EXHIBIT 10.46
PINNACLE MICRO, INC.
EMPLOYMENT AGREEMENT
This employment agreement (the "Agreement") is made and entered into by
and between XXXXX X. XXXXXX ("Executive") and Pinnacle Micro, Inc. (the
"Company"), effective as of MARCH 26, 1997 (the "Effective Date") with
reference to the following facts:
Executive has been recruited by Company to fill a critical executive
position. Company and Executive desire to agree upon the services to be
rendered for such period of time upon the terms and conditions set forth
herein. The Company's Board further believes that it must provide the
Executive with certain benefits upon Executive's termination of employment.
NOW, THEREFORE, in consideration of the premises and of the mutual
convenants and conditions set forth herein, the parties hereto agree as
follows:
1. EMPLOYMENT; DUTIES: (a) Employment Period: During the period
commencing with the Effective Date and terminating IN 1 YEAR (the "Contract
Employment Period") or on the date (the "Termination Date") that Executive is
terminated in accordance with Sections 5, 6 or 7 of this Agreement or resigns
for whatever reason, (the "Employment Period"), Executive shall serve as VICE
PRESIDENT OF OPERATIONS of the Company or in such other position as he
accepts. During such employment period, Executive shall discharge the duties
of his office as shall reasonably be assigned to him by the President and
Chief Executive Officer. The Contract Employment period shall be
automatically annually extended for 12 month periods after the expiration of
the initial term unless otherwise terminated in accordance with this
Agreement.
(b) NO CONFLICT OF INTEREST: During the Employment Period,
Executive shall not serve as a director, employee, consultant or advisor to
any other corporation or other business enterprise without the prior written
consent of the Board; which consent shall not be unreasonably withheld.
Executive may, however, serve in any capacity with any civic, educational or
charitable organization or any trade association without the approval of the
Board, so long as such activities do not interfere with his duties and
obligations under this Agreement. If the Board views any such activities as
interfering it shall notify Executive and provide a reasonable opportunity to
cure the interference.
2. COMPENSATION:
(a) BASE SALARY: During the Employment Period, the Company shall
pay Executive a base salary (the "Employment Base Salary") at a rate of not
less than $135,000 per year, payable in equal installments no less frequently
than twice monthly.
(b) BONUSES: During the Employment Period, Executive shall receive
bonuses (i) as determined by the Compensation Committee of the Board of
Directors in consultation with the President and Chief Executive Officer; and
(ii) according to the terms of any Company executive bonus plans.
(c) STOCK OPTIONS: During the Employment Period Executive will
receive such stock options or similar performance incentives as determined
separately in writing by the Compensation Committee of the Board of Directors
in its sole discretion after consultation with the President and Chief
Executive Officer. A summary of Executive's initial grant is attached hereto
as Exhibit A.
3. EMPLOYEE BENEFITS: During the Employment Period, Executive shall be
included in all employee benefit plans, programs or arrangements, including,
without limitation, any plans, programs or arrangements providing for
retirement benefits, incentive compensation, profit bonuses, disability
benefits, health and life insurance, vacation and paid holidays, which shall
be established by the Company for, or made available to, its senior
executives and to such other benefits and perquisites as are specifically set
forth herein. The Company will obtain at Company expense, life insurance and
reasonable disability policies for Executives and Key Employees and Executive
shall participate therein on a basis comparable to other executives.
(a) REIMBURSEMENT OF EXPENSES: The Company shall reimburse
Executive for all out-of-pocket expenses reasonably incurred and paid by him
in the performance of his duties pursuant to this Agreement, in accordance
with written Company policies.
4. DEFINITION OF TERMS: The following terms referred to in this
Agreement shall have the following meanings:
(a) CAUSE: "Cause" shall mean (i) any act of personal dishonesty
committed by the Executive in connection with his responsibilities as an
employee; (ii) any act which violates state or federal law, concerning or
involving dishonesty or moral tempted any settlement, order or judgment
against Executive under the federal or state securities laws and regulations;
(iii) a willful act by the Executive which is materially injurious to the
Company; and (iv) continued nonperformance (two weeks or more) by the
Executive following delivery to the Executive of a written demand for
performance from the Company which describes the basis for the Company's
belief that the Executive has not substantially performed his duties.
