Document:

ex10-12.htm

    Exhibit
10.12

     

    AMENDED
AND RESTATED

    PROMISSORY
NOTE

     

    
      	
              $275,000

            	
              March
      25, 2010 to be Effective February 17,
2010 

            

    

     

    FOR VALUE
RECEIVED, SUMOTEXT
Incorporated, a Nevada Corporation (the “Company”),
having an address of 2100 Riverdale, Suite 200, Little Rock, Arkansas, 72202,
hereby promises to pay to the order of Tim Miller, and/or assigns
(the “Holder”),
at the offices of Holder at 2100 Riverdale, Suite 200, Little Rock, Arkansas,
72202, or such other place as may be designated by Holder to the Company in
writing, the aggregate principal amount of Two Hundred and Seventy-Five Thousand
Dollars ($275,000), together with interest on the unpaid principal amount
hereof, upon the terms and conditions hereinafter set forth.

     

    
      	
              1.

            	
              Loan
      Amount.  This Amended and Restated Promissory Note
      (this “Note”,
      “Promissory
      Note” or “Agreement”),
      amends, restates and supersedes a Convertible Promissory Note entered into
      between the Company and Holder on February 17, 2010, and evidences the
      loan of Two Hundred and Seventy-Five Thousand Dollars  ($275,000),
      from the Holder to the Company (hereinafter referred to as the “Loan”
      or the “Principal”),
      pursuant to the following Promissory Notes previously entered into by and
      between the Company and Holder, which previous Promissory Notes are hereby
      superseded, combined and replaced by this Note and the terms and
      conditions herein (the “Previous
      Notes”):

               

              ·$100,000 borrowed by the Company
      from Holder on April 16, 2009, which accrued interest at the rate of 10%
      per annum and was due and payable on April 15,
      2010;  

               

              ·$50,000
      borrowed by the Company from Holder on July 1, 2009, which accrued
      interest at the rate of 10% per annum and was due and payable on July 2,
      2010;

               

              ·$50,000
      borrowed by the Company from Holder on August 3, 2009, which accrued
      interest at the rate of 10% per annum and was due and payable on August 4,
      2010; and

               

              ·$75,000
      borrowed by the Company from Holder on August 27, 2009, which accrued
      interest at the rate of 10% per annum and was due and payable on August
      28, 2010.

               

              Total
      accrued interest on the Previous Notes has been paid as of the effective
      date of this Note.

            
	 
      	 
      	 
      
	
              2.

            	
              Payment
      Terms.  The Company promises to pay to Holder the balance of
      Principal, together with accrued and unpaid interest, on February 17,
      2012 (the “Maturity
      Date”), unless this Note is earlier prepaid as herein
      provided.  All payments hereunder shall be made in lawful money of
      the United States of America.  Payment shall be credited first to the
      accrued interest then due and payable and the remainder to
      Principal.

            
	 
      	 
      	 
      
	
              3.

            	
              Interest.  Interest
      on the outstanding portion of Principal of this Note shall accrue at a
      rate of eight percent (8%) per annum, and be payable quarterly in
      arrears.  All computations of interest shall be made on the basis of
      a 360-day year for actual days elapsed.  Such interest shall accrue
      and be paid upon the Maturity Date of the
Loan.

            

    

    

    
      	 
      	
              a.

            	
              Notwithstanding
      any provision in this Note, the total liability for payments of interest
      and payments in the nature of interest, including all charges, fees,
      exactions, or other sums which may at any time be deemed to be interest,
      shall not exceed the limit imposed by the usury laws of the State of
      Arkansas or the applicable laws of the United States of America, whichever
      shall be higher (the “Maximum
      Rate”).

            

    

    

    
      	 
      	
              b.

            	
              In
      the event the total liability for payments of interest and payments in the
      nature of interest, including, without limitation, all charges, fees,
      exactions or other sums which may at any time be deemed to be interest,
      which for any month or other interest payment period exceeds the Maximum
      Rate, all sums in excess of those lawfully collectible as interest for the
      period in question (and without further agreement or notice by, among or
      to the Holder the undersigned) shall be applied to the reduction of the
      principal balance, with the same force and effect as though the
      undersigned had specifically designated such excess sums to be so applied
      to the reduction of the principal balance and the Holder had agreed to
      accept such sums as a premium-free prepayment of principal; provided,
      however, that the Holder may, at any time and from time to time, elect, by
      notice in writing to the undersigned, to waive, reduce or limit the
      collection of any sums in excess of those lawfully collectible as interest
      rather than accept such sums as a prepayment of the principal
      balance.  The undersigned does not intend or expect to pay nor
      does the Holder intend or expect to charge, accept or collect any interest
      under this Note greater than the Maximum
Rate.

            

    

      

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    

    
      	 
      	
              c.

