UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): FEBRUARY 22, 2000
PINNACLE BUSINESS MANAGEMENT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA
(STATE OR OTHER JURISDICTION OF INCORPORATION)
0-27171 91-1871963
(COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NO.)
2963 Gulf to Bay Boulevard, Suite 265, Clearwater, FL 33759
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(813) 669-7781
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
MAS ACQUISITION XIX CORP.
1710 E. DIVISION ST.
EVANSVILLE, IN 47711
(812) 479-7226
(FORMER NAME, ADDRESS AND TELEPHONE NUMBER)
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Pursuant to a Stock Exchange Agreement (the "Exchange Agreement") dated
as of March 3, 2000 between MRC Legal Services Corporation, a California
Corporation, which entity is the controlling shareholder of MAS Acquisition
XIX Corp. ("MAS XIX"), an Indiana corporation, and Pinnacle Business Management,
Inc., a Nevada corporation ("Pinnacle" or the "Company"), approximately 96.8%
(8,250,000 shares) of the outstanding shares of common stock of MAS Acquisition
XIX Corp. were exchanged for 1,500,000 shares of common stock of Pinnacle
in a transaction in which Pinnacle became the parent corporation of MAS
XIX.
The Exchange Agreement was adopted by the unanimous consent of the Board of
Directors of MAS XIX on March 3, 2000. The Exchange Agreement was adopted
by the unanimous consent of the Board of Directors of Pinnacle on March 3,
2000. No approval of the shareholders of Pinnacle or MAS XIX is required
under applicable state corporate law.
Prior to the merger, MAS XIX had 8,519,800 shares of common stock
outstanding of which 8,250,000 shares were exchanged for 1,500,000 shares
of common stock of Pinnacle. By virtue of the exchange, Pinnacle acquired
96.8% of the issued and outstanding common stock of MAS XIX. Certain
consultants were issued an additional 1,500,000 shares pursuant to a Consulting
Agreement.
Prior to the effectiveness of the Exchange Agreement, effective on
February 1, 2000, Pinnacle had an aggregate of 151,962,686 shares of common
stock, par value $0.001, issued and outstanding.
Upon effectiveness of the acquisition, Pinnacle had an aggregate of
153,462,686 shares of common stock outstanding.
The officers of Pinnacle continue as officers of Pinnacle subsequent
to the Exchange Agreement. See "Management" below. The officers, directors,
and by-laws of Pinnacle will continue without change.
A copy of the Exchange Agreement is attached hereto as an exhibit. The
foregoing description is modified by such reference.
(b) The following table sets forth certain information regarding
beneficial ownership of the common stock as of February 1, 2000 (prior to the
issuance of 1,500,000 shares pursuant to the Exchange Agreement and 1,500,000
shares pursuant to the Consulting Agreement) by each individual who is known
to the Company, as of the date of this filing, to be the beneficial owner
of more than five percent of any class of Pinnacle's voting securities. Since
Messrs. Hall and Turino are the Directors and Executive Officers of theCompany,
the
<PAGE>
following table shows each class of equity securities of Pinnacle and its
subsidiaries owned by all directors and officers of Pinnacle, as of February 1,
2000 as well.
<TABLE>
<CAPTION>
Title of Class Name and Address of Amount and Nature of Percent of Class
Beneficial Owner Beneficial Ownership
- --------------- --------------------- ---------------------- ----------------
<S> <C> <C> <C>
Common Stock . Michael Bruce Hall 38,941,585 shares 25.6%
held by the Michael
Bruce Hall Family
Partnership
- --------------- --------------------- ---------------------- ----------------
Common Stock . Jeff Turino 38,941,585 shares 25.6%
held by the Katherine
Burney Family
Limited Partnership
- --------------- --------------------- ---------------------- ----------------
Common Stock . Officers and Directors 77,883,170 shares 51.2%
as a Group
- --------------- --------------------- ---------------------- ----------------
<FN>
(1) Includes 55,000,000 shares issued to the officers as consideration for
an Agreement and Release signed February 28, 2000 by the Company, Jeff Turino
and Bruce Hall. The Agreement and Release releases any claims to back
compensation, bonus amounts and stock options arising before January 1, 2000
under the terms of the employment agreements signed in 1997. Other provisions of
the employment agreements still apply.
</TABLE>
There are no agreements between or among any of the shareholders which
would restrict the issuance of shares in a manner that would cause any
change of control of Pinnacle. There are no voting trusts, pooling
arrangements or similar agreements in place between or among any of the
shareholders, nor do the shareholders anticipate the implementation of such
an agreement in the near term.
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) The consideration exchanged pursuant to the Exchange Agreement
was negotiated between representatives of the shareholders of MAS XIX
and the management of Pinnacle.
In evaluating Pinnacle as a candidate for the proposed acquisition,
MAS XIX used criteria such as the value of the assets of Pinnacle, its
present stock price as set forth on the over-the-counter bulletin board, its
internet business and other anticipated operations, and Pinnacle's business
name and reputation. The shareholders of MAS XIX determined that the
consideration for the merger was reasonable.
(b) Pinnacle intends to continue its historical businesses and proposed
businesses as set forth more fully immediately below.
Description of Business.
Pinnacle Business Management Inc. ("Pinnacle" or the "Company") is a
holding company with two subsidiaries actively engaged in consumer lending and
deferred deposit services. Pinnacle is a Nevada corporation chartered in May
1997.
Originally, Pinnacle was a wholly-owned subsidiary of 300365 BC, Ltd. d/b/a
Peakers Resources Company, a Canadian corporation (the "Predecessor").The
Predecessor was organized in 1986 to conduct mining operations, but never
actively engaged in business. On May 15, 1997, the shareholders of the
Predecessor agreed to exchange all the shares of the Predecessor with the shares
of the Company on a share-for-share basis. The Predecessor became inactive and
its business was wound up. United States residents now own the majority of
Pinnacle's shares.
In 1997, Pinnacle acquired Fast Title Loans, Inc.("Fast Title"). It did so
by forming JTBH Corporation, a wholly owned subsidiary, which merged with Fast
Title on a share for share basis. Fast Title was the surviving entity and is
now a wholly owned subsidiary of Pinnacle.
Fast Title is a consumer lender chartered in Florida in April, 1996. It
makes relatively short term loans on the basis of a security interest in vehicle
titles.
In 1998, Pinnacle formed Fast PayCheck Advance of Florida, Inc.("Fast
PayCheck"), also a wholly owned subsidiary. Fast PayCheck is a Florida
corporation. Fast Paycheck offers deferred deposit services to individual
customers who find it difficult to obtain credit.
In 1998, Pinnacle formed Summit Property, Inc. ("Summit Property") a
Florida corporation. Summit Property is inactive.
BUSINESS OF THE ISSUER
Pinnacle is a Company in transition. In the past, Fast Title, its consumer
lending subsidiary, has generated all of its revenues. Fast Title lends money
short-term, secured by the borrower's vehicle title. Certain local ordinances
recently enacted create a hostile environment for the title loan business. As a
<PAGE>
result, the Company plans to discontinue its efforts to expand the Fast Title
business. It plans, instead, to concentrate on the Fast PayCheck business and
its potential for growth.
Fast PayCheck offers payday deferred deposit services to individuals. The
maximum amount of a deferred deposit is $500. The Company has recently signed an
agreement to offer Fast PayCheck services through Mail Boxes Etc. USA, Inc.
stores ("MBE Agreement"). Management is very optimistic about the potential for
growth in this business endeavor. Operations are expected to render a yield to
the Company, which should grow conservatively for several years into the future.
Mail Boxes Etc. USA, Inc. ("MBE") has over 3000 locations in the United States.
Locating in even a fraction of these stores could greatly expand the business of
Fast PayCheck.
Illustrated below is an estimate of the percentage of total revenue
contributed to Pinnacle by Fast Title operations compared to Fast PayCheck
operations;
<TABLE>
<CAPTION>
<C> <S> <C> <C>
1997 Fast title = 100% Fast PayCheck = 0%
1998 Fast title = 99% Fast PayCheck = 1%
1999 Fast title = 95% Fast PayCheck = 5%
</TABLE>
In 1999, the Company has spent approximately $100,000 on new proprietary
software to process its payday deferred deposit operations. This system also
services the title loan business; it accepts and processes all information
necessary for Pinnacle' s bookkeeping system.
These costs are incurred at the same time the cash flow from Fast Title is
decreasing. Management believes that any negative impact on revenues will be
temporary. Net income should increase as the new operations begin generating
revenues.
Fast Title
- -----------
Fast Title loans money on motor vehicle titles. It markets loans to
individuals and businesses with poor or non-existent credit. Fast Title
provides fast access to short-term cash loans. Borrowers pledge the title of
their vehicle as collateral. The Company will not accept a vehicle as
collateral unless there are no other outstanding liens on the vehicle. No
credit checks on the individual are required. The individual generally retains
the use of his vehicle during the loan period.
Loan amounts are generally less than 40% of the blue book value of the
collateral. The maximum interest rate is 22% per month, the maximum allowed by
Florida law. The average net yield to the Company is 12%. The average loan is
$500.00. The average term of a loan is four months, but the term may extend to
a year. In Florida, the law provides that a creditor may keep any surplus
realized from the repossession and the sale of the vehicle. Fast Title,
however, does not repossess vehicles on a regular basis. It is the policy of the
<PAGE>
Company to repossess only if there is no activity on the account for 60 days,
and only after efforts are made to secure repayment of the loan. In 1999, Fast
Title netted approximately $1,200 from the sales of repossessed vehicles.
Fast Title recently consolidated its eight store front locations, and now
markets its services through six store locations, telephone solicitation and
newspaper and Yellow Pages advertisements. Management plans to keep the six
store locations open but does not intend to open any more stores. Fast Title
holds a consumer-lending license from the State of Florida pursuant to Florida
Statutes Chapter 538. This license requires Pinnacle to register and pay a fee
for each location. Pinnacle is subject to the pawn broker laws of Florida.
Fast Title Competition
Fast Title's primary competitor is Florida Title Loans, Inc.("Florida
Title"). Florida Title has 300 locations in the Southeast and has a long
operating history. Florida Title has a loan to value ratio of 33% of the
wholesale value of the collateral. Fast Title has a loan to value ratio of up
to 50% of the wholesale value of the collateral. Fast Title therefore competes
with the larger distribution base by attracting a wider market.
Fast Title's second major competitor is Speedy Cash. Speedy Cash has
approximately 200 locations. Speedy Cash is located in the states of Florida,
Georgia, Mississippi, South Carolina and North Carolina. Management believes
that it effectively competes with Speedy Cash. The presence of these competitor
companies is favorable for Fast Title. These companies advertise heavily. This
publicity educates consumers about the title loan method of borrowing cash.
Fast Title to some extent experiences the same seasonal fluctuations that any
consumer lending facility would experience. It may experience a slight increase
in business during the Christmas season, for example. It is not, however,
considered a seasonal business. Any such fluctuations are relatively minor and
are not considered by Management in the overall planning and budgeting for the
Company.
Fast PayCheck
- --------------
Fast PayCheck offers deferred deposit services to individuals with poor or
non-existent credit or who need short-term financing. Fast PayCheck provides
fast access to short-term cash. Customers complete an application. If accepted,
the customer writes a post-dated personal check to Fast PayCheck. Fast PayCheck
then issues the customer a debit card. Pinnacle holds the personal check until
the customer's payday, and then electronically debits the individual's bank
account. The transaction is considered an exchange of a payment instrument for a
payment instrument. As a result, Fast PayCheck is not considered a paycheck
lender, but a money transmitter. No credit checks on the individual are
required.
Fast PayCheck charges the customer a fee of 10% of the check amount and a
$5 transaction fee. The maximum amount of a loan is $500.00. The average loan
is $200. The maximum term of a loan is two weeks. The Company receives an
average return of 25% per month on these transactions.
<PAGE>
Pinnacle has a contract with Comdata Network, Inc. d/b/a Comdata
Corporation ("Comdata") and Master Card to issue the borrower the pre-credited
private label debit card for the amount of the personal check minus the fees
charged. Distribution of funds to the customer is only made through this debit
card system. This insures maximum security at the store locations by
eliminating the need for each store to carry large amounts of cash. The Company
keeps a bank account by agreement with Master Card. This account generally
keeps a balance of up to $50,000. Purchases made by a customer's use of the
debit card are deducted from Pinnacle's Master Card cash account. If Pinnacle
does not keep sufficient cash in the account, Master Card will not honor debit
card purchases.
Pinnacle also has a remarketing agreement with Comdata. This allows
Pinnacle to offer the card to its competitors and receive transactional revenue
from the card usage. At the present time, the Company receives little income
from this agreement. Pinnacle also receives recurring revenue through a per
transaction fee associated with the customer's use of the Fast PayCheck debit
card.
In third quarter 1999, Fast PayCheck and Pinnacle signed a three year
contract with MBE to offer Fast PayCheck services in MBE locations throughout
the United States. MBE is a franchiser of retail outlets ("MBE Centers") which
provide a variety of postal, business and communication services to businesses
and the general public. Through this Agreement, Fast PayCheck may offer its
services in any participating MBE Centers. To participate, an individual
franchisee must agree to offer Fast PayCheck services in their MBE Center. The
MBE Agreement carries an option to renew upon terms agreed to by MBE, Pinnacle
and Fast PayCheck.
Under the terms of the MBE Agreement, customers complete the
application and provide it to MBE personnel. MBE Centers fax the documents to
Pinnacle's call center and distribute a card to the borrower at the MBE
location. MBE is paid $3.50 per transaction. Management intends the call center
to receive the fax application from the MBE centers, qualify the application,
enter the customers information into the computer, re-fax the approval or denial
and activate the debit card for the customer.
Currently, Fast PayCheck offers its services in Fast Title and Florida MBE
Center locations. Pinnacle intends to expand into a multi-state operation in the
year 2000 offering services in MBE Centers. By the end of 2001, Management
plans to expand into every MBE location in states with laws favorable to the
provisions of Fast PayCheck services. Several states have usury laws, for
example, that would prohibit Fast PayCheck practices. Management estimates that
as many as 2800 MBE stores are located in favorable states. At this time,
Pinnacle has applied for the appropriate licenses in Idaho, Missouri, Utah and
Indiana.
<PAGE>
Fast PayCheck holds a license from the State of Florida Department of
Banking and Finance pursuant to the provisions of Florida Statutes 560.200
through 560.213.
Fast PayCheck Competition
Fast PayCheck competes with paycheck lenders and check cashers. Its largest
competitor is Ace Check Cashing. Ace has approximately 1,800 locations
throughout the United States. However, Ace cashes checks. Fast PayCheck can
offer a customer the use of funds before the paycheck is actually deposited.
Therefore, Ace's competitive effect is minimal.
Several companies offer payday advance loans. These companies are
considered lenders and must comply with consumer lending laws to a greater
extent than Fast PayCheck. These companies have received a great deal of
negative press because they will "roll" the loaned amount into a greater loan
term with the payment of additional fees. Many customers find themselves having
to borrow against their paycheck in this manner every pay period. Fast PayCheck
will not roll any amounts forward. Fast PayCheck will not credit the debit card
unless all prior amounts have been paid through the electronic debit. As a
result, a true comparison of Fast PayCheck and traditional paycheck advance
lenders cannot be made.
Fast PayCheck's payday advance business has not operated for a full fiscal
year. Presently, Management does not know whether Fast PayCheck's business will
be seasonal in nature. Management anticipates a small increase in business
during the Christmas season as individuals need cash to meet holiday expenses.
EMPLOYEES
Pinnacle has four full time employees. Fast Title employs 11 people. Of
the Fast Title employees, eight manage the stores and three are administrators
in the corporate office.
Fast PayCheck currently employs 15 people. Currently, ten employees operate
the call center. Management is currently hiring more employees to man the call
center. More people will be added as additional business is added from the MBE
Agreement. At this time, it is not possible to estimate the amount of business
the MBE Agreement will generate or the resulting number of employees needed by
Fast PayCheck.
Both Michael Bruce Hall and Jeff Turino have employment agreements with the
Company.
REGULATIONS
- -----------
GENERAL. The Company is, or expects to be, subject to regulation in several
--------
jurisdictions in which it operates, including jurisdictions that regulate check
cashing fees, or require the registration of check cashing companies or money
transmission agents. The Company is also subject to regulation in jurisdictions
where it offers title loans. In addition, Pinnacle is subject to federal and
<PAGE>
state regulation relating to the reporting and recording of certain currency
transactions.
STATE REGULATIONS. Florida law requires licensing and regulates check
-------------------
cashing fees. The ceiling on fees is in excess or equal to the fees charged by
the Company.
As the Company's operations expand, check cashing fee ceilings in
additional jurisdictions could have an adverse effect on the Company's business.
Existing fee ceilings could restrict the ability of the Company to expand its
operations into certain states.
The Company must be licensed as a check casher in all jurisdictions in
which it offers payday deferred deposit services and must comply with the
regulations governing those services. In addition, in some jurisdictions, check
cashing companies or money transmission agents are required to meet minimum
bonding or capital requirements and are subject to record-keeping requirements.
FEDERAL REGULATIONS.
---------------------
The Money Laundering Suppression Act of 1994 added a section to the Bank
Secrecy Act requiring the registration of businesses, like the Company, that
engage in check cashing, currency exchange, money transmission, or the issuance
or redemption of money orders, traveler's checks, and similar instruments. The
purpose of the registration is to enable governmental authorities to better
enforce laws prohibiting money laundering and other illegal activities. The
registration requirement was suspended pending the adoption of regulations
implementing the statute, and in May 1997, the Financial Crimes Enforcement
Network of the Treasury Department ("FinCEN") proposed regulations for comment.
In August 1999, FinCEN announced the adoption of final implementing regulations,
effective September 20, 1999. The regulations require "money services
businesses" to register with the Treasury Department, by filing a form to be
adopted by FinCEN, by December 31, 2001, and to re-register at least every two
years thereafter. The regulations also require that a money services business
maintain a list of names and addresses of, and other information about, its
agents and that the list be made available to any requesting law enforcement
agency (through FinCEN). That agent list must first be maintained by January 1,
2002, and must be updated at least annually. Though FinCEN must adopt further
regulations and procedures to more fully implement these requirements, based on
the newly adopted regulations, management of the Company does not believe that
compliance with these requirements will have any material impact on the
Company's operations.
In November 1999, the Federal Reserve Board proposed new regulations that
would include "payday loans" as credit for purposes of the federal Truth in
Lending Act. The Company's lending activities may be subject to the new
regulations, if the Company's activities are included in the definition of
payday lending. The proposed regulations require that payday lenders clearly
disclose the interest rate of the loan, calculated on an annual basis, to
consumers applying for credit. The Company expects that the effect of the
proposed regulations on the Company will be minimal because Florida law already
requires such disclosures, and the Company complies. The regulations, if
adopted, would become effective October 1, 2000. Compliance with the proposed
regulations is optional until that date.
<PAGE>
To the extent that use of the debit card falls within the Electronic Funds
Transfer Act, Federal Reserve Board Regulation E will apply to Fast PayCheck
transactions. These govern electronic funds transfers ("EFT") between customer
accounts. Primarily, the Act and regulation 1) require EFT merchants to provide
customers with certain disclosures, 2 detail the circumstances under which an
EFT merchant may issue a card, 3) limit a customer's liability for a lost or
stolen card, and 4) require EFT merchants to follow certain dispute resolution
procedures.
Management's Discussion and Analysis or Plan of Operation.
Management's discussion is based on an analysis of the audited year end
financial statements for 1997 and 1998, and unaudited financial statements for
year end 1999.
Plan of Operation
Operating expenses for the Company are approximately $1,100,000 annually.
Management expects that expenses will be greater in the near future, due to the
costs of expansion of Fast PayCheck services.
The Company has suffered substantial net operating losses in each of 1997
and 1998. Management expects audited 1999 financial statements to also indicate
a net loss. In addition, the Company has a $100,000 note payable with an
investor that expired May 14, 1999.The investor has not yet called this loan.
There is no agreement as of yet to the terms of a possible reinstatement.
Moreover, the Company has approximately one million dollars in debt that will
mature between February 28, 2000 and December 31, 2000. At this time, it is
unlikely that the Company will have adequate capital available to repay the
debt. If these loans are called, the Company's financial condition will be
further negatively impacted. The Company is also defending various lawsuit
claims which, if lost, would negatively impact the Company. Even if the outcome
is positive, the cost to the Company in legal fees and employees' time is
substantial.
To meet these needs over the next twelve months, Management is pursuing
both the reduction of debt and the increase of revenue. The Company is
negotiating with investors to either extend the existing obligations or convert
the debt to equity. Additionally, Management is vigorously defending the
lawsuits that have been filed. Management believes that the Company is entitled
to certain offsets against the claims in litigation. Further, Management is
seeking an alliance partner or banking institution that could offer long-term
debt to carry the expenses of the Company until revenues are increased.
<PAGE>
At the same time, Management expects revenues to increase as the MBE
Centers begin processing Fast PayCheck services. Any increase will be affected
by the length of time it takes to complete the licensure process in each state,
and the agreement of each of the franchisees to start servicing Fast PayCheck
customers. The number of customers who participate at each location will also
affect any increase.
Further, future income could be severely affected by new federal laws,
various state laws and/or local ordinances that Fast PayCheck may encounter.
For example, should federal interest rates continue to rise, the cost of funds
to Fast PayCheck may increase. State usury laws may limit any increase Fast
PayCheck can pass through to its customers. This could effectively reduce Fast
PayCheck's margin and therefore reduce revenues.
Past and Future Financial Condition
Total Assets of the Company are $1,426,508 at year end 1997; $1,606,122 at
year end 1998, and $ 1,749,799 at year end 1999. The slight increase is
attributable primarily to the acquisition of computer equipment and software.
The deferred tax benefit realized in 1998 and 1999 accounts for the increase as
well. Liabilities, however, have substantially increased from $1,724,497 at year
end 1997 to $2,033,959 at year end 1998, and $2,078,376 at year end 1999. The
increase is due in large part to maturing long term debt. This results in a
current stockholders' deficit as reflected in the financial statements.
Management cautions that the current financial condition of the Company will
continue in its weak condition until and unless the business envisioned in the
MBE Agreement materializes.
Results of Operations
Revenue has decreased from $1,459,026 at year end 1997 to $633,478 year end
1998. In 1999, Management estimates revenue of $409,341. This is due to the
loss of business experienced by Fast Title. Unfortunately, operating expenses
continue to increase over the same time period, from $1,063,372 year end 1997 to
$1,101,311 year end 1998. In 1999, year end operating figures are estimated to
be $1,553,392. The amount of expenses is reasonable considering the expansion
and litigation expenses the Company has borne. As a result, Management believes
that the financial condition of the Company will improve substantially by 2002.
Liquidity
Maintaining sufficient liquidity is a material challenge to Management at
the present time. The Company has customer loans receivable of $1,001,658 in
1997; $804,708 in 1998; and $839,851 in 1999. With the application of net
allowance for doubtful accounts, this results in a net loans receivable of
$870,965 in 1997; $743,877 in 1998; and $831,268 in 1999. Further, the Company
owns a note receivable dated December 29, 1997 for $25,000 with 18% per annum
interest. The principal balance and accrued interest is due and payable on the
earlier of 1) a private placement being completed in whole or part including but
not limited to, any escrow disbursements of any funds to the maker, or 2) March
27, 2000. There are no payments received in 1997,1998, or 1999.
<PAGE>
In August 1999, the Company secured a national contract with Comdata. This
contract allows the distribution of the Fast PayCheck debit card at the point of
sale locations. As a result, the Company is in negotiation with its competitors
to allow them to use the debit card system. This may generate revenue on a
broader basis and increase Company value.