(b) CHANGE OF CONTROL: "Change of Control" means the occurrence of
any of the following events:
(i) Any "person" or group (as such terms and used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing 40% or more
of the total voting power represented by the Company's then outstanding
voting securities; or
(ii) A change in the composition of the Board occurring within
a one-year period, as a result of which fewer than a majority of the
directors are Incumbent Directors. "Incumbent Directors" shall mean
directors who either (A) are directors of the Company as of the date hereof;
or (B) are elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the Incumbent Directors at the
time of such election or nomination (but shall not include an individual
whose election or nomination is in connection with an actual or threatened
proxy contest relating to the election of directors for the Company); or
(iii) The stockholders of the Company approve any transaction
which would be a reorganization under Delaware or California law and result in
the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) less than fifty percent (50%)
of the total voting power represented by the voting securities of the surviving
entity outstanding immediately after such merger or consolidation; or
(iv) The stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets.
(c) DISABILITY: "Disability" shall mean that the Executive has
been unable to perform his Company duties as the result of his incapacity due
to physical or mental illness, and such inability, at least 26 weeks after
its commencement, a determined by the Company (or by a physician agreed upon
by the parties or selected by the Arbitrator if the parties cannot agree) to
be total and permanent. If a court shall determine Executive is not
competent to select an Arbitration an Disability shall be deemed to exist.
Termination resulting from Disability may only be effected after at least 30
days' written notice by the Company of its intention to terminate the
Executive's employment. In the event that the Executive resumes the
performance of substantially all of his duties hereunder before the
termination of his employment becomes effective, the notice of intent to
terminate shall automatically be deemed to have been revoked.
(d) GOOD REASON: "Good Reason" shall mean, following a change of
control (i) without the Executive's express written consent, the significant
reduction of the Executive's duties, authority or responsibilities, relative
to the Executive's duties, authority or responsibilities as in effect
immediately prior to such reduction, or the assignment to Executive of such
reduced duties, authority or responsibilities; (ii) without the Executive's
express written consent, a substantial reduction, without good business
reasons, of the facilities and perquisites (including office space and
location) available to the Executive immediately prior to the Change of
Control; (iii) a reduction by the Company in the Employment Base Salary of
the Executive; (iv) a material reduction by the Company in the kind or level
of employee benefits to which the Executive was entitled immediately prior to
the Change of Control with the result that the Executive's overall benefits
package under Section 3 hereof is significantly reduced (other than as
contemplated by this Agreement); (v) any purported termination of the
Executive by the Company which is not effected for Disability or for Cause;
or (vi) the failure of the Company to obtain the assumption of this agreement
by any successors.
5. TERMINATION OF EMPLOYMENT PRIOR TO A CHANGE OF CONTROL: The
following provisions shall apply with respect to termination of Executive's
employment prior to a Change of Control:
(a) TERMINATION WITHOUT CAUSE:
(i) GENERAL: If, prior to the end of the Employment Period
and prior to a Change of Control (A) Executive's employment is terminated by
the Company without Cause, then the Company shall:
(A) CASH SEVERANCE PAYMENTS: Pay to Executive severance
payments of one month's Employment Base Salary for a period equal to 12
MONTHS following the date of termination; (the "Severance Period"). Such
severance payments shall be paid at regular payroll intervals or in one lump
sum within thirty (30) days of the Termination Date as determined by Company.
(B) CONTINUED GROUP HEALTH AND INSURANCE BENEFITS:
Continue to make available to the Executive and the covered dependents, and
to pay directly or indirectly for, to the same extent as paid prior to the
Termination Date, all group health plan, life and other similar insurance
plans or Company-sponsored arrangements providing comparable benefits in
which Executive or such covered dependents participate on the Termination
Date, through the Severance Period.
(ii) DEATH: In the event of Executive's death while he is
receiving benefits pursuant to Section 6(a)(i)(C) hereof, the Company shall
continue providing and paying severance and for group health plan, life and
similar insurance coverage or Company-sponsored arrangements providing
comparable benefits for the covered dependents through the Severance Period.
(iii) All vested options or other equity compensation must be
exercised within 12 months of the Termination Date.
(b) TERMINATION FOR CAUSE; RESIGNATION: If, during the Employment
Period and prior to a Change of Control, Executive's employment is terminated
by the Company for Cause, or if Executive resigns from his employment, then
Executive shall be entitled only to payment of all amounts including benefits
earned or owed to Executive and only to such equity compensation as is fully
vested as of the Termination Date.
6. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE OF CONTROL: The
following provisions shall apply to termination of Executive's employment on
or following a Change of Control:
(a) TERMINATION WITHOUT CAUSE; RESIGNATION FOR GOOD REASON:
(i) GENERAL: If, following a Change of Control (A) Executive's
employment is terminated by the Company without Cause; or (B) Executive
resigns from his employment hereunder for Good Reason, then the Company shall:
(A) CASH SEVERANCE PAYMENTS: Pay to Executive severance
payments of one month's Employment Base Salary for a period equal to 12
MONTHS following the date of termination; (the "Severance Period"). Such
severance payments shall be paid at regular payroll intervals or in a lump
sum within thirty (30) days of the Termination Date as determined by the
Company.
(B) ACCELERATED VESTING: Cause the vesting of all
restricted stock, stock options and other equity-based compensation held on
the date of termination by Executive, to fully accelerate, as of the date of
termination, so that they become 100% vested in the stock of the Controlling
entity.
(C) CONTINUED GROUP HEALTH AND INSURANCE BENEFITS:
Continue to make available to the Executive and the Covered Dependents, and
pay for, to the same extent as paid prior to the Change of Control and
termination of the employment or consulting relationship, all group health
plan, life and other similar insurance plans or Company-sponsored
arrangements providing comparable benefits in which Executive or such Covered
Dependents participate on the date of the Executive's termination, through
the Change of Control Severance Period.
(ii) DEATH DURING SEVERANCE PERIOD: In the event of
Executive's death while he is receiving benefits pursuant to Section
6(a)(i)(C) hereof, the Company shall continue providing and paying for group
health plan, life and similar insurance plan coverage or Company-sponsored
arrangements providing comparable benefits to the covered dependents through
the Change of Control Severance Period.
(b) TERMINATION FOR CAUSE; RESIGNATION WITHOUT GOOD REASON: If,
following a Change of Control, Executive's employment is terminated by the
Company for Cause, or if Executive resigns from his employment hereunder
other than for Good Reason, then Executive shall be entitled only to payment
of all amounts (including benefits) earned or owed to Executive, and only to
such equity compensation as is fully vested as of the Termination Date.
(iii) All stock options or warrants so vested must be exercised
within 12 months of the Termination Date.
7. DEATH OR PERMANENT DISABILITY: In the event Executive's employment
terminates due to Executive's death or Disability, whether or not there has
been a Change of Control, the Company shall:
(a) EQUITY COMPENSATION: Allow the estate or representative of the
Executive 12 months from the Termination Date to exercise equity compensation
vested as of the Termination Date.
(b) CONTINUED GROUP HEALTH AND INSURANCE BENEFITS: Continued to
make available to the Executive (if alive) and the Covered Dependents
(whether or not Executive is alive) and pay for, to the same extent as paid
prior to termination of employment, all group health plan, life and other
similar insurance plans or Company-sponsored arrangements providing
comparable benefits in which Executive or such Covered Dependents participate
on the date of the Executive's termination, for a period of 12 months
following the Termination Date.
(c) OTHER BENEFITS: Pay to Executive, his estate, or his personal
representative (as appropriate) all other benefits normally paid to employees
who have died or incurred a disability.
8. GOLDEN PARACHUTE LIMITATION: The payments and benefits payable to
Executive under this Agreement and all other contracts, arrangements, or
programs with the Company shall not, in the aggregate exceed the maximum
amount that may be paid to Executive without triggering golden parachute
penalties under Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), as determined in good faith by the Company's independent
auditors. Executive agrees that, to the extent payments or benefits under
this Agreement would not be deductible under Code Section 162(m) if made or
provided when otherwise due under this Agreement, such payments and benefits
shall be made or provided later, immediately after Section 162(m) ceases to
preclude their deduction, with interest thereon at the rate provided in Code
Section 1274(b)(2)(B). If even after such deferral the payments and benefits
otherwise payable to Executive must be reduced to avoid triggering such
penalties, the payments and benefits will be reduced in the priority order
designated by the Executive, or, if the Executive fails promptly to designate
an order, in the priority order designated by the Company. If an amount in
excess of the limit set forth in this Section 8 is paid to Executive,
Executive shall repay the excess amount to the Company upon demand.
Executive and the Company agree to cooperate with each other in connection
with any administrative or judicial proceedings concerning the existence or
amount of golden parachute penalties on payments or benefits received by
Executive.
9. TERMINATION DATE: The date of termination of employment by the
Company shall be the date specified in a written notice of termination to
Executive. The date of resignation shall be the date specified in the
written notice of resignation from Executive to the Company. For purposes of
this Agreement, no purported termination of Executive's employment for Cause
shall be effective without delivery of such Notice of Termination.