            	
              If
      any payment of principal or interest on this Note shall become due on a
      Saturday, Sunday or any other day on which national banks are not open for
      business, such payment shall be made on the next succeeding business
      day.

            

    

     

    
      	
              4.

            	
              Warrants. 
      In connection with Holder agreeing to be bound by the terms and conditions
      of this Note, the Company agrees to grant the Holder warrants to purchase
      an aggregate of 550,000 shares of the Company’s common stock at an
      exercise price of $0.50 per share, which warrants shall have a term of two
      years and be evidenced by the Warrant Agreement attached hereto as Exhibit
      A (the “Warrant”). 

            

    

    

    
      	
              5.

            	
              Redemption. 
      This Note may be redeemed by the Company by payment of the entire
      Principal and interest outstanding under this Note in cash to
      Holder. 

            

    

     

    
      	 
      	
              a.

            	
              This
      Note may be prepaid in whole or in part at any time without
      penalty.

            
	 
      	 
      	 
      
	 
      	
              b.

            	
              Any
      partial prepayment shall be applied first to any accrued interest and then
      to any principal Loan amount outstanding.

            
	 
      	 
      	 
      
	 
      	
              c.

            	
              This
      Note and the repayment hereof will be senior to all of the Company’s other
      privately held outstanding notes, other than a $150,000 promissory note
      held by Steve Bova (“Seniority”),
      and the Company shall be required to take prompt action to obtain a
      confirmation of such Seniority from its current note holders following the
      parties’ execution of this Note.

            

    

     

    
      	
              6.

            	
              Representations
      and Warranties of the Company. The Company represents and warrants
      to Holder as follows: 

            

    

     

    
      	 
      	
              a.

            	
              The
      execution and delivery by the Company of this Note (i) are within the
      Company’s corporate power and authority, and (ii) have been duly
      authorized by all necessary corporate action.  Further, the
      undersigned is a duly authorized representative of the Company and has
      been authorized by a resolution of the Board of Directors of the Company
      to exercise any and all documents necessary to effectuate the transaction
      contemplated hereby.

            

    

    

    
      	 
      	
              b.

            	
              This
      Note is a legally binding obligation of the Company, enforceable against
      the Company in accordance with the terms hereof, except to the extent that
      (i) such enforceability is limited by bankruptcy, insolvency,
      reorganization, moratorium or other laws relating to or affecting
      generally the enforcement of creditors’ rights, and (ii) the availability
      of the remedy of specific performance or in injunctive or other equitable
      relief is subject to the discretion of the court before which any
      proceeding therefore may be
brought.

            

    

    

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    
      	
              7.

            	
              Representations,
      Warranties and Covenants of Holder. Holder represents and warrants
      to the Company, and agrees, as follows (collectively the “Representations”):

            

    

      

    
      	 
      	
              a.

            	
              The
      Warrant and any shares of common stock issuable in connection with the
      exercise of the Warrant (“Warrant
      Shares”) are being acquired by Holder for its own account for
      investment and not with a view to, or for sale in connection with, any
      distribution thereof.

            

    

      

    
      	 
      	
              b.

            	
              Holder
      is either an “accredited
      investor” as such term is defined under Rule 501 of the Securities
      Act of 1933, as amended (the “Act”);
      and/or Holder has thoroughly read, reviewed, had a chance to ask questions
      to the Company regarding, and has all of Holder’s questions answered
      sufficiently, the Company’s Form 10-K, Form 10-Q and Form 8-K filings on
      the Securities and Exchange Commission’s Edgar filing website
      (www.sec.gov), including the risk factors, description of business
      operations, unaudited and audited financial information, results of
      operations and other disclosures therein (the “Filings”).  In
      connection with the Filings or otherwise, the Holder has reviewed and has
      access to similar information regarding the Company as would be found in a
      Registration Statement under the Act, and is familiar with the Company,
      its business operations, results of operations and risk factors regarding
      Holders investment herein.  Holder further represents to the
      Company that Holder does not need a Purchaser Representative in connection
      with the investment in the Note or Common Stock.

            
	 
      	 
      	 
      
	 
      	
              c.

            	
              Holder
      has sufficient knowledge and experience in financial and business matters
      and is capable of evaluating the risks and merits of Holder’s investment
      in the Company; Holder believes that Holder has received or had access to
      all information Holder considers necessary or appropriate to make an
      informed investment decision with respect to this Note; and Holder is able
      financially to bear the risk of losing Holder’s full investment in this
      Note.

            
	 
      	 
      	 
      
	 
      	
              d.

