Document:

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                                  EXHIBIT 10(n)

                         HP/pinnacle Data Systems, Inc.
              DIRECT CONNECT VS SUPPLIER SERVICES AGREEMENT #C2-607
                               TERMS & CONDITIONS

This Virtual Sourcing, e-Fulfillment Services Agreement (hereinafter referred
to as "Services Agreement") is made and entered into by and between
Hewlett-Packard Company ("HP"), a Delaware corporation, and its divisions and
the Virtual Source Supplier, Pinnacle Data Systems, Inc. ("PDS"), a Ohio
corporation, located at 6600 Port Road, Groveport, Ohio 43125.

1.   VIRTUAL SOURCING DIRECT CONNECT SUPPLIER PROGRAM SCOPE. The primary goal
     of the Virtual Sourcing, e-Fulfillment Program is to electronically route
     Hewlett-Packard customer orders directly to suppliers who will fulfill
     these orders on a same day basis from available inventory and
     electronically message back to Hewlett-Packard the details specific to
     the shipment sent directly to the customer. To provide a foundation of
     HP's expectations of the VS Supplier, included below is an outline of HP
     and VS Supplier responsibilities specific to the Virtual Sourcing,
     e-fulfillment Program.

2.   RELATIONSHIP OF THE PARTIES.  (a) Neither this Services Agreement nor any
     of the services described in the attached Exhibits are intended by the
     parties to interfere with or change for any reason the relationship
     between VS Supplier and all other divisions at HP governed by the
     Divisional Services Agreement #01-17-6261.  (b) The relationship of VS
     Supplier to HP shall be that of independent contractor.  All inventory,
     equipment, warehouse facilities, and computer systems used by VS Supplier
     in the performance of the services rendered hereunder shall at all times
     be owned or leased by VS Supplier or loaned to the supplier by HP. This
     Agreement does not create any agency or partnership relationship between
     HP and the VS Supplier.  (c) All expenses incurred by VS Supplier in the
     operation of the equipment, warehouse facilities, and computer systems
     shall be paid by VS Supplier without reimbursement from HP. VS Supplier'
     s sole compensation for the fulfillment services rendered to HP and work
     performed for HP under this Service Agreement shall be as provided in
     this Services Agreement.  (d) HP may let other contracts in connection
     with, or similar to, the services performed by VS Supplier.  (e) This
     Agreement provides no assurance or guarantees of any order or services.

3.   TERM OF AGREEMENT. This Agreement is effective as of September 01, 2001
     ("Effective Date") for a period of one (1) year (the "Term"). The parties
     may, by mutual agreement in writing, renew the term for additional one
     (1) year periods. This Agreement is no guarantee of future business for
     the VS Supplier and will not ensure the continuation of the Virtual
     Sourcing business to the above VS Supplier.

4.   TERMINATION.
     4.1 Any of the services or functions described in this Services Agreement
         may be terminated by either party with or without cause with thirty
         (30) days written notice to the other party.
     4.2 If either party is in breach of any provision of this Services
         Agreement, the nonbreaching party may, by notice to the breaching
         party, terminate the whole or any part of this Services Agreement or
         any Order, unless the breaching party cures the breach within 15 days
         after receipt of notice.
     4.3 In the event of termination of this Services Agreement or any of the
         services described in the attached Exhibits for any reason, HP shall
         have no liability other than payments of amounts then due or accrued
         until the effective date of termination of said Services Agreement.
     4.4 The termination of this Services Agreement or any of the services
         described in the attached Exhibits for any reason shall not have any
         impact on the relationship of the parties governed by the Divisional
         Services Agreement #01-17-6261.

5.   PAYMENT  TERMS. (a) HP will pay invoices within forty-five (45) calendar
     days of receipt of the invoice.  (b) Billing Excluded Costs: Costs
     allocated to HP shall exclude any and all domestic and/or international
     fines and penalties with respect to violations of any statute, ordinance,
     regulation, rule, order, judgment or decree (including settlement
     thereof) by VS Supplier and the foregoing shall be the responsibility of
     VS Supplier.

6.   CONFIDENTIAL INFORMATION/INTELLECTUAL PROPERTY.
     6.1 (a) Confidential Information: Other than in the performance of this
         Agreement, neither VS Supplier nor VS Supplier's agents, employees,
         or subcontractors shall use or disclose to any person or entity any
         confidential information of HP (whether in written, oral, electronic
         or other form) which is obtained from HP or otherwise prepared or
         discovered either in the performance of this Agreement, through access
         to HP Assets/Systems, or while on HP premises. As used herein, the
         term "confidential information" shall include, without limitation,
         this Services Agreement, all information related to the Virtual
         Sourcing, e-Fulfillment Program, all Work Product, all information
         designated by HP as confidential or private, all information or data
         concerning or related to HP's products (including the discovery,
         invention, research, improvement, development, manufacture, or sale
         thereof), processes, or general business operations (including sales
         costs, profits, pricing methods, organization and employee lists), and
         any information obtained through access to any Information
         Assets/Systems