10. ASSIGNMENT: Executive's rights and obligations under this Agreement
are not assignable by Executive, but shall pass to his estate or personal
representative upon death or disability (as determined pursuant to this
Agreement).
11. NOTICES: Any notice required or permitted under this Agreement
shall be given in writing and shall be deemed to have been effectively made
or given if personally delivered, or if sent by facsimile, or mailed to the
other party at its address set forth below in this Section 10, or at such
other address as such party may designate by written notice to the other
party hereto. Any effective notice hereunder shall be deemed given on the
date personally delivered or on the date
sent by facsimile or deposited in the United States mail (sent by certified
mail, return receipt requested), as the case may be, at the following address:
(i) If to the Company: (ii) If to Executive:
Pinnacle Micro, Inc. 5674 Xxxxx Fargo
00 Xxxxxxxxxx Xxxxx Xxxxxxxx Xxxxxxx, XX 00000
Xxxxxx, Xxxxxxxxxx 00000
Attn: General Counsel
Fax: 714/000-0000
12. DISPUTES: Any disputes between the parties hereto shall be settled
by arbitration in Irvine, California under the auspices of, and in accordance
with the rules of, the Judicial Arbitration and Mediation Service/Endispute,
by an arbitrator who is mutually agreeable to the parties hereto, (such
arbitrator or hereinafter referred to as the "Arbitrator"). The decision in
such arbitration shall be final and conclusive on the parties, in lieu of any
court action, which is expressly waived, with the sole exception of a Company
initiated injunctive proceeding to protect its confidential information or
trade secrets, judgment upon such decision may be entered in any court having
jurisdiction thereof. The parties hereby agree that the Arbitrator shall be
empowered to enter an equitable decree mandating specific enforcement of the
terms of this Agreement. The Company and Executive shall share equally all
expenses of the Arbitrator incurred in any arbitration hereunder; PROVIDED,
HOWEVER, that the Company or Executive, as the case may be, shall bear all
expenses of the Arbitrator and all of the legal fees and out-of-pocket
expenses of the other party to the extent if the Arbitrator determines that
the claim or position of such party was without reasonable foundation.
13. SEVERABILITY: If an arbitrator determines that any term or
provision hereof is invalid or unenforceable, (a) the remaining terms and
provisions hereof shall be unimpaired; and (b) such arbitrator shall have the
authority to replace such invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision.
14. ENTIRE AGREEMENT: This Agreement by and between the Company and
Executive represents the entire agreement of the parities with respect to the
matters set forth herein, and to the extent inconsistent with other prior
contracts, arrangements or understandings between the parties, supersedes all
such previous contracts, arrangements or understandings between the Company
and Executive. The Agreement may be amended only by mutual written agreement
of the parties hereto.
15. WITHHOLDING: Company shall be entitled to withhold, or cause to be
withheld, from payment any amount of withholding taxes required by law with
respect to payments made to Executive in connection with his employment
hereunder.
16. GOVERNING LAW: This Agreement shall be construed, interpreted, and
governed in accordance with the laws of California without reference to rules
relating to conflict of law.
17. SUCCESSORS: This Agreement shall be binding upon and inure to the
benefit of, and shall be enforceable by Executive and the Company, their
respective heirs, executors, administrators and assigns. In the event the
Company is merged, consolidated, liquidated by a parent corporation, or
otherwise combined into one or more corporations, the provisions of this
Agreement shall be binding upon and inure to the benefit of the parent
corporation or the corporation resulting from such merger or to which the
asset shall be sold or transferred, which corporation from and after the date
of such merger, consolidation, sale or transfer shall be deemed to be the
Company for purposes of this Agreement. In the event of any other assignment
of this Agreement by the Company, by operation of law or otherwise, the
Company shall remain primarily liable for its obligations hereunder. This
Agreement shall not be assignable by Executive.
18. HEADINGS: The headings of sections herein are included solely for
convenience of reference and shall not control the meaning or interpretation
of any of the provisions of this Agreement.
19. COUNTERPARTS: This Agreement may be executed by either of the
parties hereto in counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this in counterparts
Agreement as of the Effective Date.
COMPANY: EXECUTIVE:
PINNACLE MICRO, INC.
------------------------------------ ---------------------------------
Xxxxx X. XxXxx Xxxxx X. Xxxxxx
Vice President Human Resources & Adm. Vice President of Operations