            	
              Holder
      understands that the Warrant and the Warrant Shares have not been
      registered under the Securities Act of 1933, as amended (the “Securities
      Act”) or registered or qualified under any the securities laws of
      any state or other jurisdiction, are “restricted
      securities,” and cannot be resold or otherwise transferred unless
      they are registered under the Securities Act, and registered or qualified
      under any other applicable securities laws, or an exemption from such
      registration and qualification is available. Prior to any proposed
      transfer of the Warrant or the Warrant Shares, Holder shall, among other
      things, give written notice to the Company of its intention to effect such
      transfer, identifying the transferee and describing the manner of the
      proposed transfer and, if requested by the Company, accompanied by (i)
      investment representations by the transferee similar to those made by
      Holder in this Section 7 and (ii) an opinion of counsel satisfactory to
      the Company to the effect that the proposed transfer may be effected
      without registration under the Securities Act and without registration or
      qualification under applicable state or other securities laws. Each
      certificate issued to evidence the Warrant and the Warrant Shares shall
      bear a legend as follows:

               

              "The
      securities represented by this certificate have not been registered under
      the Securities Act of 1933 or any state securities act.  The
      securities have been acquired for investment and may not be sold,
      transferred, pledged or hypothecated unless (i) they shall have been
      registered under the Securities Act of 1933 and any applicable state
      securities act, or (ii) the corporation shall have been furnished with an
      opinion of counsel, satisfactory to counsel for the corporation, that
      registration is not required under any such acts."

            

    

    

    
      	
              8.

            	
              Certain Waivers by the
      Company.  Except as expressly provided otherwise in
      this Note, the Company and every endorser or guarantor, if any, of this
      Note waive presentment, demand, notice, protest and all other demands and
      notices in connection with the delivery, acceptance, performance, default
      or enforcement of this Note, and assent to any extension or postponement
      of the time of payment or any other indulgence, to any substitution,
      exchange or release of collateral available to Holder, if any, and to the
      addition or release of any other party or person primarily or secondarily
      liable.

            

    

    

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    
      	
              9.

            	
              Assignment by
      Holder.  If and whenever this Note shall be
      assigned and transferred, or negotiated, including transfers to substitute
      or successor trustees, the holder hereof shall be deemed the “Holder”
      for all purposes under this Note.

            
	 
      	 
      
	
              10.

            	
              Amendment.  This
      Note may not be changed orally, but only by an agreement in writing,
      signed by the party against whom enforcement of any waiver, change,
      modification or discharge is
sought.

            

    

     

    
      	
              11.

            	
              Costs
      and Fees.  Anything else in this Note to the contrary
      notwithstanding, in any action arising out of this Agreement, the
      prevailing party shall be entitled to collect from the non-prevailing
      party all of its attorneys’ fees.  For the purposes of this
      Note, the party who receives or is awarded a substantial portion of the
      damages or claims sought in any proceeding shall be deemed the “prevailing”
      party and attorneys’ fees shall mean the reasonable fees charged by an
      attorney or a law firm for legal services and the services of any legal
      assistants, and costs of litigation, including, but not limited to, fees
      and costs at trial and appellate levels.

            
	 
      	 
      
	
              12.

            	
              Governing
      Law.  It is the intention of the parties hereto that the
      terms and provisions of this Note are to be construed in accordance with
      and governed by the laws of the State of Arkansas, except as such laws may
      be preempted by any federal law controlling the rate of interest which may
      be charged on account of this Note.

            

    

      

    
      	
              13.

            	
              No Third Party
      Benefit.  The provisions and covenants set forth
      in this Agreement are made solely for the benefit of the parties to this
      Agreement and are not for the benefit of any other person, and no other
      person shall have any right to enforce these provisions and covenants
      against any party to this Agreement.

            
	 
      	 
      
	
              14.

            	
              Jurisdiction, Venue and Jury
      Trial Waiver.  The parties hereby consent and
      agree that, in any actions predicated upon this Note, venue is properly
      laid in Arkansas and that the Circuit Court in and for Little Rock,
      Arkansas, shall have full subject matter and personal jurisdiction over
      the parties to determine all issues arising out of or in connection with
      the execution and enforcement of this Note.

            
	 
      	 
      
	
              15.

            	
              Interpretation.  The
      term “Company”
      as used herein in every instance shall include the Company’s successors,
      legal representatives and assigns, including all subsequent grantees,
      either voluntarily by act of the Company or involuntarily by operation of
      law and shall denote the singular and/or plural and the masculine and/or
      feminine and natural and/or artificial persons, whenever and wherever the
      contexts so requires or properly applies.  The term “Holder”
      as used herein in every instance shall include the Holder’s successors,
      legal representatives and assigns, as well as all subsequent assignees,
      endorsees and holders of this Note, either voluntarily by act of the
      parties or involuntarily by operation of law.  Captions and
      paragraph headings in this Note are for convenience only and shall not
      affect its interpretation.

            
	 
      	 
      
	
              16.

