Vice President, Marketing Severance Agreement And Release - Scott Blum -

SEVERANCE AGREEMENT AND MUTUAL RELEASE


This SEVERANCE AGREEMENT AND MUTUAL RELEASE (the "Agreement") is made and entered into as of February 1, 1997, by and between SCOTT A. BLUM, an individual ("Blum") and PINNACLE MICRO, INC., a Delaware corporation ("Pinnacle" or "the Company").


W I T N E S S E T H:


WHEREAS, Blum has been a Director of the Company and has been employed in various management positions with the Company, including, since July 1, 1996, as Vice President, Marketing; and


WHEREAS, Blum and the Company had been parties to an Employment Agreement entered into as of February 26, 1996 ("the Employment Agreement"); and


WHEREAS, on August 1, 1996, Blum and the Company mutually agreed to rescind and cancel the Employment Agreement; and


WHEREAS, Blum and the Company have previously entered into a Letter Agreement dated September 27, 1996 ("the Letter Agreement") in which Blum agreed to resign from his position as an officer and employee of the Company, effective as of the close of business on September 30, 1996, and agreed to more fully document said agreement in the form of a formal severance agreement; and


WHEREAS, Blum and the Company entered into a stock option agreement dated January 3, 1995, whereby Blum was granted options to purchase 450,000 shares of the Company's common stock at an exercise price of $6.41 per share (the "Initial Blum Option"); and


WHEREAS, because the Initial Blum Option was based on continuing employment with the Company, the options granted under the Initial Blum Option terminated as of September 30, 1996 due to Blum's resignation as an officer and employee, and therefore two-thirds of the options granted under the Initial Blum Option have not vested and one-third of such options vested as of the date of Blum's resignation from the Company, which such options have expired by the date of this Agreement; and


WHEREAS, Blum desires to waive his rights under the Initial Blum Option in exchange for a grant of new options; and


WHEREAS, Blum resigned as a director of the Company on December 8, 1996, and on the same date entered into a Stand-still and Voting Agreement with the Company; and


WHEREAS, Blum and the Company desire to fully document the terms of the September 27, 1996 Letter Agreement in the form of a formal severance agreement and to make certain other modifications in the terms of the Letter Agreement, and Blum and the Company desire to replace and supersede the Letter Agreement in its entirety with this Severance Agreement;


NOW, THEREFORE, in consideration of the covenants herein contained, the parties hereto agree as follows:


1. Resignation. By signing this Agreement, and in consideration of the mutual covenants contained in this Agreement, Blum confirms the resignation of his employment with the Company as Vice President, Marketing, effective as of the close of business on September 30, 1996. His personnel records will be marked accordingly. Should any employer or prospective employer inquire of the Company regarding Blum's reason for leaving the employment of Pinnacle, the President or General Counsel of the Company will give "mutual agreement of the parties" as the reason.


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2. Severance Benefits. Upon execution of this Agreement, Pinnacle shall provide Blum with the following benefits:


(a) Pinnacle will make severance payments to Blum in the gross amount of $16,667 per month, representing his salary immediately prior to his resignation from employment, less the minimum legally required deductions and withholdings, for a period of thirty-six (36) months beginning October 1, 1996 and continuing until September 30, 1999; such amounts shall be paid in bi-monthly installments on the same days as the Company's regular payroll payments. The amounts previously paid to Blum as severance benefits shall be retroactively adjusted as follows: within ten (10) days of the execution of this Agreement, Pinnacle shall pay to Blum a lump-sum amount representing the difference between the severance payments agreed to above and the amount actually paid to Blum from October 1, 1996 through the date of execution of this Agreement, less applicable withholding taxes.


(b) Pinnacle shall provide those rights and benefits Pinnacle customarily provides pursuant to the Comprehensive Omnibus Retirement Act of 1974 ("COBRA") to an employee who voluntarily resigns from employment with Pinnacle.


3. Stock Options. Pinnacle shall grant to Blum, subject to the terms of a Pinnacle Micro Stock Option Agreement (Nonstatutory Option) attached hereto as Exhibit "A", non-statutory stock options to purchase 450,000 shares of Pinnacle common stock at the exercise price of $6.41 per share (the same exercise price as the Initial Blum Option), vesting immediately upon the execution of this Agreement. These new options, which will be granted directly by the Company and not pursuant to any stock option plan, will expire, regardless of vesting, if not exercised by September 30, 1998.


4. Releases.


(a) By Blum. Blum hereby releases, acquits and forever discharges Pinnacle and its current and former officers, directors, employees, agents and professional advisors from any and all claims, causes of action, charges, suits, actions, complaints, liabilities and obligations of any nature whatsoever, whether known or unknown, relating to Blum's employment with Pinnacle and the cessation of such employment, including, but not limited to, (i) actions alleging wrongful termination of employment; (ii) actions under Title VII of the Civil Rights Act of 1964, Section 1981 of the Civil Rights Act of 1866, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, any amendment to any of the foregoing, or any other State, Federal or local law concerning age, race, religion, national origin, gender, handicap, or any other form of discrimination; and (iii) any common law contract, tort or other claim relating to Blum's employment with the Company and the cessation thereof, from the beginning of Blum's employment by Pinnacle up to and including the date of execution of this Agreement. Notwithstanding the foregoing, nothing herein is intended to, nor shall it, affect any right or claim of Blum for indemnification from the Company pursuant to the Company's Articles of Incorporation and By-Laws and that certain Indemnification Agreement with the Company dated March 18, 1993, for claims by third parties arising from his service as an officer or director of the Company, and Blum does not release Pinnacle or its affiliates from any such claims for indemnification.


(b) By the Company. Pinnacle hereby releases, acquits and forever discharges Blum from any and all claims, causes of action, charges, suits, actions, complaints, liabilities and obligations of any nature whatsoever, whether known or unknown, relating to Blum's employment with the Company and the cessation thereof from the beginning of Blum's employment by Pinnacle up to and including the date of execution of this Agreement. Notwithstanding the foregoing, nothing herein is intended to, nor shall it, affect any right or claim Pinnacle may have under the General Corporation Law of Delaware, the law of any other state or the federal securities laws for indemnity or contribution from Blum with respect to claims by third parties arising from Blum's service as an officer or director of the Company or any claim arising from any transactions in the Company's stock or taken as a ...