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EXHIBIT NO. 10(j)
EMPLOYMENT AGREEMENT
This Employment Agreement is made as of July 22, 1998, between Pinnacle
Data Systems, Inc., an Ohio corporation (the "Company"), and Xxxxx Xxxxxxxx (the
"Employee"), who hereby agree as follows:
Section 1. TERM OF AGREEMENT. Upon the terms and subject to the
conditions described in this Agreement, the Company hereby retains the Employee
to provide consulting and advisory services to the Company, and the Employee
hereby accepts such employment by the Company. The term of the Employee's
retention by the Company under this Agreement shall begin on the date of this
Agreement and shall end on the first anniversary date of this Agreement.
Section 2. CONSULTING SERVICES. The Employee shall provide consulting
and advisory services to the Company with respect to the Company's
communications with its stockholders and with members of the financial
community. Without limiting the types of services to be provided by the
Employee, the Employee's advisory and consulting services shall include, without
limitation, the following:
(a) consulting with and assisting the Company in connection
with communication between the Company and its stockholders;
(b) identifying various newsletters which focus on emerging
public companies and other financial publications and assisting the
Company in developing strategies to increase its visibility with such
publications;
(c) consult with and advise the Company on specific methods to
increase the breadth and diversification of its stockholder base;
(d) identifying specific / broker dealers who may be able to
assist the Company in achieving the goals set forth in (c) above and/or
in making a market in the Company's equity securities, and advising the
Company as to how it may increase its visibility and name recognition
with such broker/dealers and other members of the investment community;
and
(e) consult with and advise the Company with respect to its
capital structure and capital needs.
The Employee shall devote such amounts of his time to the furnishing of
these services as may be required for their proper performance. The Company and
the Employee anticipate that the Employee shall devote an average of four (4) to
eight (8) hours per calendar week in the performance of the services enumerated
above, whether done during or after normal business hours.
The Employee shall initially devote his efforts to familiarizing
himself with the Company, which time period is estimated at six (6) to eight (8)
weeks, during which time the Company will make its officers and employees
available to provide to the Employee information
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regarding the Company, its operations, its financial conditions, and its
business prospects. The Employee shall at all times perform his duties hereunder
in good faith and in a fair, lawful and business-like manner. The Employee is
currently a shareholder of the Company. In connection with the performance of
his duties hereunder, the Employee may come into possession of material
non-public information with respect to the Company. In such event, the Employee
shall not buy or sell the Company's securities until such time as any material
non-public information with respect to the Company in his possession becomes
public information and the Employee shall comply, in all respects, with all
applicable securities laws in connection with (a) his purchase and/or sale of
the Company's securities, and (b) in all other respects in connection with his
performance under this Agreement.
Section 3. PART TIME EMPLOYEE. Under this Agreement, the Employee shall
be a part time employee of the Company.
Section 4. AUTHORITY. The employee shall have only such authority to
act on behalf of the Company as may be specifically conferred upon him in
writing from time to time by the Company. The Employee shall report his findings
and his progress in connection with the services enumerated in (a) through (e)
of Section 2 above, to the Company's Chief Financial Officer, Mr. Xxx Xxxx, or
his designee, on a biweekly basis after such time as the initial company study
is complete.
Employee acknowledges (i) that the Company is taking a substantial risk
by paying Employee in advance for the services to be rendered by Employee under
this Employment Agreement, and (ii) that in taking such risk, the Company is
relying on the good faith and integrity of Employee. Employee represents and
warrants to the Company that in the performance of the duties and services
required of him by this Agreement he shall, at all times, act in good faith and
shall deal fairly and in a reasonable and businesslike manner with the Company.
The Company further agrees to act in good faith and to deal fairly and in a
reasonable and businesslike manner with Employee.
Section 5. COMPENSATION. For his services under this Agreement, the
Employee shall be granted Thirty-Seven Thousand (37,000) options (the "Options")
to purchase shares of common stock, no par value (the "Shares"), of the Company
pursuant to the provisions of Section 6 below, and the Stock Option Agreement
attached as Exhibit A hereto (the "Stock Option Agreement"). The Option shall be
valued pursuant to the Blackshoals method of valuation on the date hereof.