            	
              WAIVER
      OF JURY TRIAL.  THE COMPANY AND HOLDER HEREBY KNOWINGLY,
      VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO TRIAL BY
      JURY IN RESPECT TO ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER
      OR IN CONNECTION WITH THIS NOTE AND ANY AGREEMENT CONTEMPLATED TO BE
      EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF
      DEALING, STATEMENTS, (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER
      PARTY.  THE COMPANY ACKNOWLEDGES THAT THIS WAIVER OF JURY TRIAL
      IS A MATERIAL INDUCEMENT TO THE HOLDER IN EXTENDING CREDIT TO THE COMPANY,
      THAT THE HOLDER WOULD NOT HAVE EXTENDED SUCH CREDIT WITHOUT THIS JURY
      TRIAL WAIVER, AND THAT THE COMPANY HAS BEEN REPRESENTED BY AN ATTORNEY OR
      HAS HAD AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY IN CONNECTION WITH THIS
      JURY TRIAL WAIVER AND UNDERSTANDS THE LEGAL EFFECT OF THIS
      WAIVER.

            

    

    

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    
      	
              17.

            	
              Entire
      Agreement.  This Agreement constitutes the sole
      and only agreement of the parties hereto and supersedes any prior
      understanding or written or oral agreements between the parties respecting
      the subject matter hereof.

            

    

    

    
      	
              18.

            	
              Effect
      of Facsimile and Photocopied Signatures. This Agreement may be
      executed in several counterparts, each of which is an
      original.  It shall not be necessary in making proof of this
      Agreement or any counterpart hereof to produce or account for any of the
      other counterparts.  A copy of this Agreement signed by one
      Party and faxed or scanned and emailed to another Party (as a PDF or
      similar image file) shall be deemed to have been executed and delivered by
      the signing Party as though an original.  A photocopy or PDF of
      this Agreement shall be effective as an original for all
      purposes.

            

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    [Remainder
of page left intentionally blank.  Signature page
follows.]

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    IN WITNESS WHEREOF, the
undersigned have caused this Amended and Restated Promissory Note to be executed
and delivered by a duly authorized officer as of the date first above written,
to be effective as of the effective date set forth above.

     

    
      	 
      	
              SUMOTEXT
      INCORPORATED

              a
      Nevada Corporation

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
              By:
      /s/ Matthew
      Lozeau

            	 
      
	 
      	
              Matthew
      Lozeau, Secretary

            	 
      

    

    

    Holder:

    

    /s/ Tim Miller

    Tim
Miller

    

    

    
      
        
        

      

      
        -6-canfieldempagreement.htm

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into effective as of 5th day of January, 2006, by and between Duckwall-ALCO Stores, Inc., a Kansas corporation (the "Company"), and Tom L. Canfield,  Jr., an individual.

 

W I T N E S S E T H:

 

WHEREAS, the Company desires to employ Tom L. Canfield, Jr. as the Company's Vice President – Distribution & Administration (hereinafter the “Employee”) on the terms and conditions set forth herein;

 

NOW, THEREFORE, the Company and the Employee, each intending to be legally bound, hereby mutually covenant and agree as follows:

 

SECTION I.

DEFINITIONS

 

The following terms used in this Agreement shall have the meanings set forth below:

 

"Earned Obligations" shall mean, as of the date of Termination of Employment, the sum of (A) the Employee's aggregate Base Salary through such date to the extent not theretofore paid, plus(B) all vacation pay, expense reimbursements and other cash entitlements earned by the Employee hereunder as of such date to the extent not theretofore paid.

 

"Base Salary" shall mean the amount set forth in Section 3(a).

 

"Board" shall mean the board of directors of the Company.

 

"Cause" shall mean (i) the Employee's material violation of any of Sections 2(c), 4(a),4(b) or 4(c) of this Agreement; (ii) the Employee engaging in conduct which is fraudulent or illegal with respect to the Company or any of its subsidiaries; (iii) the Employee’s gross negligence in the performance or nonperformance of his duties or responsibilities hereunder; (iv) the Employee's engagement in misconduct which is materially injurious or materially damaging to the Company or any of its subsidiaries or the reputation of the Company or any of its subsidiaries; (v) the Employee's conviction of, or plea of nolo contendere to, a felony; (vi) failure to cooperate with regulatory or legal proceedings; or (vii) material breach of Company policy.

 

"Competitor" shall have the meaning set forth in Section 4(b).

 

"Confidential Information" shall have the meaning set forth in Section 4(c).

 

"Change of Control" shall mean a change in control of a nature as set forth in the Duckwall-ALCO Stores, Inc. Incentives Stock Option Plan of 2003, or as may be amended ("ISO Plan").

 

"Disability" shall mean Employee's permanent disability or incapacity as determined in accordance with the Company's disability insurance policy, if such a policy is then in effect, or if no such policy is then in effect, such permanent disability or incapacity shall be determined by the Company in its good faith judgment based upon inability to perform the essential functions of his position, with reasonable accommodation by the Company, for a period in excess of 180 days during any period of 365 calendar days.

