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EXHIBIT NO. 10(h)
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT, MADE BETWEEN XXXXXXX X. XXXXXX, an
individual residing at ___________________________________________ (the
"Employee"), and PINNACLE DATA SYSTEMS, INC., an Ohio corporation whose
principal place of business is located at 0000 Xxxx Xx., Xxxxxxxxx, Xxxx 00000
(the "Employer").
BACKGROUND
A. Employer is engaged in the business of providing depot repair
services for electronic equipment and providing customized engineering
application and CPU board designs and manufacturing for integration into
existing systems.
B. Employee is willing to be employed by Employer, and Employer is
willing to employ Employee, on the terms, covenants and conditions hereinafter
set forth.
THEREFORE, Employer and Employee agree as follows:
1. EMPLOYMENT. Employer hereby employs, engages, and hires Employee as
Vice President of Engineering, to direct and coordinate the activities of
personnel within the Engineering Department of Employer.
Generally, Employee shall be responsible for the design, manufacture
and testing of electronic components, products and systems produced or assembled
by Employer; including without limitation, technical project management of all
phases of product development. In addition, Employee is expected to manage the
Department's staffing needs; hire, train and supervise staff; distribute and
review work assigned to personnel within the Department; appraise personnel
performance; initiate disciplinary procedures when appropriate; assist in the
proper classification and reclassification of Department personnel; recommend
salary increases for department personnel when appropriate; and process
employee-related paperwork.
Employee shall also research new concepts and trends within Employer's
industry, so as to be able to design and build prototype products; and to enable
Employer to design and develop specifications to optimize the functions of a
product and improve the value and appearance of existing products of the
Employer. As part of his duties, Employee shall schedule all aspects of
engineering projects, including ordering parts and supplies, and shall further
assume responsibility for timely completion of each project, and the achievement
of desired qualitative standards by Engineering Department personnel, including
without limitation, adherence to ISO standards and procedures.
Employee shall confer with Management, Production and Sales departments
of Employer to assist in the evaluation of customer demand for new and existing
products; and provide expertise related to engineering feasibility and
cost-effectiveness; support the Sales Department by providing current data on
engineering projects such as product specifications, data sheets and performance
characteristics; participate in Company-wide committees and task forces to
improve Company processes, procedures and services to customers; confer with
customers to provide
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equipment design and systems solutions; assist in ensuring Company level
compliance with all Federal, State and local laws, regulations and ordinances;
address, in public and private meetings, the administration and operations of
the Engineering Department and participate in professional groups, on an
approved basis, to enhance the reputation of Employer and the professional
capabilities of Employee.
Employee shall also render such other engineering or other services and
duties as may be assigned to him from time to time by Employer, acting by and
through its President or Board of Directors. Such duties shall be primarily
rendered in Groveport, Ohio, and at such other places as Employer shall in good
faith require or as the interest, needs, business, or opportunity of Employer
shall required. Employee hereby accepts and agrees to such hiring, engagement,
and employment, subject to the general supervision and pursuant to the orders,
advice, and direction of Employer, acting by and through its President and its
Board of Directors.
2. STANDARD OF PERFORMANCE OF EMPLOYEE. Employee shall at all times
faithfully, industriously, and to the best of his ability, experience and
talents, perform all of the duties that may be required of and from him pursuant
to the express and implicit terms hereof.
3. TERM OF EMPLOYMENT. This Agreement shall be effective as of the date
hereof, and shall have an initial term expiring on September 1, 2000. The term
of this Agreement shall be automatically extended for one (1) year on each
September 1 thereafter unless either party shall have given written notice to
the other party no later than the preceding August 15 of his or its intention
that the term hereof not be extended beyond its current term.