Section 6. TERMS OF OPTIONS. The Options granted to the Employee shall
have an exercise price equal to the average of the bid and asked price of the
Shares as of the date of this Agreement and shall be exercisable for a period
commencing on the date of grant and continuing for a period of two (2) years
thereafter. The remaining terms and conditions of such Options shall be set
forth in the Stock Option Agreement. The Stock Option Agreement, and not this
Agreement, shall evidence the grant of the Options, and the Stock Options
Agreement shall be entered into as of the date of this Agreement.
Section 7. EMPLOYEE'S CAPACITY. The Employee represents and warrants to
the Company that he has the capacity and right to enter into this Agreement and
perform all of his services hereunder without any restriction whatsoever by any
other agreement, other document, or otherwise.
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Section 8. NOTICES. Any notice or other communication required or
desired to be given to any party to this Agreement 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, or delivered to
the address specified below:
(a) If to the Company:
Pinnacle Data Systems, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxx, CFO
with copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxx & Xxxxxxxxx LLP
00 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxx 00000
(b) If to the Employee:
Xxxxx Xxxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Any party may change their respective address listed above by giving
the other parties notice of such change.
Section 9. EXECUTION OF DOCUMENTS. Each party to this Agreement and
such party's successors and assigns shall execute, acknowledge or verify, and
deliver any and all documents which from time to time may be reasonably
requested by any other party to this Agreement to carry out the purposes and
intent of this Agreement.
Section 10. GOVERNING LAW. All questions concerning the validity or
meaning of this Agreement or relating to the rights and obligations of the
parties with respect to performance under this Agreement shall be construed and
resolved under the laws of the State of Ohio.
Section 11. SEVERABILITY. The intention of the parties to this
Agreement is to comply fully with all laws and public policies, and this
Agreement shall be construed consistently with all laws and public policies to
the extent possible. If and to the extent that any court of competent
jurisdiction determines that it is impossible to construe any provision of this
Agreement consistently with any law or public policy and consequently holds that
provision to be invalid, such holding shall in no way affect the validity of the
other provisions of this Agreement, which shall remain in full force and effect.
Section 12. NON-WAIVER. 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's party's right to
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insist upon such compliance, to exercise that option, to enforce that right, or
to seek that remedy with respect to that default or any prior, contemporaneous,
or subsequent default. No custom or practice of the parties at variance with any
provision of this Agreement shall affect, or constitute a waiver of, any party's
right to demand strict compliance with all provisions of this Agreement.
Section 13. CAPTIONS. 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.
Section 14. COMPLETE AGREEMENT. This document (including the exhibit,
which is incorporated herein by reference) contains the entire agreement among
the parties and supersedes all prior or contemporaneous discussions,
negotiations, representations, or agreements relating to the subject matter of
this Agreement. No changes to this Agreement shall be made or be binding on any
party unless made in writing and signed by each party to this Agreement.
Section 15. SUCCESSORS. This Agreement shall be personal to the
Employee, and no rights or obligations of the Employee under this Agreement may
be assigned by him, and any attempted assignment shall be null and void. Except
as described in the preceding sentence, this Agreement shall be binding upon,
inure to the benefit of, and be enforceable by and against the respective heirs,
personal representatives, successors, and assigns of each party to this
Agreement.
EMPLOYEE PINNACLE DATA SYSTEMS, INC.
/s/ Xxxxx Xxxxxxxx By: /s/ Xxxx Xxxx
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Xxxxx Xxxxxxxx Xxxx Xxxx, Chairman and Chief
Executive Officer
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EXHIBIT A
STOCK OPTION AGREEMENT
This Agreement is made as of July 22, 1998, between Xxxxx Xxxxxxxx
("Xx. Xxxxxxxx") and Pinnacle Data Systems, Inc., an Ohio corporation (the
"Company"), who hereby agree as follows:
Section 1. GRANT AND EXERCISE OF OPTION. Upon the terms and subject to
the conditions described in this Agreement, the Company hereby grants to Xx.