 

"Good Reason" means assignment of the Employee to duties and responsibilities that are substantially inconsistent with the scope of the duties and responsibilities of Employee or the Company has a Change in Control.

 

"Person" shall mean an individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, other entity or governmental or other agency or political subdivision thereof.

 

"Term" shall mean the period beginning on the date of this Agreement and ending as provided in Section 2(b).

 

"Termination of Employment" shall mean (i) the Employee's death or Disability, (ii) termination by the Company of the Employee's employment for Cause or without Cause, (iii) resignation by the Employee from the employ of the Company, (iv) retirement of the Employee or (v) expiration of the Term.

 

SECTION II.

EMPLOYMENT AND TERM

 

(a) Employment. The Company hereby offers to employ the Employee as Employee of the Company and each of its subsidiaries, and the Employee hereby accepts such employment, for the Term.

 

(b) Term. The Term shall commence on February 1, 2006 and end on January 31, 2007 ("Original Term"). The Term shall automatically extend for successive one year periods (each, a "Supplemental Term") following the expiration of the Original Term unless either party delivers written notice to the other party no later than 60 days preceding the end of the Original Term or any Supplemental Term, as the case may be, of intent not to renew. See also Section V. No Supplemental Term may start after the date of Termination of Employment.

 

(c) Duties. The Employee shall have all powers, duties and responsibilities commensurate with his position as set forth in Section 2 hereof or as may be assigned by the Company from time to time (provided any such powers, duties and responsibilities assigned by the Company are commensurate with such position). The Employee shall devote substantially all of his business time, attention and energies to the performance of his duties hereunder. Notwithstanding the foregoing, nothing in this Agreement shall restrict the Employee from managing his personal investments, personal business affairs and other personal matters, or serving on civic or charitable boards or committees, provided that none of such activities interferes with the performance of his duties and responsibilities hereunder or conflicts or competes with the interests of the Company or its subsidiaries. The Employee shall not serve on the Board of Directors or similar governing body of any for-profit Person without the consent of the Company, which consents will not be unreasonably withheld.   The Employee shall report to the President of the Company.

 

SECTION III.

COMPENSATION AND BENEFITS

 

(a) Base Salary. For services performed by the Employee for the Company and its subsidiaries pursuant to this Agreement, the Company shall pay the Employee an initial Base Salary of One Hundred Fifty-Four Thousand Five Hundred Dollars ($154,500.00) per year, payable in accordance with the Company's regular payroll practices and subject to annual review by the Company to consider increases.

  (b)  Bonus.  The Company shall have a bonus plan for the Employee as follows:  If the Company has a Return on Equity ("ROE") as later defined of at least six percent (6%) after the completion of fiscal year 2006, and such percentage thereafter as set forth by the Company, Employee will receive a bonus of thirty percent (30%) of his base pay, all paid within 30 days after determination. ROE is defined for any completed fiscal year as (Earnings from continuing operation before discontinued operations excluding cumulative change in accounting and one-time termination benefits recognized in accordance with FAS 146) divided by (stockholders' equity beginning of year plus stockholders' equity end of year divided by two). The Company, at its sole discretion may pay, or not pay any other bonus as it determines. Employee agrees to reimburse the Company and/or have the Company offset any payments due to Employee to the extent that any bonuses are paid on financial information which is later determined to be materially overstated and results in any financial restatement, which would have lessened the amount paid to Employee.

 

(c) Additional Benefits. The Employee shall be eligible for such fringe benefits, if any, by way of insurance, hospitalization, vacations and bonus programs normally provided to other members of the executive management of the Company generally and such additional benefits as may be from time to time agreed upon in writing between the Employee and the Company.

 

(d) Expenses. The Company shall reimburse the Employee for all ordinary and necessary expenses incurred and paid by the Employee in the course of the performance of the Employee's duties pursuant to this Agreement and consistent with the Company's policies in effect from time to time with respect to travel, entertainment and other business expenses, and subject to the Company's requirements with respect to the manner of approval and reporting of such expenses.

 

SECTION IV.

COVENANTS

 

 (a) Non-Interference. For a period ending on the second anniversary of the Termination of Employment of the Employee, the Employee agrees to refrain from, directly, indirectly or as an agent on behalf of or in conjunction with any Person, (i) soliciting or encouraging any Employee of the Company or its subsidiaries who is employed in an executive, managerial, administrative or professional capacity or who possesses Confidential Information (as defined below), to leave the employment of the Company or its subsidiaries or (ii) soliciting any customer of the Company or any of its subsidiaries on behalf of any Competitor.