Capital Expenditures
The Company is engaged in consumer finance and electronic technology
development. As a result, capital expenditures are not substantial. The
facilities are leased. Property and equipment net costs are $70,902 in 1997,
$101,761 in 1998, and $169,417 in 1999. This represents approximately 6% of
total operating expenses in 1997; 9% in 1998, and 10% in 1999. Substantially all
of the value of the Company is not in physical assets but in the ongoing
operations of the Company. Should the Company be liquidated, there are few
assets to distribute to creditors or shareholders.
Non-cancelable lease commitments run until 2002. The total amount due under
the lease terms, however, for 2000 is $37,373. Rent and related expenses under
operating leases amount to $110,923 for 1997; $83,792 for 1998, and $167,641 for
1999. The Company is operating various locations on a month to month basis.
Litigation
The Company is in the process of settling litigation involving a claim in
Bankruptcy by First American Reliance, Inc. against the Company for $800,000
Including 9% interest, for amounts loaned and advanced by First American
Reliance, Inc. The Company had asserted a defense and set off alleging monies
due to Pinnacle from stock subscriptions in 1998, which were never turned over
to the Company. Pinnacle accrued a liability for $538,276 in 1998 and $355, 755
in 1997, respectively. The financial condition of the Company will benefit
greatly from settlement of the suit without liability to the Company.
Tyler Jay & Company, L.L.C. and First American Reliance, Inc.
- ----------------------------------------------------------------------
The first proceeding regarding Tyler Jay is an adversary proceeding brought by
the Trustee in Bankruptcy of First American Reliance, Inc.("the Debtor") in the
United States Bankruptcy Court, Western District, New York, BK Case No.
98-23906, AP No. 99-2186, entitled Douglas J. Lustig, as Trustee v. Pinnacle
-----------------------------------------
Business Management, Inc., and Fast Title Loans, Inc. The trustee is seeking to
- ----------------------------------------------------
recover purported loans from the Debtor to Fast Title and/or Pinnacle, in a sum
of approximately $800,000. An answer to the suit has been filed and the parties
are currently in the discovery process. Management has agreed to determine the
actual amount of the loans against proceeds of a private placement diverted by
the Debtor's principal using a separate corporation. Management believes that
the setoff for funds diverted during the private placement will equal or exceed
the amounts loaned to Fast Title.
In the second proceeding, Pinnacle and Fast Title Loans are defendants in a
pending civil action instituted in 1999, in Erie County, New York, entitled
Tyler Jay & Company, L.L.C. v. Fast Title Loans, Inc. and Pinnacle Business
- --------------------------------------------------------------------------------
Management, Inc., Index No. I-1999/5697. Plaintiffs asserts a claim for fees
- ------------------------------------------
<PAGE>
and commissions arising from loans made by the Debtor in the previously
described adversary proceeding and sums lost by Tyler Jay allegedly because
Tyler Jay was not permitted to conduct the private placement noted above. Tyler
Jay claims that it is owed certain monies and stock options, which damages are
allegedly in excess of $600,000. Fast Title and Pinnacle have filed a motion to
dismiss the case alleging that the New York courts do not have jurisdiction over
them in this matter. They have also asserted that Tyler Jay is not entitled to
recovery since the agreed-upon services were not provided. Moreover, Fast Title
and Pinnacle have filed a counterclaim seeking $34,000, the sum paid to Tyler
Jay, on the basis that Tyler Jay's fraudulent representations and breach of
fiduciary duty damaged them.
Peter Polland and Euro Products
- -----------------------------------
By letter dated October 14, 1999, addressed to Fast Title and Pinnacle, a
law firm representing Peter Pollard and Euro Products Limited demanded payment
of the sum of $300,000 with accrued interest for default in payment obligations
relating to certain business arrangements. These obligations are evidenced in a
promissory note in the principal amount of $300,000 dated June 28, 1999,
executed by Pinnacle in favor of Euro Products Limited. Fast Title is neither a
party to nor a guarantor of the promissory note. The demand was reduced to
$200,000 by reason of a payment of $100,000 that was made. Pinnacle's counsel
responded to said demand by letter dated November 5, 1999, which proposed a
schedule as to payment by Pinnacle of the $200,000 outstanding balance owing
under the note. As of the date hereof, Peter Pollard and Euro Products have not
responded, in writing or otherwise. Neither Pinnacle nor Fast Title has been
served with citation of a lawsuit.
Acquisition of MAS XIX Consulting Agreement
On March 3, 2000 the Company entered into a consulting agreement between the
Company and the following individual professional persons who acted as
consultants to the Company: M. Richard Cutler, Brian A. Lebrecht, Vi Bui, James
Stubler, and Samuel Eisenberg for services involving consultation, advice and
counsel with respect to the negotiation and completion of the stock exchange
between Pinnacle and MAS XIX. In addition to cash compensation, the
agreement calls for issuance of a total of 1,500,000 shares of Pinnacle
to be issued to the consultants together with an obligation for the Company
to register such shares on Form S-8.
Property
The Company lease certain office space and store front facilities. It has
made no investments in real estate, real estate mortgages, or securities or
interest in persons primarily engaged in real estate activities. There is no
plan to do so in the future.
Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters.
<PAGE>
Market Information
Pinnacle is traded on the Over the Counter Bulletin Board, symbol PCBM.
The price for the stock during each full quarterly period for the last two
years are as follows:
<TABLE>
<CAPTION>
Quarter High Low
- ------- ------ -----
<S> <C> <C>
4Q 1999 .275 .09
3Q 1999 .60 .095
2Q 1999 .51 .029
1Q 1999 .84375 .0625
4Q 1998 .625 .125
3Q 1998 1.75 .50
2Q 1998 4.00 1.50
1Q 1998 4.00 3.50
</TABLE>
The OTC BB market quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not necessarily represent actual
transactions.
As of February 1, 2000 there are 123 holders of common stock on February 1,
2000. Management believes that most of the stock is held in nominee name, and as
a result, there may be as many as 2,000 individuals who own Pinnacle stock. As
of February 1, 2000, there are no holders of preferred stock.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following sets forth the names and ages of the current directors
and executive officers of Pinnacle who will remain so with the combined entity,
their principal offices and positions and the date each such person became a
director or executive officer.
All directors are elected annually by the shareholders and hold office
until the next annual general meeting of shareholders or until their successors
are duly elected and qualified, unless they sooner resign or cease to be
directors in accordance with the Articles of Incorporation of the Registrant.
Executive officers are appointed and serve at the pleasure of the Board
of Directors.
The following persons are the current directors and executive officers
of the Company:
<TABLE>
<CAPTION>
Name of Officer or Position Age Term of Office
Director
- ------------------ --------------- --- ------------------
<S> <C> <C> <C>
Michael Bruce Hall President 45 Since October 1997
Director
- ------------------ --------------- --- ------------------
Jeffrey G. Turino. Chief Executive 43 Since October 1997
Officer
Director
- ------------------ --------------- --- ------------------
</TABLE>
<PAGE>
Michael Bruce Hall: President since 1997. Mr. Hall has a BSBA from the
University of Richmond. Mr. Hall started Landmark Custom Homes in the early
1980s and built 200 custom homes in Pinellas and Hillsborough Counties in
Florida. In 1983, he started and still owns Market Place Travel, which is one
of the top five independent producing agencies in Pinellas County. In the late
1980s, he worked as a financial planner for E.F. Hutton. He returned to the
construction and design field in the early 1990s and worked for Zuma
Engineering, Inc., a local recycling company, as an electrical design specialist
until 1997. He served as the Chairman for the Legislative Committee for the
Southern Association of Title Lenders in 1996.
Mr. Hall oversees and manages all facets of the corporation including, but
not limited to, marketing, collections, customer service and expansion. He also
plans, develops and establishes policies and objectives of Pinnacle. He
approves all financial obligations.
Jeffrey G. Turino: Chief Executive Officer since 1997. Mr. Turino has a
management degree from the University of Florida. From 1986 to 1997, Mr. Turino
served as corporate secretary for Zuma Engineering, Inc. Mr. Turino coordinates
and implements all policies and procedures directed by the Board of Directors.
SUITS AGAINST DIRECTORS
In 1986, Michael Hall was a party to an arbitration proceeding convened by
the National Association of Securities Dealers, Inc.("NASD"). The proceeding was
the result of a complaint by a client of Shearson Lehman stemming in part from
Mr. Hall's activities as a broker for such client. The arbitration resulted in
an award for the client in the amount of $250,000.
In 1995, Jeffrey Turino entered into a Stipulation and Consent Agreement
with the Florida Department of Banking and Finance Division of Financial
Investigation. Mr. Turino consented to a finding that, as corporate secretary
of Zuma Engineering, Inc., he failed to prevent corporate agents of Zuma to
offer for sale and sell unregistered securities in the State of Florida. He
agreed to pay a $10,000 fine and to refrain from future violations of Florida's
securities laws.
<PAGE>
EXECUTIVE COMPENSATION
Bruce Hall and Jeff Turino EACH have entered into an employment agreement
with Pinnacle. The term extends until October 13, 2002, and is automatically
renewed for one year terms. Under the terms of the agreement, each receives an
annual base salary of $104,000 with additional increases, at least annually, as
deemed necessary by the Board of Directors. In the event that the Company cannot
meet the executive's compensation, the executive may either defer the
compensation and accrue the salary or take the difference in common stock at the
rate of one share of each dollar not received in the first year. In years two
through five, the executive may take stock at a rate equal to shares purchased
by the dollar difference of the paid versus unpaid salary at an average price of
the last thirty days in the trading year of the stock.
Each executive is entitled to an incentive bonus equal to 5% of that
portion of the pretax income of the Company for that fiscal year.
<TABLE>
<CAPTION>
Name and Year Salary (1) Bonus Other Annual All Other
Principal Compensation Compensation
Position
- -------------- ---- ----------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Michael Hall . 1999 $ 55,000 $ -0- -0- -0-
1998 $ 65,464
1997 $ 61,728
- -------------- ---- ----------- ------ ------------ ------------
Jeffrey Turino 1999 $ 55,000 $ -0- -0- -0-
1998 $ 65,464
1997 $ 61,728
- -------------- ---- ----------- ------ ------------ ------------
<FN>
(1) The employment agreements originally provided that each executive may
take in the form of stock or cash compensation earned up to $104,000
per year but not paid, and bonus amounts of $52,000 each in 1998. Such
acquisition could be deferred by each and taken at a time in their sole
discretion. The employment agreements also provided two stock option
plans, "A" and "B." Option "A" allowed for 500,000 shares of common
stock, having an exercise price of $.50 per share, in 1998. Option "B"
allowed for 500,000 shares of common stock, having an exercise price of
$1.00 per share, from 1999 through 2002. The officers each release the
Company from claims for past compensation, bonus and option amounts
arising before January 1, 2000.
</TABLE>
Certain Relationships and Related Transactions
In June 1999, Jeff Turino and Bruce Hall signed an agreement with
Primex Capital pledging 6,000,000 shares of Pinnacle stock to secure a personal
loans. Turino and Hall then loaned the proceeds to Pinnacle in the amount of
$350,000.
Description of Securities
Common and Preferred Stock
The authorized capital stock of the Company consists of 200,000,000 shares of
common stock, par value $.001 per share and 100,000,000 shares of preferred
stock, par value $.001 per share. As of February 1, 2000, there are 151,962,686
shares of common stock outstanding. None of the preferred shares have been
issued. The common stock is currently traded on the Over The Counter Bulletin
Board ("OTC BB"). The Company's trading symbol is PCBM. There are approximately
123 current shareholders of record. At year end 1999, 85,952,686 shares were
outstanding.
The common stock traded on OTCBB will be delisted if the Company is not
considered fully reporting by March 8,, 2000. As a result, the stock has
experienced recent decreases in market price. The current market price is
approximately $.10 per share.
<PAGE>
All shares of common stock have equal voting, liquidation, dividend and
other rights. Shareholders are entitled to one vote for each share of common
stock at any Shareholders' meeting. Holders of shares of common stock are
entitled to receive such dividends as may be declared by the Board of Directors.
In the event of liquidation, shareholders are entitled to participate pro rata
in a distribution of. There are no conversion, preemptive, or other
subscription rights or privileges with respect to the common shares. The common
stock of the Company does not have cumulative voting rights. The holders of
more than fifty percent (50%) of the shares voting in an election of directors
may elect all of the directors if they choose to do so. In such event, the
holders of the remaining shares aggregating less than fifty percent (50%) would
not be able to elect any directors.
Stock Options
At year end 1999, the following stock options were outstanding:
1. Gordon & Associates Strategic Investments, Inc. A consulting agreement
entered into with Gordon & Associates grants options with the
following attributes:
<TABLE>
<CAPTION>
Expiry Date Exercise Price Number of Shares
- ------------------ ---------------------------------------- ----------------
<S> <C> <C>
Termination of the __ The lessor of $.25 per share or Up to 35,322,578
Agreement 30% of the average closing bid price for
trading.
</TABLE>
2. The Company issued 8% Convertible Debentures dated March 19, 1999, in the
amount of $260,000 all of which has been converted and 2,054,480 shares
issued. On March 31, 1999, the Company granted an option to buy 33,000
shares at a purchase price of $.319 per share to the attorney and
underwriter for the 8% Notes.
Warrants
The Company has entered into an agreement with M.H. Meyerson & Co., Inc.
for the provision of investment banking services. As consideration, the Company
has granted five year Warrants to purchase, at a price of $.125 per share, a
total of 5,580,000 shares of the common stock of Pinnacle. These warrants may
be exercised until August 18, 2004. At the present time, none have been
exercised.
Dividends
The Company has not declared dividends in the past and does not have the
current capital necessary to declare a dividend in the foreseeable future.
Potential de-listing of common stock
We may be de-listed from the OTC bulletin board. NASD Eligibility Rule 6530
issued on January 4, 1999, states that issuers who do not make current
filings pursuant to Sections 13 and 15(d) of the Securities Act of 1934 are
ineligible for listing on the OTC bulletin board. Issuers who are not current
with such filings are subject to de-listing according to a phase-in
schedule depending on each issuer's trading symbol as reported on January 4,
1999. Our trading symbol on January 4, 1999 was PCBM. Therefore, under
the phase-in schedule, our common stock is subject to de-listing on March 8,
2000. One month prior to our potential de-listing date, our common stock
had its trading symbol changed to PCBME.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
Successor Issuer Election.
Upon execution of the Exchange Agreement and delivery of the Pinnacle
shares to
<PAGE>
the shareholders of MAS XIX, pursuant to Rule 12g-3(a) of the General Rules and
Regulations of the Securities and Exchange Commission, Pinnacle became the
successor issuer to MAS XIX for reporting purposes under the Securities
Exchange Act of 1934 and elected to report under the Act effective March 3,2000.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
Not applicable.
ITEM 7. FINANCIAL STATEMENTS
PINNACLE BUSINESS MANAGEMENT, INC.
AND SUBSIDIARIES
FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
<PAGE>
<TABLE>
<CAPTION>
PINNACLE BUSINESS MANAGEMENT, INC.
AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
PAGE
----
CONSOLIDATED FINANCIAL STATEMENTS:
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS . . . . . . 1
BALANCE SHEETS AS OF DECEMBER 31, 1998 AND 1997. . . . . . . . 2-3
STATEMENTS OF OPERATIONS FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997 . . . . . . . . . . . . . . . . . . 4
STATEMENTS OF STOCKHOLDERS' DEFICIT FOR THE
YEARS ENDED DECEMBER 31, 1998 AND 1997 . . . . . . . . . . . . 5
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED . . . . . . . . . 6
DECEMBER 31, 1998 AND 1997
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . 7-15
</TABLE>
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
Pinnacle Business Management, Inc.
Clearwater, Florida
We have audited the accompanying consolidated balance sheets of Pinnacle
Business Management, Inc. and Subsidiaries as of December 31, 1998 and 1997, and
the related consolidated statements of operations, stockholders' deficit, and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The accompanying financial statements for December 31, 1998 and 1997 have been
prepared assuming that the company will continue as a going concern. As
discussed in Notes 8 and 10 to the financial statements, the company has
suffered recurring losses from operations, has a net capital deficiency, and
certain litigation pending that raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 8 and 10. The financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Pinnacle Business
Management, Inc. and Subsidiaries as of December 31, 1998 and 1997, and the
results of their operations and their cash flows for the years ended December
31, 1998 and 1997, in conformity with generally accepted accounting principles.
/S/ BAGELL, JOSEPHS, LEVINE, FIRESTONE & CO., L.L.C.
- ----------------------------------------------------
BAGELL, JOSEPHS, LEVINE, FIRESTONE & CO., L.L.C
Certified Public Accountants
February 16, 2000
Page 1
<PAGE>
<TABLE>
<CAPTION>
PINNACLE BUSINESS MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
------
DECEMBER 31,
----------------------
1998 1997
---------- ----------
<S> <C> <C>
CURRENT ASSETS
- --------------
Cash and cash equivalents $ 2,984 $ 5,521
Customer loans receivable, net 743,877 870,965
---------- ----------
TOTAL CURRENT ASSETS 746,861 876,486
- --------------------------------- ---------- ----------
RECEIVABLES - OTHER - NET - 0 - - 0 -
PROPERTY AND EQUIPMENT - NET 101,761 70,902
INTANGIBLE ASSET - GOODWILL - NET 244,944 251,390
DEFFERED TAX ASSET 505,560 202,734
OTHER ASSETS 6,996 6,996
---------- ----------
859,261 532,022
---------- ----------
TOTAL ASSETS $1,606,122 $1,426,508
- --------------------------------- ========== ==========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
Page 2
<PAGE>
<TABLE>
<CAPTION>
PINNACLE BUSINESS MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
DECEMBER 31,
------------------------
1998 1997
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES
- -------------------
Accounts payable and accrued expenses $ 79,783 $ 75,742
Current portion of long-term debt 600,000 550,000
----------- -----------
TOTAL CURRENT LIABILITIES 679,783 625,742
- ------------------------------------------- ----------- -----------
NOTES PAYABLE - OFFICERS' 9,900 100,000
LONG-TERM DEBT, LESS CURRENT PORTION 1,344,276 998,755
----------- -----------
TOTAL LONG-TERM LIABILITIES 1,354,176 1,098,775
- ------------------------------------------- ----------- -----------
TOTAL LIABILITIES 2,033,959 1,724,497
- ------------------------------------------- ----------- -----------
COMMITMENTS AND CONTINGENCIES
- -------------------------------------------
STOCKHOLDERS' DEFICIT
- -------------------------------------------
Preferred stock $ - $ -
Common stock 16,494 13,418
Additional paid-in capital 541,965 121,992
Deficit (986,296) (433,399)
----------- -----------
TOTAL STOCKHOLDERS' DEFICIT (427,837) (297,989)
- ------------------------------------------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $1,606,122 1,426,508
- ------------------------------------------- =========== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
Page 3
<PAGE>
<TABLE>
<CAPTION>
PINNACLE BUSINESS MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
DECEMBER 31,
-------------------------
1998 1997
----------- ------------
<S> <C> <C>
OPERATING REVENUE
- ---------------------------------------------------------
Revenue $ 633,478 $ 1,459,026
----------- ------------
OPERATING EXPENSES
- ---------------------------------------------------------
Salaries, employee leasing and related 444,352 463,106
Advertising 106,183 81,244
Commissions 35,568 46,282
Office and general 56,746 43,632
Professional fees 55,676 75,452
Repairs and maintenance 5,562 12,892
Rent 110,923 83,792
Repossession costs 53,310 33,563
Telephone and utilities 81,260 71,313
Travel 59,749 62,401
Other operating 91,982 89,695
----------- ------------
TOTAL OPERATING EXPENSES 1,101,311 1,063,372
- --------------------------------------------------------- ----------- ------------
OPERATING INCOME (LOSS) (467,833) 395,654
- --------------------------------------------------------- ----------- ------------
OTHER EXPENSES
- ---------------------------------------------------------
Interest expense (278,050) (552,839)
Depreciation and Amorizitation expense (31,009) (19,842)
Bad debt (60,831) (122,793)
----------- ------------
TOTAL OTHER EXPENSES (369,890) (695,474)
- --------------------------------------------------------- ----------- ------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM
LIQUIDATION AND DISSOLUTION OF WHOLLY OWNED SUBSIDIARY (837,723) (299,820)
- ---------------------------------------------------------
AND PROVISION FOR INCOME TAX BENEFIT
- ---------------------------------------------------------
EXTRAORDINARY LOSS - (1,933)
- --------------------------------------------------------- ----------- ------------
NET INCOME (LOSS)
BEFORE FEDERAL INCOME TAX BENEFIT (837,723) (301,753)
- ---------------------------------------------------------
PROVISION FOR INCOME TAX BENEFIT (EXPENSE) 284,826 100,934
----------- ------------
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES (552,897) (200,819)
----------- ------------
NET INCOME (LOSS) PER COMMON SHARES (0.04) 0.02
- --------------------------------------------------------- ----------- ------------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 14976794 12,340,182
- --------------------------------------------------------- ----------- ------------
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
Page 4
<PAGE>
<TABLE>
<CAPTION>
PINNACLE BUSINESS MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
ADDITIONAL
COMMON STOCK PAID-IN TOTAL
$.001 PAR VALUE CAPITAL STOCKHOLDER'S
---------------
SHARES AMOUNT AMOUNT DEFICIT DEFICIT
--------------- ------- ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Balance January 1, 1997-Fast Title
Loans, Inc. 11,104,000 $11,104 $ - 0 - $(232,580) $ (221,476)
Issuance of common stock for stock 1,973,027 1,973 24,960 - 26,933
Conversion of debt for common stock 341,000 341 97,032 - 97,373
Net Loss - - - (200,819) (200,819)
--------------- ------- ----------- ---------- ---------------
Balance December 31, 1997 13,418,027 $13,418 $ 121,992 $(433,399) $ (297,989)
Issuance of common stock 3,076,175 3,076 419,973 - 423,049
Net Loss - - - (552,897) (552,897)
--------------- ------- ----------- ---------- ---------------
Balance December 31, 1998 16,494,202 $16,494 $ 541,965 $(986,296) $ (427,837)
=============== ======= =========== ========== ===============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
Page 5
<PAGE>
<TABLE>
<CAPTION>
PINNACLE BUSINESS MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
---------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $(552,897) $ (200,819)
---------- ------------
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Depreciation 31,009 19,842
Provision for doubtful accounts 60,831 81,919
Deferred Income Tax Benefit (284,826) (100,934)
CHANGES IN ASSETS AND LIABILITIES:
(Increase) Decrease in customer loans receivable - net 49,257 (965,897)
(Increase) Decrease in loans other - (25,000)
(Increase) Decrease in deposits and other - (13,973)
Increase (Decrease) in accounts payable and accrued expenses 4,041 44,896
---------- ------------
TOTAL ADJUSTMENTS (139,688) (959,147)
- ---------------------------------------------------------------------- ---------- ------------
NET CASH (USED IN) OPERATING ACTIVITIES (692,585) (1,159,966)
- ---------------------------------------------------------------------- ---------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
- ----------------------------------------------------------------------
Capital expenditures (58,422) (53,316)
---------- ------------
NET CASH (USED IN) INVESTING ACTIVITIES (58,422) (53,316)
- ---------------------------------------------------------------------- ---------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
- ----------------------------------------------------------------------
Proceeds from issuance of long-term debt 583,952 1,243,150
Proceeds from issuance of common stock and paid in capital 423,049 25,000
Principle payments on long-term debt (168,431) (50,000)
Reduction of loans payable officers (90,100) -
---------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 748,470 1,218,150
- ---------------------------------------------------------------------- ---------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (2,537) 4,868
- ----------------------------------------------------------------------
CASH AND CASH EQUIVALENTS-BEGINNING OF PERIOD 5,521 653
- ---------------------------------------------------------------------- ---------- ------------
CASH AND CASH EQUIVALENTS-END OF PERIOD $ 2,984 $ 5,521
- ---------------------------------------------------------------------- ========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE YEAR FOR:
Interest Expense 270,250 470,862
NON-CASH ACTIVITY
Conversion of debt to equity - 179,173
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
Page 6
<PAGE>
PINNACLE BUSINESS MANAGEMENT, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION
--------------------------------------
Pinnacle Business Management, Inc. is an integrated consumer finance and E-
commerce technology developer. The company operates title loan and paycheck
advance locations. Fast Title Loans, Inc. (FTL)is a wholly owned subsidiary
of Pinnacle Business Management, Inc. Fast Title Loans, Inc. is a consumer
loan company that operates title loan offices in central Florida. The title
loan is an immediate short term cash loan, using the free and clear title
of a person's car or truck as collateral. The loan allows the customer to
retain possession and use of their motor vehicle. Fast Paycheck Advance,
Inc. is a wholly owned subsidiary of Pinnacle Business Management, Inc.
that provides short-term paycheck advances to consumers. The accompanying
financial statements reflect the consolidated operations of the above.
