EXHIBIT 10(q)
EMPLOYMENT AGREEMENT
This Employment Agreement is made between Xxxxxxxxxxx X. Xxxxxxx, an
individual residing at 0000 Xxxxxxx Xxxx, Xxxxx Xxxxxxxxx, Xxxx 00000 (the
"Employee"), and Pinnacle Data Systems, Inc., an Ohio corporation whose
principal place of business is located at 0000 Xxxx Xxxx, Xxxxx 000, Xxxxxxxxx,
Xxxx 00000 (the "Company").
Statement of Agreement
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[sect]1. Employment. The Company hereby renews and continues the
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Employee's employment as Vice President, Product Group, and Employee hereby
accepts such employment renewal and continuation by the Company, on the terms
and subject to the conditions set forth in this agreement. Employee shall also
render such other executive services and duties as may be assigned to him from
time to time by the Company, acting by and through its Chief Executive Officer
("CEO") or Board of Directors. Such duties shall be primarily rendered in
Groveport, Ohio, and at such other places as Company shall in good faith
require or as the interest, needs, business, or opportunity of Company shall
require. Employee shall report to the Company's CEO.
[sect]2. Standard of Performance of Employee. Employee shall at
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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.
[sect]3. Term of Employment. The term of Employee's employment
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pursuant to this agreement shall begin as of the date hereof, and shall have
an initial term expiring on __________________, unless sooner terminated
pursuant to the provisions of[sect].6, below. The term of employment shall be
automatically extended for successive one (1) year periods on each
________________ 1 unless either party shall have given written notice to the
other party no later than the preceding _____________ 15 of his or its
intention that the term hereof not be extended beyond its then current term.
[sect]4. Compensation. During the term of his employment pursuant
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to this agreement, the Employee shall be entitled to receive the following
compensation:
(a) Salary. An annual base salary of $160,000 (one
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hundred sixty thousand) per year.
(b) Bonus. An incentive cash bonus equal to a percentage
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of the pretax net income of the Company (or based upon other factors
deemed appropriate by the President and CEO, or board of Directors)
for each fiscal year ending
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during the term of employment under this agreement (calculated
prior to the deduction of the bonus). The bonus percentage or
other factors for each year will be determined by the President
and CEO of the Board of Directors, or its Compensation
Committee no later than March of that year.
The base salary will be payable in accordance with the
Company's general policies for payment of compensation to salaried personnel.
The bonus will be payable after the end of each fiscal year of the Company as
soon as practical after the Company's independent auditors have completed the
year-end audit of the Company's financial statements for such year.
[sect]5. Fringe Benefits. During the term of employment pursuant to
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this agreement, the Employee shall be entitled to the following fringe
benefits:
(a) Vacation. Employee is entitled to 20 days of Paid
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Time Off ("PTO"). PTO will be taken pursuant to the Company's PTO
policy, as amended or changed from time to time.
(b) Stock Options. All stock options received by the
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Employee prior to and during the term of this agreement will
immediately (forward) vest upon a Change in Control of the Company
(as defined below).
(c) Disability Payments. If at any time during the term
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of employment the Employee shall be unable to perform his duties
hereunder for a period not to exceed six (6) months, Employee shall
nonetheless be entitled to receive any compensation the Employee would
otherwise be entitled to pursuant to [sect]4(a), above, during the
period of such disability, provided, however, that his "disability" be
documented by a competent medical doctor selected to examine the
Employee at the request of the disinterested Board of Directors, which
examination expense shall be borne by the Company. In the event said
disability shall continue for a period greater than six (6) months,
then it shall be considered a "long-term disability", the Employee
shall no longer be entitled to receive any compensation under [sect]4
of this agreement during the remaining period of such disability,
and upon the vote of a majority of the disinterested Directors,
said Employee shall be terminated in consonance with the provisions of
[sect]6 hereof as if said disabled Employee had voluntarily terminated
his services hereunder.
(d) Executive Development. The Employee is entitled to
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attend a personal executive development or experiential learning
seminar of his choice for up to three days during each year of the
employment term, with spousal accommodations. The Employee is also
entitled to maintain membership with a reasonable number of industry
associations. Such membership fees will be paid by the Company.
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(e) Other Fringe Benefits. The Employee shall be
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entitled to such other fringe benefits and perquisites as may be
provided generally for the Company's executive management pursuant to
policies established or changed from time to time by the Board.
[sect]6. Termination of Employment. Notwithstanding the
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provisions of.[sect]3 above, the Agreement may be terminated by either party
as follows:
(a) By the Employee within six months after a Change in
Control of the Company (as defined below); provided that after such
Change in Control of the Company, the Employee's benefits have been
reduced or the Employee's authority or responsibilities have been
significantly reduced. If the Employee terminates his employment
pursuant to this provision, he shall be entitled to receive his salary
and benefits to the date of termination, any bonus for such year to
which he would otherwise be entitled, prorated for the portion of the
year during which the Employee was employed, and a payment from the
Company, in a lump sum, in an amount equal to one year's base salary.