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         (including computers,networks, voice mail, etc.) which, if not
         otherwise described above, is of such a nature that a reasonable
         person would believe it to be confidential or proprietary. (b) VS
         Supplier shall not disassemble, decompile, reverse engineer, decrypt,
         or otherwise analyze the HP software or Confidential Information, or
         allow others to do so. (c) Access to HP Information Assets/Systems:
         Access, if any, is granted solely to facilitate the business
         relationship described in this Agreement, and is limited to those
         specific Assets/Systems, time periods, and personnel designated by VS
         Supplier as are separately agreed to by HP and VS Supplier from time
         to time. Access is subject to business control and information
         protection policies, standards, and guidelines as may be provided by
         HP. Use of any other HP Assets/Systems is expressly prohibited. This
         prohibition applies even when an HP Asset/System which VS Supplier is
         authorized to access serves as a gateway to other HP Assets/Systems
         outside the scope of VS Supplier's authorization. Use of
         Assets/Systems during other time periods or by individuals not
         authorized by HP is expressly prohibited. Without limiting the
         foregoing, VS Supplier warrants that it has adequate security measures
         in place to comply with the above obligations and to insure that
         access granted hereunder will not impair the integrity and
         availability of HP information assets/systems. Upon reasonable notice,
         HP may audit VS Supplier to verify VS Supplier's compliance with these
         obligations. Further, the warranty regarding adequate security
         measures and audit verification described above shall also apply to
         any servers used by VS Supplier in the performance of this Agreement.
     6.2 The foregoing confidentiality obligations will not apply to
         Confidential Information that (a) is already known to VS Supplier
         prior to disclosure by HP; (b) is or becomes a matter of public
         knowledge through no fault of VS Supplier; (c) is rightfully received
         from a third party by VS Supplier without a duty of confidentiality;
         (d) is independently developed by VS Supplier; (e) is disclosed under
         operation of law; or (f) is disclosed by VS Supplier with the prior
         written approval of HP.
     6.3 WORK PRODUCT. "Work Product" means models, devices, reports, computer
         programs, tooling, schematics and other diagrams, instructional
         materials, and anything else VS Supplier, its agents, employees, and
         subcontractors produce in connection with this Services Agreement. All
         Work Product will belong to HP. VS Supplier, its agents, employees,
         and subcontractors will deliver all Work Product to HP upon the
         earlier of the expiration/termination of this Services Agreement or
         HP's request.
     6.4 WORKS OF AUTHORSHIP. VS Supplier will promptly disclose to HP any
         works of authorship, including but not limited to, drawings, designs,
         plans, specifications, notebooks, tape recordings, computer programs,
         computer output, models, tracings, schematics, photographs, reports,
         findings, recommendations, educational materials, data and memoranda
         of every description and anything else VS Supplier produces in
         connection with this Services Agreement, and VS Supplier hereby
         assigns to HP all copyrights in such works. To the extent permitted by
         law, VS Supplier waives any moral rights, such as the right to be
         named as author, the right to modify, the right to prevent mutilation
         and the right to prevent commercial exploitation, whether arising
         under the Berne Convention or otherwise. VS Supplier will sign any
         necessary documents and will otherwise assist HP, at HP's expense, in
         registering HP's copyrights and otherwise protecting HP's rights in
         such works in any country. HP will own all patents, copyrights or
         trade secrets covering such materials and will have full rights to use
         the materials without claim on the part of VS Supplier for additional
         compensation.
     6.5 INVENTIONS. VS Supplier will promptly disclose to HP any inventions or
         discoveries made in connection with this Services Agreement and paid
         for by HP. HP will own all intellectual property rights in such
         inventions or discoveries. VS Supplier will sign any necessary
         documents and will otherwise assist HP, at HP's expense, in obtaining
         patents or mask work registrations and otherwise protecting such
         inventions in any country.
     6.6 PRE-EXISTING INTELLECTUAL PROPERTY. (1) "Pre-Existing Intellectual
         Property" means any trade secret, invention, work of authorship, mask
         work or protectable design that has already been conceived or
         developed by anyone other than HP before VS Supplier renders any
         services under this Services Agreement. (2) VS Supplier will not use
         any Pre-Existing Intellectual Property in connection with this
         Agreement unless VS Supplier has the right to use it for HP's benefit.
         If VS Supplier is not the owner of such Pre-Existing Intellectual
         Property, VS Supplier will obtain from the owner any rights necessary
         to enable VS Supplier to comply with this Agreement.  (3) If VS
         Supplier uses any Pre-Existing Intellectual Property in connection
         with this Agreement, VS Supplier hereby grants HP non-exclusive,
         royalty-free, worldwide, perpetual license to make, have made, sell,
         use, reproduce, modify, adapt, display, distribute, make other
         versions of, and disclose the Property and to sublicense other to do
         these things. (4) Indemnification: VS Supplier will give HP notice
         immediately if at any time VS Supplier knows or reasonable should know
         of any third party claim to any intellectual property provided by VS
         Supplier to HP pursuant to this Agreement. VS Supplier will indemnify
         and hold harmless HP from all liability arising from HP's use of such
         intellectual property.
     6.7 LICENSE. HP grants to VS Supplier the license described in Exhibit D
         for use of the e-Fulfillment Specifications and Software Components
         during the term of this Agreement, for the purpose of performing its
         obligations pursuant to the terms of this Agreement and the license.
     6.8 SURVIVAL. The provisions of this section 6 regarding use and
         disclosure of Confidential Information shall survive termination of
         this Agreement.

7.   INDEMNIFICATION. General: VS Supplier shall defend, indemnify, and hold
                      -------
     harmless HP, its officers, directors, and employees from any claims,
     losses, attorney's fees, damages, liabilities, costs, expenses, or suits:
     for injury or death to any person (including VS Supplier or its
     employees), damage to or loss of property, or any other claim arising out
     of or resulting

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     from any act or omission of VS Supplier, its employees,
     agents, or subcontractors in VS Supplier's performance of this Agreement,
     the presence of VS Supplier or its personnel on HP's premises, or the
     driving of HP motor vehicles. In no event, however, shall VS Supplier be
     responsible for the sole negligence of HP.

8.   LIMITATION OF LIABILITY. In no event shall HP be liable to VS Supplier for
     any special, indirect, incidental or consequential damages in any way
     arising out of or relating to this Agreement even if HP has been advised
     of the possibility of such damages.

9.   WARRANTY.
     9.1 VS Supplier warrants to HP that:
         9.1.1 All Services will be performed by VS Supplier in a professional
               manner, consistent with the standard of skill and care
               exercised by the best professional consultants on projects of
               comparable scope and complexity, in a similar location, and in
               conformance with the requirements of this Services Agreement.
         9.1.2 All work shall be of good quality and
               workmanship, free from faults and defects, and in conformity
               with the requirements of this Services Agreement, including any
               plans or specifications incorporated in this Services Agreement.
         9.1.3 VS Supplier is sufficiently experienced,
               properly qualified, registered, licensed, equipped, organized,
               and financed to perform the Services in compliance with the
               terms of this Services Agreement.
         9.1.4 VS Supplier will devote such time, personnel and
               resources for the performance of its duties under this Services
               Agreement and any Purchase Order, and within the deadlines set
               by HP.
         9.1.5 Nothing in this Warranty section shall be deemed
               to relieve VS Supplier of any warranties included in the
               Divisional Services Agreement #01-17-6261.