On May 9, 1997, Pinnacle Business Management, Inc. (The "Company") was
incorporated as a wholly owned subsidiary of 300365 BC, Ltd., D/B/A Peaker
Resource Company, a company which was incorporated in British Columbia,
Canada on November 13, 1985. 300365 BC, Ltd. had been inactive for years
due to the lack of working capital. On May 15, 1997, the stockholders of
300365 BC, Ltd. exchanged all of the company's outstanding stock of 300365
BC, Ltd. for the stock of Pinnacle Business Management, Inc. This exchange
was made on a share for share basis. There were no tangible assets of
300365 BC, Ltd. The excess of par value of the common stock issued over the
assets acquired upon the acquisition of the parent was $1,933. After the
exchange of stock, the parent became the wholly owned subsidiary and it was
liquidated and the $1,933 was written off as an extraordinary loss upon the
dissolution of 300365 BC, Ltd.
On October 27, 1997, JTBH Corporation, a wholly owned subsidiary of the
"Company", with no assets, merged with Fast Title Loans, Inc. (FTL) a
Florida corporation. On that date Fast Title Loans, Inc. became the wholly
owned subsidiary of Pinnacle Business Management, Inc. The shares of (FTL)
were converted into common stock $.001 per share, of Pinnacle Business
Management, Inc.
The merger of (FTL) the private company into the public shell company
Pinnacle Business Management, Inc. on October 27, 1997 gave rise to the
private company having effective operating control of the combined company
after the transaction. This was a reverse merger and the costs
associatedwith were treated as a recapitilization. In 1998, the company
incorporated Fast Paycheck Advance, Inc. as a wholly owned subsidiary. Also
in 1998, the Company incorporated Summit Property, Inc. This subsidiary has
remained inactive, however.
Page 7
<PAGE>
PINNACLE BUSINESS MANAGEMENT, INC.
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
PRINCIPLES OF CONSOLIDATION:
----------------------------
The consolidated financial statements include the accounts of the Company
and all of its wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
USE OF ESTIMATES:
-------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
PROPERTY AND EQUIPMENT:
-------------------------
Property and equipment are stated at cost. Depreciation is computed
primarily using the straight-line method over the following estimated
useful lives:
YEARS
-----
Improvements 10-40
Furniture and Equipment 5-7
Leasehold Improvements are amortized over their estimated useful lives or
the lives of the related leases, whichever is shorter.
REVENUE RECOGNITION:
---------------------
Substantially most of the revenues are derived from interest charged on
consumer financing, title loans and advance paychecks.
INCOME TAXES:
--------------
The income tax benefit is computed on the pretax loss based on the current
tax law. Deferred income taxes are recognized for the tax consequences in
future years of differences between the tax basis of assets and liabilities
and their financial reporting amounts at each year-end based on enacted tax
laws and statutory tax rates.
Page 8
<PAGE>
PINNACLE BUSINESS MANAGEMENT, INC.
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
-----------------------------------------------------------
NATURE OF BUSINESS AND CREDIT RISK:
----------------------------------------
The company operates in mainly one business segment and primarily earns
interest income on consumer title loans and advanced paychecks. Financial
instruments which potentially subject the company to concentrations of
credit risk are primarily customer loans receivable.
FAIR VALUE OF FINANCIAL INSTRUMENTS:
----------------------------------------
The carrying amounts reported in the consolidated balance sheets for cash
and cash equivalents, customer loan receivables, accounts payable and
accrued expenses and other liabilities approximate fair value because of
the immediate or short-term maturity of these financial instruments. The
carrying amount reported for long-term debt approximates fair value
because, in general, the interest on the underlying instruments fluctuates
with market rates.
EARNINGS (LOSS) PER SHARE OF COMMON STOCK:
------------------------------------------------
Historical net income (loss) per common share is computed using the
weighted average number of common shares outstanding.
STATEMENTS OF CASH FLOWS:
----------------------------
For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid debt instruments and other short-term
investments with an initial maturity of three months or less to be cash
equivalents.
ADVERTISING AND PROMOTIONAL COSTS
------------------------------------
Costs of advertising and promotional costs are expensed as incurred.
Advertising costs were $106,183 and $81,244 in 1998 and 1997. respectively.
GOODWILL
--------
Goodwill is amortized over 40 years. Amortization charged to expense was
$6,446 and $6,446 in 1998 and 1997 respectively.
Page 9
<PAGE>
PINNACLE BUSINESS MANAGEMENT, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
NOTE 3- CUSTOMER LOANS RECEIVABLE - NET
-------------------------------
Customer loans receivable, net consists of the following:
<TABLE>
<CAPTION>
December 31,
-----------------
1998 1997
------- ------
<S> <C> <C>
Customer loans receivable $804,708 $1,001,656
Less: Allowance for doubtful accounts (60,831) ( 130,691)
-------- -----------
Customer loans receivable - Net $743,877 $ 870,965
======== ===========
</TABLE>
Customer loans receivable include accrued interest amounts.
NOTE 4- RECEIVABLE - OTHER
------------------
Note receivable dated December 29, 1997 to a company for $25,000 together
with interest thereon at the rate of 18% per annum. The principal balance
and accrued interest is due and payable on the earlier of a private
placement being completed in whole or part including but not limited to any
escrow disbursements of any funds to the maker, or March 27, 2000. There
were no payments received in 1997 or 1998. The company has made an
allowance for doubtful receivable for the entire loan.
NOTE 5- PROPERTY AND EQUIPMENT, NET
------------------------------
Property and equipment, net consists of the following:
<TABLE>
<CAPTION>
1998 1997
-------- ---------
<S> <C> <C>
Furniture and Equipment $ 109,922 $ 59,256
Improvements 34,917 30,161
---------- ---------
144,839 89,417
Less: Accumulated depreciation (43,078) (18,515)
---------- ---------
Property and Equipment, Net $ 101,761 $ 70,902
========== =========
</TABLE>
Page 10
<PAGE>
PINNACLE BUSINESS MANAGEMENT, INC.
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
NOTE 6- LONG-TERM DEBT
---------------
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1998 1997
---------- -----------
<S> <C> <C>
Note payable lending institution with monthly
interest payable at 14% per annum expiring
February 28, 2000 (see Note 8). $ 538,276 $ 355,755
Note payable investor with monthly interest
payable at 4.5% per month. This note
expires May 14, 1999. 100,000 100,000
Note payable investor with monthly interest
payable at rates varying between 16-36% per
annum, expiring March 1, 2000. 606,000 643,000
Renegotiated note payable investors with
monthly interest payable at rates varying
between 1.5%-6% per month. This loan
expires in December, 2000. 450,000 450,000
Note payable investor with monthly interest
payable at 4%, expiring May 17, 1999. 150,000 - 0 -
Notes payable investor with interest payable
at 18% per annum, expiring February and
March, 1999. 100,000 - 0 -
----------- -----------
1,944,276 1,548,755
Less: Current Portion (600,000) (550,000)
----------- -----------
Net Long-Term Debt $1,344,276 $ 998,755
============ ===========
The non-current portion of long-term debt
matures as follows:
1999 600,000
2000 1,344,276
-----------
- $ 1,944,276
==============
</TABLE>
The company has negotiated with certain investors to convert long-term debt
to common stock at various negotiated prices predicated on market value.
Long-term debt is substantially collateralized with motor vehicle titles and the
personal guarantees of the officers and the assets of the company.
Page 11
<PAGE>
PINNACLE BUSINESS MANAGEMENT, INC.
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
NOTE 7- STOCKHOLDERS' DEFICIT
---------------------
The authorized capital stock of the company in 1997 consists of
15,000,000 shares of common stock with par value of $.001. As of December
31, 1997, there were 13,418,027 shares outstanding.
The authorized preferred stock of the company in 1998 and 1997
consists of 10,000,000 shares with a par value of $.001 with rights and
privileges to be set by the board of directors. As of December 31, 1998 and
1997, there were no shares issued or outstanding.
In 1998, the corporation authorized an additional 5,000,000 shares of
common stock for a total of 20,000,000 shares authorized with a par value
of $.001. As of December 31, 1998, there were 16,494,202 shares
outstanding.
NOTE 8- COMMITMENTS AND CONTINGENCIES
-----------------------------
(A) LEASES:
-------
The company operates its facilities under certain operating leases. Future
minimum lease commitments under non-cancelable operating leases are as
follows:
1999 $37,373
2000 36,624
-------
73,997
=======
Rent and related expenses under operating leases amounted to $110,923 and
$83,792 for the years ended December 31, 1998 and 1997 respectively. The
company is operating various locations on a month to month basis.
(B) LITIGATION:
-----------
The company is a defendant involving a claim made in bankruptcy by First
American Reliance, Inc. (FAR) against the company for $800,000, including
9% interest, for amounts loaned and advanced by FAR to the company
Page 12
<PAGE>
PINNACLE BUSINESS MANAGEMENT, INC.
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
NOTE 8- COMMITMENTS AND CONTINGENCIES (CONTINUED)
-----------------------------------------
which were not repaid. The company has asserted a defense and set off
alleging that monies due to Pinnacle from stock subscriptions in 1998
delivered to FAR were not turned over to the company. It is further alleged
that the claims of the company exceed the sum that FAR claims it is owed by
the company. The company has not accrued any interest on this note for 1998
because of the offsets of monies due the company alleged in the litigation.
The lawyers have stated that documentation to fully evaluate the claims is
not presently available. However, the company is contesting the case
vigorously. The company has accrued a liability for $538,276 in 1998 and
$355,755 in 1997, respectively.
Secondly, Tyler Jay & Company, L.L.C. commenced an action against the
company asserting a claim for fees and commissions arising from loans made
by FAR described in the previous paragraph. This also includes sums lost by
Tyler Jay allegedly because Tyler Jay was not permitted to complete the
private placement noted above. The sums demanded exceed $500,000 in the
aggregate. Management is vigorously contesting the claim. The company has
asserted claims and defenses that are still in the process of being
evaluated by the attorneys. It is not possible to determine whether there
will be a loss; or, if there is a loss, the extent of the loss.
The company is anticipating filing form 10-sb to become fully
reporting by march 8, 2000 pursuant to NASD rule 6530. The filing may not
be accepted as effective by the United States Securities and Exchange
Commission (SEC) by March 8. If the filing of Form 10-SB is not filed and
accepted by the SEC by that date the Company would be removed from the OTC
exchange. Should this occur, the Company would be required to file a Form
15c2-11 or exception thereto and be once again listed as soon as the SEC
accepted the filing. The Company and their legal representatives have
indicated that they have a contingency plan in place should they foresee or
encounter any problems. This contingency plan would entail merging or
acquiring another publicly reporting entity in a timely matter to keep
enlisted.
NOTE 9- RELATED PARTY TRANSACTIONS
--------------------------
The officers of the company loaned $100,000 to the business to pay for
certain costs in acquiring the public company. The loan is non-interest
bearing and has no specific payment terms. In 1998, $90,100 was repaid.
NOTE 10- GOING CONCERN
-------------
As shown in the accompanying financial statements, the company
incurred substantial net losses for the years ended December 31, 1998 and
1997. Additionally, the company has a $100,000 note payable with an
investor that expired May 14, 1999.
Page 13
<PAGE>
PINNACLE BUSINESS MANAGEMENT, INC.
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
NOTE 10- GOING CONCERN (CONTINUED)
-------------------------
The investor has not called this loan and it is shown as a current
liability. Moreover, the company has debt that will be coming due between
March 1, 2000 and December 31, 2000 without adequate capital available to
repay the debt. The company is negotiating with the investors to either
extend these obligations or convert the debt to equity. However, if these
loans are called, the company's financial condition will be further
negatively impacted. Finally, the company is defending various lawsuit
claims that, if the outcome is unfavorable, would negatively impact the
company. These factors raise substantial doubt about the company's ability
to continue as a going concern.
Management is working with the certain investors to rework the debt that is
coming due. Additionally, management is vigorously contesting the lawsuits
that have been filed against the company. The company feels that they have
certain offsets against the claims in litigation and does not expect to pay
more than what is reflected on the balance sheet at this time (see note 8).
However, there can be no assurance that the company will be successful in
its efforts to not have the payment of debt accelerated. If the company is
unsuccessful in its efforts, it may be necessary to undertake such other
actions as may be necessary to preserve asset value. The financial
statements do not include any adjustments, other than the current
classification of long-term debt in default, that might result from the
outcome of those uncertainties.
NOTE 11- INCOME TAX BENEFIT
------------------
The benefit for income taxes is as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1997
-------- --------
Deferred income tax benefit
(Federal only) $284,826 $100,934
======== ========
</TABLE>
At December 31, 1998 and 1997, the company had net operating loss carry
forwards for U. S. Federal tax purposes available to offset future taxable
income of approximately $986,296 and $433,399 which expire through 2013.
The company has concluded that, based on expected future results and future
reversals of existing temporary differences, it is more likely than not
that the deferred tax assets will be realized. (See note 12)
Page 14
<PAGE>
PINNACLE BUSINESS MANAGEMENT, INC.
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998 AND 1997
NOTE 11- INCOME TAX BENEFIT (CONTINUED)
---------------------------------
The net deferred tax assets in the accompanying balance sheets
include the following components:
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Deferred tax assets $505,560 $220,734
Deferred tax valuation allowance -0- -0-
-------- --------
Net deferred tax assets $505,560 $220,734
======== ========
</TABLE>
NOTE 12- SUBSEQUENT EVENTS
------------------
A note for an investor of $100,000 expired in 1999 and is reclassified
as a ________ current obligation.
Due to current local legislative climate regarding the title loan industry,
the company aggressively pursued alternative operations. After considerable
research and development, the company implemented payday advances and a
debit card program in 1999. The result of this is a three year contract
with Mailboxes ETC to facilitate payday advances on a national level. This
contract was executed on September 24, 1999. The contract provides for
rapid expansion without the considerable cost of store locations.
Additionally, in August 1999 the company secured a national contract with
Comdata through their banking affiliates. This contract allows the
distribution of debit cards at the point of sale location. Subsequently,
the company is in negotiation with its competitors to allow them to use the
debit card system. This transforms the competitors into vendors and allows
revenue on a broader basis. Management anticipates putting forth its
efforts to expand the payday advance basis through physical locations and
the Internet on a national basis to increase company value.
February 28, 2000, the Company, Jeff Turino and Bruce Hall entered into an
Agreement and Release concerning claims arising from operation of those
officers' employment agreements with the Company between 1997 and 2000.
Turino and Hall released the Company from certain performance obligations,
including the waiver of back compensation and bonus amounts. In exchange,
each received 27,500,000 shares of restricted common stock of the Company.
Turino and Hall agreed to perform the remainder of the employment agreement
in accordance with its terms. The Company released any claims arising from
the officers' performance of the agreements prior to January 1, 2000.
ITEM 8. CHANGE IN FISCAL YEAR
Pinnacle as the successor issuer has a fiscal year end of December 31,
which fiscal year end will continue for the successor issuer.
EXHIBITS
1.1. Stock Exchange Agreement between MRC Legal Services Corporation and
Pinnacle Business Management, Inc., dated as of March 3, 2000.
1.2. Consulting Agreement dated March 3, 2000.
3.1 Articles of Incorporation and Amendments
3.2 By-laws
10.1 Mail Boxes Etc. USA, Inc. Contract
10.2 Comdata Corporation Contracts:
10.2.1 Comdata Referral Agreement
10.2.2 Comdata Payment Services Express
Cash Statement of Services
10.3 Mastercard Agreement
10.4 M.H. Meyerson & Co., Inc.
10.5 Employment Agreements:
10.5.1 Turino Employment Agreement
10.5.2 Hall Employment Agreement
10.5.3 Agreement and Release
10.6 Gordon & Associates, Inc. Contract
21 Subsidiaries of the Registrant
23 Consent of Accountants
28 Letter from Accountant with respect to Rule
12b-21 conditions
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PINNACLE BUSINESS MANAGEMENT INC.
/S/ Jeffrey G. Turino
- -------------------------------------------------------
Jeffrey G. Turino, Chief Executive Officer and Director
/S/ Michael B. Hall
- -------------------------------------------------------
Michael B. Hall, President and Director
Date: March 6, 2000
STOCK EXCHANGE AGREEMENT
Agreement dated as of March 3, 2000 between Pinnacle Business Management,
Inc., a Nevada corporation ("PCBM"), on the one hand, and MRC Legal Services
Corporation ("MRC" or the "Shareholder"), on the other hand.
1. THE ACQUISITION.
1.1 Purchase and Sale Subject to the Terms and Conditions of this Agreement.
At the Closing to be held as provided in Section 2, PCBM shall sell the PCBM
Shares (defined below) to the Shareholder and the Shareholder shall purchase the
PCBM Shares from PCBM, free and clear of all Encumbrances other than
restrictions imposed by Federal and State securities laws.
1.2 Purchase Price. PCBM will exchange 1,500,000 shares of its
restricted common stock (the "PCBM Shares") for 8,250,000 shares of MAS
Acquisition XIX Corp. ("MAS XIX"), representing approximately 96.8% of the
issued and outstanding common shares of MAS XIX (the "MAS XIX Shares").
Immediately after the Closing, the Shareholder will cause MAS XIX to complete a
reverse stock split (the "Reverse Stock Split") previously approved by the
directors of MAS XIX which will result in the remaining 269,900 shares of MAS
XIX being cashed out by the Shareholder at no additional cost to PCBM.
Immediately subsequent to the Reverse Stock Split, PCBM shall be the sole
shareholder of MAS XIX with 1,000 shares issued and outstanding. The PCBM
Shares shall be issued and delivered to the Shareholder or assigns as set forth
in Exhibit "A" hereto.
2. THE CLOSING.
2.1 Place and Time. The closing of the sale and exchange of the PCBM
Shares for the MAS XIX Shares (the "Closing") shall take place at Cutler Law
Group, 610 Newport Center Drive, Suite 800, Newport Beach, CA 92660 no later
than the close of business (Orange County California time) on or before March 6,
2000 or at such other place, date and time as the parties may agree in writing.
2.2 Deliveries by the Shareholders. At the Closing, the Shareholder
shall deliver the following to PCBM:
1. Certificates representing the MAS XIX Shares, duly endorsed for transfer
to PCBM and accompanied by appropriate medallion guaranteed stock powers; the
Shareholder shall immediately change those certificates for, and to deliver to
PCBM at the Closing, a certificate representing the MAS XIX Shares registered in
the name of PCBM (without any legend or other reference to any Encumbrance other
than appropriate federal securities law limitations).
2. The documents contemplated by Section 3.
1.
<PAGE>
3. All other documents, instruments and writings required by this Agreement
to be delivered by the Shareholder at the Closing and any other documents or
records relating to MAS XIX's business reasonably requested by PCBM in
connection with this Agreement.
2.3 Deliveries by PCBM. At the Closing, PCBM shall deliver the
following to the Shareholder:
a. The PCBM Shares for further delivery to the Shareholder or assigns as
contemplated by section 1.
2. The documents contemplated by Section 4.
3. All other documents, instruments and writings required by this Agreement
to be delivered by PCBM at the Closing.
3. CONDITIONS TO PCBM'S OBLIGATIONS.
The obligations of PCBM to effect the Closing shall be subject to the
satisfaction at or prior to the Closing of the following conditions, any one or
more of which may be waived by PCBM:
3.1 No Injunction. There shall not be in effect any injunction, order
or decree of a court of competent jurisdiction that prevents the consummation of
the transactions contemplated by this Agreement, that prohibits PCBM's
acquisition of the MAS XIX Shares or the PCBM Shares or that will require any
divestiture as a result of PCBM's acquisition of the MAS XIX Shares or that will
require all or any part of the business of PCBM to be held separate and no
litigation or proceedings seeking the issuance of such an injunction, order or
decree or seeking to impose substantial penalties on PCBM or MAS XIX if this
Agreement is consummated shall be pending.
3.2 Representations, Warranties and Agreements. (a) The
representations and warranties of the Shareholder set forth in this Agreement
shall be true and complete in all material respects as of the Closing Date as
though made at such time, and (b) the Shareholder shall have performed and
complied in all material respects with the agreements contained in this
Agreement required to be performed and complied with by it at or prior to the
Closing.
3.3 Regulatory Approvals. All licenses, authorizations, consents,
orders and regulatory approvals of Governmental Bodies necessary for the
consummation of PCBM's acquisition of the MAS XIX Shares shall have been
obtained and shall be in full force and effect.
3.4 Resignations of Director. Effective on the Closing Date, all of
officers and directors shall have resigned as an officer, director and employee
of MAS XIX.
<PAGE>
4. CONDITIONS TO THE SHAREHOLDER'S OBLIGATIONS.
The obligations of the Shareholder to effect the Closing shall be subject
to the satisfaction at or prior to the Closing of the following conditions, any
one or more of which may be waived by the Shareholder:
4.1 No Injunction. There shall not be in effect any injunction, order
or decree of a court of competent jurisdiction that prevents the consummation of
the transactions contemplated by this Agreement, that prohibits PCBM's
acquisition of the MAS XIX Shares or the Shareholder's acquisition of the PCBM
Shares or that will require any divestiture as a result of PCBM's acquisition of
the Shares or the Shareholder's acquisition of the PCBM Shares or that will
require all or any part of the business of PCBM or MAS XIX to be held separate
and no litigation or proceedings seeking the issuance of such an injunction,
order or decree or seeking to impose substantial penalties on PCBM or MAS XIX if
this Agreement is consummated shall be pending.
4.2 Representations, Warranties and Agreements. (a) The
representations and warranties of PCBM set forth in this Agreement shall be true
and complete in all material respects as of the Closing Date as though made at
such time, and (b) PCBM shall have performed and complied in all material
respects with the agreements contained in this Agreement required to be
performed and complied with by it at or prior to the Closing.
4.3 Regulatory Approvals. All licenses, authorizations, consents,
orders and regulatory approvals of Governmental Bodies necessary for the
consummation of PCBM's acquisition of the MAS XIX Shares and the Shareholder's
acquisition of the PCBM Shares shall have been obtained and shall be in full
force and effect.
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER.
The Shareholder represents and warrants to PCBM that, to the Knowledge of
the Shareholder, and except as set forth in an MAS XIX Disclosure Letter:
5.1 Authorization. The Shareholder is a corporation duly organized,
validly existing and in good standing under the laws of the state of California.
This Agreement constitutes a valid and binding obligation of the Shareholder,
enforceable against it in accordance with its terms.
5.2 Capitalization. The authorized capital stock of MAS XIX consists
of 80,000,000 authorized shares of stock, par value $.001, and 20,000,000
preferred shares, par value $.001, of which 8,519,800 common shares are
presently issued and outstanding. No shares have been registered under state or
federal securities laws. As of the Closing Date there will not be outstanding
any warrants, options or other agreements on the part of MAS XIX obligating MAS
XIX to issue any additional shares of common or preferred stock or any of its
securities of any kind.
