way to describe, interpret,
define or limit the extent or intent of the Agreement or of any part hereof.

16.      ARBITRATION.

         Except as to matters of injunctive or equitable relief (over which the
parties agree that the federal and state courts located in Minneapolis,
Minnesota shall have exclusive jurisdiction and are deemed to be of proper venue
and convenience to the parties), any unresolved dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three (3) arbitrators in Minneapolis,
Minnesota, in accordance with the rules of the American Arbitration Association
then in effect. The arbitrators shall not have the authority to add to, detract
from or modify any provision hereof nor to award punitive damages to any injured
party. The arbitrators shall have the authority to order back-pay, severance
compensation, vesting of options (or cash compensation in lieu of vesting of
options), reimbursement of costs, including those incurred to enforce this
Agreement, and interest thereon in the event the arbitrators determine that
Employee was terminated without disability or good cause, as defined in Sections
5(b) and 5(c) hereof, respectively, or that the Company has otherwise materially
breached this Agreement. A decision by a majority of the arbitration panel shall
be final and binding. Judgment may be entered on the arbitrators' award in any
court having jurisdiction. The direct expense of any arbitration proceeding
shall be borne by the Company.

17.      GOVERNING LAW.

         This Agreement shall in all respects be construed according to the laws
of the State of Minnesota without regard to the conflicts of laws principles of
such state.



18.      COUNTERPARTS.

         This Agreement may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.

         IN WITNESS WHEREOF, the undersigned have hereunto affixed their
signatures.

                                        VIRTUAL TECHNOLOGY CORPORATION

                                      -13-
<PAGE>   14


                                        By /s/ Greg Appelhof, President & CEO
                                          -------------------------------------
                                          Greg Appelhof, President & CEO




                                            /s/ John Harvatine
                                          -------------------------------------
                                           John Harvatine


























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