10.  DELETED.

11.  INSURANCE. During the Term and at all times that VS Supplier performs
     services for HP, VS Supplier shall maintain in full force and effect, at
     VS Supplier expense, the following minimum insurance coverages.
     Certificates of insurance evidencing the required coverages and limits
     shall be furnished to HP before any Work is commenced hereunder, name HP
     as additional insured, and provide that there will be no cancellation or
     reduction of coverage without 30 days prior written notice to HP. (a)
     Workers Compensation: Workers' Compensation shall be provided as required
     --------------------
     by law or regulation. Employer's Liability insurance shall be provided in
     amounts not less than $1,000,000 per accident for bodily injury by
     accident, $1,000,000 policy limit by disease, and $1,000,000 per employee
     for bodily injury by disease. (b) General Liability: VS Supplier shall
                                       -----------------
     carry either Comprehensive or Commercial General Liability Insurance with
     coverage to include Premises and Operations, Products and Completed
     Operations, Contractual Liability, Broad Form Property Damage (including
     completed operations), and Personal Injury Liability with combined single
     limits of $1,000,000 per occurrence and general aggregate of $10,000,000.
     (c) Automobile Liability: VS Supplier shall carry bodily injury, property
         --------------------
     damage, and automobile contractual liability coverage for owned, hired,
     and non-owned autos with a combined single limit of liability for each
     accident of not less than $1,000,000. (d) Such policies shall name HP,
     its officers, directors, and employees as Additional Insureds to the
     extent of the indemnity herein and shall stipulate that the insurance
     afforded Additional Insureds to the extent of its indemnity herein shall
     apply as primary insurance and that no other insurance carried by any of
     them shall be called upon to contribute to a loss covered thereunder.

12.  GOVERNING LAW. Both parties shall comply with all applicable federal,
     state, and local laws, rules, regulations, or orders issued by any public
     authority having jurisdiction over their respective obligations under
     this Services Agreement. This Services Agreement and all rights and
     obligations hereunder, including matters of construction, validity, and
     performance, shall be governed by the law of California without giving
     effect to the conflict of law provisions thereof. Any dispute arising
     under this Services Agreement shall be heard in courts of the State of
     California.

13.  COUNTRY OF MANUFACTURE AND DUTY DRAWBACK RIGHTS.
     13.1 Country of Origin Certification. Upon HP's request, VS Supplier will
          -------------------------------
          provide HP with an appropriate certification stating the country of
          origin for the Products sold, sufficient to satisfy the requirements
          of the customs authorities of the country of receipt and any
          applicable export licensing regulations, including those of the
          United States.
     13.2 Country of Origin Marking. VS Supplier will mark each Product, or the
          -------------------------
          container if there is no room on the Product, with the country of
          origin. VS Supplier will, in marking the Products, comply with the
          requirements of the customs authorities of the country of receipt.
     13.3 Duty Drawback. If the Products delivered under this Agreement are
          -------------
          imported, VS Supplier will when possible allow HP to be the
          importer of record. If HP is not the importer of record and VS
          Supplier obtains duty drawback rights to the Products sold, VS
          Supplier will, upon HP's request, provide HP with documents required
          by the customs authorities of the country of receipt to prove
          importation and to transfer duty drawback rights to HP.

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14.  GOVERNMENTAL COMPLIANCE.
     14.1  Duty To Comply. VS Supplier agrees to comply with all federal,
           --------------
           state, local and foreign laws, rules and regulations applicable to
           its performance of this Agreement or to the Products sold, including
           any approvals necessary to allow for HP's sale and customers' use of
           the Products. Without limiting the generality of the foregoing
           sentence, VS Supplier represents that:
           14.1.1   VS Supplier will comply with all government or freight
                    regulations and requirements for each country to which the
                    Products are shipped;
           14.1.2   VS Supplier will comply with all equal employment
                    opportunity and non-discrimination requirements prescribed
                    by Presidential Executive Orders, including the requirements
                    of Executive Order 11246, the Vocational Rehabilitation Act,
                    and the Vietnam Era Veterans' Readjustment Assistance Act;
           14.1.3   Each chemical substance contained in the Products sold is on
                    the inventory of chemical substances compiled and published
                    by the Environmental Protection Agency pursuant to the Toxic
                    Substances Control Act;
           14.1.4   All Products sold will be shipped in conformance with
                    government or freight regulations and requirements
                    applicable to chemicals; and
           14.1.5   VS Supplier will provide complete and accurate material
                    safety data sheets prior to shipping any Product sold.
     14.2  Procurement Regulations. For the Products purchased under this
           -----------------------
           Agreement for incorporation into products to be sold under a
           federal contract or subcontract, those applicable procurement
           regulations that are required by federal statute or regulation to be
           inserted in contracts or subcontracts will upon notice to VS Supplier
           be deemed incorporated in this Agreement and made to apply to all
           Orders.
     14.3  Ozone Depleting Substances. VS Supplier certifies that no Product
           --------------------------
           sold nor any component of any Product sold:
           14.3.1   Contains any Class I Substance, or Class II Substance, as
                    those terms are defined in 42 USC Section 7671 and
                    implementing regulations of the United States Environmental
                    Protection Agency at 40 CFR Part 82, as now in existence or
                    hereafter amended.
     14.4  In addition to the requirements and specifications for Products and
           their packaging set forth elsewhere in this Agreement and in
           Divisional Services Agreement #01-17-6261, all Products and their
           packaging will comply with HP's General Specifications for
           Environment, DWG No. A-5951-1745-1. www.hp.com/go/supplierE
                                               -----------------------

15.  MODIFICATIONS/REVISIONS/ASSIGNMENT. (a) This Agreement represents the
     entire Agreement of the Parties with respect to the Virtual Sourcing,
     e-Fulfillment Program, and may not be amended or modified except by a
     written instrument signed by both VS Supplier and HP. (b) VS Supplier shall
     neither delegate any duties nor assign any rights under this Agreement
     without the prior written consent of HP. Any such attempted delegation or
     assignment shall be void. Any use of sub-contractors by VS Supplier in the
     performance of this Agreement does not relieve VS Supplier of any
     obligations contained herein.