Xxxxxxxx an option (the "Option") to purchase Thirty-Seven Thousand (37,000)
shares of common stock, no par value, of the Company (the "Shares") for a
purchase price of $3.50 per Share (the "Option Price"). The Option Price is
equal to the average of the bid and asked price of the Shares as of July 22,
1998, which was the date of an Employment Agreement (the "Employment Agreement")
between Xx. Xxxxxxxx and the Company. The Option is being issued in accordance
with the Employment Agreement. The Option may be exercised, in whole or in part,
at any time or from time to time during the period commencing on the date of
this Agreement and ending on the second anniversary of the date of this
Agreement, both dates inclusive (the "Exercise Period"). If any portion of the
Option has not been exercised prior to the expiration of the Exercise Period,
then that unexercised portion of the Option shall expire. The Option is intended
to qualify as an incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended.
Section 2. METHOD OF EXERCISE. The Option shall be exercisable by
written notice to the Company, which notice shall be substantially in the form
of the notice attached hereto as Schedule A ("the Notice"). The full purchase
price for those Shares being purchased upon the exercise of the Option shall be
payable by certified or bank cashier's check at the time of the delivery of the
Notice to the Company. Thereafter, the Company shall deliver a certificate or
certificates representing those Shares to the person or persons specified in the
Notice, at the time specified in the Notice, and at the location specified in
the Notice.
Section 3. TRANSFERABILITY. The Option shall not be transferable by Xx.
Xxxxxxxx other than by will or the laws of descent and distribution. During the
lifetime of Xx. Xxxxxxxx, the Option shall be exercisable (subject to any other
applicable restrictions on exercise) only by Xx. Xxxxxxxx for his own account.
Upon the death of Xx. Xxxxxxxx, the Option shall be exercisable (subject to any
other applicable restriction on exercise) only by the executor or administrator
of Xx. Xxxxxxxx'x estate.
Section 4. CHANGE IN CAPITAL STRUCTURE. If the Company (a) pays a
dividend or makes a distribution in its shares of common stock without receiving
consideration in the form of money, services, or property, (b) subdivides or
splits its outstanding shares of common stock into a greater number of shares,
or (c) combines its outstanding shares of common stock into a smaller number of
shares, then the aggregate number of Shares then subject to the unexercised
portion of the Option and the Option Price shall be proportionally adjusted so
that Xx. Xxxxxxxx would be entitled to receive for the same aggregate price that
number of Shares which he would have owned after the happening of any of the
events described above had he exercised the entire portion of the Option prior
to the happening of such event. An adjustment made pursuant to this
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section shall become effective immediately after the record date in the case of
a dividend or the effective date in the case of a subdivision, split, or
combination.
If the Company reclassifies or changes its shares of common stock
(except for splitting or combining, or changing par value, or changing from par
value to no par value, or changing from no par value to par value) or
participates in a consolidation or merger (other than a merger in which the
Company is the surviving corporation and which does not result in any
reclassification or change of its shares of common stock except as stated
above), the aggregate number of Shares then subject to the unexercised portion
of the Option and the Option Price shall be adjusted so that Xx. Xxxxxxxx would
be entitled to receive for the same aggregate price that number and type of
shares of capital stock which he would have owned after the happening of any of
the events described above had he exercised the entire portion of the Option
prior to the happening of such event.
No adjustment pursuant to this section shall be required unless such
adjustment would require an increase or decrease of at least 1% in the number or
price of Shares; provided that any adjustments which by reason of this section
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this section shall be made to
the nearest cent or to the nearest full Share, as the case may be.
Whenever an adjustment is made pursuant to the preceding provisions of
this section, the Company shall give notice to Xx. Xxxxxxxx of such adjustment,
which notice shall set forth the terms of such adjustment and the date on which
such adjustment became effective.
Section 5. COMPLIANCE WITH SECURITIES LAWS; DELIVERY OF SHARES. The
Option shall not be exercisable and no Shares shall be delivered under this
Agreement except in full compliance with all applicable federal and state
securities laws and regulations. Furthermore, the Option shall not be
exercisable except for Shares which at the time of such exercise are exempt from
registration under all applicable federal and state securities laws, is the
subject matter of a transaction which is exempt under all applicable federal and
state securities laws, or are registered under all applicable federal and state
securities laws. As a condition of any exercise of the Option, the Company may
require Xx. Xxxxxxxx or his successor to make any representation or warranty to
comply with any applicable federal or state securities law or to confirm any
factual matters reasonably requested by counsel to the Company. The Company
shall have the right to imprint on each certificate evidencing the ownership of
any of the Shares a legend setting the restrictions on transfer imposed by
applicable federal and state securities laws and to issue stop transfer
instructions to its transfer agent prohibiting transfer of any of the Shares
except in full compliance with the provisions of all applicable federal and
state securities laws.