 

(b) Noncompetition. For a period ending on the second anniversary of the Termination of Employment of the Employee, the Employee will not, either directly or indirectly, own, manage, operate, join or control or participate (or serve as a consultant or in a similar position) in the ownership, management operation or control of, any business, entity, firm, partnership, corporation or other Person, whether, private, governmental or quasi-governmental ("Competitor"), other than the Company and its subsidiaries, which is engaged, directly or indirectly, in any state where the Company has a retail establishment, including (i) the business of the development, design, production, supply, sale or distribution of small variety or discount retail stores or (ii) any other business engaged in or being developed by the Company or its subsidiaries in which the Employee has played a material role in the acquisition, development or management of such business; provided, however, that the Employee will not be deemed to engage in any of the businesses of any publicly traded corporation solely by reason of his ownership of less than 2% of the outstanding stock of such Person or by serving as a director on the board of directors of a customer or supplier of the Company at the request of the Company.

 

(c) Nondisclosure of Confidential Information.

 

(l) Company Information. In the performance of his duties, the Employee has

previously had, and may be expected in the future to have, access to Company proprietary information, technical data, trade secrets or know-how, including, but not limited to, research, product plans, products, methods, strategies, services, customer lists, prospective customer lists, customer records, telephone lists and all other information with respect to customers (including, but not limited to, customers of the Company on whom he called or with whom he became acquainted during the term of his employment), documents, notes, working papers, records, systems, contracts, agreements, market data and related information, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering information, hardware configuration information, marketing plans, finances, pricing and credit documents and policies, service development techniques or plans, business acquisition plans, new personnel acquisition plans or other business information presently owned or at any time hereafter developed by the Company or its subsidiaries, agents or consultants or used presently or at any time hereafter in the course of the business of the Company and its subsidiaries, that are not otherwise part of the public domain (collectively, the "Company Information"). All such Company Information is considered secret and has been and/or will be disclosed to the Employee in confidence, and the Employee acknowledges that, as a consequence of his employment and position with the Company and its subsidiaries, the Employee will have access to and become acquainted with Company Information. Except in the performance of his duties to the Company or its subsidiaries, the Employee shall not, during the Term and at all times thereafter, directly or indirectly for any reason whatsoever, disclose or use any such Company Information. All records, files, drawings, documents, equipment and other tangible items, wherever located, relating in any way to or containing Company Information, which the Employee has prepared, used or encountered or shall in the future prepare, use or encounter, shall be and remain the Company's sole and exclusive property and shall be included in the Company Information. Upon termination of this Agreement, or whenever requested by the Company, the Employee shall promptly deliver to the Company any and all of the Company Information and copies thereof, not previously delivered to the Company or its subsidiaries, that may be in the possession or under the control of the Employee. The foregoing restrictions shall not apply to the use, divulgence, disclosure or grant of access to Confidential Information to the extent, but only to the extent, (i) expressly permitted or required pursuant to any other written agreement between or among the Employee and the Company (and/or any of its subsidiaries), (ii) such Company Information which has become publicly known and made generally available through no wrongful act of the Employee or of others who were under confidentiality obligations as to the item or items involved, (iii) the Employee's general skills and education, and know-how of broad application known to the Employee or independently developed by the Employee prior to the Employee's employment by the Company or (iv) the Employee is required to disclose Company Information by or to any court of competent jurisdiction or any governmental or quasi-governmental agency, authority or instrumentality of competent jurisdiction, provided, that the Employee shall, prior to any such disclosure, immediately notify the Company of such requirement and provided further, that the Company shall have the right, at its expense, to object to such disclosures and to seek confidential treatment of any Company Information to be so disclosed on such terms as it shall determine.

 

 

(2) Third Party Information.  In the performance of his duties, the Employee has previously had, and may be expected in the future to have, access to confidential or proprietary information with respect to third parties which is subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for certain limited purposes (the "Third Party Information"). Except in the performance of his duties to the Company or its subsidiaries, the Employee shall not, during the Term and at all times thereafter, directly or indirectly for any reason whatsoever, disclose or use any such Third Party Information.

 

(d) Enforcement.

 

(1) The Employee acknowledges that violation of any of the covenants and agreements set forth in this Section IV would cause the Company or any of its subsidiaries irreparable damage for which the Company or any of its subsidiaries cannot be reasonably compensated in damages in an action at law, and therefore in the event of any breach by the Employee of this Section IV, the Company or its subsidiaries shall be entitled to make application to a court of competent jurisdiction for equitable relief by way of injunction or otherwise (without being required to post a bond). Employee agrees to pay all of the Company's court costs and attorneys' fees incurred in enforcing its rights under this Section IV and all other obligations of Employee under this Employment Agreement. This provision shall not, however, be construed as a waiver of any of the rights which the Company or its subsidiaries may have for damages under this Agreement or otherwise, and all of the Company's and its subsidiaries' rights and remedies shall be unrestricted. This Section IV shall survive termination of this Agreement or Termination of Employment for any reason whatsoever.