           In situations where terms and conditions of this Services Agreement
           #C2-607 and Divisional Services Agreement #01-17-6261 articles are
           inconsistent, VS Supplier and HP hereby acknowledge that, with
           respect to parts listed in Exhibit B of this Services Agreement and
           on order by any HP customer via a HP Electronic Purchase Order (EPO),
           the terms and conditions found in this Services Agreement #C2-607
           will prevail.

16.  EXHIBITS. All Exhibits attached to this  Agreement  shall be deemed a part
     of this Agreement and incorporated herein. The following Exhibits are
     hereby made part of this Agreement:

                    Exhibit A - Virtual Sourcing Specific Business Conditions
                    Exhibit B - Parts/Pricing List
                    Exhibit C - Confidential Disclosure Agreement
                    Exhibit D - HP e-fulfillment Specifications and Software
                                Components License Terms

17.  SUBCONTRACTORS. VS Supplier will not subcontract any of the Services to
     other persons or entities without the prior written approval of HP. All
     obligations imposed upon VS Supplier will be similarly imposed by VS
     Supplier upon any authorized Subcontractor. VS Supplier's execution of any
     subcontracts, including subcontracts approved by HP, will not relieve,
     waive or diminish any obligation VS Supplier may have to HP under this
     Services Agreement. Fees for subcontracted Services will be included in the
     fees and costs billed by VS Supplier according to Exhibit A, Section 11
     below.

18.  RECORDS. VS Supplier will maintain books, records, documents and other
     evidence pertaining to costs, charges, fees, and other expenses to the
     extent and in such detail as will properly evidence all costs for labor,
     materials, equipment, supplies, and services, and other costs and expenses
     of whatever nature for which reimbursement is claimed under the provisions
     of this Services Agreement. HP may examine or audit all books, documents,
     papers, or records of VS Supplier pertaining to the Services at all
     reasonable times during the term of this Services Agreement; and VS
     Supplier will safeguard and make them available to HP for inspection for a
     period of up to four (4) years following the completion of termination of
     this Services Agreement.

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IN WITNESS WHEREOF, this Services Agreement has been entered into as of
September 01, 2001 (Effective Date).

HEWLETT-PACKARD COMPANY                              PINNACLE DATA SYSTEMS, INC.

Date:                                                Date:
By: _______________________________                  By: _______________________
Printed Name: Bruno Pillet                           Printed Name: Bob Hahn
Title:  HP Customer Support General Manager          Title:  Vice President/COO

HEWLETT-PACKARD COMPANY

Date:
By: _______________________________
Printed Name:     William Shadle
Title: Sourcing Development Manager

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                                    EXHIBIT A

                  Virtual Sourcing Specific Business Conditions

1.     PRICE SETTING.
       -------------
1.1    At random, Hewlett-Packard shall monitor program part numbers to ensure
       VS Supplier is providing "fair market" value. Exhibit B provides the Unit
       Cost for each part to be provided under the terms of this Agreement.
1.2    Hewlett-Packard and VS Supplier agree to review and or adjust pricing as
       appropriate within the terms in the Statement of Work. Pricing changes
       will not be effective until documented in writing with authorized
       signatures from both parties.

2.     HP CARRIER FREIGHT AUTHORIZATION.
       --------------------------------

2.1    Hewlett-Packard will establish exclusive "carrier freight" accounts for
       use by VS Supplier.
2.2    VS Supplier shall use these exclusive accounts for the purpose of
       shipping ONLY to Hewlett-Packard customers whose orders were received
       "electronically".

       2.2.1   HP Carrier Specification:
               ------------------------

               2.2.1.1. As mentioned in 2.2 above, VS Supplier shall use the
                        specific HP approved carriers and shall use only the
                        specific account numbers assigned by HP to VS Supplier.
               2.2.1.2. VS Supplier shall use the HP routing guide and approved
                        logistics process to ship HP Product.
               2.2.1.3. Exception: "First Flight Customer Orders." VS Supplier
                        shall use the HP designated carrier for shipment of
                        First Flight Customer Orders.
2.3    Individual Packaging. All products shipped by VS Supplier to HP customers
       shall be packaged in individual packaging ("single-pack"), and shall be
       in accordance with HP packaging standards contained in Packaging Standard
       Requirements for HP Support Hardware document number A-5961-4800-1.
       Individual box labeling shall include the following information, at a
       minimum: HP's Replacement/Exchange Part Number, Part Description, Part
       Revision, Part Serial Number, Unit of Measure, and Country of Origin.
2.4    Bar Coding requirements. All HP Products shipped by VS Supplier to HP
       customers shall be in accordance with the 3 of 9 Bar Coding accepted as
       industry standard and the VS Supplier Handbook.

3.     CUSTOMER ORDER FULLFILLMENT.
       ---------------------------

3.1    VS Supplier shall ship directly to the customer all electronically
       received HP customer orders on the day received. This includes all
       Hotline and Standard customer orders.
3.2    VS Supplier must exceed a monthly success rate of 98% in fulfilling all
       orders based upon the shipment cutoff times set forth in Attachment A-1.
3.3    If less than 100% of orders are fulfilled as described in Section 3.2 due
       to fault on the part of VS Supplier, HP shall be reimbursed by VS
       Supplier for all additional costs incurred by HP.
3.4    Corrective Action Process: In addition, in the event order fulfillment
       fails to meet the 100% requirement for 3 consecutive work days, VS
       Supplier must submit a one page summary corrective action plan along with
       associated root cause analysis in writing to HP within 24 hours of the
       third missed transaction day.
3.5    Shipping Errors: In the event an HP Customer submits a shipment
       discrepancy claim, HP and VS Supplier will mutually resolve the claim
       using one of the following remedies:

       3.5.1  Customer claims product was not received. Remedy: HP will submit
              another order for the item. HP and VS Supplier will review the
              issue. If VS Supplier is at fault, VS Supplier will issue credit
              for the original order.
       3.5.2  Customer claims wrong part received. Remedy: HP will issue a new
              order. Customer will send incorrect part to HP Roseville. HP will
              contact VS Supplier regarding return of item and credit. Wrong
              part will be returned to VS Supplier for credit.
       3.5.3  Customer claims the wrong quantity was received. Remedy too few:
              HP will submit another order for the quantity short. VS Supplier
              will ship the order at no charge or issue a credit for the same
              quantity. Remedy too many: Customer to return excess items to HP.
              HP will contact VS Supplier regarding return authorization and VS
              Supplier will issue a credit if necessary.
       3.5.4  Customer claims incomplete part received (i.e. missing item in
              kit). Remedy: HP will issue a new order. Customer will return
              incomplete part to HP.  HP and VS Supplier will review, VS
              Supplier will send missing item(s) to HP at no charge to HP.
       3.5.5  Customer claims that a part was damaged upon receipt. Remedy: HP
              will submit a new order. Customer will return damaged part to HP.
              HP and VS Supplier will review the damage, if VS Supplier is
              responsible, credit will be issued.

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       3.5.6  Customer wishes to return or reject receipt of order. Remedy:
              Customer will return product to HP. HP will place Product in
              inventory. No VS Supplier action required.

4.     NOTICES.
       -------

4.1    All notices will be directed to the following:

       If to Hewlett-Packard Company:       If to Pinnacle Data Systems, Inc.
       Attn: Ryan Donovan                   Attn:  Bob Hahn
       Account Manager                      Vice President Service
       8000 Foothills Blvd.                 6600 Port Road
       Roseville, CA  95747                 Groveport, Ohio 43125
       Phone:  (916) 785-9098               Phone: 614/748-1150
       Fax:  (916)                          Fax:  614/748-1209
       e-mail:                              e-mail:

4.2    The HP Account Manager will coordinate the distribution of all notices
       received from VS Supplier to the appropriate HP department/entity.

5.     PROGRAM COVERAGE AVAILABILITY.
       -----------------------------

5.1    VS Supplier shall make available (a) Systems and (b) Staffing to ensure
       Program coverage of 7x24x365 (7 Days by 24 Hours by 365 Calendar Days
       Per Year).

6.     DISASTER RECOVERY.
       -----------------

6.1    Hewlett-Packard and VS Supplier have documented appropriate disaster
       recovery plans (DRP) to assure the non-interruption of customer order
       fulfillment. The aforementioned plans will comply with the HP VS Supplier
       Handbook supplied by HP.

7.     PERFORMANCE REPORTING.
       ---------------------

7.1    Hewlett-Packard will measure the program performance of VS Supplier and
       report results on a daily basis.
7.2    HP will perform an semiannual business review of VS Supplier.
7.3    VS Supplier will assign a VS Program Lead and the VS Program Lead shall
       be identified in an HP approved Escalation Matrix. The HP account
       manager will perform a review of VS Suppliers' delivery metric
       compliance on a monthly basis.

8.     QUALITY AUDITS.
       --------------

8.1    VS Supplier shall provide access to Hewlett-Packard for the purpose of
       on-site/ process inspection audits.

9.     WARRANTY TRACKING.
       -----------------

9.1    VS Supplier shall track product/part warranty, issue credit and report
       on a monthly basis to Hewlett-Packard as appropriate.

10.    ACTIVITY REPORTING.
       -------------------

10.1   VS Supplier shall submit a daily Activity Report to Hewlett-Packard.
       Each Report must include the following:
       10.1.1   Customer Order Number,
       10.1.2   Hewlett-Packard Part Number,
       10.1.3   Description,
       10.1.4   Quantity Shipped,
       10.1.5   Unit of Measure,
       10.1.6   Date Shipped,
       10.1.7   Ship Confirmation ID
       10.1.8   Price

10.2   Each Daily Activity Report must have a month-to-date cumulative summary
       section by part number of quantity shipped.
10.3   Activity Reports are to be electronically submitted or mailed to:
              Hewlett-Packard
              Attn: Ryan Donovan

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              8000 Foothills Blvd.
              M/S 5781
              Roseville, CA  95747

11.    TRANSACTIONAL BILLING.
       ---------------------

11.1   Orders Electronically Received. HP will invoice the HP Financial
       Operations electronically on behalf of the VS Supplier. If VS Supplier
       has invoicing reconciliation issues, VS Supplier shall contact the HP
       account manager and supply the following data. The data required includes
       and is not limited to:

       11.1.1   Customer Order Number,
       11.1.2   Ship Confirmation ID,
       11.1.3   Hewlett-Packard Part Number,
       11.1.4   Description,
       11.1.5   Quantity Shipped,
       11.1.6   Unit of Measure,
       11.1.7   Date Shipped,
       11.1.8   Price

11.3   Any credits issued for missed shipments should be identified by customer
       order number and listed in a separate monthly invoice and sent to the
       following address:
                Hewlett-Packard Company
                Financial Operations
                PO Box 2810
                Colorado Springs, Colorado  80901-2810

12.    OWNERSHIP OF HP PRODUCTS.
       ------------------------

12.1   Pursuant to this Agreement, VS Supplier will receive HP Products (whether
       considered functional, non-functional or defective) returned by HP and/or
       HP customer sites. All such HP Products shall be owned by HP and
       consigned to VS Supplier unless and until VS Supplier purchases the HP
       Product from HP as more specifically set forth in the applicable
       Statement of Work.

12.2   With respect to all such HP Products owned by HP and consigned to VS
       Supplier (the Consigned Goods), VS Supplier hereby grants to HP its power
       of attorney to file a UCC-1 Financing statement or similar notice
       describing the Consigned Goods or HP Products and the proceeds thereof,
       wherever HP deems appropriate to provide notice to other parties that the
       Consigned Goods are not property of VS Supplier. Should this Agreement or
       the transactions under this Agreement be deemed for any reason to pass
       ownership of the Consigned Goods to VS Supplier, VS Supplier agrees that
       HP shall be deemed to hold, and VS Supplier hereby grants to HP, a
       purchase money security interest in the Consigned Goods, and the proceeds
       thereof including without limitation the cash and checks described above,
       to secure all of its obligations to HP including without limitation
       obligations under this Agreement.