4. COMPENSATION OF EMPLOYEE. Employer shall pay Employee, and Employee
shall accept from Employer, in full payment for Employee's services hereunder,
(a) a base salary of ninety-three thousand dollars ($93,000) per year, plus (b)
a bonus of up to two thousand dollars ($2,000) per fiscal quarter of the
Employer, commencing with the Fourth Quarter of 1999, provided that Employee
achieves certain performance objectives during each fiscal quarter. Such
performance objectives shall be established by the Employer prior to the
commencement of each fiscal quarter, reduced to writing, and provided to
Employee by Employer. This quarterly performance bonus is intended to provide a
mechanism for payment to Employee for outstanding achievement. As a consequence,
Employee acknowledges that achievement of all performance objectives established
by Employer will be difficult to achieve. Employee shall also receive those
health, retirement, vacation and other fringe benefits customarily accorded to
employees of Employer in effect from time to time. However, commencing January
1, 1999, Employee shall begin to earn paid time-off at the rate of 13.33 hours
per month, which equates to 160 hours per year. During calendar year 1999,
Employee shall receive two (2) weeks of paid vacation. All payments and benefits
shall be subject to withholding for any applicable Federal, State or local
taxes, including Social Security. Employee may receive compensation and benefit
increases in accordance with any personnel policies of Employer in effect at
such time or as may be directed by the Board of Directors. Employer shall
reimburse Employee for all necessary business expenses incurred by Employee
while acting pursuant to this Agreement, provided such expenses are documented
to Employer's reasonable satisfaction.
In addition, Employee's base salary shall be reviewed by Employer not
less often than annually, and may be increased to such level as Employer may
determine. Review of Employee's salary may include a review of Employer's
performance and financial condition, salaries paid to other employees, and such
other factors as Employer deems relevant.
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5. TERMINATION PROVISIONS. Notwithstanding the provisions of Paragraph 3
above, this Agreement may be terminated by either party as follows:
(a) Employer may terminate Employee's employment at any time
without prior notice and with pay and benefits only to the date of such
termination for cause. Termination for causes shall include, but shall
not be limited to, willful failure or refusal by Employee to perform his
normal duties, dishonesty, incompetence or other serious acts of
misconduct within Employee's control.
(b) Employer may remove Employee from his duties at any time
for any other reason and terminate this Agreement only upon giving prior
written notice to Employee and upon the payment, in lump sum, of an
amount equal to (1) one month of base salary if such termination occurs
during the first year of this Employment Agreement, or (2) two months
base salary if such termination occurs after the first year of this
Employment Agreement.
6. MODIFICATION OF AGREEMENT. No waiver or modification of this
Agreement or any covenant, condition, or limitation herein contained shall be
valid unless in writing and duly executed by both parties hereto.
7. RELOCATION ASSISTANCE. Employee acknowledges that Employer has
provided Employee with relocation assistance as an inducement to accept
employment with Employer. Specifically, Employer has agreed to reimburse
Employee, up to a maximum of $5,000 for expenses incurred by Employee of a
moving vehicle, packing materials and storage, in connection with moving
Employee's belongings from the Oberlin, Ohio area to the Greater Columbus, Ohio
area. Such expenses are hereinafter referred to as "moving expenses."
In addition, Employer has offered to reimburse Employee up to a maximum
of $6,000, for costs incurred by Employee for temporary housing in the Greater
Columbus, Ohio area, for up to six (6) months. Such expenses are hereinafter
referred to as "temporary housing expenses."
Additionally, Employer has offered to reimburse Employee for realtor
fees and closing costs in connection with the sale of his existing residence in
the Oberlin, Ohio area, up to a maximum of $12,000. Such expenses are
hereinafter referred to as "residence sale expenses."
If Employee receives reimbursement from Employer for moving expenses,
temporary housing expenses, or sale of residence expenses (collectively
"relocation expenses"), Employee agrees to repay Employer fifty percent (50%) of
the relocation expenses paid by Employer if Employee terminates his employment
with Employer, for any reason prior to March 1, 2000, and further agrees to
repay Employer twenty-five percent (25%) of the relocation expenses paid by
Employer to Employee if the Employee terminates his employment with Employer
during the period between March 1, 2000 and August 31, 2000.
Employee agrees that Employer shall, under no circumstances, be liable
for damages sustained by Employee to any of the Employee's personal property or
real property, in connection with Employee's relocation to Central Ohio, and any
such damages are not a reimbursable relocation expense.
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8. CONFIDENTIAL INFORMATION. Employee shall not during the employment
period or thereafter, disclose to any person any confidential information
obtained by him from or regarding the Employer, including without limitation,
the whole or any portion or phase of any technical information, design,
procedure or improvement, or any business plans, financial information, listing
of names, addresses or telephone numbers, or any other non-public information
prepared by or for the benefit of the Employer. In the event Employee shall
leave the employment of the Employer for any reason, Employee agrees that he
will not take with him any writings, records, recordings, drawings, samples,
specimens, prototypes, models, photographs, customer lists, product information,
or other data of any description or any copy or reproduction of any of the
foregoing.