 

(2) If any of the provisions of this Agreement shall otherwise contravene or be invalid under the laws of any state or other jurisdiction where it is applicable but for such contravention or invalidity, such contravention or invalidity shall not invalidate all of the provisions of this Agreement, but rather the Agreement shall be reformed and construed, insofar as the laws of that state or jurisdiction are concerned, as not containing the provision or provisions, but only to the extent that they are contravening or are invalid under the laws of that state or jurisdiction, and the rights and obligations created hereby shall be reformed and construed and enforced accordingly. In particular, if any of the covenants or agreements set forth in Section IV, or any part thereof, is held to be unenforceable because of the duration of such provision or the area covered thereby, or otherwise, the parties hereby expressly agree that the court making such determination shall have the power to reduce the duration and/or the areas of such provision or otherwise limit any such provision, and, in its reduced form, such provision shall then be enforceable. The parties intend that each covenant set forth in this Section IV shall be deemed to be a series of separate covenants, one for each and every county and political subdivision to which it is applicable.

 

(3) The Employee understands that the provisions of this Section IV may limit his ability to earn a livelihood in a business similar to the business of the Company and its subsidiaries but nevertheless agrees and hereby acknowledges that such provisions do not impose a greater restraint than is necessary to protect the goodwill or other business interests of the Company and its subsidiaries and the consideration provided under this Agreement, including, without limitation, any amounts or benefits provided hereunder, is sufficient to compensate the Employee for the restrictions contained in this Section IV. In consideration of the foregoing and in light of the Employee's education, skills and abilities, the Employee agrees that he will not assert, and it should not be considered, that any provisions of this Section IV prevented him from earning a living or otherwise are void, voidable or unenforceable or should be voided or held unenforceable.

(4)  Each of the covenants of this Section IV is given by the Employee as part of the consideration for this Agreement and as an inducement to the Company to enter into this Agreement and accept the obligations hereunder.

 

SECTION V.

TERMINATIONS

 

(a) Termination of Agreement. At the Termination of Employment, Sections 4(c), 4(d) and 5(c) will survive, and Sections 4(a) and 4(b) will survive only to the extent set forth in this Section V.

 

            (b) Procedures Applicable to Termination of Employment. The Employee may resign upon notice to the Company. The Employee must, however, give at least thirty (30) days advance notice of his resignation. The Company may notify the Employee that his employment is terminated, with or without Cause, or for Disability and in such case the date of Termination of Employment will be the date such notice is given.

 

(c) Obligations of the Company and the Employee Upon Termination of Employment.

 

(1) Termination In the Event of Death or Disability.

 

(A)           In the event of the Employee's death or Disability, the Company shall pay to the Employee or the Employee's heirs, estate or legal representatives, as the case may be, the following:

 

(i) all Earned Obligations in a lump sum within thirty (30) days after the date of Termination of Employment; and

 

(ii) any benefits earned by the Employee as of the date of Termination of Employment under all qualified and non qualified retirement, pension, profit sharing and similar plans of the Company to such extent, in such manner and at such time as are provided under the terms of such plans and arrangements.

 

(B)           In the event of Termination of Employment as a result of the Employee's Disability, the Company shall keep in force existing health and dental benefits for the Employee and his dependents for a period of twelve (12) months from the date of Termination of Employment on the basis in effect at the time of such Termination of Employment.

 

(C)           In the event of Termination of Employment as a result of the Employee's Disability, the Employee agrees that the covenants made by the Employee set forth in Sections 4(a) and 4(b) of this Agreement will remain in effect for the period specified therein.

 

 

(2) Termination Without Cause. for Good Reason. or Company's Failure to Extend.

 

(A)           In the event that the Company terminates the Employee's employment without Cause or the Employee terminates his employment for Good Reason (but excluding Termination of Employment by reason of the Employee's death or Disability), or the Company fails to extend in accordance with Section 2, the Company shall pay to the Employee the following:

 

(iii) all Earned Obligations in a lump sum within thirty (30) days after the date of Termination of Employment;

 

(iv) any benefits earned by the Employee as of the date of Termination of Employment under all qualified and nonqualified retirement, pension, profit sharing and similar plans of  the Company to such extent, in such manner and at such time as are provided under the terms of such plans and arrangements;

 

(v) the Company shall pay to the Employee, subject to applicable withholding, one additional year of Base Salary paid in accordance with the Company's regular payroll practices; and

 

(vi) the Company shall continue all benefits coverage of the Employee and his dependents provided under the Company's benefit plans or policies (or under other benefit plans or policies that provide substantially equivalent coverage) for the unexpired portion of the Original Term and/or Supplemental Term.

 

(B)           If the Employee obtains other employment that would cause Employee to violate Section 4(b) were it then in effect during the period the Company remains obligated to compensate Employee as set forth in this Section 5, the Employee shall promptly notify the Company thereof and of the aggregate gross compensation payable to Employee in respect of such other employment, and the Company shall have the right to deduct, dollar for dollar, from the amount payable by the Company to Employee the gross aggregate amount of compensation Employee receives from such other employment.