13.    HP PRODUCT DISPOSITION.
       ----------------------

13.1   VS Supplier shall confirm receipt of all defective or non-conforming
       returns via the Web Return Tool. See the VS Supplier Handbook for
       additional information regarding the Web Return Tool.

       13.1.1   VS Supplier shall provide additional information via the Web
                Return Tool. Additional information required includes and is not
                limited to:

                13.1.1.1   Condition:  Good or Bad
                13.1.1.2   Quantity received
                13.1.1.3   Transaction ID/RMA Number
                13.1.1.4   Date assembly returned

13.2   VS Supplier shall maintain inventory accuracy and report the results upon
       HP's request.
13.3   VS Supplier shall keep Defectives separate from finished goods inventory
       and clearly marked as such.
13.4   Both Scrap quantities and disposition channel of all material, (FGI, HP
       proprietary components, defective returns, and F-code inventory) will be
       subject to prior HP approval.

                                    Page 8

<PAGE>

14.    HANDBOOK.
       --------

14.1   VS Supplier will comply with all instructions as stated in the Virtual
       Sourcing Supplier's Handbook provided by HP.

                                    Page 9

<PAGE>

                                   EXHIBIT A-I

                     VS Supplier Order Fulfillment Criteria

       1.   VS Supplier must exceed a monthly success rate of 98% in fulfilling
            all orders based upon the shipment cutoff times set forth in the
            following.
                1.1. If a domestic hotline customer order is received by VS
                Supplier by 4:00 PM PST, then shipment must be completed and
                made available for picked up by the carrier no later than
                midnight the same day. The shipment must also be delivered to
                the customer no later than 10:30 am customer's local time the
                next day.

                1.2. If a domestic standard customer order is received by VS
                Supplier by 4:00 PM PST, then shipment must be completed and
                made available for picked up by the carrier no later than twenty
                four (24) hours after the order was received.

                1.3. If an international hotline or international standard
                customer order is received by VS Supplier by 12:30 PM PST, then
                shipment must be completed and made available for picked up by
                the carrier no later than midnight the same day.

                1.4. First Flight, Four (4) Hour Special, After Hours, and/or
                other Expedited Shipments must be completed and made available
                for pick up by the carrier no later than midnight PST the same
                day regardless of what time VS Supplier receives the customer
                order.

                1.5. Supplier shall make reasonable efforts to ensure that
                International shipments received before 12:30 PM PST are
                consolidated prior to shipment. Refer to the VS Supplier
                Handbook for detail on how to implement.

       2.   VS Supplier must meet or exceed the following order fulfillment
            requirements.

                2.1. 98% of all orders received will ship within 24 hours of
                receipt by PDS from HP's VS order systems.

                2.2. 99% of all orders received will ship within 48 hours of
                receipt by PDS from HP's VS order systems.

                2.3. 100% of all orders received will ship within 72 hours of
                receipt by PDS from HP's VS order systems.

                     2.3.1. Inability to fulfill orders within 72 hours will
                     require corrective actions as specified in 3.4 of Exhibit A

                                    Page 10

<PAGE>

         2

                                    EXHIBIT B
                               Parts/Pricing List

         Part Number       Description           Lead Time                Price
         -----------       -----------           ---------                -----

                                    Page 11

<PAGE>

                                    EXHIBIT C
                        CONFIDENTIAL DISCLOSURE AGREEMENT

In order to protect certain confidential information, HP and Pinnacle Data
Systems, Inc. agree to the following:

1. Definitions.  A Discloser is a party disclosing confidential information.
   ------------
A Recipient is a party receiving disclosed confidential information.  An
Associate is a subsidiary, parent or corporate affiliate of Recipient, or a
third party contractually bound to Recipient in accord with this Agreement.

2. Agreement Coordinator.  Each party designates the following person, if any,
   ----------------------
as its Agreement Coordinator for coordinating the disclosure or receipt of
confidential information:
HP:  Ryan Donovan     phone:   (916) 785-9098
Pinnacle: Bob Hahn phone:   (614) 748-1150

3. HP Confidential Information.
   ----------------------------
(a) Confidential information, if any, disclosed by HP to Participant is
described as: Any and all program specific information and programming code
related to Virtual Sourcing and Virtual Hub e-Fulfillment Program without the
express permission of an HP General Manager and HP-GSL Virtual Sourcing
e-Fulfillment Program Manager. This includes but is not limited to any Virtual
Sourcing specific information related to pricing, freight account information,
customer base, information technology integration and any and all information
regarding shipment profile.

(b) and may be used by the Recipient and its Associates, if any, only for the
following purpose and subject to the obligations under Section 5: To fulfill HP
Virtual Sourcing e-Fulfillment Program requirements.

4. Pinnacle Data Systems Confidential Information.
   -----------------------------------------------
(a) Confidential information, if any, disclosed by Pinnacle to HP is described
as: Information related to ERP system integration, inventory management and
distribution processes, procedures and reports; customer order fulfillment
processes, procedures, and reports; and pricing-related information specific to
parts or products placed on Virtual Sourcing Program.

(b) and may be used by the Recipient and its Associates, if any, only for the
following purpose and subject to the obligations under Section 5: To fulfill
service requirements of this Agreement.

5. Recipient's Obligations.
   ------------------------
(a) Recipient will protect, and will ensure its participating Associates will
protect, the disclosed confidential information by using the same degree of
care, but no less than a reasonable degree of care, to prevent the unauthorized
use, dissemination or publication of the confidential information as Recipient
uses to protect its own confidential information of a like nature. Recipient may
reassign its employees. Recipient will provide reasonable prior notice to
Discloser if Recipient is required to disclose the confidential information
under operation of law.
(b) Recipient will comply with all applicable export laws.