(b) By the Company immediately upon the occurrence of
cause as defined below) or at any time thereafter. For purposes of
this agreement, "cause" shall mean the Employee's failure to operate
the Company's business in accordance with the policies, programs,
budgets, procedures, and directions established from time to time by
the Board of Directors or the CEO, the Employee's failure fully to
perform and observe all obligations and conditions to be performed and
observed by the Employee under this agreement, or the Employee's
dishonesty, conviction of a crime (other than minor traffic offenses),
habitual drunkenness, using illegal drugs, embezzlement, material
conflict of interest, willful insubordination, or material neglect of
duty. If the Company terminates the Employee's employment pursuant to
this provision, he shall be entitled to receive only his base salary
through the date of termination.
(c) By the Company with or without cause upon giving not
less than 60 days advance written notice prior to the date of
termination. If the Company terminates the Employee's employment
pursuant to this provision, he shall be entitled to receive his salary
to the date of termination, any bonus for such year to which he would
otherwise be entitled, prorated for the portion of the year during
which the Employee was employed, and a payment for the Company, in a
lump sum, in an amount equal to one year's base salary.
(d) By the Company if the Employee is under a long-term
disability, at which time the Employee will receive any amounts due to
him under a long-term
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disability policy of the Company, if any, and due to him pursuant to
[sect]5(c). For purposes of this agreement, the term "long-term
disability" shall have the same meaning as set forth in [sect]5(c),
and employment may be terminated as provided in[sect]5(c)
For purposes of this agreement, a Change in Control shall be deemed to
occur:
(i) When any "person" as defined in [sect]3(a)
(9) of the Securities Exchange Act of 1934 (the "Exchange
Act") and as used in [sect]13(d) and 14(d) thereof, including
a "group" as defined in [sect]13(d) of the Exchange Act, but
excluding the Company and any subsidiary and any employee
benefit plan sponsored or maintained by the Company or any
subsidiary (including any trustee of such plan acting as
trustee), directly or indirectly, becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act, as
amended from time to time), of securities of the Company
representing 30% or more of the combined voting power of the
Company's then outstanding securities;
(ii) When, during any period of 24 consecutive
months during the existence of this agreement, the
individuals who, at the beginning of such period, constitute
the Board (the "Incumbent Directors") cease for any reason
other than death to constitute at least a majority thereof;
provided, however, that a director who was not a director at
the beginning of such 24-month period shall be deemed to have
satisfied such 24-month requirement (and be an Incumbent
Director) if such director was elected by, or on the
recommendation of or with the approval of, at least two-
thirds of the directors who then qualified as Incumbent
Directors either actually (because they were directors at the
beginning of such 24-month period) or by prior operation of
this paragraph; or
(iii)Upon the occurrence of a transaction requiring
shareholder approval for the acquisition of the
Company by an entity other than the Company or a
subsidiary through purchase of assets, by merger, or
otherwise.
[sect]7. Noncompetition; Nondisclosure; Ownership of Developments
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In consideration of his employment, the base salary and other benefits
provided to the Employee, the Company and the Employee agree as
follows:
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(a) During the term of the Employee's employment by the
Company, pursuant to this agreement or otherwise, and for a period of
one year immediately after termination of such employment, the Employee
shall not directly or indirectly:
(i) Engage in or participate in any business
that directly competes with the business of the Company
within the United States and within any other country in
which the Company has engaged in business during the term of
the Employee's employment by the Company; or
(ii) Sell or perform the same or similar
services or products as then provided by the Company to, or
solicit, any of the Company's present customers or accounts
or persons or businesses which were customers or accounts
within three years preceding the Employee's termination of
employment with the Company; or
(iii) Promote or assist, financially or otherwise,
any person, firm, association, corporation, or other entity
which directly or indirectly competes with the Company; or
(iv) Otherwise enter into or engage in any
business which directly or indirectly competes with the
business carried on by the Company.
(v) Solicit any of the Company's employees to
leave the employ of the Company; or
(vi) Seek to employ any of the Company's
employees (other than on behalf of the Company).
(b) The Employee shall not at any time, either during
the term of his employment with the Company or after the termination
of such employment for whatever reason, disclose to anyone (except to
the extent necessary as a benefit to the Company in the performance
of his duties) any trade secrets or confidential information (as
defined below).