<PAGE>
5.3 Ownership of MAS XIX Shares. The delivery of certificates to PCBM
provided in Section 2.2 will result in PCBM's immediate acquisition of record
and beneficial ownership of the MAS XIX Shares, free and clear of all
Encumbrances subject to applicable State and Federal securities laws.
5.4 Consents and Approvals of Governmental Authorities. Except with
respect to applicable State and Federal securities laws, no consent, approval or
authorization of, or declaration, filing or registration with, any Governmental
Body is required to be made or obtained by MAS XIX or PCBM or any of its
Subsidiaries in connection with the execution, delivery and performance of this
Agreement by MAS XIX or the consummation of the sale of the MAS XIX Shares to
PCBM.
5.5 Financial Statements. MAS XIX has delivered to PCBM the
consolidated balance sheet of MAS XIX as at June 30, 1998 and June 30, 1999,
and statements of income and changes in financial position for the fiscal years
then ended and the period from inception to the period then ended, together with
the report thereon of MAS XIX's independent accountant (the "MAS XIX Financial
Statements"). The MAS XIX Financial Statements are accurate and complete in
accordance with generally accepted accounting principles. The independent
accountants for MAS XIX will furnish any and all work papers required by PCBM
and will sign any and all consents required to be signed to include the
financial statements of PCBM in any subsequent filing by PCBM.
5.6 Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any court or Governmental Body pending or threatened
in writing against or involving MAS XIX which is likely to have a material
adverse effect on the business or financial condition of MAS XIX, PCBM and any
of their Subsidiaries, taken as whole, or which would require a payment by MAS
XIX in excess of $2,000 in the aggregate or which questions or challenges the
validity of this Agreement. MAS XIX is not subject to any judgment, order or
decree that is likely to have a material adverse effect on the business or
financial condition of MAS XIX, PCBM or any of their Subsidiaries, taken as a
whole, or which would require a payment by MAS XIX in excess of $2,000 in the
aggregate.
5.7 Absence of Certain Changes. Since the date of the MAS XIX Financial
Statements, MAS XIX has not:
1. suffered the damage or destruction of any of its properties or assets
(whether or not covered by insurance) which is materially adverse to the
business or financial condition of MAS XIX or made any disposition of any of
its material properties or assets other than in the ordinary course of business;
2. made any change or amendment in its certificate of incorporation or
by-laws, or other governing instruments;
<PAGE>
3. issued or sold any Equity Securities or other securities, acquired,
directly or indirectly, by redemption or otherwise, any such Equity Securities,
reclassified, split-up or otherwise changed any such Equity Security, or granted
or entered into any options, warrants, calls or commitments of any kind with
respect thereto;
4. organized any new Subsidiary or acquired any Equity Securities of any
Person or any equity or ownership interest in any business;
5. borrowed any funds or incurred, or assumed or become subject to, whether
directly or by way of guarantee or otherwise, any obligation or liability with
respect to any such indebtedness for borrowed money;
6. paid, discharged or satisfied any material claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than in the ordinary course
of business;
7. prepaid any material obligation having a maturity of more than 90 days
from the date such obligation was issued or incurred;
8. canceled any material debts or waived any material claims or rights,
except in the ordinary course of business;
9. disposed of or permitted to lapse any rights to the use of any material
patent or registered trademark or copyright or other intellectual property owned
or used by it;
10. granted any general increase in the compensation of officers or
employees (including any such increase pursuant to any employee benefit plan);
11. purchased or entered into any contract or commitment to purchase any
material quantity of raw materials or supplies, or sold or entered into any
contract or commitment to sell any material quantity of property or assets,
except (i) normal contracts or commitments for the purchase of, and normal
purchases of, raw materials or supplies, made in the ordinary course business,
(ii) normal contracts or commitments for the sale of, and normal sales of,
inventory in the ordinary course of business, and (iii) other contracts,
commitments, purchases or sales in the ordinary course of business;
12. made any capital expenditures or additions to property, plant or
equipment or acquired any other property or assets (other than raw materials and
supplies) at a cost in excess of $100,000 in the aggregate;
13. written off or been required to write off any notes or accounts
receivable in an aggregate amount in excess of $2,000;
14. written down or been required to write down any inventory in an
aggregate amount in excess of $ 2,000;
1.
<PAGE>
15. entered into any collective bargaining or union contract or agreement;
or
16. other than the ordinary course of business, incurred any liability
required by generally accepted accounting principles to be reflected on a
balance sheet and material to the business or financial condition of MAS XIX.
5.8 No Material Adverse Change. Since the date of the MAS XIX Financial
Statements, there has not been any material adverse change in the business or
financial condition of MAS XIX.
5.9 Brokers or Finders. Other than James Stubler, the Shareholder has
not employed any broker or finder or incurred any liability for any brokerage or
finder's fees or commissions or similar payments in connection with the sale of
the MAS XIX Shares to PCBM.
6. REPRESENTATIONS AND WARRANTIES OF PCBM.
PCBM represents and warrants to the Shareholder that, to the Knowledge of
PCBM (which limitation shall not apply to Section 6.3). Such representations
and warranties shall survive the Closing for a period of two years.
6.1 Organization of PCBM; Authorization. PCBM is a corporation duly
organized, validly existing and in good standing under the laws of Nevada with
full corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate action of
PCBM and this Agreement constitutes a valid and binding obligation of PCBM;
enforceable against it in accordance with its terms.
6.2 Capitalization. The authorized capital stock of PCBM consists of
200,000,000 shares of common stock, par value $0.001 per share, and 100,000,000
shares of preferred stock, par value $0.001 per share. As of the date of this
Agreement, PCBM had approximately 151,962,686 shares of common stock issued and
outstanding, and no shares of Preferred Stock issued and outstanding. As of the
Closing Date, all of the issued and outstanding shares of common stock of PCBM
are validly issued, fully paid and non-assessable. The Common Stock of PCBM is
presently listed and trading on the Nasdaq Over-the-Counter Bulletin Board under
the symbol "PCBME."
6.3 Ownership of PCBM Shares. The delivery of certificates to MAS XIX
provided in Section 2.3 will result in the Shareholder or assigns immediate
acquisition of record and beneficial ownership of the PCBM Shares, free and
clear of all Encumbrances other than as required by Federal and State securities
laws.
<PAGE>
6.4 No Conflict as to PCBM and Subsidiaries. Neither the execution and
delivery of this Agreement nor the consummation of the sale of the PCBM Shares
to the Shareholders will (a) violate any provision of the certificate of
incorporation or by-laws (or other governing instrument) of PCBM or any of its
Subsidiaries or (b) violate, or be in conflict with, or constitute a default (or
an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or excuse performance by any Person of any of its obligations
under, or cause the acceleration of the maturity of any debt or obligation
pursuant to, or result in the creation or imposition of any Encumbrance upon any
property or assets of PCBM or any of its Subsidiaries under, any material
agreement or commitment to which PCBM or any of its Subsidiaries is a party or
by which any of their respective property or assets is bound, or to which any of
the property or assets of PCBM or any of its Subsidiaries is subject, or (c)
violate any statute or law or any judgment, decree, order, regulation or rule of
any court or other Governmental Body applicable to PCBM or any of its
Subsidiaries except, in the case of violations, conflicts, defaults,
terminations, accelerations or Encumbrances described in clause (b) of this
Section 6.4, for such matters which are not likely to have a material adverse
effect on the business or financial condition of PCBM and its Subsidiaries,
taken as a whole.
6.5 Consents and Approvals of Governmental Authorities. No consent,
approval or authorization of, or declaration, filing or registration with, any
Governmental Body is required to be made or obtained by PCBM or any of either of
their Subsidiaries in connection with the execution, delivery and performance of
this Agreement by PCBM or the consummation of the sale of the PCBM Shares to the
Shareholders.
6.6 Other Consents. No consent of any Person is required to be obtained
by MAS XIX or PCBM to the execution, delivery and performance of this Agreement
or the consummation of the sale of the PCBM Shares to the Shareholders,
including, but not limited to, consents from parties to leases or other
agreements or commitments, except for any consent which the failure to obtain
would not be likely to have a material adverse effect on the business and
financial condition of MAS XIX or PCBM.
6.7 Financial Statements. Prior to closing, PCBM shall have delivered
to the Shareholder consolidated balance sheets of PCBM and its Subsidiaries as
at December 31, 1998 and 1997, and statements of income and changes in financial
position for each of the periods then ended, together with the report thereon of
PCBM's independent accountant (the "PCBM Financial Statements"). PCBM will file,
no later than April 15, 2000, a Form 10-K which shall include audited financial
statements of PCBM as of December 31, 1999. Such PCBM Financial Statements and
notes fairly present the consolidated financial condition and results of
operations of PCBM and its Subsidiaries as at the respective dates thereof and
for the periods therein referred to, all in accordance with generally accepted
United States accounting principles consistently applied throughout the periods
involved, except as set forth in the notes thereto, and shall be utilizable in
any SEC filing in compliance with Rule 310 of Regulation S-B promulgated under
the Securities Act.
<PAGE>
6.8 Brokers or Finders. Other than M. Richard Cutler, Brian Lebrecht,
Vi Bui, James Stubler and Samuel Eisenberg, PCBM has not employed any broker or
finder or incurred any liability for any brokerage or finder's fees or
commissions or similar payments in connection with the sale of the PCBM Shares
to the Shareholders.
6.9 Purchase for Investment. PCBM is purchasing the MAS XIX Shares
solely for its own account for the purpose of investment and not with a view to,
or for sale in connection with, any distribution of any portion thereof in
violation of any applicable securities law.
7. Access and Reporting; Filings With Governmental Authorities; Other
Covenants.
7.1 Access Between the date of this Agreement and the Closing Date.
Each of the Shareholder and PCBM shall (a) give to the other and its authorized
representatives reasonable access to all plants, offices, warehouse and other
facilities and properties of MAS XIX or PCBM, as the case may be, and to its
books and records, (b) permit the other to make inspections thereof, and (c)
cause its officers and its advisors to furnish the other with such financial and
operating data and other information with respect to the business and properties
of such party and its Subsidiaries and to discuss with such and its authorized
representatives its affairs and those of its Subsidiaries, all as the other may
from time to time reasonably request.
7.2 Regulatory Matters. The Shareholder and PCBM shall (a) file with
applicable regulatory authorities any applications and related documents
required to be filed by them in order to consummate the contemplated transaction
and (b) cooperate with each other as they may reasonably request in connection
with the foregoing.
8. CONDUCT OF MAS XIX'S BUSINESS PRIOR TO THE CLOSING. The Shareholder
shall use its best efforts to ensure the following:
8.1 Operation in Ordinary Course. Between the date of this Agreement
and the Closing Date, MAS XIX shall cause conduct its businesses in all material
respects in the ordinary course.
8.2 Business Organization. Between the date of this Agreement and the
Closing Date, MAS XIX shall (a) preserve substantially intact the business
organization of MAS XIX; and (b) preserve in all material respects the present
business relationships and good will of MAS XIX.
8.3 Corporate Organization. Between the date of this Agreement and the
Closing Date, MAS XIX shall not cause or permit any amendment of its certificate
of incorporation or by-laws (or other governing instrument) and shall not:
1. issue, sell or otherwise dispose of any of its Equity Securities, or
create, sell or otherwise dispose of any options, rights, conversion rights or
other agreements or commitments of any kind relating to the issuance, sale or
disposition of any of its Equity Securities;
1.
<PAGE>
2. create or suffer to be created any Encumbrance thereon, or create, sell
or otherwise dispose of any options, rights, conversion rights or other
agreements or commitments of any kind relating to the sale or disposition of any
Equity Securities;
3. reclassify, split up or otherwise change any of its Equity Securities;
d. be party to any merger, consolidation or other business combination;
4. sell, lease, license or otherwise dispose of any of its properties or
assets (including, but not limited to rights with respect to patents and
registered trademarks and copyrights or other proprietary rights), in an amount
which is material to the business or financial condition of MAS XIX except in
the ordinary course of business; or
5. organize any new Subsidiary or acquire any Equity Securities of any
Person or any equity or ownership interest in any business.
8.4 Other Restrictions. Between the date of this Agreement and the
Closing Date, MAS XIX shall not:
1. borrow any funds or otherwise become subject to, whether directly or by
way of guarantee or otherwise, any indebtedness for borrowed money;
2. create any material Encumbrance on any of its material properties or
assets;
3. increase in any manner the compensation of any director or officer or
increase in any manner the compensation of any class of employees;
4. create or materially modify any material bonus, deferred compensation,
pension, profit sharing, retirement, insurance, stock purchase, stock option, or
other fringe benefit plan, arrangement or practice or any other employee benefit
plan (as defined in section 3(3) of ERISA);
5. make any capital expenditure or acquire any property or assets;
6. enter into any agreement that materially restricts PCBM, MAS XIX or any
of their Subsidiaries from carrying on business;
7. pay, discharge or satisfy any material claim, liability or obligation,
absolute, accrued, contingent or otherwise, other than the payment, discharge or
satisfaction in the ordinary course of business of liabilities or obligations
reflected in the MAS XIX Financial Statements or incurred in the ordinary course
of business and consistent with past practice since the date of the MAS XIX
Financial Statements; or
8. cancel any material debts or waive any material claims or rights.
9. DEFINITIONS.
As used in this Agreement, the following terms have the meanings specified
or referred to in this Section 9.
9.1 "Business Day" C Any day that is not a Saturday or Sunday or a day
on which banks located in the City of New York are authorized or required to be
closed.
9.2 "Code" C The Internal Revenue Code of 1986, as amended.
<PAGE>
9.3 "Encumbrances" C Any security interest, mortgage, lien, charge,
adverse claim or restriction of any kind, including, but not limited to, any
restriction on the use, voting, transfer, receipt of income or other exercise of
any attributes of ownership, other than a restriction on transfer arising under
Federal or state securities laws.
9.4 "Equity Securities" C See Rule 3aB11B1 under the Securities
Exchange Act of 1934.
9.5 "ERISA" C The Employee Retirement Income Security Act of 1974, as
amended.
9.6 "Governmental Body" C Any domestic or foreign national, state or
municipal or other local government or multi-national body (including, but not
limited to, the European Economic Community), any subdivision, agency,
commission or authority thereof.
9.7 "Knowledge" C Actual knowledge, after reasonable investigation.
9.8 "Person" C Any individual, corporation, partnership, joint venture,
trust, association, unincorporated organization, other entity, or Governmental
Body.
9.9 "Subsidiary" C With respect to any Person, any corporation of which
securities having the power to elect a majority of that corporation's Board of
Directors (other than securities having that power only upon the happening of a
contingency that has not occurred) are held by such Person or one or more of its
Subsidiaries.
10. TERMINATION.
10.1 Termination. This Agreement may be terminated before the Closing
occurs only as follows:
1. By written agreement of the Shareholder and PCBM at any time.
2. By PCBM, by notice to the Shareholders at any time, if one or more of the
conditions specified in Section 3 is not satisfied at the time at which the
Closing (as it may be deferred pursuant to Section 2.1) would otherwise occur or
if satisfaction of such a condition is or becomes impossible.
3. By the Shareholder, by notice to PCBM at any time, if one or more of the
conditions specified in Section 4 is not satisfied at the time at which the
Closing (as it may be deferred pursuant to Section 2.1), would otherwise occur
of if satisfaction of such a condition is or becomes impossible.
4. By either the Shareholders or PCBM, by notice to the other at any time
after March 6, 2000, if the transaction has not been completed.
10.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 10.1, this Agreement shall terminate without any liability or further
obligation of any party to another.
<PAGE>
13. NOTICES. All notices, consents, assignments and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given when (a) delivered by hand, (b) sent by telex or facsimile (with receipt
confirmed), provided that a copy is mailed by registered mail, return receipt
requested, or (c) received by the delivery service (receipt requested), in each
case to the appropriate addresses, telex numbers and facsimile numbers set forth
below (or to such other addresses, telex numbers and facsimile numbers as a
party may designate as to itself by notice to the other parties).
(a) If to PCBM:
Pinnacle Business Management, Inc.
2963 Gulf to Bay Boulevard, Suite 265
Clearwater, Florida 33759
Facsimile (____) ___________________
Attn: Michael Bruce Hall, President
(b) If to the Shareholder:
c/o Cutler Law Group
610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
Facsimile No.: (949) 719-1988
Attention: M. Richard Cutler, Esq.
14. MISCELLANEOUS.
14.2 Expenses. Each party shall bear its own expenses incident to the
preparation, negotiation, execution and delivery of this Agreement and the
performance of its obligations hereunder.
14.3 Captions. The captions in this Agreement are for convenience of
reference only and shall not be given any effect in the interpretation of this
agreement.
14.4 No Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
14.5 Exclusive Agreement; Amendment. This Agreement supersedes all prior
agreements among the parties with respect to its subject matter with respect
thereto and cannot be changed or terminated orally.
14.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument.
14.7 Governing Law, Venue. This Agreement and (unless otherwise provided)
all amendments hereof and waivers and consents hereunder shall be governed by
the internal law of the State of California, without regard to the conflicts of
law principles thereof. Venue for any cause of action brought to enforce any
part of this Agreement shall be in Orange County, California.
<PAGE>
14.8 Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns,
provided that neither party may assign its rights hereunder without the consent
of the other, provided that, after the Closing, no consent of MAS XIX or the
Shareholder shall be needed in connection with any merger or consolidation of
PCBM with or into another entity.
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement
to be executed by their respective offi-cers, hereunto duly authorized, and
entered into as of the date first above written.
PINNACLE BUSINESS MANAGEMENT, INC.
a Nevada corporation
/s/ Michael Bruce Hall
____________________________________________________
By: Michael Bruce Hall, President
MRC LEGAL SERVICES CORPORATION
/s/ M. Richard Cutler
____________________________________________________
By: M. Richard Cutler, President
<PAGE>
EXHIBIT A
MAS XIX SHAREHOLDER AND ASSIGNS
Shareholder PCBM Shares to be Issued
- ----------- ----------------------------
MRC Legal Services LLC 663,000
Brian A. Lebrecht 204,000
Vi Bui 153,000
MAS Capital Inc. 300,000
James Stubler 60,000
Samuel Eisenberg 120,000
TOTAL 1,500,000
CONSULTING AGREEMENT
CONSULTING AGREEMENT dated as of March 3, 2000 between PINNACLE BUSINESS
MANAGEMENT, INC., a Nevada corporation, ("PCBM"), on the one hand, and M.
RICHARD CUTLER ("Cutler"), BRIAN A. LEBRECHT ("Lebrecht"), VI BUI ("Bui"),
JAMES STUBLER ("Stubler"), and SAMUEL EISENBERG ("Eisenberg", and, together with
Cutler, Lebrecht, Bui, and Stubler, the "Consultants"), on the other hand.
WHEREAS:
A. Consultants have agreed to render consulting services with regard to
the negotiation and completion of a stock exchange between PCBM and the majority
shareholder of MAS Acquisition XIX Corp., an Indiana corporation (the "MAS XIX
Shareholder").
B. In the event PCBM is able to complete the Stock Exchange with the
MAS XIX Shareholder, PCBM wishes to compensate Consultants for their consulting
services.
NOW THEREFORE, it is agreed:
1. Stock Compensation. PCBM shall pay and cause to be issued to the
-------------------
Consultants a consulting fee of 1,500,000 shares of common stock of PCBM (the
"Shares") immediately upon the execution of a stock exchange agreement with the
MAS XIX Shareholder. Such shares shall be subject to registration by PCBM on
Form S-8 within 7 days of PCBM closing on the stock exchange agreement with the
MAS XIX Shareholder. The Consultants agree to prepare and file the S-8
Registration Statement at their sole expense. The parties agree that the value
of the Shares is equal to 50% of the closing bid price on the date of this
Agreement. The shares shall be issued as follows: 873,500 to Cutler, 238,000 to
Lebrecht, 178,500 to Bui, 70,000 to Stubler, and 140,000 to Eisenberg.
2. Miscellaneous. This Agreement (i) shall be governed by the laws of
-------------
the State of California; (ii) may be executed in counterparts each of which
shall constitute an original; (iii) shall be binding upon the successors,
representatives, agents, officers and directors of the parties; and (iv) may not
be modified or changed except in a writing signed by all parties.
<PAGE>
This Consulting Agreement has been executed as of the date first above
written.
PINNACLE BUSINESS MANAGEMENT, INC.
/s/ Michael Bruce Hall
____________________________________________________
By: Michael Bruce Hall, President
CONSULTANTS
/s/ M. Richard Cutler
____________________________________________________
M. Richard Cutler
/s/ Brian A. Lebrecht
____________________________________________________
Brian A. Lebrecht
/s/ Vi Bui
____________________________________________________
Vi Bui
/s/ James Stubler
____________________________________________________
James Stubler
/s/ Samuel Eisenberg
____________________________________________________
Samuel Eisenberg
ARTICLES
OF
INCORPORATION
SECRETARY OF STATE
OF NEVADA
CORPORATE CHARTER
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that PINNACLE BUSINESS MANAGEMENT INC. did on MAY 09, 1997, DID
FILE in this office the original Articles of Incorporation; that said Articles
are now on file and of record in the office of the Secretary of State of the
State of Nevada, and further, that said Articles contain all the provisions
required by the law of said State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Great Seal of
State, at my office, in Carson City, Nevada, on May 28, 1997.
Secretary of State
By: ________________________________
Certification Clerk
<PAGE>
ARTICLES OF INCORPORATION
-------------------------
OF
--
PINNACLE BUSINESS MANAGEMENT INC.
---------------------------------
KNOW ALL MEN BY THESE PRESENTS, that we the undersigned, do hereby
associate into a corporation under and pursuant to the provisions and by virtue
of the laws of the State of Nevada, as provided in the Corporation Act of 1925,
and all acts amendatory and supplemental thereto, and for that purpose do hereby
make, subscribe, acknowledge, certify and set forth as follows;
FIRST: That the name of the corporation shall be:
-----
PINNACLE BUSINESS MANAGEMENT INC.
SECOND: The corporation may maintain offices, agencies and places of
------
business in any state in the United States and foreign countries without
restriction as to place; and the corporation may keep such books, papers and
records of the corporation as are not required by law to be kept within the
State of Nevada, and as the Directors may find convenient, in such offices,
agencies and places of business.