 

(C)           The Employee agrees that the covenants made by the Employee set forth in Sections 4(a) and 4(b) of this Agreement will remain in effect for the period specified therein.

 

 

(3) Other Terminations.

 

(A)           In the event of Termination of Employment for any other reason

(including a termination for Cause or resignation), the Company shall pay to the Employee the following:

 

(vii)           all Earned Obligations in a lump sum within thirty (30) days after the date of Termination of Employment; and

 

(viii) any benefits earned by the Employee as of the date of Termination of Employment under all qualified and nonqualified retirement, pension, profit sharing and similar plans of the Company to such extent, in such manner and at such time as are provided under the terms of such plans and arrangements.

 

(B)           The Employee agrees that the covenants made by the Employee set forth in Sections 4(a) and 4(b) of this Agreement will remain in effect for the periods specified therein.

 

(4) Exclusivity. The amounts payable to the Employee pursuant to Sections 5(c), as the case may be, shall be the Employee's sole remedy in the event of the Termination of Employment of the Employee, and the Employee waives any and all rights to pursue any other remedy at law or in equity; provided, however, that this shall not constitute a waiver of any rights provided under any federal, state or local laws or regulations relating to discrimination in employment and provided, further, that nothing in this Section 5(c) or elsewhere in this Agreement is intended to limit the Employee's rights under Company Plans or applicable law which by their terms survive the applicable Termination of Employment.

SECTION VI.

EMPLOYEE REPRESENTATIONS

 

(a) Employee represents that he is free to enter into this Agreement and that he has no outstanding agreements which would prohibit him from the execution of this Agreement and carrying out the responsibilities delegated herein.

 

SECTION VII.

MISCELLANEOUS

 

(a) Binding Effect. This Agreement shall be binding upon and inure to the benefit of the heirs and representatives of the Employee and the successors and assigns of the Company. The Company shall require any successor (whether direct or indirect, by purchase, merger, reorganization, consolidation, acquisition of assets or stock, liquidation, or otherwise), by agreement in form and substance reasonably satisfactory to the Employee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform this Agreement if no such succession had taken place. Regardless of whether such agreement is executed, this Agreement shall be binding upon any successor of the Company in accordance with the operation of law, and such successor shall be deemed to be the "Company" for purposes of this Agreement.

 

(b) Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand or mailed within the continental United States by first class certified mail, return receipt requested, postage prepaid, addressed as follows:

 

(1) if to the President or the Company, to:

 

Duckwall-ALCO Stores, Inc.

401 Cottage Street

Abilene, KS 67410

Attention:                      Bruce C. Dale, President

 

 

 

(2) if to the Employee to:

 

 Tom L. Canfield, Jr.

Duckwall-Alco Stores, Inc.

401 Cottage Street

 Abilene, KS  67410

 

Any such address may be changed by written notice sent to the other party at the last recorded address of that party.

 

(c) Tax Withholding. The Company shall provide for the withholding of any taxes required to be withheld under federal, state and local law (other than the employer's portion of such taxes) with respect to any payment in cash and/or other property made by or on behalf of the Company to or for the benefit of the Employee under this Agreement or otherwise. The Company may, at its option: (i) withhold such taxes from any cash payments owing from the Company to the Employee or (ii) make other satisfactory arrangements with the Employee to satisfy such withholding obligations.

 

(d)  No Assignment; No Third-Party Beneficiaries.  Except as otherwise expressly provided in Section 6.1 herein, this Agreement is not assignable by any party, and no payment to be made hereunder shall be subject to alienation, sale, transfer, assignment, pledge, encumbrance or other charge.  No person shall be, or deemed to be, a third-party beneficiary of this Agreement.

 

(e) Execution in Counterparts.  This Agreement may be executed by the parties hereto in one or more counterparts, each of which shall be deemed to be an original, but all such counterparts shall constitute one and the same instrument, and all signatures need not appear on anyone counterpart.

 

(f)  Governing Law: Jurisdiction:  The validity of this Agreement and the interpretation and performance of all its terms shall be governed by and construed in accordance with the laws of the State of Kansas, without regard to the choice of law rules thereof.  Each of the parties hereto (a) consents to submit itself to the personal jurisdiction of any federal court sitting the District of Kansas in the event any dispute that the parties fail to resolve arises out of this Agreement, (b) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, and (c) agrees that it shall not bring any action relating to this Agreement in any court other than courts set forth above.  In any such proceeding, the parties agree to accept service of process by mail at the addresses herein provided for notice.

 

(g)  Headings.  The headings in this Agreement are for convenience of reference only and shall not be construed as part of this Agreement or to limit or otherwise affect the meaning hereof.

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first above written.

 

 

 

DUCKWALL-ALCO STORES, INC.

 

 

 

By: ___________________________________

 

       Bruce C. Dale, President

 

 

 

 

_______________________________________

 

Tom L. Canfield, Jr.

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