(c) All inventions, discoveries, concepts, improvements,
formulas, processes, devices, methods, innovations, designs, ideas, and
product developments (collectively, the "Developments") developed or
conceived by the
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Employee, solely or jointly with others, whether or
not patentable or copyrightable, at any time during the term of his
employment with the Company or within one year after the termination of
such employment for any reason, whether or not during normal working
hours, and which relate in any way to the actual or planned business
activities of the Company shall be considered to be developed or
conceived by the Employee on behalf of the Company within the scope of
his employment, and all of the Employee's right, title, and interest
therein shall be the exclusive property of the Company. The Employee
hereby assigns, transfers, and conveys to the Company all of his right,
title, and interest in and to any and all such Developments. Employee
shall disclose fully, as soon as practicable and in writing, all
Developments to the Board. At any time and from time to time, upon the
request of the Company, the Employee shall execute and deliver to the
Company any and all instruments, documents, and papers, give evidence,
and do any and all other acts which, in the opinion of counsel for the
Company, are or may be necessary or desirable to document such transfer
or to enable the Company to file and prosecute applications for, and to
acquire, maintain, and enforce, any and all patents, trademark
registrations, or copyrights under United States or foreign law with
respect to any such Developments or to obtain any validation,
reissuance, continuance, or renewal of any such patent, trademark, or
copyright. The Company will be responsible for the preparation of any
such instruments, documents, and papers and for the prosecution of any
such proceedings and will reimburse the Employee for all reasonable
expenses the Employee incurs upon authorization of the Board.
(d) The Employee understands that this section is an
essential element of this agreement and that the Company would not
have entered into this agreement without this section being included
in it. The Employee has consulted with his legal counsel and has been
fully advised concerning the reasonableness and propriety of this
section in the specific context of the operations and business of the
Company, and the Employee acknowledges that this section is reasonable
and appropriate in all respects. In the event of any violation or
attempted violation of this section, Employee specifically
acknowledges and agrees that the Company's remedy at law will be
inadequate, that the Company, its business, and business relationships
will suffer irreparable injury and, therefore, that the Company shall
be entitled to injunctive relief upon such breach in addition to any
other remedy to which it may be entitled, either at law or in equity,
without the necessity of proof of actual damage.
(e) As used in this agreement, the terms "trade secrets"
and "confidential information" shall mean any information which is not
generally known to the public, and include without limitation any
information relating to the Company's business operations and
structure, sales methods, practices and techniques, technical know-how
, Developments, advertising, marketing methods
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and practices, and the Company's relationships with suppliers,
employees, or other persons or entities doing business with the
Company.
(f) For purposes of this agreement, "directly or
indirectly" shall mean and include participation for the Employee's
own account or as an owner, shareholder, member, partner, director,
officer, employee, creditor, or agent of any other person or
organization or through the Employee's spouse or other family relation
, but shall not include a passive investment of not more than two
percent of the outstanding stock of a company whose shares are then
being regularly traded in open-market brokerage transactions (either
on a stock exchange or over-the-counter).
(g) In the event that a court of competent jurisdiction
finally determines that any provision of this section is unenforceable
,the Company and the Employee agree that such court shall have
jurisdiction to reform this agreement and such provision so that it is
enforceable to the maximum extent permitted by law, and the parties
agree to abide by such court's determination.
[sect]8. General. This document contains the entire agreement between
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the parties and supersedes any prior discussions, negotiations,
representations, or agreements between them relating to the employment of the
Employee. No additions or other changes to this agreement shall be made or be
binding on either party unless made in writing and signed by each party to this
agreement Any notice or other communication required or desired to be given to
any party under this agreement shall be in writing and shall be deemed given
when either delivered personally to that party or deposited in the United
States mail, first-class postage prepaid, addressed to that party at the
address set forth below its or his name below. Any party may change the address
to which notices and other communications are to be given by giving the other
parties notice of such change. All questions concerning the validity,
intention, or meaning of this agreement or relating to the rights and
obligations of the parties with respect to performance hereunder shall be
construed and resolved under the laws of Ohio. If and to the extent that any
court of competent jurisdiction determines that it is impossible or violative
of any legal prohibition to construe any provision of this agreement
consistently with any law, legal prohibition, or public policy and consequently
holds that provision to be invalid or prohibited, such holding shall in no way
affect the validity of the other provisions of this agreement, which shall
remain in full force and effect . No failure by any party to insist upon strict
compliance with any term of this agreement, to exercise any option, to enforce
any right, or to seek any remedy upon any default of any other party shall
affect, or constitute a waiver of, the first party's right to insist upon such
strict compliance, exercise that option, enforce that right, or seek that
remedy with respect to that default or any prior, contemporaneous, or
subsequent default; nor shall any custom or practice of the
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parties at variance with any provision of this agreement affect, or constitute
a waiver of, any party's right to demand strict compliance with all provisions
of this agreement. The captions of the various sections of this agreement are
not part of the context of this agreement, but are only labels to assist in
locating those sections, and shall be ignored in construing this agreement.
This agreement shall be personal to the Employee and no rights or obligations
of the Employee under this agreement may be assigned by him.
PINNACLE DATA SYSTEMS, INC.
____________________________ By ______________________________
XXXXXXXXXXX X. XXXXXXX Xxxx X. Xxxx, President and
Chief Executive Officer
Address: 0000 Xxxxxxx xxxx Address: 0000 Xxxx Xxxx
Xxxxx Xxxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
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