THIRD: The nature of the business to be transacted and the objects and
-----
purposes to be promoted and carried on by the corporation shall be as follows:
a) The provisions in the clauses contained in this Article are to be
construed both as purposes and powers and shall, except when otherwise expressed
in this Article be in no wise limited or restricted by reference to or inference
from the terms of any clause of this, or of any other Article of these Articles,
but each of the purposes and powers specified in this Article shall be regarded
as independent purposes and powers; and the specification herein contained of
particular powers is not intended to be, and shall not be held to be, in
limitation of the general powers herein contained, or in limitation of the
powers granted to corporations under the laws of the State of Nevada, but is
intended to be, and shall be held to be, in furtherance thereof.
b) To engage in and conduct every type of building and/or contracting
and/or mining work in the State of Nevada and in every state and territory of
the United States, and/or in any foreign country, including, but not limited to
the construction of all types of building, highways, mining developments,
irrigation works, naval and military installations, docks, piers, airports,
ranching and farming projects, and also to engage in every type and manner of
activity incidental thereto; and in connection with or independently of the
above, to own, lease and rent and/or in any manner deal with and trade in every
type and manner of motor vehicles, machinery, equipment, merchandise and
<PAGE>
supplies, and to manage, operate and conduct every type and manner of business
in which such may be employed: to enter into every kind and manner of contract
and agreement concerning such work: to give and post bond for the faithful
performance thereof; and without limitation, except as may be imposed by law; to
do every act and thing necessary and/or required in the carrying on, operating
and conducting of a general contracting business; to engage in the
transportation of passengers and commodities both intrastate and interstate, and
within the State of Nevada, and in any other state and territory in the United
States and/or in any foreign country; to build, rent, lease, buy, sell, own,
operate and manage machine shops, foundries, garages, service stations, depots,
hotels, restaurants, taxi cabs, stages, bus lines, freight lines, passenger and
transportation lines, railroads and steamships, and airlines.
d) To manufacture, purchase, sell and deal in, export and import personal
property of all kinds other than and in addition to goods, wares and merchandise
hereinbefore set forth and described, and to pledge, hypothecate, or to
otherwise encumber the same in any manner whatsoever, or to borrower thereon, in
such ways and to such extent as may be prescribed or required by the laws of any
state of the United States or any other country.
e) To mortgage, pledge, hypothecate and trade in all manner of goods,
wares, merchandise, commodities and products, including machinery and mechanical
appliances of every description.
f) To acquire by purchase, lease or otherwise, the good will, business,
property, assets, franchises and rights, in whose or in part of any person,
firm, association or corporation; and to assume all or any of the liabilities
thereof and to pay for the same in cash, with the stock of this corporation or
its debentures, or bonds, or otherwise, and to hold, maintain, operate and
conduct, as well as in any manner to dispose of, the whole or any pert of the
property so acquired, but always in accordance with, and subject to, the laws of
the State of Nevada.
g) To borrow money and contract debts when necessary for the transaction of
the business of the corporation, for the exercise of its corporate rights,
privileges or franchises, or for any other purpose of its incorporation; also to
issue bonds, promissory notes, bills of exchange, debentures and other
obligations and also evidences of indebtedness, payable at specified time or
times, or payable upon the happening of a specified event or events, and when
necessary to secure the same by mortgage, pledge or otherwise, for money
borrowed, or goods purchases or for payment of property bought or acquired or
for any other lawful obligation; also to issue, sell and dispose of certificates
of investment or participation certificates, upon such terms and under such
conditions as are or may be prescribed by the laws of the State of Nevada, or by
the by-laws of the corporation.
h) To loan the funds of the corporation upon notes, bonds, mortgages, deeds
of trust, debentures or other securities, or property, real, personal or mixed,
or otherwise.
i) To receive, collect and dispose of principal and interest, dividends,
income, increment and profits upon or from all or any notes, stocks, bonds,
deeds of trust, debentures, securities, obligations and other property held,
owned or possessed by the corporation, or any other person, firm or corporation
as escrow or trustee or for the use and benefit of the corporation and to
exercise in respect of all such stocks, bonds, mortgages, deeds of trust, notes,
debentures, obligations, securities and all other property and any and all
bonds, any and all rights of individual ownership thereof.
<PAGE>
j) To purchase, acquire and to hold, use, operate, introduce, sell, assign
or otherwise dispose of, hire, let or license, any patents, patent rights,
licenses, trademarks, trade names, privileges, formulas, secret processes, and
any and all inventions, improvements and processes used in connection with or
secured under letters patent and grants of the United States of America or any
other country or government, and which may appear likely to be advantageous or
useful to the corporation, and to use, exercise, develop, and grant licenses in
respect of and to turn to account, manufacture, build and construct under such
patents, licenses, processes and the like, inventions and improvements with the
view of working and developing the same and effectuating the foregoing objects
or any part thereof.
k) To act as agent, attorney in fact, trustee, or in any other
representative capacity for other persons, firms or corporations.
l) To guarantee, purchase, hold, sell, transfer, assign, mortgage, pledge
or otherwise dispose of the shares of the capital stock, or of any bonds,
securities or evidences of indebtedness, created by any other corporation or
corporations of the State of Nevada, or of any other state or government, and
while owner of such stocks to exercise all rights, powers and privileges or
ownership, including the right to vote thereon.
m) To purchase, hold, sell, transfer and re-issue shares of its own stock,
but always in accordance with, and as permitted by, the laws of the State of
Nevada, and the by-laws of the corporation.
n) To enter into, make and perform contracts of every kind with any person,
firm, association or corporation, public, private or municipal; or anybody
politic, and with any state of with the government of the United States or any
dependency thereof, as well as any foreign governments; and in general to carry
on and conduct and engage in any business in connection with the foregoing,
either as manufacturer, dealer, principal, agents, or otherwise permitted to
corporations organized under the laws of Nevada.
o) To establish, maintain, operate, conduct and carry on in the State of
Nevada and in any or all of the several states, territories, possessions and
dependencies of the United States, the District of Columbia, and in any foreign
country, its business or any part or parts thereof, and as many other
businesses, stores, plants, factories, mills, warehouses, offices, and agencies
as may be necessary or deemed expedient for the corporation and its business, as
well as for the extension, expansion and exploitation of the affairs, operation
and benefit of the corporation.
p) To elect not to be taxed as a corporation, but as a Subchapter S
Corporation under the United States Internal Revenue Code.
q) And generally to do all and everything necessary, suitable, convenient
or proper for the accomplishment of any of the purposes or the attainment of any
of the objects or the furtherance of any of the powers hereinbefore set forth,
either alone or in association with other corporations, firms, or individuals,
and to do every other act or thing incidental or pertaining to or growing out of
the aforesaid purposes or powers, and/or any of them, provided the same be not
<PAGE>
inconsistent with the laws of the State of Nevada; and also to exercise any and
all of the powers conferred upon corporations, by the laws of the State of
Nevada which now exist or which may be hereafter conferred upon or granted to
corporations by the laws of the said State of Nevada.
r) In furtherance and not in limitation of the powers conferred by the laws
of the State of Nevada, the Board of Directors is expressly authorized from time
to time to determine whether and to what extent and at what times and places and
under what conditions and regulations the books and accounts of this
corporation, or any of them other than the stock ledger, shall be open to
inspection of the stockholders, and no stockholder shall have the right to
inspect any account or book or document of the corporation, except as conferred
by law or authorized by Resolution of the Directors or of the Stockholders.
FOURTH: This corporation is authorized to issue Twenty-Five Million
------
(25,000,000) shares of stock as follows: Fifteen Million (15,000,000) common
shares at one tenth of one cent ($.001) par value and Ten Million preferred
shares at one tenth of one cent ($.001) par value rights and privileges to be
set by the Board of Directors and no other class of stock shall be authorized.
All or part of the shares of the capital stock may be issued by the corporation
from time to time and for such consideration as may be determined upon and fixed
by the Board of Directors as provided by law.
FIFTH: The initial members of the Governing Board shall be known as
-----
Directors and the number thereof shall be One. A different number of Directors
may be fixed by the By-laws, provided, that the number may be increased or
decreased within the limit above specified from time to time pursuant to the
By-laws.
The names of the First Board, consisting of one (1) Director, shall be as
follows:
NAMES: David Wages
-----
ADDRESS: 500 East College Pkwy. #U384 Carson City, Nevada 89706
-------
SIXTH: The capital stock, after the value thereof has been paid in, shall
-----
be subject to no further assessment to pay debts of the corporation.
SEVENTH: The name of the incorporators signing this Articles of
-------
Incorporation is as follows:
NAMES: David Wages
-----
ADDRESS: 500 East College Pkwy. #U384 Carson City, Nevada 89706
-------
EIGHTH: This corporation is to have perpetual existence.
------
NINTH: In furtherance, and not in limitation of the powers conferred by
-----
statute, the Board of Directors is expressly authorized:
Subject to the By-laws, if any, adopted by the stockholders, to make,
alter or amend the By-laws of the corporation;
<PAGE>
To fix the amount to be reserved as working capital over and above its
capital stock paid in; to authorize and cause to be executed mortgages and liens
upon the real and personal property of this corporation;
From time to time, to determine whether, and to what extent, and at
what times and places, and under what conditions and regulations, the accounts
and books of this corporation (other than the original or duplicate stock
ledger), or any of them, shall be open to inspection of stockholders, and no
stockholder shall have any right or inspecting any account, book or document of
this corporation except as conferred by statute, unless authorized by a
Resolution of the Stockholders or Directors; By Resolution, or Resolutions,
passed by a majority of the whole board, to designate one or more committees,
each committee to consist of two or more of the directors of the corporation,
which, to the extent provided in said Resolutions, or Resolutions, or in the
by-laws of the corporation, shall have, and may exercise the powers of the Board
of Directors in the management of the business affairs of the corporation, and
may have power to authorize the seal of the corporation to be affixed to all
papers which may require it. Such committee, or committees, shall have such
name, or names, as may be stated in the by-laws of the corporation, or may be
determined by resolution adopted by the Board of Directors;
Pursuant to the affirmative note of the stockholders, of at least a
majority of the stock issued and outstanding, having voting power, given at a
stockholders' meeting duly called for that purpose, or when authorized by the
written consent of the holders of at least a majority of the voting stock issued
and outstanding, the Board of Directors shall have power and authority, at any
meeting, to sell, lease or exchange all of the property and assets of this
corporation, including its good will and its corporation franchises, upon such
terms and conditions as its Board of Directors deem expedient and for the best
interests of the corporation.
This corporation may, in its By-laws, confer powers upon its Directors in
addition to the foregoing, and in addition to the powers and authorities
expressly conferred upon them by statute.
TENTH: Both Stockholders and Directors shall have power, if the By-laws
-----
so provide, to hold their meetings, and to have one or more offices within or
without the State of Nevada, and to keep the books of this corporation (subject
to the requirements of the statutes) outside the State of Nevada at such places
as may from time to time be designated by the Board of Directors.
ELEVENTH: This corporation reserves the right to amend, alter, change or
--------
repeal any provision contained in these Articles of Incorporation, in the manner
now or hereafter prescribed by statute or by these Articles of Incorporation,
and all rights conferred upon stockholders herein are granted subject to this
reservation.
TWELFTH: Bruce Thompson whose address is 128 Fortune Drive Dayton, Nevada
-------
89403 will be the Resident Agent of the corporation.
I, Bruce Thompson, hereby accept appointment as Resident Agent, for the
above named corporation.
Dated this 09th day of May, 1997. ____________/s/__________
We, THE UNDERSIGNED, being the original incorporators hereinbefore named
for the purpose of forming a corporation to do business both within and without
the State of Nevada, and in pursuance of the Corporation Laws of the State of
Nevada, being Chapter 177 of the Laws of 1925, and the acts amendatory thereof
and supplemental thereto, do make and file this Certificate, hereby declaring
and certifying that the facts herein stated are true.
_____/s/______________
State of Nevada )
Carson City )
On this 09th day of May, 1997, in Carson City, Nevada, before me the
undersigned, a Notary Public in and for Carson City, State of Nevada personally
appeared:
David Wages
Known to me to be the person whose name is subscribed to the foregoing document
and acknowledged to me that he executed the same.
_______________________________
Notary Public
<PAGE>
AMENDEMENTS TO
ARTICLES OF INCORPORATION
March 5, 1998
THE BOARD OF DIRECTORS OF PINNACLE BUSINESS MANAGEMENT, INC. A NEVADA
CORPORATION, FILE NUMBER 10008-1997, AT A MEETING DULY CONVENED AND HELD ON THE
2ND DAY OF MARCH 1998, ADOPTED A RESOULTION TO AMEND THE ORIGINAL ARTICLES OF
INCORPORATION AS FOLLOWS:
THE FOURTH ARTICLE IS AMENDED TO READ AS FOLLOWS:
THIS CORPORATION IS AUTHORIZED TO ISSUE THIRTY MILLION (30,000,000) SHARES
OF STOCK AS FOLLOWS: TWENTY MILLION (20,000,000) COMMON SHARES AT ONE-TENTH OF
ONE CENT ($.001) PAR VALUE AND TEN MILLION (10,000,000) PREFERRED SHARES AT
ONE-TENTH OF ONE CENT ($.001) RIGHTS AND PRIVILEGES TO BE SET BY THE BOARD OF
DIRECTORS AND NO OTHER CLASS OF STOCK SHALL BE AUTORIED. ALL OR PART OF THE
SHARES OF THE CAPITAL STOCK MAY BE ISSUED BY THE CORPORATION FROM TIME TO TIME
AND FOR SUCH CONSIDERATION AS MAY BE DETERMINED UPON AND FIXED BY THE BOARD OF
DIRECTORS, AS PROVIDED BY LAW.
THE NUMBER OF SHARES OF THE CORPORATION OUTSTANDING AND ENTITLED TO VOTE ON
AN AMENDMENT TO THE ARTICLES OF INCORPORATION IS 14,851,000; THAT THE SAID
CHANGE AND AMENDMENT HAS BEEN CONSENTED TO AND APPROVED BY A MAJORITY VOTE OF
THE STOCKHOLDERS HOLDING AT LEAST A MAJORITY OF EACH CLASS OF STOCK OUTSTANDING
AND ENTITLED TO VOTE THEREON.
___________/s/____________________'
M. Bruce Hall, President
_____________/s/__________________'
Fred Schultz Secretary
<PAGE>
AMENDEMENTS TO
ARTICLES OF INCORPORATION
March 1, 1999
THE BOARD OF DIRECTORS OF PINNACLE BUSINESS MANAGEMENT, INC. A NEVADA
CORPORATION, FILE NUMBER 10008-1997, AT A MEETING DULY CONVENED AND HELD ON THE
22ND DAY OF FEBRUARY 1999, ADOPTED A RESOULTION TO AMEND THE ORIGINAL ARTICLES
OF INCORPORATION AS FOLLOWS:
THE FOURTH ARTICLE IS AMENDED TO READ AS FOLLOWS:
---------------
THIS CORPORATION IS AUTHORIZED TO ISSUE ONE HUNDRED MILLION (100,000,000)
SHARES OF STOCK AS FOLLOWS: FIFTY MILLION (50,000,000) COMMON SHARES AT
ONE-TENTH OF ONE CENT ($.001) PAR VALUE AND FIFTY MILLION (50,000,000) PREFERRED
SHARES AT ONE-TENTH OF ONE CENT ($.001) PAR VALUE. THE BOARD OF DIRECTORS HAS
THE AUTHORITY TO PRESCRIBE BY RESOLUITON, THE VOTING POWER, DESIGNATIONS,
PREFERENCES, LIMITATIONS, RESTRICTIONS AND RELATIVE RIGHTS OF EACH CLASS AND
SERIES OF STOCK ALL OR PART OF THE AGGREGATE AMOUNT OF THE SHARES OF STOCK MAY
BE ISSUED BY THE CORPORATION FROM TIMETO TIME AND FOR SUCH CONSIDERATION AS MAY
BE DETERMINED AND FIXED BY THE BOARD OF DIRECTORS, AS PROVIDED BY LAW.
THE NUMBER OF SHARES OF THE CORPORATION OUTSTANDING AND ENTITLED TO VOTE ON
AN AMENDMENT TO THE ARTICLES OF INCORPORATION IS 16,123,000; THAT THE SAID
CHANGE AND AMENDMENT HAS BEEN CONSENTED TO AND APPROVED BY A MAJORITY VOTE OF
THE STOCKHOLDERS HOLDING AT LEAST A MAJORITY OF EACH CLASS OF STOCK OUTSTANDING
AND ENTITLED TO VOTE THEREON.
___________/s/____________________'
M. Bruce Hall, President
_____________/s/__________________'
Fred Schultz Secretary
<PAGE>
AMENDEMENTS TO
ARTICLES OF INCORPORATION
June 1, 1999
THE BOARD OF DIRECTORS OF PINNACLE BUSINESS MANAGEMENT, INC. A NEVADA
CORPORATION, FILE NUMBER 10008-1997, AT A MEETING DULY CONVENED AND HELD ON THE
26th DAY OF JUNE 1999, ADOPTED A RESOULTION TO AMEND THE ORIGINAL ARTICLES OF
INCORPORATION AS FOLLOWS:
THE FOURTH ARTICLE IS AMENDED TO READ AS FOLLOWS:
THIS CORPORATION IS AUTHORIZED TO ISSUE ONE HUNDRED FIFTY MILLION
(150,000,000) SHARES OF STOCK AS FOLLOWS: ONE HUNDRED MILLION (100,000,000)
COMMON SHARES AT ONE-TENTH OF ONE CENT ($.001) PAR VALUE AND FIFTY MILLION
(50,000,000) PREFERRED SHARES AT ONE-TENTH OF ONE CENT ($.001) PAR VALUE. THE
BOARD OF DIRECTORS HAS THE AUTHORITY TO PRESCRIBE BY RESOLUITON, THE VOTING
POWER, DESIGNATIONS, PREFERENCES, LIMITATIONS, RESTRICTIONS AND RELATIVE RIGHTS
OF EACH CLASS AND SERIES OF STOCK, ALL OR PART OF THE AGGREGATE AMOUNT OF THE
SHARES OF STOCK MAY BE ISSUED BY THE CORPORATION FROM TIMETO TIME AND FOR SUCH
CONSIDERATION AS MAY BE DETERMINED AND FIXED BY THE BOARD OF DIRECTORS, AS
PROVIDED BY LAW
THE NUMBER OF SHARES OF THE CORPORATION OUTSTANDING AND ENTITLED TO VOTE ON
AN AMENDMENT TO THE ARTICLES OF INCORPORATION IS 18,500,000; THAT THE SAID
CHANGE AND AMENDMENT HAS BEEN CONSENTED TO AND APPROVED BY A MAJORITY VOTE OF
THE STOCKHOLDERS HOLDING AT LEAST A MAJORITY OF EACH CLASS OF STOCK OUTSTANDING
AND ENTITLED TO VOTE THEREON.
___________/s/____________________'
M. Bruce Hall, President
_____________/s/__________________'
Fred Schultz Secretary
<PAGE>
ARTICLES OF AMENDMENT
FEBRURARY 22, 2000
THE BOARD OF DIRECTORS OF PINNACLE BUSINESS MANAGEMENT, INC. A NEVADA
CORPORATION, FILE NUMBER 10008- 1997 AT A MEETING DULY CONVENED AND HELD ON THE
7TH DAY OF FEBRUARY 2000, ADOPTED A RESOLUTION TO AMEND THE ORIGINAL ARTICLES OF
INCORPORATION AS FOLLOWS:
THE FOURTH ARTICLE IS AMENED TO READ AS FOLLOWS:
THE CORPORATION IS AUTHORIZED TO ISSUE TWO HUNDRED FIFTY MILLION
(250,000,000) SHARES OF STOCK AS FOLLOWS: TWO HUNDRED MILLION (200,000,000)
COMMON SHARES AT ONE-TENTH OF ONE CENT ($.001) PAR VALUE AND FIFTY MILLION
(50,000,000) PREFERRED SHARES AT ONE-TENTH OF ONE CENT ($.001) PAR VALUE. THE
BOARD OF DIRECTORS HAS THE AUTHORITY TO PRESCRIBE, BY RESOLUTION, THE VOTING
POWERS, DESIGNATIONS, PREFERENCES, LIMITATIONS, RESTRICTIONS AND RELATIVE RIGHTS
OF EACH CLASS AND SERIES OF STOCK. ALL OR PART OF THE AGGREGATE AMOUNT OF THE
SHARES OF STOCK MAY BE ISSUED BY THE CORPORATION FROM TIME TO TIME AND FOR SUCH
CONSIDERATION AS MAY BE DETERMINED AND FIXED BY THE BOARD OF DIRECTORS, AS
PROVIDED BY LAW.
THE NUMBER OF SHARES OF THE CORPORATION OUTSTANDING AND ENTITLED TO VOTE ON
AN AMENDMENT TO THE ARTICLES OF INCORPORATION IS 25,500,000; THAT THE SAID
CHANGE(S) AND AMENDMENT(S) HAVE BEEN CONSENTED TO AND APPROVED BY A MAJORITY
VOTE OF THE STOCKHOLDERS HOLDING AT LEAST A MAJORITY OF EACH CLASS OF STOCK
OUTSTANDING AND ENTITLED TO VOTE THEREON.
___________/S/_______________ ____________/S/_________
M. BRUCE HALL, PRESIDENT FRED SCHULTZ, SECRETARY
<PAGE>
BY-LAWS
OF
PINNACLE BUSINESS MANAGEMENT, INC.
ARTICLE 1
STOCKHOLDER'S MEETING
All meetings of stockholders shall be held either at the principal office
of the corporation or at any other place within or without the State of Nevada
as the Board or any person authorized to call such meeting or meetings may
designate.
ARTICLE 2
Annual Meeting
The annyal meeting of the stockholders of the corporation shall be held at
two o'clock in the afternoon (2:00 P.M.) of the first Monday in the anniversary
month of the corporation in each year if not a legal holiday, and if a legal
holiday, then at the same time on the next succeeding Monday not a legal holday.
In the event that such annual meeting is omitted by oversight or otherwise on
the date herein provided for, the Directors shall cause a meeting in lieu
thereof to be held as soon thereafter a conveniently may be, and any business
transacted or elections held at such meeting shall be as valid as if transacted
or held at the annual meeting. Such subsequent meeting shall be called in the
same manner as provided for in the annual stockholders' meeting.
ARTICLE 3
Special Meeting
Except as otherwise provided by law, special meetings of the stockholders
of this corporation shall be held whenever called by the president or by the
treasurer or by a majority of the board of directors or whenever one or more
stockholders who are entitled to vote and who hold at least twenty-five percent
(25%) of the capital stock issued and outstanding shall make written application
therefor to the secretary or an assistant secretary stating the time, place, and
purpose of the meeting called for.
ARTICLE 4
Notice of Stockholders' Meetings
Notice of stockholders' meetings stating the time and place, and the
objects for which such meetings are called, shall be given by the president or
the treasurer or the secretary or an assistant secretary o by any one (1) or
more stockholders or by such other person or persons as the Board of Directors
shall designate by mail not less than ten (10), nor more than sixty (60) days
prior to the date of the meeting, to each stockholder of record at his address
as it appears on the stock books of the corporation, unless he shall have filed
with the secretary of the corporation a written request that notice intended for
him be mailed to some other address, in which case it shall be mailed to the
address designated in such request. The person giving such notice shall make an
Affidavit in relation thereto.
<PAGE>
Any meeting of which all stockholders shall at any time waive or have
waived notice in writing shall be a legal meeting for the transaction of
business, notwithstanding that notice has not been given as hereinbefore
provided.
ARTICLE 5
Waiver of Notice
Whenever any notice whatever is required to be given by these by-laws, or
the articles of incorporation of this corporation, or any of the corporation
laws of the State of Nevada, a waiver thereof in writing, signed by the person
or persons entitled to such notice whether before or after the time stated
therein, shall be deemed equivalent thereto.
ARTICLE 6
Quorum of Stockholders
Except as hereinafter provided, and as otherwise provided by law, at the
meeting of the stockholders, a majority in interest of all the capital stock
issued and outstanding, represented by stockholders of record in person or by
proxy, shall constitute a quorum; but a less interest may adjourn any meeting
and the meeting may be held as adjourned without further notice; provided,
however, that directors shall not be elected at meetings so adjourned. When a
quorum is present at any meeting a majority in interest of the stock represented
thereat shall decide any question which by express provision of law or of the
articles of incorporation, or of these by-laws, a larger or different vote is
required, in which case such express provision shall govern and control the
decision o such question.
ARTICLE 7
Proxy and Voting
Stockholders of record may vote at any meeting either in person or by proxy
in writing, which shall be filed with the secretary of the meeting before being
voted. Such proxies shall entitle the holders thereof to vote at any
adjournment of such meeting, but shall not be valid after the expiration of
eleven (11) months from the date of its execution unless the stockholder
executing it shall have specified therein the length of time it is to continue
in force, which shall be for some limited period. Each stockholder, except as
hereinafter otherwise provided, shall be entitled to one (1) vote for each share
of stock held by him. At all elections of directors of the corporation, each
stockholder shall be entitled to as may votes as shall equal the number of his
shares of stock, multiplied by the number of directors to be elected, and he may
cast all of such votes for a single director, or he may distribute them among
the number to be voted for, or any two (2) or more of them, as he may see fit.