6. Disclosure and Protection Periods. The Disclosure Period starts on the
   ----------------------------------
Begin Disclosure Date. Recipient's obligations under Section 5(a) only apply to
confidential information disclosed during the Disclosure Period. Recipient's
obligations under Section 5(a) stop at the end of the Protection Period. The
Disclosure Period will be one month, and the Protection Period will be one year,
if not specified below.
The Begin Disclosure Date is:  September 01, 2001

The Disclosure Period ends on the following date or at the end of the following
time period: August 31, 2002, renewable by HP for additional one year periods.

The Protection Period ends on August 31, 2007.

7. Marking. Recipient's obligations under this Agreement extend only to
   --------
confidential information that is
(a) itemized in Section 3(a) or 4(a); or
(b) both described generally in Section 3(a) or 4(a) and
(i) marked at the time of disclosure to show its confidential nature, or
(ii) unmarked (for example, orally or visually disclosed) but treated as
confidential at the time of disclosure, and designated as confidential in a
written message sent to Recipient's Agreement Coordinator within thirty days
after disclosure, summarizing the disclosed confidential information
sufficiently for identification.

8. Exclusions. This Agreement imposes no obligation upon Recipient with
   -----------
respect to information that (a) was in Recipient's possession before receipt
from Discloser, (b) is or becomes publicly known without breach by Recipient,
(c) is rightfully received by Recipient from a third party without a duty of
confidentiality, (d) is disclosed by Discloser to a third party without a duty
of confidentially on the third party, (e) is independently developed or learned
by Recipient or (f) is disclosed by Recipient with Discloser's prior written
approval.

9. Choice of Law. Without regard to choice of law provisions, this Agreement
   --------------
is governed by and will be construed in accordance with the laws of the State of
California and the USA.

10. Warranty. Each Discloser warrants that it has the right to make the
    ---------
disclosures under this Agreement. Each Recipient warrants that its participating
Associates will protect disclosed confidential information in accordance with
the terms of this Agreement. NO OTHER WARRANTIES ARE MADE BY EITHER PARTY UNDER
THIS AGREEMENT. ANY CONFIDENTIAL INFORMATION DISCLOSED UNDER THIS AGREEMENT IS
PROVIDED "AS IS."

11. Miscellaneous. This Agreement imposes no obligation on either party to
    --------------
purchase, sell, license, transfer or otherwise dispose of any technology,
services or products. This Agreement does not create any agency or partnership
relationship. Both parties shall adhere to all applicable laws, regulations and
rules relating to the export of technical data, and shall not export or reexport
any technical data, any products received from Discloser, or the direct product
of such technical data to any proscribed country listed in such applicable laws,
regulations and rules unless properly authorized. All additions or modifications
to this Agreement must be made in writing and must be signed by both parties.

The undersigned acknowledges on behalf of HP and Pinnacle Data Systems, Inc.
that the terms and conditions included in this agreement shall be applicable
both party's employees, agents, and subcontractors.

                                    Page 12

<PAGE>

<TABLE>
<S>                                                         <C>
                              HP                                            PINNACLE DATA SYSTEMS, INC.
HEWLETT-PACKARD COMPANY  Global Support Logistics           PINNACLE DATA SYSTEMS
-------------------------------------------------------     --------------------------------------------------------
(Company Name)                                              (Company Name)
8000 Foothills Blvd.                                        6600 Port Road
-------------------------------------------------------     --------------------------------------------------------
(Address)                                                   (Address)
Roseville, California  95747                                Groveport, OH 43125
-------------------------------------------------------     --------------------------------------------------------
(Address)                                                   (Address)
By ____________________________________________________     By _____________________________________________________
(Functional Manager's Signature)                            (Authorized Signature)
William Shadle                                              Bob Hahn
-------------------------------------------------------     --------------------------------------------------------
(Name)                                                      (Name)
Sourcing Development Manager           C200                 Vice President/COO
-------------------------------------------------------     --------------------------------------------------------
(Title)                               (Entity)              (Title)
</TABLE>

                                    Page 13

<PAGE>

                                    EXHIBIT D

      HP e-FULFILLMENT SPECIFICATIONS AND SOFTWARE COMPONENTS LICENSE TERMS

The following License Terms govern Pinnacle Data Systems, Inc.'s (PDS) use of
the HP e-Fulfillment Specifications and Software Components:

1.0  License Grant. HP grants PDS a license to Use the e-Fulfillment
     -------------
     Specifications and Software Components solely for the purpose of
     implementing the HP/PDS Direct Connect VS Supplier Agreement #C2-607 dated
     September 01, 2001, and for no other purpose. "Use" means configuring,
     storing, loading, installing, executing or displaying the e-Fulfillment
     Specifications and Software Components. PDS may not modify the
     e-Fulfillment Specifications and Software Components or disable any
     licensing or control features of the e-Fulfillment Specifications and
     Software Components.

2.0  Ownership. The e-Fulfillment Specifications and Software Components are
     ---------
     owned and copyrighted by HP or its third party suppliers. PDS's license
     confers no title or ownership and is not a sale of any rights in the
     e-Fulfillment Specifications and Software Components, their documentation
     or the media on which they are recorded or printed. Third party suppliers
     may protect their rights in the e-Fulfillment Specifications and Software
     Components in the event of any infringement.

3.0  Copies and Adaptations. PDS may only make copies or adaptations of the
     ----------------------
     e-Fulfillment Specifications and Software Components for archival purposes
     or when copying or adaptation is an essential step in the authorized Use of
     the e-Fulfillment Specifications and Software Components on a backup
     product, provided that copies and adaptations are used in no other manner
     and provided further that Use on the backup product is discontinued when
     the original or replacement product becomes operable. PDS must reproduce
     all copyright notices in the original e-Fulfillment Specifications and
     Software Components on all copies or adaptations. PDS may not copy the
     e-Fulfillment Specifications and Software Components onto any public or
     distributed network.

4.0  No Disassembly or Decryption. PDS may not disassemble or decompile the
     ----------------------------
     e-Fulfillment Specifications and Software Components without HP's prior
     written consent. Where PDS has other rights under statute, PDS will provide
     HP with reasonably detailed information regarding any intended disassembly
     or decompilation. PDS may not decrypt the e-Fulfillment Specifications and
     Software Components unless necessary for the legitimate use of the
     e-Fulfillment Specifications and Software Components.

