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                                                                   EXHIBIT 10.40


                              PINNACLE MICRO, INC.
                              EMPLOYMENT AGREEMENT


       This employment agreement (the "Agreement") is made and entered into by
and between Jonathan B. Eddison ("Executive") and Pinnacle Micro, Inc., (the
"Company"), effective as of December 1, 1996 (the "Effective Date") with
reference to the following facts:

       Executive has been recruited by Company to fill a critical executive
position. The Company is going through a management transition and financial
turnaround. 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 enhanced severance benefits upon Executive's termination of employment
following a change of control (as defined below) to provide the Executive,
through enhanced financial security, incentive to continue providing services to
the Company notwithstanding the possibility of a change of control.

       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 1 year for (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, General Counsel of the Company or in such other position as he
accepts prior to a Change of Control. 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 $150,000.00 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 

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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 20% 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 two-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

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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) the
relocation of the Executive to a facility or a location more than thirty (30)
miles from the Executive's then present location, without the Executive's
express written consent; (vi) any purported termination of the Executive by the
Company which is not effected for Disability or for Cause; or (vii) the failure
of the Company to obtain the assumption of this agreement by any successors
contemplated in Section 18 below;

       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
Vice President - 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 30 days of the Termination Date as determined by Company.

                             (B) Accelerated Vesting Option:  Give Executive 
(or his legal representative if he is Disabled) 30 days to elect to accelerate
the vesting of 80% all unvested equity compensation (forfeiting the 20% balance
of unvested equity compensation) to the same extent as if it would have vested
if Executive remained employed through the required vesting period.

                             (C)  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.


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       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
Vice President - 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 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) Cash Lump-Sum Payment: Pay to Executive, his estate, or his
personal representative (as appropriate) a lump-sum cash payment equal to 12
months' Employment Base Salary to be paid within 30 days after the date the
Company receives notice of Executive's death, or within 30 days after the date
it has been determined that Executive has incurred a Disability.

                (b) 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.

                (c) 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 

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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.

                (d) 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.
                      19 Technology Drive
                      Irvine, California  92618
                      Attn:  General Counsel
                      Fax:  714/789-3045

       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 

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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.                                 JONATHAN B. EDDISON



/s/ Lawrence Goelman                                 /s/ Jonathan B. Eddison
--------------------                                 -----------------------
Lawrence Goelman
President, Chief Executive Officer

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