In the case of the exercise of the Option by a person or estate
acquiring the right to exercise such Option by bequest or inheritance, the
Company may require reasonable evidence as to the ownership of the Option and
may require such consents and releases of taxing authorities as the Company
deems advisable.
Section 6. WITHHOLDING TAXES. The Company, at its option, shall have
the right to require Xx. Xxxxxxxx to pay to the Company the amount of any taxes
which the Company is required to withhold with respect to the Shares to be
issued upon the exercise of the Option or any portion of
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the Option. The obligations of the Company under the Agreement shall be
conditions upon such payment.
Section 7. RIGHTS AS A STOCKHOLDER. Xx. Xxxxxxxx shall have no rights
of a stockholder in the Company with respect to the Shares subject to the
Options unless and until a certificate representing such Shares has been duly
issued and delivered to him under this agreement.
Section 8. NOTICES. All notices and other communications under this
Agreement to any Party shall be in writing and shall be deemed given when
delivered personally, mailed by registered or certified mail (return receipt
requested) to that Party at the address for that Party set forth below (or at
such other address for such Party as such Party shall have specified in notice
to the other Party), or delivered to Federal Express, Purolator, or any similar
express delivery service for delivery to that Party at that address:
(a) If to the Company:
Pinnacle Data Systems, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxx, CFO
with copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxx & Xxxxxxxxx LLP
00 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxx 00000
(b) If to Xx. Xxxxxxxx:
Xxxxx Xxxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Section 9. GOVERNMENT REGULATION. Notwithstanding any other provisions
of this agreement, the Company's obligations under this Agreement shall be
subject to all applicable laws, rules, and regulations and to such approvals as
may be required by any governmental or regulatory agencies.
Section 10. CAPTIONS. 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.
Section 11. GOVERNING LAW. All questions concerning the validity or
meaning of this Agreement or relating to the rights and obligations of the
parties with respect to performance under this Agreement shall be construed and
resolved under the laws of Ohio.
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Section 12. SUCCESSORS. Except as expressly provided in this Agreement,
no rights or obligations of Xx. Xxxxxxxx under this Agreement may be assigned by
Xx. Xxxxxxxx to any third party. Any assignment or attempted assignment by Xx.
Xxxxxxxx in violation of the preceding sentence shall be null and void. Subject
to the foregoing, this Agreement shall be binding upon, inure to the benefit of,
and be enforceable by and against the heirs, personal representatives,
successors and assigns of each party to this Agreement.
PINNACLE DATA SYSTEMS, INC.
By /s/ Xxxx Xxxx
---------------------------------
Xxxx Xxxx, Chairman and Chief
Executive Officer
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XXXXX XXXXXXXX
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SCHEDULE A
Form of Notice to Exercise Option
[Date]
Pinnacle Data Systems, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxx, CFO
Ladies and Gentleman:
This letter shall constitute the written notice pursuant to Section 2
of the Stock Option Agreement dated July 22, 1998 (the "Agreement"), between
Xxxx Xxxxxxxx and Pinnacle Date Systems, Inc., an Ohio corporation (the
"Company"). The undersigned, the holder of an option (the "Option") to purchase
the number of shares of common stock, no par value ("Shares"), of the Company
set forth in the Agreement, hereby exercises the Option with respect to
_________ Shares. Certificates for the Shares to be issued in connection with
this exercise should be registered in the name set forth below and delivered to
the address set forth above before the close of business on or about
_______________, ________ [not less than 15 and more than 30 days from the date
of this notice]:
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Name
-------------------------------
Street Address
-------------------------------
City, State, and Zip Code
-------------------------------
Social Security Number
Accompanying this notice is a certified or bank cashier's check made payable to
the Company in the amount of $___________ in payment of the purchase price for
the Shares to which this notice relates.
Sincerely,
/s/ Xxxxx Xxxxxxxx
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Signature
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Printed or Typed Name