<PAGE>
ARTICLE 8
Order of Business
At all such meetings of the stockholders, the order of business shall be:
a) Calling of roll;
a) Proof of notice of the meeting;
a) Approving of minutes of previous meetings;
a) Repots of directors and officers;
a) Election of directors; and
a) Miscellaneous business.
ARTICLE 9
Board of Directors
A board of director shall be chosen by ballot at the annual meeting of the
stockholders, or at any meeting held in place thereof as provided by law. The
number of directors of this corporation shall be determined by the stockholders.
The board of directors may, by resoultion adopted, increase or decrease the
number of the directors of this corporation in accordance with the provisions of
the Articles of Incorporation. Every election of directors by the stockholders
shall be conducted by two (2) inspectors, neither of whom shall be candidate for
the office of director, appointed by the presiding officer of the meeting, but
inspectors of the first election of directors and of all previous meetings of
the stockholders shall be appointed by the board of directors. Before entering
upon the discharge of their duties, the inspectors shall be sworn as provide by
law. The appointment of such inspectors may be waived by the consent of a
majority of stockholders present or represented by proxy at the meeting.
Each director shall serve until the next annual meeting of the stockholders
and until his successor is duly elected and qualified. Directors need not be
stockholders in the corporation. Directors shall be of full age, and at least
one (1) of them shall be a citizen of the United States.
<PAGE>
ARTICLE 10
Powers of Directors
The Board of Directors shall have the entire management of the business of
the corporation. In the management and control of the property, business and
affairs of the corporation, the board of directors is hereby vested with all the
powers possessed by the corporation itself, so far as this delegation of
authority is not inconsistent with the laws of the State of Nevada, with the
Articles of Incorporation of the corporation, or with these y-laws. The Board
of Directors shall have power to determine what constitutes net earnings,
profits and surplus, respectively; what amount shall be reserved for working
capital and for any other purpose, and what amount shall be declared as
dividends, as such determination by the Board of Directors shall be final and
dividends, as such determination by the Board of Directors shall be final and
conclusive. Any action that may be taken by the majority of the board of
directors or a quorum thereof at a regular or special meeting may also be taken
without a regular or special meeting by resolution signed and approved by each
and every member of the board of directors.
ARTICLE 11
Meetings
The regular meetings of the board of directors shall be held at such
places, and at such times, as the Board by vote may determine, and if so
determined no notice thereof need be given. Special meetings of the Board of
Directors may be held at any time or place, whenever and wherever called by the
president, the treasurer, or the secretary. Notice thereof being given to each
director by the secretary or an assistant secretary or an officer calling the
meeting, or at any time without formal notice, provided all the directors are
present, or those not present shall at any time waive or have waived notice
thereof. Notice of special meetings, stating the time and place thereof, shall
be given by mailing the same to each director at his residence or business
address at least two (2) days before the meeting, or by delivering the same to
him personally or telegraphing the same to him at his residence, or business
address, not later than the day before the day on which the meeting is to be
held; unless, in case of emergency, the chairman of the board of directors or
the president shall prescribe a shorter notice to be give personally or by
telegraphing each director at this residence or business address. Such special
meeting shall be held at such time and place as the notice thereof or waiver
shall specify. The officers of the corporation shall be elected by the Board of
Directors after its election by the stockholders, and a meeting may be held
without notice for this purpose immediately after the annual meeting of the
stockholders, and at the same place.
ARTICLE 12
Quorum of Directors
A majority of the members of the board of directors as constituted for the
time being shall constitute a quorum for the transaction of business, but a
lesser number may adjourn any meeting, and the meeting may be held as adjourned
without further notice. When a quorum is present at any meeting, a majority of
the members present thereat shall decide any question brought before such
meeting, except as otherwise provided by law or by these by-laws.
<PAGE>
ARTICLE 13
Limitation of Power
The enumeration of the powers and duties of the directors in these by-laws
shall not be construed to exclude all or any of the powers and duties, except
insofar as the same are expressly prohibited or restricted by the provisions of
these by-laws or the articles of incorporation; and the directors shall have and
exercise all other powers and perform all such duties as may be granted by the
laws of the State of Nevada and do not conflict with the provisions of these
by-laws or articles of incorporation.
ARTICLE 14
Officers
The officers of this corporation shall be a president, a secretary, and a
treasurer and such further officers as the board of directors may from time to
time determine, including, but not limited to, assistant secretary or assistant
secretary-treasurer, who shall be elected and hold office at the pleasure of the
board of directors. The board of directors may, at its discretion, elect one
(1) person to two (2) or more official positions, and may elect a chairman of
the board of directors, who, when present, shall preside at all meetings of the
board of directors, and who shall have such other powers as the board shall
prescribe. The board of directors may provide for an office of counsel.
ARTICLE 15
Eligibility of Officers
The president and the chairman of the board of directors need not be
stockholders, but shall be directors of the corporation. The secretary,
treasurer, and such other officers as may be elected or appointed need not be
stockholders or directors of the corporation. Any person may hold more than one
(1) office.
ARTICLE 16
President
The president shall be the chief executive officer of the corporation and,
when present, shall preside at all meetings of the stockholders and, unless a
chairman of the board of directors has been elected and is present, shall
preside at meetings of the board of directors. The president or a
vice-president, unless some other person is specifically authorized by vote of
the board of directors shall sign all certificates of stock, bonds, deeds,
mortgages, extension agreements, modification of mortgage agreements, leases and
contracts of the corporation. He shall perform all the duties commonly incident
to his office and shall perform such other duties as the board of directors
shall designate.
<PAGE>
ARTICLE 17
Secretary
The secretary shall deep accurate minutes of all meetings of the
stockholders and the board of directors, and shall perform all the duties
commonly incident to his office, and shall perform such other duties and have
such other powers as the board of directors shall designate. The secretary
shall have power, together with the president or a vice-president, to sign
certificates of stock of the corporation. In his absence at any meeting an
assistant secretary or a secretary pro tempore shall perform his duties thereat.
The Secretary, any assistant secretary, and any secretary pro tempore shall be
sworn to the faithful discharge of his duties.
ARTICLE 18
Treasurer
The treasurer, subject to the order of the board of directors, shall have
the care and custody of the money, funds, valuable papers, and documents of the
corporation (other than his won bond, if any, which shall be in the custody of
the president), and shall have and exercise, under the supervision of the board
of directors, all the powers and duties commonly incident to his office, and
shall give bond in such form and with such sureties as shall be required by the
board of directors. He shall deposit all funds of the corporation in such bank
or banks, trust company or trust companies, or with such firm or firms, doing a
banking business, as the directors shall designate. He may endorse for deposit
or collection all checks and notes payable to the corporation or to its order,
may accept drafts on behalf of the corporation, and together with the president
or a vice-president may sign certificates of stock. He shall keep accurate
books of account of the corporation'' transactions which shall be the property
of the corporation, and together with all its property in his possession, shall
be subject at all times to the inspection and control of the board of directors.
All checks, drafts, notes, or other obligations for the payment of money
shall be signed by such officer or officers or agent or agents as the board of
directors shall be general or special resolution direct. The board of directors
may also in its discretion, require, by general or special resolutions, that
checks, drafts, notes, and other obligations for the payment of money shall be
countersigned or registered as a condition to their validity by such officer or
officers or agent or agents as shall be directed in such resolution.
<PAGE>
ARTICLE 19
Counsel
The counsel, if any, shall be the legal advisor of the corporation and
shall receive such salary for his services as the Board of Directors may
determine.
ARTICLE 20
Resignations and Removals
Any directors or officer of the corporation may resign at any time by
giving written notice to the corporation, to the board of directors, or to the
chairman of the board, or to the president, or to the secretary of the
corporation. Any such resignation shall take effect at the time specified
therein, or, if the time be not specified therein, upon its acceptance by the
board of directors.
The stockholders, at any meeting called for the purpose, by vote of a
majority of the stock issued and outstanding, may remove from office any
director or other officer elected or appointed by the stockholders or board of
directors and elect or appoint his successor. The board of directors, by vote
of not less than a majority of the entire board, may remove from office any
officer or agent elected or appointed by it.
ARTICLE 21
Vacancies
If the office of any director or officer or agent becomes vacant by reason
of death, resignation, removal, disqualification, or otherwise, the directors
may by vote of a majority of a quorum, choose a successor or successors, who
shall hold office for the unexpired term. If there shall be less than a quorum
of the directors, but at least two (2) directors at the time in office, the
directors may by a majority vote choose a successor or successors, who shall
hold office for the unexpired term. Vacancies in the board of directors may be
filled for the unexpired term by the stockholders at a meeting called for that
purpose, unless such vacancy shall have been filled by the directors. Vacancies
resulting from an increase in the number of directors may be filled in the same
manner.
ARTICLE 22
Certificates of Stock
Every stockholder shall be entitled to a certificate or certificates of the
capital stock of the corporation in such form as may be prescribed by the board
of directors, duly numbered and kind of shares. Such certificates shall be
signed by the president or a vice-president and by the treasurer or an assistant
treasurer or the secretary, or an assistant secretary.
<PAGE>
ARTICLE 23
Transfer of Stock
Shares of stock may be transferred by delivery of the certificate
accompanied either by an assignment in writing on the back of the certificate or
by a written power of attorney to sell, assign, and transfer the same on the
books of the corporation, signed by the person appearing by the certificate to
be the owner of the shares represented thereby, together with all necessary
federal and state transfer tax stamps affixed, and shall be transferable on the
books of the corporation upon surrender thereof so assigned or endorsed. The
person registered on the books of the corporation as the owner of any shares of
stock shall be entitled to all the rights of ownership with respect to such
shares. It shall be the duty of every stockholder to notify the corporation of
his post office address.
ARTICLE 24
Transfer Books
The transfer books of the stock of the corporation may be closed for such
period, not exceeding forty (40) days, in anticipation of stockholders' meetings
as the board of directors may determine. In lieu of closing the transfer books,
the board of directors may fix a day not more than forty (40) days prior to the
day of holding any meeting of stockholders as the day as of which stockholders
entitled to notice of and to vote at such meeting shall be determined; and only
stockholders of record on such day shall be entitled to notice of or to vote at
such meeting.
ARTICLE 25
Loss of Certificates
In case of the loss, mutilation, or destruction of a certificate of stock,
a duplicate certificate may be issued upon such terms as the board of directors
shall prescribe.
ARTICLE 26
Seal
The corporation shall have a seal on which shall appear the corporate name
and the year when incorporated and such other designs as the board of directors
may determine.
ARTICLE 27
Amendments
The by-laws of the corporation, regardless of whether made by the
stockholders or by the board of directors, may be amended, added to, or repealed
by vote of a majority of the holders of the issued and outstanding capital stock
of this corporation at any meeting of the stockholders, provided notice of the
proposed change is given in the notice of meeting, or notice thereof is waived
in writing or by a majority vote of the board of directors or the stockholders
at any regularly called meeting.
________________________
Secretary
<PAGE>
National Accounts
Business Communications
Prepared for:
PINNACLE BUSNIESS MANAGEMENT
<PAGE>
CONFIDENTIAL PRICING
MAIL BOXES ETC.
NATIONAL ACCOUNTS - BUSINESS COMMUNICATIONS
TERMS AND CONDITIONS
NATIONAL ACCOUNTS PROGRAM SET-UP FEE
$40,000 Total
- - Due upon contract execution
- - 20,000 initial set up fee
- - 20,000 exclusivity for 18 months from date contract is executed
FLAT FEE PER TRANSACTION
$5.00 Total per each transaction paid to MBE
(MBE distributes $3.50 to MBE Center and keeps $1.50 as an administrative fee)
- - All transactions will be paid whether payday advance is approved for
customer or not.
- - Only a fully completed transaction shall be considered a true billable
transaction.
If any part of the transaction is not completed, NAC does not have to pay for
transaction.
MONTHLY SYSTEM MAINTENANCE AND SUPPORT FEE:
- - Fee to maintain National Accounts Program throughout the MBE network,
administration of reporting, billing, transaction analysis, help desk,
monthly locator disk subscription, and new Center training:
- - Administrative flat fee of $1.50 of each transaction begins with first
transaction (out of $5.00 transaction)
- - Administrative fee of 10% will be applied only to products and services
outside of the flat fee transaction that may be incurred and added to the
monthly billing.
- - Total billing is based on the monthly reporting of MBE Center charges for
services rendered
- - Minimum monthly administrative fees must not fall below $450 will be
charged in lieu of $1.50 administrative fee. This minimum will be waived
for the first 90 days of program.
CONDITIONS
- - Rates apply to volunteer MBE Centers only
- - Rates do not include local sales/use taxes
- - Rates are based on current schedules in effect and are subject to change
- - Other terms and conditions may apply.
Exhibit A - Page 1 of 2
<PAGE>
MAIL BOXES ETC.
NATIONAL ACCOUNTS - BUSINESS COMMUNICATIONS
PINNACLE SERVICE RATES
PRODUCT/SERVICE DESCRIPTION NAC PRICE
FLAT FEE:
1 transaction allocated to Center $3.50
Administrative Fee allocated to MBE $1.50
Total $5.00
SERVICES TO BE PROVIDED IN ONE (1) TRANSACTION INCLUDE:
Copy driver license & check and pay stub on one page
Copy phone bill & bank statement on one page
One application to be filled out by customer
Send 3 pages via fax of above named documents to Pinnacle
Receive 1 page fax with approval or disapproval for customer
Hand customer ATM card or disapproval card
Keep a copy of all paperwork on file at the MBE Center for no more than 6
months from transactions date.
SERVICES THAT MAY ALSO BE REQUIRED THAT ARE NOT INCLUDED IN FLAT FEE PRICE:
Pinnacle can request original documents of any customer's information to be
forwarded to them within the above referenced six month period.
Rates for those services are listed below and are subject to change.
PACKAGING MATERIALS Attached Contracted Rates
POSTAL SERVICES:
Single Stamp $.36
Return Receipt $1.65
Certified Mail $1.95
SHIPPING SERVICES:
Via UPS on MBE Center's Account # Attached Contracted Rates
Via FedEx on MBE Center's Account # 10% discount on MBE Centers Full
Retail Rate.
Via UPS or FedEx on NAC Clients Account or Shipper $5.00 Handling Fee
per parcel $2.00 Handling Fee per document.
DECLARED VALUE:
Via UPS on MBE Center's Account # $.55 per $100 unit (first $100 no
charge)
Via FedEx on MBE Center's Account # 10% discount on MBE Centers Full
Retail Rate.
OTHER SERVICES/PRODUCTS: Locally Priced
Exhibit A- Page 2 of 2
<PAGE>
NATIONAL ACCOUNT AGREEMENT
GENERAL
This Agreement for various services is made by and between Mail Boxes Etc.
USA, Inc. ("MBE"), a California Corporation, having its principal place of
business at 6060 Cornerstone Court West, San Diego, California 92121-3795; and
Pinnacle Business Management, Inc., a Florida corporation and Fast PayCheck
Advance, Inc., a Florida Corporation (collectively National Account Client or
"NAC") located at the address designated in this Agreement and is made with
reference to the following:
1. SERVICES AND TERM
MBE is a franchisor of retail outlets ("MBE Centers") which provide a
variety of postal, business and communication services to businesses and the
general public. Through this Agreement, NAC or NAC's designees will access
participating MBE Centers for various services ("Services") in certain states in
the United States in which NAC is doing business, under the terms set forth in
Exhibit A. The term of this Agreement will begin on the date of execution by
MBE below and will remain in force for thirty-six (36) months unless terminated
as set forth herein, or as otherwise provided for in Exhibit A.
MBE and NAC agree to begin negotiating a renewal of the initial agreement
within six (6) months of the end of the thirty-six (36) month term. The renewal
will be on terms and conditions mutually acceptable to the parties. If the
parties agree to renew the agreement, the renewal fee shall be ten thousand
dollars ($10,000) for the first eighteen (18) month renewal period. If MBE does
not renew the NAC Agreement after thirty-six (36) months, MBE shall not be
entitled to any further compensation not earned before expiration of the
Agreement under the assignment of compensation from Gordon and Associates
Strategic Investments, Inc. to MBE attached hereto as Exhibit C ("Assignment").
If this Agreement is renewed, NAC shall continue to pay to MBE the compensation
set forth in the Assignment.
NAC shall not accept transactions on the Internet or telephonically from
customers who previously applied for NAC's services through an MBE Center
("Existing Customers") without compensating MBE and MBE Franchises the flat fee
as set forth in Exhibit A. If NAC does accept new loans from Existing Customers
from the Internet or telephonically, NAC shall notify MBE of such transactions
and pay MBE Center where the Existing Customer most recently applied for NAC's
services so that MBE can credit such franchisee its share of the fee.
2. EXCLUSIVITY
-----------
NAC shall pay to MBE a non-refundable amount equal to twenty thousand
dollars ($20,000) as consideration for the exclusivity rights set forth in this
section. Such payment shall be due and payable upon execution of the Agreement
and shall be deemed fully earned when paid. For a period of eighteen (18)
months after NAC is approved by MBE for a particular state (not to extend past
the thirty-six month term of this Agreement), MBE will not enter into any
National Account Agreement with any other payroll advance business for any
purpose similar to this Agreement for such state. Notwithstanding the above, if
any state in which NAC is doing business has less than ten (10) MBE Centers who
<PAGE>
have participated in this NAC program, which are doing has less than a total of
two hundred fifty (250) transactions per month, after six (6) months from the
date that NAC begins operations in such state, the exclusivity provision for
that state shall be void and of no further effect at such time. This
Exclusivity provision shall not survive expiration or termination of this
Agreement. This Exclusivity provision does not impose an obligation on MBE to
approve this NAC program for any particular state. This exclusivity shall in no
way limit or preclude MBE from entering into similar payroll advance programs
with any other entity in those states where NAC either does not have retail
operations open and doing business, or is not diligently pursuing governmental
approval for its payroll advance services (and NAC has advised MBE in writing
that it is pursuing governmental approval in such state).
After the initial eighteen (18) month exclusivity period, if MBE signs an
agreement with any other pay day advance company and such agreement provides
that MBE Centers shall offer substantially similar services as those provided to
NAC hereunder, MBE franchisee territory, which is identified in MBE's franchise
agreement with participating MBE Centers.
Neither NAC nor any of its subsidiaries or affiliates may, during the term
of this agreement, offer any payroll advance business or allow any third party
to complete a pay day advance transaction with any other company or business
within any MBE franchisee territory, which is identified in MBE's franchise
agreement with participating MBE Centers.
3. FEES AND BILLING
NAC agrees to pay MBE the fees set forth in the attached Exhibit A for
Services rendered by MBE and MBE Centers. MBE reserves the right to
reasonably increase prices (based upon an increase in providing products or
services) upon thirty (30) days written notice. On or before the twentieth
(20th) business day of each month, MBE agrees to prepare and transmit to
NAC a completed NAC billing summary for the previous month's activities.
MBE reserves the right to change to a bi-monthly billing cycle upon 30 days
written notice to NAC. Terms of payment are net 15 days from the billing
date.
NAC shall provide MBE a monthly accounting of transactions completed,
amounts owed to MBE and MBE Centers by NAC.
4. LIMITATION OF LIABILITY
<PAGE>
Neither MBE nor MBE Center will be liable for any consequential, incidental, or
punitive damages, or any loss or damage resulting from delays in shipping or
delivery, which are beyond the control or without the fault of MBE or MBE
Center.
NAC agrees to assume all liability for any loss or damage from any reason
or source whatsoever to equipment or other items supplied to the MBE Centers for
use in this program and agrees to maintain adequate property damage and other
insurance to adequately protect the interest of NAC, NAC Customers, NAC
Employees, MBE, and its franchisees.
5. NAC TOLL FREE NUMBER OBLIGATION
NAC agrees to provide a toll free telephone number for MBE Center personnel
and NAC customers and/or employees to answer questions about the services
offered by NAC along with an adequate number of telephones and operators.
6. NAC REPRESENTATIONS AND WARRANTIES
A. NAC shall comply with all laws, regulations, rules and any other
governmental requirements regarding the sale, distribution and advertising
of its products and services and the performance of this Agreement.
b. NAC will provide to MBE a separate statement ("Statement") for every state
in which this Agreement applies. Such Statement will state that NAC has
reviewed any and all applicable state, federal, or local laws and
regulations regarding the services provided pursuant to this Agreement.
Based upon that review, NAC will notify MBE of any requirements of
participating MBE Centers, such as licensing or "posting" of signs on the
premises for such MBE Centers to participate in this program. NAC
represents and warrants that the Statement will set forth any and all legal
requirements of participating MBE Centers relating to providing any service
pursuant to this Agreement. NAC agrees to pay for all applicable government
imposed fees, including licensing fees, for each participating MBE Center.
NAC's obligations under this provision will be ongoing, and NAC will be
obligated to revise the Statements upon any change in applicable laws or
regulations. Payroll advances with any customer pursuant to this Agreement
shall not exceed seven hundred fifty dollars ($750) per transaction.
7. STATEMENT OF LEGAL OPINION
Prior to being approved by MBE for MBE Centers participation in any
particular state, NAC shall provide to MBE a legal opinion at NAC' sole
expense by Ed Kagan, Esq. or a mutually agreed upon licensed attorney who
is not an employee of NAC which states that the attorney has researched,
<PAGE>
analyzed and reviewed the Statement referenced in the prior section, and
that in the attorney's professional opinion the Statement is accurate and
complete, and that MBE and any participating MBE Centers can rely on such
opinion in participating in this program.
8. MARKETING MATERIALS
NAC agrees to design and deliver at NAC's expense, in sufficient
quantities to supply to the MBE Network for any applicable state,
promotional and training brochures and other marketing materials customized
to the MBE Network as reasonably requested by MBE. Additionally, NAC agrees
to produce and distribute to participating MBE franchisees at its sole
expense a training video. All marketing materials must be approved in
writing by MBE prior to distribution to the MBE Network. All such marketing
materials or other materials produced by NAC for the MBE Network or their
customers must state prominently that the services are being supplied by
NAC. NAC further agrees that it will be responsible for any and all
customer service or customer satisfaction issues.
NAC shall not use MBE's name, logo or other trademarks for any of its
marketing materials without the express written approval of MBE, which
approval shall be as the sole discretion of MBE. NAC may, with MBE express
written approval and subject to MBE's standard Hyperlink Agreement, use an
MBE Center locator on its Web site that shows the location of participating
MBE Centers. Under no circumstances shall NAC indicate or imply the MBE or
any MBE franchisee or affiliate is part of or affiliated with NAC or
approves or recommends NAC.
9. INSURANCE
During the term of this Agreement, NAC shall maintain, at NAC's sole
expense, the types and amounts of insurance as may be required to adequately
protect the interests of MBE and its franchisees, issued by a company acceptable
to MBE.
Such business owner's insurance policy shall include, at a minimum, the
following:
a. Comprehensive general liability (including products liability) and all risk
coverage insurance, with limits per occurrence of $4,000,000 as to bodily
injury and general liability, and $500,000 as to property damage; and
b. Crime coverage, including employee dishonesty (which coverage will not
include crime or employee dishonesty involving employees of MBE Centers),
with limits per occurrence of $25,000.
The policy shall contain an additional insured endorsement such that MBE
and participating MBE franchisees are named as additional insureds and are
provided the same coverage as the named insured, including the cost of defense,
against any claim arising out of or related to this NAC program. The named
insured's coverage is primary and shall not require contribution from the
additional insured's insurance coverage, unless the claim is determined by a
court of competent jurisdiction to have arisen from the sole or gross negligence
or the willful misconduct of an additional insured. The parties understand that
the specified coverage or limits of insurance in no way limits the liability of
NAC.
<PAGE>
Within fifteen (15) days of executing this Agreement, NAC shall submit to
MBE a certificate of such insurance, describing and confirming the required
coverage set forth above, each of which shall contain a statement by the insurer
that the policy shall not be canceled or materially altered without at least
thirty (30) days prior written notice to MBE. If NAC fails to comply with the
insurance requirements herein, MBE may, but is not obligated to, obtain such
insurance and keep the same in force and effect, and NAC shall pay MBE, on
demand, the cost thereof. MBE reserves the right to review and revise these
insurance requirements on an annual basis, or when circumstances warrant.