5.0  Transfer. PDS's license will automatically terminate upon any transfer of
     --------
     the e-Fulfillment Specifications and/or Software Components. Upon transfer,
     PDS must deliver the e-Fulfillment Specifications and Software Components,
     including any copies and related documentation, to the transferee. The
     transferee must accept these License Terms as a condition to the transfer.

6.0  Term and Termination. PDS's license shall run concurrently with the term of
     --------------------
     the VS Supplier Agreement to which it is appended. Notwithstanding the
     foregoing, HP may terminate PDS's license upon notice for failure to comply
     with any of these License Terms or for any reason whatsoever. Upon
     termination, PDS must immediately destroy the e-Fulfillment Specifications
     and Software Components, together with all copies, adaptations and merged
     portions in any form, and certify such destruction to HP.

7.0  Warranty. The e-Fulfillment Specifications and Software Components are
     --------
     provided AS-IS, and HP makes no warranties with regard to their performance
     or suitability for a particular purpose.

8.0  Export  Requirements.  PDS may not export or re-export the e-Fulfillment
     --------------------
     Specifications and Software Components or any copy or adaptation in
     violation of any applicable laws or regulations.

9.0  U.S. Government Restricted Rights. The e-Fulfillment Specifications and
     ---------------------------------
     Software Components and any accompanying documentation have been developed
     entirely at private expense. They are delivered and licensed as "commercial
     computer software" as defined in DFARS 252.227-7013 (Oct 1988), DFARS
     252.211-7015 (May 1991) or DFARS 252.227-7014 (Jun 1995), as a "commercial
     item" as defined in FAR 2.101(a), or as "Restricted computer software" as
     defined in FAR 52.227-19 (Jun 1987)(or any equivalent agency regulation or
     contract clause), whichever is applicable. PDS has only those rights
     provided for such e-Fulfillment Specifications and Software Components and
     any accompanying documentation by the applicable FAR or DFARS clause.

                                    Page 14<PAGE>

                                  EXHIBIT 10(o)

                              EMPLOYMENT AGREEMENT

     This Employment Agreement is made as of September 1, 2001, at Groveport,
Ohio, between Pinnacle Data systems, Inc., an Ohio corporation (the "Company"),
and C. Robert Hahn (the "Employee"), who hereby agree as follows:

     [sect]1.     Employment.  The Company hereby renews and continues the
                  ----------
Employee's employment, and the Employee hereby accepts such employment renewal
and continuation by the company, on the terms and subject to the conditions set
forth in this agreement.

     [sect]2.     Term of Employment.  The term of this Employee's employment as
                  ------------------
renewed pursuant to this agreement shall begin as of the date of this agreement
and shall terminate, unless sooner terminated in accordance with the provisions
of [sect]6, below, on September 1, 2003. The term of employment under this
Agreement shall be automatically extended for successive one (1) year periods
commencing on each September 1 each year 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 then current
term.

     [sect]3.     Services.  The Employee shall be employed as Vice President of
                  --------
the Service Group, and will 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
and such other duties as may be assigned to him from time to time by the
Company, acting by and through its Chief Executive Officer ("CEO") or its Board
of Directors. The Employee shall report to the Company's CEO and President.

     [sect]4.     Compensation.  During the term of his employment  pursuant to
                  ------------
this agreement, the Employee shall be entitled to receive the following
compensation:

                  (a)     Salary.  An annual base salary of $125,000 (one
                          ------
         hundred twenty-five thousand) per year.

                  (b)     Bonus. An incentive cash bonus equal to a percentage
                          -----
         of the pre-tax net income of the company (or based upon other factors
         deemed appropriate by the CEO and President) for each fiscal year
         ending 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 CEO and President or
         the Board or Directors or its Compensation Committee no later than
         March of that year.

                                      -1-

<PAGE>

                  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 this agreement, the Employee shall be entitled to the following fringe
benefits:

                  (a)     Vacation.  Employee is entitled to 20 days of Paid
                          --------
     Time Off ("PTO"). PTO will be taken pursuant to the Company's PTO policy as
     amended or changed from time to time.

                  (b)     Disability Payments.  If at any time during the term
                          -------------------
     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 Employer. 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.

                  (c)     Executive Development.  The Employee shall be required
                          ---------------------
     to 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.

                  (d)     Other Fringe Benefits.  The Employee shall be 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.

                                      -2-

<PAGE>

     [sect]6.     Termination of Employment.  Notwithstanding the 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 base salary or other 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 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, conflict of interest, willful insubordination, or
     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 from the Company, in a lump sum, in an amount
     equal to one year's base salary.

                                      -3-

<PAGE>

                  (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 disability policy of the Company, if any, and due
     to him pursuant to [sect]5(b). For purposes of this agreement, the term
     "long-term disability" shall have the same meaning as set forth in
     [sect]5(b) and employment may be terminated as provided in [sect]5(b).

     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][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.

                                      -4-

<PAGE>

     [sect]7.     Noncompetition; Nondisclosure; Ownership of Developments.  In
                  --------------------------------------------------------
consideration of the substantial increase in base salary and other benefits
provided to the Employee, the Company and the Employee agree as follows:

                  (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
                  similar to 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.

                  (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:

                          (i)     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):

                          (ii)    Solicit any of the Company's employees to
                  leave the employ of the Company; or

                                      -5-

<PAGE>

                          (iii)   Seek to employ any of the Company's employees
                  (other than on behalf of the Company).

                  (c)     All inventions, discoveries, concepts, improvements,
     formulas, processes, devices, methods, innovations, designs, ideas, and
     product developments (collectively, the "Developments") developed or
     conceived by the 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

                                      -6-

<PAGE>

     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 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
                  -------
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

                                      -7-

<PAGE>

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 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____________________________________
C. ROBERT HAHN                              John D. Bair, President and
                                            Chief Executive Officer

Address:     5765 Lee High Circle        Address:    6600 Port Road, Suite 100
             Nashport, OH 43830                      Groveport, OH 43125

                                      -8-

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