9. NON-COMPETITION. Except as herein provided, if the employment of the
Employee by the Employer shall be terminated for any reason, he shall for a
period of two (2) years from the date of termination refrain from competing
directly or indirectly with the Employer and each of its subsidiaries and
affiliates, if any, within a 250 (two hundred and fifty) mile radius of the City
of Columbus, Ohio. The foregoing notwithstanding, if the Employer shall
wrongfully prevent or refuse to permit Employee to perform the duties assigned
to him under this Agreement or shall otherwise be in default in the performance
of any of its obligations hereunder, then Employee may terminate his employment
and enter into a competing business; provided, however, that Employee shall not
compete with the Employer if he is receiving any form of compensation or other
payments pursuant to the terms of this Agreement
10. NOTICES AND PAYMENTS. All payments required or permitted to be made
under the provisions for this agreement, and all notices and other
communications required or permitted to be given or delivered under this
Agreement, which notices or communications must be in writing, shall be deemed
to have been given when delivered by hand, or mailed by first-class or certified
mail, return receipt requested, addressed to the parties at the address set
forth above for the Employer and the residence address last provided to Employer
by Employee from time to time as shown in the employment records of the
Employer. Either party may, by notice given to the other, designate a different
address for making payments or giving notices or other communications.
11. WAIVER. Failure to insist upon a strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of any such
term, covenant or condition, nor shall any such failure at any one time or more
times be deemed a waiver or relinquishment at any other time or times of any
right under the terms, covenants or conditions hereof.
12. BENEFIT. This Agreement shall inure to the benefit of and be binding
upon the Employer, its successors and assigns, including but not limited to, any
company which may acquire all or substantially all of the Employer's assets and
business or into which the Employer may be consolidated or merged or by which
the Employer's business may be held or prosecuted. Any sale of all or
substantially all of the assets of the Employer shall be conditioned upon the
assumption of this Employment Agreement by the Purchaser or a buyout of the same
by the Employer at fair market value. The rights of the Employee may not be
assigned or otherwise transferred, nor may the obligations of Employee be
delegated.
13. MISCELLANEOUS. This Agreement contains the complete agreement of the
parties hereto concerning the employment arrangement between such parties, and
shall, as of the
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effective date hereof, supersede all other such agreements between the parties.
This Agreement shall be constructed in accordance with and governed by the laws
of the State of Ohio. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, legal
representatives, successors, and assigns.
14. RIGHTS TO INTELLECTUAL PROPERTY. In consideration of employment
pursuant to this Agreement, and compensation to be paid hereunder, Employee
agrees to disclose to the C.E.O. of Employer any and all improvements and
inventions made by Employee, alone or in conjunction with others, during his
employment with Employer, which relate in any way directly or indirectly to
Employer's business, the goods it manufactures or assembles, or the process by
which such goods are manufactured or assembled. Employee agrees to assign to
Employer all of his right, title and interest in any improvements and inventions
developed by Employee during his employment for $1, and to execute all documents
necessary to file and prosecute any patent application in the name of and for
the benefit of Employer, its successors or assigns. Employee further agrees to
testify in any legal proceedings, and otherwise to do everything possible to aid
Employer, or its successors, assigns and nominees to obtain and enforce patent
protection for the improvements and inventions in any country.
15. STOCK OPTIONS. Upon execution of this Agreement, Employee shall
receive an Option to Purchase 1,000 shares of common shares of the Employer at
an exercise price of $4.625 per share, which shall become exercisable on August
12, 2000 and remain exercisable thereafter until expiration on August 12, 2009.
These options are issued pursuant to the Pinnacle Data Systems, Inc. 1995
Employee Stock Option Plan, and are governed in all respects by the terms and
provisions of such Plan.
Employee's options hereunder are also subject to ratification or
approval by the Shareholders of Employer at the annual meeting of shareholders
in the year 2000. In the event these options are not approved for issuance by
shareholder vote, they shall be rendered null and void, and have of no further
force and effect.
Employee shall receive an option certificate evidencing such options
within thirty (30) days after execution of this Agreement, and shall sign an
acknowledgement evidencing his awareness and acceptance of certain key terms and
conditions of such options.
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS Agreement as of
the __22___day of ___September___________,___1999___.
EMPLOYEE: EMPLOYER:
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PINNACLE DATA SYSTEMS, INC
/s/ Xxxxxxx X. Xxxxxx BY: /s/ Xxxx X. Xxxx
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XXXXXXX X. XXXXXX XXXX X. XXXX, CEO