10. WAIVER OF SUBROGATION
NAC shall waive any and every claim (whether in contract or in tort) that
arises or may arise in its favor for any and all loss of, or damage to, any of
its property, including the loss of payroll disbursements, if the loss or damage
is covered under NAC's valid insurance policies. NAC's waiver shall be limited
to the extent that the loss or damage is covered under its insurance policies.
NAC's waiver shall be in addition to, and not in limitation or derogation of,
any other right of MBE contained in this Agreement with respect to any loss or
damage to property of NAC.
NAC hereby agrees to immediately provide written notice of the terms of
this waiver of subrogation to its insurance company from whom it is procuring
applicable insurance policies. Also, NAC hereby agrees to immediately provide
written notice to its insurance company, instructing the company, if necessary,
to properly endorse the applicable insurance policies so as to prevent the
invalidation of its policies due to the waiver of subrogation agreed to in this
Section.
11. INDEMNIFICATION
NAC hereby agrees to indemnify and hold harmless MBE, its affiliates,
subsidiaries, franchisees, officers, directors, agents and employees
("Indemnities") from and against any and all acts or omissions in carrying out
obligations under the NAC business activities, including acts or omissions in
carrying out obligations under the NAC program or any breach by NAC of any
terms, covenants, conditions, warranties or representations in this Agreement.
This indemnification shall include but shall not be limited to, any claims by
customers, governmental agencies or others relating to or arising out of the
services provided by NAC or the MBE Centers in furtherance of this Agreement.
MBE has entered into contracts with those MBE Centers participating in the
NAC program whereby MBE Centers agree to indemnify and hold NAC harmless from
and against any and all claims, liabilities, losses, judgments or costs arising
out of the MBE Centers' negligence in carrying out obligations under the NAC
program. Notwithstanding the above, MBE Centers shall have no liability
whatsoever for verifying the identification of customers, nor will MBE Centers
have any liability for negligently hanging over sums to the customer (whether
through an ATM card or other form).
Each MBE franchise is an independently owned and operated franchise and,
while MBE imposes certain operating requirements on its franchisees through its
franchise agreements and operating manuals, MBE cannot directly control the
day-to-day operations of its independent franchisees. NAC acknowledges and
agrees that MBE is not responsible or liable for any acts or omissions of its
franchisees.
12. TAXES
NAC agrees that it will be responsible for any and all taxes based on
packaging, shipping, storage of items and any other goods and services provided
for in this Agreement including, but not limited to, sales, use, excise, or
similar tax whether by federal, state, county, municipal, local, or similar
authority.
13. RIGHT TO AUDIT
NAC has the right, upon thirty (30) days advance written notice MBE's
National Accounts Department and any participating MBE Center, to have an
examination and audit made of the MBE Center's financial books and records
relating to this NAC program. MBE has the right, upon thirty (30) days written
advance notice to NAC, to have an examination and audit made of the NAC's
financial books and records relating to this NAC program.
14. TRADEMARK PROTECTIONS
The trademarks, tradenames, service marks, and logos of MBE, and its
franchisees, together with the goodwill appurtenant thereto, are the exclusive
property of MBE, and nothing contained herein confers upon NAC any right to use
such trademarks without the prior written approval of MBE. All public relations
releases and any public announcements shall be approved by each party prior to
any release.
15. TERMINATION
FOR CAUSE:
If either party is in default as to any obligation or covenant herein and,
within thirty (30) days after delivery of written notice of such default
specifying the nature thereof, fails to remedy the same, this Agreement may
thereupon be terminated by the notifying party; and such termination is
effective upon such delivery. Cause for termination shall include failure of
NAC to fulfill its obligations under the Assignment. Additionally, if either
party becomes insolvent or bankrupt, the other party may terminate this
Agreement by giving ten (10) days written notice, or a shorter time period as
circumstances warrant. In the even of termination, this Agreement will remain
fully applicable to any services performed prior to the effective date of
termination.
<PAGE>
16. MBE CENTER PARTICIPATION
During the term of this agreement, MBE reserves the right to reasonably
increase or decrease the number of MBE Centers participating in this NAC
program. NAC agrees that during the term of this Agreement it will use only
those MBE Centers designated by MBE to contract for and obtain services of the
type specified herein. MBE Centers are not required to participate in this NAC
program; its is purely voluntary.
NAC also agrees that during the term of this Agreement and for a period of
one (1) year thereafter it will not enter into any agreement with MBE Centers or
ex-franchisees of MBE for the purpose of establishing national or regional
distribution of services of the type specified herein without the prior written
approval of MBE.
17. CONFIDENTIALITY
NAC and MBE each agree to preserve in strict confidence any list of
participating MBE Centers, or NAC customer lists, work orders, or other
information designated as confidential by MBE or NAC and agrees to refrain from
disclosing such information without the express written consent of the other
party. Each party agrees to promptly return to the other party all such
information and any copies or reproductions thereof upon termination of this
Agreement.
The confidentiality referenced herein does not include any information of
its owner that (i) is already known to the other party at time of its
disclosure; (ii) is or becomes publicly known through no wrongful act of the
disclosing party; (iii) is communicated to a third party with express written
consent of its owner and without a duty of confidentiality; (iv) is
independently developed; or (v) is lawfully required to be disclosed to any
governmental agency or is otherwise required to be disclosed by law, provided
that before making such disclosure the disclosing party shall immediately give
the other party written notice and an adequate opportunity to raise an objection
or take action to assure confidential handling of such information.
18. REQUIREMENTS OF NOTICE
All notices and other communications permitted or required to be delivered
by the provisions of this Agreement shall be deemed delivered; (a) at the time
personally delivered to MBE or NAC ; (b) on the next day after placing in the
hands of a commercial courier service or the United States Postal Service for
next day delivery; or (c) five days after placement in the United States Mail by
Certified Mail, Return Receipt Requested, postage prepaid, or on the date of
actual receipt, whichever is earlier. Notice shall be addressed to NAC at the
address on the signature page of this Agreement, or MBE as follows:
To MBE at:Mail Boxes Etc. USA, inc.
6060 Cornerstone Court West
San Diego, CA 92121
Attn: Director of National Accounts
With a copy to:
MBE Legal Department
And
To NAC: Pinnacle Business Management
2963 Gulf Two Bay, Suite 265
Clearwater, FL 33759
Attn: Michael Bruce Hall
19. NO PARTNERSHIP CREATED
It is the express intention of the parties hereto that no partnership is
created as a result of this Agreement, that neither party is the agent, legal
representative, franchise or employee of the other for any purpose whatsoever,
and that neither party is granted any right or authority to assume or create any
obligation for or on behalf of, or in the name of, or in any way to bind the
other party. Each party agrees not to incur or contract any debt or obligation
on behalf of the other party or commit any act, make any representation or
advertise in any manner which may adversely affect any right of the other party
or be detrimental to its good name and reputation.
20. ATTORNEYS' FEES
In the event either party is required to employ attorneys to enforce the
provisions of this Agreement, as part of any judgment entered hereon, the court
will award the prevailing party reasonable attorneys' fees.
21. NO WAIVER
No delay or omission on the party of either party in exercising any right
under this Agreement will operate as a waiver of any such right or of any other
right. Waiver on any one occasion will not be construed as a bar to or waiver
of any such right or remedy on any future occasion.
22. NO ASSIGNMENTS ALLOWED
NAC agrees not to assign its rights or delegate its accountability or
liability under this Agreement without the prior written consent to MBE.
23. COUNTERPARTS
<PAGE>
This Agreement may be signed in counterparts; each will be deemed a fully
signed original.
24. GOVERNING LAW AND VENUE
This Agreement will be construed under and will be deemed governed by the
laws of the State of California. The parties hereby consent and agree that
venue and jurisdiction for all actions enforcing and/or arising out of this
Agreement will be state or federal courts in the City of San Diego, County of
San Diego, State of California, U.S.A., to the exclusion of the courts of any
other State or County.
25. ENTIRE AGREEMENT/OTHER AGREEMENT
This Agreement sets forth the entire understanding of the parties in
connection with the subject matter hereof. No party has made any statement,
representation or warranty in connection herewith except as expressly set forth
herein. This Agreement shall be effective only upon the execution of the
Assignment.
MAIL BOXES ETC. USA, INC. Fast PayCheck Advance, Inc.
a California Corporation Pinnacle Business Management, Inc.
NATIONAL ACCOUNT CLIENT
By: ____/s/_______________________ By: /s/Michael Bruce Hall
Thomas K. Herskowitz Signature
Executive Vice President
Date: ____9-24-99_________________ Michael Bruce Hall, President
Name and Title
2963 Gulf To Bay, Suite 265
Clearwater, FL 33759
Tel. No. 727-669-7781
Fax No. 727-669-5912
<PAGE>
EXHIBIT "A"
COMPENSATION FOR SERVICES RENDERED
1. Gordon shall receive the following compensation upon the introduction of
Pinnacle to Mailboxes Etc.
If an agreement in principle or a National Account signing occurs, then
50,000 registered, free trading shares of common stock of Pinnacle will be
delivered to Gordon and Gordon's nominees for services rendered and expenses
incurred within twenty-four (24) hours ("Initial Remuneration"). If the parties
fail to reach an agreement or sign a National Account then Pinnacle will pay the
expenses incurred by Gordon relating to this proposed business venture.
2. Gordon shall receive the following compensation upon the execution by
Pinnacle and Mailboxes of a National Account:
5,000,000 registered shares of the common stock of Pinnacle. Upon signing
the National Account, Pinnacle will within twenty-four (24) hours instruct
the transfer agent to deliver 2,500,000 shares of common stock to Gordon
and its nominees. With respect to the remaining 2,500,000 shares of common
stock herein. Pinnacle will expeditiously have these shares authorized, and
upon authorization, Pinnacle will within twenty-four (24) hours instruct
the transfer agent to deliver these 2,500,000 shares of common stock to
Gordon and its nominees. Immediately following the execution of a National
Account. Pinnacle will expeditiously commence taking all necessary action
to register these 5,000,000 shares of common stock and will inform Gordon
of its efforts and the status of the registration statement, on a timely
basis and at least twice monthly.
3. Gordon shall receive the following compensation based upon the performance
of the Pinnacle/Mailboxes venture. This compensation shall e in the form of
stock options, exercisable at $25 per share or 30% of the closing bid price
on the date the options are exercised, whichever is less.
<TABLE>
<CAPTION>
1st 2nd 3rd 4th 5th 6th 7th 8th
option option option option option option option option
--------- --------- --------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Location. . . 50 50 50 50 50 50 50 50
open
--------- --------- --------- --------- ---------- ---------- ---------- ----------
Total 100 150 200 250 300 350 400
--------- --------- --------- --------- ---------- ---------- ---------- ----------
Stock Options 2,559,903 2,559,903 2,000,000 2,000,000 3,550,893 3,550,893 3,550,893 3,550,893
--------- --------- --------- --------- ---------- ---------- ---------- ----------
Total . . . . 2,559,903 7,119,806 7,119,806 9,119,806 12,670,499 16,221,192 19,771,885 23,322,578
</TABLE>
<PAGE>
The options set forth above are to be received assuming that Pinnacle is
authorized by Mailboxes to pen at least 400 locations. If less than 400
locations are authorized, the options shall be received and distributed on a pro
rata basis for the number of locations actual approved. All option shares shall
be registered and freely tradable.
8. Gordon shall receive the following bonus options which are intended to
reflect the perceived appreciation due to the consulting services brought
to Pinnacle by Gordon.
If the closing price of the common stock is equal to or greater than $1.00
per share for 30 consecutive days, Pinnacle will issue 1,500,000 shares to
Gordon within seven (7) days of such event (the "$1.00 Options").
If the closing price of the common stock is equal to or greater than $2.00
per share for 30 consecutive days, Pinnacle will issue in addition to the
$1.00 option, 2,500,000 shares to Gordon within seven (7) days of such
event (the "$2.00 Options").
If the closing price of the common stock is equal to or greater than $2.75
per share for 30 consecutive days, Pinnacle will issue in addition to the
$1.00 Options and $2.00 Options, 3,000,000 shares to Gordon within seven
(7) days of such event (the "$2.75 Options").
If the closing price of the common stock is equal to or greater than $5.00
per share for 30 consecutive days, Pinnacle will issue in addition to the
$1.00 Options, $2.00 Options, and the $2.75 Options, 5,500,000 shares to
Gordon within seven (7) days of such event (the "$2.00 Options").
The bonus options shall be deemed earned at such time as the stock prices
set forth in paragraph 4 are achieved, regardless of the number of
locations opened per paragraph 3.
It is the intent of the parties that all shares of common stock, including
shares to be issued pursuant to options, issued under this Agreement, be
freely tradable, registered shares and Pinnacle will use best efforts to
ensure that all shares are registered without delay.
<PAGE>
Exhibit A
COMDATA PAYMENT SERVICES
EXPRESS CASH STATEMENT OF SERVICES
----------------------------------
(CARDHOLDER AGREEMENT AND DISCLOSURE)
This Comdata Express Cash Cardholder Agreement and funds distribution disclosure
(the "Agreement") covers both your rights and the rights of Comdata Network,
Inc. ("Comdata"), its affiliates and representatives relating to: (a) the
issuance to, and use by, you of Comdata's proprietary Comcheks card (the
"Card"); (b) direct transfers of your payroll payments or other recurring or
periodic payments of an electronic nature to an account established for your
benefit which may be used or accessed by your Card; and (c) Card transactions
(i) at automated teller machines (individually, an "ATM"), (ii) approved
point-of-sale merchant locations ("POS"), (iii) resulting in the issuance of a
Comcheck draft, (iv) long distance services and (v) other approved uses for the
Card.
By accepting and using a Card issued by Comdata or its designee, you agree to
the terms and conditions contained in this Agreement and that such terms and
conditions will apply to your use of the Card.
As used in this Agreement, the words "Cardholder", "you", "your", and "yours"
refers to the persons to whom a Card has been issued pursuant to this Agreement
and the related Funds Distribution Agreement between Comdata and your employer.
The words "we", "us", "our" and "ours" refers to Comdata and, as applicable, its
affiliates and representatives, including First American National Bank,
Nashville, Tennessee or a successor or alternate bank or financial institution
designated by Comdata (the "Bank"). The phrases "business day" means Monday
through Friday, except federal holidays.
Please retain a copy of this Agreement for your records and future reference.
FUNDS DISTRIBUTION AND TRUST AGREEMENT
--------------------------------------
1. GENERAL. Comdata's Express Cash Funds Distribution Services (the
--------
"Service") is a means by which your employer may transfer funds owed to
you, such as wages or expense reimbursements, which funds are then, in
turn, made available for access and use by you by use of the Card. Funds
transferred by your employer to Comdata under the Service will, in turn, be
deposited and held in a non-interest bearing trust account located at the
Bank, as trustee, pursuant to a trust agreement existing between Comdata
and the Bank for the benefit of each Cardholder. Comdata and/or the Bank
will cause funds transfer to be made from funds assigned to each Cardholder
in the Comdata accounts or trust account, be applicable and appropriate, in
accordance with instructions received from you by use of your Card (for
example, withdrawal instructions received from the use of the Cad at an
ATMN or purchase instructions received from a point-of-sale network). By
<PAGE>
accepting and/or using the Card, you hereby request and authorize Comdata
and/or the Bank, as applicable, to make such funds transfers from each such
Cardholder's funds in accordance with any such instructions and to pay the
principal amount of any such transactions, including any fee associated
therewith, to the appropriate party or parties.
2. CONSENT TO BE PAID THROUGH THE SERVICE, ACKNOWLEDGEMENTS. (a) Consent to
----------------------------------------------------------- -------
Method of Payment. By accepting and/or using the Card, you hereby request
-----------------
and authorize your employer to transfer funds due to you through the
Service as described herein and expressly and voluntarily consent to such
payment and funds distribution method.
(b) No interest Paid on Funds. You acknowledge and agree that funds transferred
--------------------------
to you through the Service will be held in a trust account (which will not
accrue or pay interest for your benefit) at the Bank for your benefit until
used or accessed by you through your use of the Card and that no interest
will be paid on you on such funds. To the extent interest may accrue, if
any, you understand that Comdata or its designee shall be entitle to
receive and keep any such amounts to cover costs associated with the
Service.
(c) Employer Access to Spending Information. You recognize that your employer
-----------------------------------------
may provide you periodic statements regarding purchases and other activity
with respect to your Card. This Card statement delivery method means that
your employer will have access to information about your use of the Card,
including information such as where purchases have been made by you. You
hereby consent to your employer having access to such information for the
purpose of delivering periodic Card statements to you and waive
confidentiality with respect to such information for this purpose.
3. TRANSACTION LIMITATIONS. Withdrawals or use of funds assigned to your Card
-----------------------
may only be made from an ATM, POS, issuance of a Comchek draft, use of
certain long distance telecommunications services or other means approved
by Comdata. Withdrawals or use of funds assigned to your Card may not be
made unless there are sufficient, collected funds attributable to your
Card.
4. DEPOSITS; FUNDS AVAILABILITY. Additional deposits assigned to your Card may
-----------------------------
only be made by direct deposit of your pay or other monies (such as expense
reimbursement) from your employer in any amount or by other electronic
transfer as permitted by Comdata in writing. Deposits by check, cash, other
preauthorized transaction or any other manner are not available through the
Service. Any transfers from your employer to your Card will be immediately
available.
5. FEES. Current fees applicable to use of your Card have been provided to you
-----
on a Fee Schedule. Fees are assessed at the time of the applicable
transaction and may be changed by Comdata or others from time to time upon
written notice to your employer.
<PAGE>
6. STATEMENTS; ERROR RESOLUTION.You will receive periodic statements showing
------------------------------
all Card activity during the statement cycle, including fees or service
charges imposed. If you believe that your statement contains a mistake or
discrepancy, then you must notify us within sixty (60) days of receipt of
the first statement containing a mistake or discrepancy in order to resolve
-----
the discrepancy. Otherwise, the statement may be deemed correct.
7. CUSTOMER SERVICE. Customer service is available to assist you in obtaining
-----------------
Card balance information, lost or stolen card assistance and other matters.
The telephone number for customer service is (800)741-2777. Customer
service representatives are available twenty-four (24) hours a day, seven
(7) days a week.
8. TRANSFERABILITY. Your Card is not transferable. You may not assign, pledge
----------------
or otherwise transfer you interest in funds accessible by the Card without
our prior written consent.
9. RIGHT OF SET-OFF. We have a right of set-off against funds that are
-------------------
accessible through use of your Card.
10. WARRANTIES; LIMITATION OF LIABILITY. COMDATA AND THE BANK MAKE NO
---------------------------------------
WARRANTIES, WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO ANY SERVICES,
PRODUCTS OR EQUIPMENT PROVIDED HERUNDER, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
COMDATA'S SOLE RESPONSIBILITY TO CARDHOLDERS SHALL BE TO MAKE THE SERVICE
AVAILABLE IN ACCORDANCE WITH THE TERMS OF THIS CARDHOLDER AGREEMENT AND
DISCLOSURE. IN NO EVENT SHALL COMDATA OR THE BANK BE LIABLE TO ANY
CARDHOLDER OR ANY OTHER FIRM OR PERSON FOR CONSEQUENTIAL INCIDENTAL,
SPECIAL OR PUNITIVE DAMAGES, EVEN IF COMDATA OR THE BNK HAD PRIOR KNOWLEDGE
OF THE POSSIBILITY OF SAME.
ELECTRONIC FUNDS TRANSFER DISCLOSURE
------------------------------------
1. CARD ISSUANCE AND RESPONSIBILITIES.(a) You will be issued one Card and you
-----------------------------------
will select a Personal Identification Number ("PIN") for use with your Card
to access funds distributed to your Card. Upon our acceptance of your
written acceptance of this Agreement, you may use your Card to access or
use such funds.
(b) For security purposes, only you will know your PIN. It is not printed on
the Card, and neither our personal nor your employees have access to it.
The Card and the PIN are not transferable and are provided for your
protection and identification during Card related financial transactions
and other uses of the Card.
<PAGE>
(c) You agree that you will; (i) use the Card, PIN and services available
through the Service as instructed; (ii) promptly notify us of any loss or
theft of the Card or disclosure of the PIN; and (iii) accept liability for
misuse of the Card and PIN as described in Section 5 below.
2. CARD USES. By properly using your valid Card and PIN, you may withdraw cash
---------
at any ATMs bearing the ATM network logo on your Card (i.e., Cirrus) or
other network to which the Card and the Service has access, subject to
applicable limitations. You may also use you Card to purchase goods and
services at POS merchant participating in the POS network(s) to which the
Card has access (i.e., Maestro), subject to applicable limitations.
Further, you can use your Card to purchase a Comchek draft, use long
distance services and obtain other products and services, as may be offered
and authorized by Comdata from time to time.
3. CARD USE LIMITATIONS. There may be a network or ATM owner limitation on the
--------------------
dollar amount of cash withdrawals initiated by the use of your Card during
a given time period. This may limit the minimum and maximum amounts that
you may withdraw through use of your Card. The owner of the ATM may also
charge a fee for the transaction, which is in addition to any fees charged
by us. You will be charged by us a fee per transaction, including balance
inquiries, as stated in our then current Fee Schedule. In using your Card,
you agree not to initial a withdrawal, purchase or other transaction which
will exceed the total amount of funds assigned to your Card at that time.
You authorize us or our designee to verify the balance available on your
Card prior to authorizing or completing a transaction.
4. DOCUMENTATION OF TRANSFERS. (a) Transaction Records. You will get a record
-------------------------- -------------------
each time you use an ATM or POS; (b) Statements. Periodic Card statements
----------
will be made available to you which will show information for each
preauthorized transfer as well as other account activity; and (c) Recurring
---------
Electronic Deposits.
-------------------
5. LIABILITIES. (a) Our Liabilities for Failure to Make Transfers. If we do
-----------
not cause the completion of a transfer to or from your account in the
correct amount and manner according to our agreement with your and your
employer, we will be liable for your loses and damages, except as limited
herein. However, there are some exceptions. For example, we will not be
liable under the following circumstances; (i) if through no fault of ours,
you do not have enough money in your account to make the transfer; (ii) if
the ATM where you are making the transfer does not have enough cash; (iii)
if the ATM, POS or other device was not working properly; (iv) if
circumstances beyond our control (such as fire, flood, telecommunications
or computer malfunctions or acts of God) prevent the transfer; (v) if funds
are encumbered through legal process; or (iv) if we receive incomplete or
inaccurate information from governmental or other sources, such as
Automated Clearing Houses.
<PAGE>
(b) Your Liability for Unauthorized Transfers. You agree to use the Card, PIN,
------------------------------------------
ATMs, POS network and other authorized services or products only for the
purposes outlined in this Agreement. You must tell us immediately if you
-----------
believe your Card has been lost, stolen, or if someone has possibly learned
your PIN. Telephoning us is the best way of keeping your possible losses to
a minimum. You could lose all the money assigned to your Card account. If
you tell us within two (2) business days, you can lose no more than $50 if
someone used your Card without your permission. If you do not tell us
within tow (2) business days after you learn of the loss or theft of your
Card, and we prove we could have stopped someone from using your Card
without your permission if you had told us, you could lose as much as $500.
Further, if your Card statement shows transfers that you did not make, tell
us at once. If you do not tell us within sixty (60) days after the
statement was delivered to you, you may not get back any money you lost
after the 60 days, if we can prove that we could have stopped someone from
taking or using the money if you had told us in time.
If you need to report discrepancies or a lost or stolen card, please call
or write either Comdata or the Bank. Our addresses and telephone numbers
are:
First American National Bank Comdata Network, Inc.
First American Center 5301 Maryland Way
Nashville, TN 37238 Brentwood, TN 37027
(800)741-2777
GENERAL TERMS AND CONDITIONS
----------------------------
1. CANCELLATION OF AGREEMENT. We reserve the right, in our sole discretion, to
-------------------------
refuse further funds distributions from your employer to your Card account
and to terminate your Card account and access at any time upon notice to
you. This Agreement may be canceled by either of us at any time by giving
written notice of cancellation. Your cancellation will be effective within
two business days after receipt of any such notice. You will remain
responsible and liable for any transactions initiated prior to the
effective date of the cancellation and any service charges or fees
incurred. Any funds remaining on your Card upon cancellation will be
remitted to you by check or Comcheck draft at the address you provide to us
for such purpose.
2. ENFORCEMENT. If we refer any matter relating to your Card to a lawyer to
-----------
enforce any of the terms of this Agreement, you agree to pay our lawyer's
fees plus court costs, and any other fees or expenses allowed by law in the
event that we are the prevailing party. we can delay enforcing our rights
under this Agreement without losing or waiving them.
<PAGE>
3. CHANGES AND MODIFICATIONS. We may amend or change the terms of this
---------------------------
Agreement and our Fee Schedule at any time by giving [written] notice of
the change and the effective date. We will notify your employer at least 10
days prior to the effective date of any amendment or change in the terms of
this Agreement or the Fee Schedule.
4. GOVERNING LAW; MISCELLANEOUS MATTERS.This Agreement shall be interpreted in
------------------------------------
accordance with the local laws of the State of Tennessee, without regard to
the choice of law rules of such stare. If any of the terms of this
Agreement are determined to be invalid or unenforceable, the remainder of
the Agreement shall survive in full force and effect. This Agreement may be
assigned by us and is binding upon and enforceable against your heirs,
legal representatives or successors.
5. DISCLOSURE OF ACCOUNT INFORMATION. We will keep information about your Card
---------------------------------
account confidential. However, Comdata and/or the Bank will disclose
information to certain parties about your Card activity in the following
situations; (a) to your employee so that Card account statements may be
delivered to you as discussed above; (b) in order to verify the existence
and condition of your account for a third party (such as a credit bureau or
merchant); (c) in order to comply with government agency or court orders;
(d) if you give us written permission to do so; or (e) to lawyers,
accountants, collection agencies, credit bureaus. Financial institutions
and others involved in collection, adjustment, settlement or reporting of
such matters.
<PAGE>
Exhibit 10.2.1
REFERRAL AGREEMENT
COMCHEK CASH FUND DISTRIBUTION SERVICE
--------------------------------------
THIS AGREEMENT is made and entered into as of the 11th day of November,
1999, by and between Comdata Network, Inc. d/b/a Comdata Corporation, a Maryland
corporation, by and through its Payment Services Division with its principal
offices at 5301 Maryland Way, Brentwood, Tennessee 37027 ("Comdata") and
Pinnacle Business Management with its principal offices at 2963 Gulf To Bay
Blvd, Clearwater, FL 33759 ("Company").
WITNESSETH:
WHEREAS, Comdata has developed, offers and operates a funds distribution
service (the "Service"), which may be used by companies to distribute wages or
salaries to employees, expense reimbursement funds or such other funds to
persons entitled to such funds as may be approved by Comdata, by means of the
Comchek eCash Card (the "Card"), which has access to the CIRRUS ATM Network and
the Maestro POS Debit Network (the "Networks"). The Cards are issued by First
American National Bank ("Issuing Bank"), a Cirrus and Maestro Member; and
NOW THEREFORE, for and in consideration of the premises and the mutual
covenants and promises contained herein, the receipt and sufficiency of which
are hereby acknowledged, Comdata and Company agree as follows:
1. REFERRALS. Comdata hereby grants to Company the right to refer, and
----------
Company hereby agrees to use reasonable efforts to refer, Prospective
Customers to Comdata, subject to the terms and conditions o this
Agreement. Company shall refer Prospective Customers to Comdata using
Card applications bearing the identification number assigned to
Company by Comdata, which applications shall be sole identification of
the source of the Prospective Customers referred by Company to Comdata
for purposes of determining whether Company is entitled to receive
referral fees pursuant to Section 6.
2. TRAINING. Comdata will provide, and at least one employee of Company
--------
must attend and complete, an initial training program relating to the
Card and the methods, procedures, and requirements for referring
Prospective Customers to Comdata prescribed by Comdata and Issuing
Bank. Comdata, in its discretion, may provide additional training
programs for attendance by employees of Company.
3. MANUAL. During Comdata's initial training program, Comdata will
------
deliver one (1) copy of a manual which sets forth the methods,
procedures, and requirements for referring Prospective Customers to
Comdata prescribed by Comdata and Issuing Bank ("Manual") to Company
for use by its employees during the term of this Agreement. Comdata
<PAGE>
may amend the Manual to provide new and revised methods, procedures,
and requirements for referring Prospective Customers to Comdata by
delivery of such new pages, replacement pages, addenda, or revised
copies to Company as Comdata shall determine to be appropriate.
Company must refer Prospective Customers to Comdata in accordance with
methods, procedures, and requirements set forth in the Manual.
4. PROMOTION. Comdata will provide to Company brochures, direct mail
---------
pieces, customer agreement forms, and other similar materials
pertaining to the Service and the Card for Company's distribution to
Prospective Customers. Company must not advertise or promote the
Service and Card other than by the distribution of such materials and
by telephone conversations and personal meetings with the owners and
employees of Prospective Customers.
5. REFERRAL FEES. Company will be entitled to receive referral fees
--------------
during the term of this Agreement as set forth on Exhibit A, which is
---------
attached hereto and incorporated herein by this reference, except as
otherwise provided herein. If Company terminates the term of this
Agreement, Company shall not be entitled to receive such referral fees
after the term of this Agreement. Payments of such referral fees will
be made not later than the twenty (20) day of each month for the
previous month's fees.
6. CONFIDENTIAL INFORMATION. All methods, procedures, requirements, and
------------------------
other business and technical information disclosed to Company by
Comdata during the term of this Agreement, whether in the Manual or
otherwise, constitute confidential information of Comdata and are
disclosed to Company in confidence. Company must hold such
confidential information in strict confidence, take all reasonable
precautions to prevent the same from reaching third persons, not
disclose the same to third persons without Comdata's prior written
approval, and make no other use of the same except to refer
Prospective Customers to Comdata. Company acknowledges that the
originals and all copies, whether made by Comdata or Company, of the
Manual and all other writings and documents containing such
confidential information are the personal property of Comdata and
agrees to promptly return such originals and copies to Comdata upon
the expiration or termination of the term of this Agreement.
7. RELATIONSHIP OF PARTIES. Company must not represent or hold itself out
-----------------------
as an agent, legal representative, partner, subsidiary, joint
venturer, or employee of Comdata or Issuing Bank. Company has no right
or power to bind or obligate Comdata or Issuing Bank and must not bind
or obligate Comdata or Issuing Bank in any way, manner, or thing
whatsoever, nor represent that Company has any right to do so. Company
must not use any trademark, service mark, trade name, or other
commercial symbol of Comdata, Issuing Bank, or CIRRUS OR Maestro in
any manner.
<PAGE>
8. NETWORK RULES AND REGULATIONS. Comdata and Company each acknowledges
-------------------------------
that this Agreement is subject to and governed by the bylaws, rules,
and regulations of the CIRRUS AND MAESTRO Networks ("Network Rules").
In case of any conflict between the Network Rules and this Agreement,
the Network Rules will control, and this Agreement will be deemed
amended to conform with the Network Rules.
9. TERM OF AGREEMENT. The term of this Agreement shall be for a period of
-----------------
one (1) year, commencing as of the date set forth above, unless
terminated sooner as provided elsewhere in this Agreement.
10. NON-ASSIGNMENT. Company must not assign, transfer, or encumber this
--------------
Agreement, or any right or interest herein or hereunder, or suffer or
permit any such assignment, transfer, or encumbrance to occur by
operation of law.
11. TERMINATION. The term of this Agreement will terminate automatically
-----------
if (a) either party becomes insolvent, (b) the Networks prohibit
Comdata from providing services related to the Card, (c) Issuing Bank
ceases to be a Network Member, (d) the term of the Agreement between
Comdata and Issuing Bank pertaining to the issue of Cards expires or
terminates, or (e) the Networks prohibit this Agreement.
12. NON-COMPETITION. During the term of this Agreement, Company must not
---------------
engage in, or enter the employment of, or render services to any
person, partnership, association, corporation, or other entity or
enterprise engaged in, any funds distribution service featuring any
cards which are competitive with the Card.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
-----------------
understanding of the parties hereto with respect to the subject matter
hereof and supersedes all prior negotiations, commitments,
representations, and undertakings of the parties with respect to such
subject matter.
14. AUDITS AND REVIEWS. Comdata and Issuing Bank, and their designees have
------------------
the right to conduct procedural audits and reviews at any time to
assure that Company is in compliance with this Agreement, the Manual,
the Network Rules, and all applicable laws and regulations.
15. WAIVERS. The failure of Comdata to exercise any right, power, or
-------
option give to it hereunder or to insist upon strict compliance with
the terms hereof will not constitute a waiver of the terms and
conditions of this Agreement with respect to any other subsequent
breach thereof nor a waiver of its right at any time thereafter to
require exact and strict compliance with all the terms and conditions
hereof.
<PAGE>
16. APPLICABLE LAW. This Agreement, and the rights and obligations of the
--------------
parties hereto, will be construed under and in accordance with the
local laws of the State of Tennessee without reference to the choice
of law rules of such state.
17. NOTICES. Any notice required to be given hereunder must be given in
-------
writing by personal delivery, or by certified or registered mail,
return receipt requested, directed to the party at its last know
address.
18. SEVERABILITY. If any provision of this Agreement is declared invalid
------------
or inoperable by any court or other governmental authority of
competent jurisdiction, such finding will not invalidate the remainder
of this Agreement.
19. MODIFICATION. This Agreement cannot be modified except by a writing
------------
signed by the parties.
20. PARTIES BOUND. This Agreement will be binding on and inure to the
--------------
benefit of Comdata, including its successors and assigns.
The parties hereunto have duly executed, sealed and delivered this Agreement, in
duplicate, on the applicable day and year which appears below.
COMPANY ______________________________ COMDATA NETWORK, INC.
By: __________________________________ By:____________________________
Title: _______________________________ Title:_________________________
<PAGE>
EXHIBIT A
REFERRAL FEES
-------------
The schedule for the referral fees to which the Company is entitled to receive
is as follows:
The referral fee will begin 60 days from the first transaction date of each
account. The referral fee will be paid to customer each month by check. The
referral fee for each account will remain in place for a period of one year from
the initial measurement date. The referral fee will be as follows:
<TABLE>
<CAPTION>
APPLICATION GROSS FEE REFERRAL FEE
REBATE AMOUNT
- -------------------------------- ---------- -------------
<S> <C> <C>
Load Fee $ 1.50 $ .25
Draft Withdrawal $ 1.50 $ .25
ATM Withdrawal $ 1.50 $ .25
ATM Balance Inquiry $ 1.50 $ .25
ATM Transaction Decline $ 1.50 $ .25
Maestro P.O.S. Debit Transaction $ 1.00 $ .10
Answer Plus Phone Service $0.20/min. $ .01
</TABLE>
Customer Initials: _________________
Date:_________________________________
<PAGE>
STOCK OPTION AGREEMENT
Pinnacle Business Management, Inc. (the "Company" or "Pinnacle") and Gordon &
Associates Strategic Investments, Inc. and/or its designee(s) ("Gordon" or the
"Optionee"), to be effective as of the 19th day of May 1999 (the "Grant Date").
1. PURPOSE. The company and Optionee have entered into a Consulting
Services Agreement dated May 19, 1999 pursuant to which the Company
agreed to issue shares of common stock, $.001 par value and options to
purchase shares of common stock for providing a strategic and valuable
contact for the Company's business. In order to meet its obligations
under the Consulting Services Agreement, the Company desires to enter
into this Stock Option Agreement to more fully evidence the intent of
the Company to issue stock options and to reward Optionee for its
efforts in contributing to the growth of the Company.
2. NATURE OF OPTION. The options are intended a constitute non-qualified
stock option.
3. GRANT OF OPTIONS. The Company grants to Optionee stock options (the
"Options") to purchase up to a total of 35,322,578 shares of the
Company's common stock, par value $.001 per share (the "Common
Stock"), at such time(s) and at such price(s) as set forth on Exhibit
"A" attached to Consulting Services Agreement and any amendments
thereto (hereinafter referred to as Exhibit "A").
4. VESTING AND EXERCISE OF OPTIONS. The Options vest and are immediately
exercisable upon the occurrence of the opening of facilities at
certain Mailbox, Etc. locations and/or the Company achieving certain
closing prices for its Common Stock, as more fully set forth on
Exhibit "A".
5. ADJUSTMENTS IN THE EVENT OF CERTAIN TRANSACTION. In the event of a
stock dividend, stock split or a combination, reverse stock split, or
other change in the Company's capitalization, or other distribution to
common stockholders other than __________ cash dividends, after the
effective date of this Agreement, the Options will be adjusted
accordingly; provided that in no event will the exercise prices be
increased.
6. ADJUSTMENTS IN THE EVENT OF SIGNIFICANT TRANSACTIONS. In the event
Gordon introduces, initiates, or consults to the Company regarding an
event of a consolidation or merger in which the Company is not the
surviving corporation or which results in the acquisition of
substantially all of the Company's outstanding stock, or in the event
of the sale or transfer of substantially all the Company's assets or a
dissolution or liquidation of the Company, or in the event of a
<PAGE>
transaction that would effectively take the Company private or result
in the Company de-listing its shares of stock ("Significant
Transaction"), all outstanding options under this Agreement as of the
effective date of the Significant Transaction shall immediately vest
and become exercisable in full and Gordon shall participate in such
Significant Transaction as a stockholder and the Company shall
immediately upon such exercise issue and deliver shares of Common
Stock representing the Options.
7. EXERCISE PRICE.
a. Registered Shares: In the event that the shares of Common Stock
------------------
covered by the Options are registered and free trading at the
time of exercise, the exercise prices of the Options are at such
prices as set forth on Exhibit "A".
b. Unregistered Shares: In the event the shares of Common Stock
--------------------
covered by the Options are not registered and free trading, then
the Company will carry a zero interest promissory note for a
period of time sufficient for Gordon to have the opportunity to
sell, in accordance with the restrictive stock sale provisions of
the Consulting Services Agreement, an amount of registered free
trading securities sufficient to pay the exercise price per
Exhibit "A".
c. Significant Transaction: In the event of a Significant
-------------------------
Transaction, Gordon will pay the exercise price of the lesser of
twenty-five cents ($.25) per share or 30% of the average closing
bid price for the thirty trading days prior to the first day of
which either the company enters into an agreement to execute a
significant Transaction or disseminates any news release,
announcement or other information to the public or the Company's
shareholders related to the Significant Transaction. In the event
of a Significant Transaction the company will carry a zero
interest promissory note for a period of time sufficient for the
events of the Significant Transaction to either provide Optionee
cash and/or the opportunity to sell, in accordance with the
restrictive stock sale provisions of the Consulting Services
Agreement, an amount of registered free trading securities
sufficient to pay the exercise price.
8. TERM OF OPTIONS. This Option Agreement is valid for the same term as
the Consulting Services Agreement.
9. METHOD OF EXERCISING OPTION. The Options are exercisable by delivering
a written notice signed by the Optionee to the Secretary of the
Company, which shall specify the number of shares to be acquired by
virtue of the exercise of the options. The Optionee shall further
deliver the federal tax identification numbers or social security
numbers of the Optionee, the method of payment elected and the amount
<PAGE>
thereof, and the exact name in which the shares will be registered.
The Optionee may withdraw notice of exercise of the Option at any time
before close of business on the business day preceding the exercise
date. If a person or persons other than the Optionee exercises the
Option, such other person or persons must sign such notice.
10. DELIVERY OF SHARES. Upon the exercise of any options under this
Agreement, the Company will deliver to Gordon, within ten (10)
business days, the stock certificates evidencing the options
exercised.
11. METHOD OF PAYMENT.
Registered Shares: If the shares are registered and free trading,
------------------
payment of the exercise price for the shares purchased under the
Options shall be delivered to the Secretary of The Company, within ten
(10) business days after receipt of shares covered by the exercised
options, by any combination of the following:
a. Cash;
b. Certified Check;
c. Cashier's Check;
d. Wire Transfer;
e. Shares of Common Stock. Shares of common stock owned by the
Optionee and valued at the closing price of the common stock at
the date that the payment is due by the Optionee and shall
contain all proper endorsements;
f. Broker-Dealer. The Options are exercisable by a broker-dealer
acting on behalf of the Optionee if the broker-dealer receivers
the following from the Optionee or the Company:
i. This Option Agreement; and
ii. Written instructions, signed by the Optionee, requesting the
Company to deliver the Shares to the broker-dealer on behalf
of such Optionee and specifying the account into which such
Shares should be deposited.
Unregistered Shares or Significant Transaction: If the shares are not
----------------------------------------------
registered and free trading or in the event of a Significant
Transaction the payment of the exercise price will be made in
accordance with the provisions of paragraph 7 (b) or (c) herein and
delivered to the Secretary of the Company. When payment is required it
shall be made in accordance with (a), (b), (c), (d), (e), or (f) of
this paragraph.
12. RIGHT OF EXERCISE. The Options are exercisable at any time during the term
-----------------
of this Option Agreement, in whole or in part, to acquire those Shares that
have vested in accordance with this Option Agreement; provided, however,
that this Option may only be exercisable to acquire whole shares of Common
Stock.
<PAGE>
13. APPROVAL. If required by applicable law, the Company will obtain board of
director and shareholder approval of this Option Agreement pursuant to
which the options are covered. The resolutions of the Board of Directors
and Shareholders will authorize the Company to reserve for issuance under
the Stock Option Plan 35,322,578 shares of the Company's Common Stock.
14. SECURITIES REPRESENTATION. The Company is obligated to have previously
registered the shares of Common Stock covered by these Options, however, as
of the date of this Agreement the shares of Common Stock have not been
registered but this in no way eliminates or modifies the Company's
obligation to register all shares of common Stock subject to the Options.
However, Optionee understands that until such shares are registered there
are certain restrictions upon the sale and transfer of such shares and Rule
144 and/or Rule 701 under the Securities Act of 1933 may be available in
connection with any resale of shares of Common Stock. Optionee hereby
represents (and promises to so represent upon any exercise under this
Option) that as of the dates any unregistered shares of Common Stock are
hereafter acquired by Optionee, such unregistered shares shall be acquired
for Optionee's own account, for investment and not with a view to be
distribution thereof.
Company represents and warrants that upon the exercise of Options, the
Company will notify Gordon as to the number of shares issued and
outstanding of the Company so that Gordon may comply with applicable
Securities Laws.
15. MISCELLANEOUS
a. Registration Rights. The company shall register the shares of Common
--------------------
Stock represented by the Options with the Securities and Exchange
Commission pursuant to a registration statement (Securities Acts of
1933 and 1934) as soon as practicable following execution of this
Agreement and in any event no later than one (1) month following the
execution date of this Agreement.
b. Notification. The Company shall notify the Optionee that the
------------
registration statement has been filed within five business days after
such filing. The Company shall include in such registration statement
all shares of Common Stock subject to this Option Agreement,
regardless of whether such shares of Common Stock have been the
subject of an exercise or are currently vested.
c. Modification. This Agreement may not be modified, changed or
------------
terminated verbally, and may only be modified, changed or terminated
by an - agreement in writing signed by the party against whom
enforcement of any such change of termination is sought. Any
<PAGE>
modification or change or termination of this Agreement shall not
operate to deny or otherwise take away any right of the Optionee to
exercise the Options to the extent of the vested rights set forth
herein.
d. No Minimum Engagement. The company shall not be deemed by the grant of
---------------------
the Options (as distinguished from the separate Consulting Services
Agreement) to be required to engage Optionee for any minimum period,
nor is Gordon required to perform any further duties or functions for
the Company.
e. Shareholder Rights Prior to and after Exercise. Optionee shall not
-------------------------------------------------
have any rights as a shareholder with respect to any shares covered by
the Options until the date of the exercise of each of the Options and
tender of payment pursuant to the terms and conditions for payment
hereunder. No adjustment shall be made for dividends or other rights
related to shares of Common Stock for which the record date is prior
to the date the Option is exercised. The delay or refusal on the part
of the Company in issuing the stock certificates evidencing the shares
of Common Stock subject to an exercise of the Options shall not result
in a limitation, restriction or denial of the Optionee's rights as a
shareholder of the Company subsequent to such exercise.
f. Governing Law. The laws of the State of Texas shall govern the
--------------
validity, construction and performance of this agreement. Any
invalidity of any provision of this Agreement shall not affect the
validity of any provision.
g. Notice. All offers, notices, demands, requests, acceptances or other
------
communications hereunder shall be in writing and shall be deemed to
have been duly made or given if mailed by registered or certified
mail, return receipt requested. Any such notice mailed to the Company
shall be addressed to its principal office, and any notice mailed to
Optionee shall be addressed to Optionee's residence address as it
appears on the signature page hereof or the books and records of the
Company or to such other address as either party may hereafter
designate in writing to the other.
h. Third Party Beneficiaries. This Agreement shall inure to the benefit
--------------------------
of and bind the legal representatives, successors and assigns of the
parties hereto.
i. No Obligation to Exercise. To Optionee shall have no obligation to
----------------------------
exercise any Option granted by this Agreement.
<PAGE>
IN WITNESS WHEREOF, THIS AGREEMENT IS EXECUTED EFFECTIVE AS OF THE GRANT DATE.
GORDON & ASSOCIATES STRATEGIC INVESTMENTS, INC.
By: _______________________________________
Denis Gordon, President
Address: 11191 Westheimer #330
Houston, Texas 77024
PINNACLE BUSINESS MANAGEMENT, INC.
By: ________________________________________
Jeff Turino, Chief Executive Officer
By: ________________________________________
M. Bruce Ball, President
Address: 2963 Gulf to Bay Blvd., Suite 265
Clearwater, Florida 33759
<PAGE>
Exhibit 10.2.2
COMDATA PAYMENT SERVICES
EXPRESS CASH STATEMENT OF SERVICES
----------------------------------
(CARDHOLDER AGREEMENT AND DISCLOSURE)
This Comdata Express Cash Cardholder Agreement and funds distribution disclosure
(the "Agreement") covers both your rights and the rights of Comdata Network,
Inc. ("Comdata"), its affiliates and representatives relating to: (a) the
issuance to, and use by, you of Comdata's proprietary Comcheks card (the
"Card"); (b) direct transfers of your payroll payments or other recurring or
periodic payments of an electronic nature to an account established for your
benefit which may be used or accessed by your Card; and (c) Card transactions
(i) at automated teller machines (individually, an "ATM"), (ii) approved
point-of-sale merchant locations ("POS"), (iii) resulting in the issuance of a
Comcheck draft, (iv) long distance services and (v) other approved uses for the
Card.
By accepting and using a Card issued by Comdata or its designee, you agree to
the terms and conditions contained in this Agreement and that such terms and
conditions will apply to your use of the Card.
As used in this Agreement, the words "Cardholder", "you", "your", and "yours"
refers to the persons to whom a Card has been issued pursuant to this Agreement
and the related Funds Distribution Agreement between Comdata and your employer.
The words "we", "us", "our" and "ours" refers to Comdata and, as applicable, its
affiliates and representatives, including First American National Bank,
Nashville, Tennessee or a successor or alternate bank or financial institution
designated by Comdata (the "Bank"). The phrases "business day" means Monday
through Friday, except federal holidays.
Please retain a copy of this Agreement for your records and future reference.
FUNDS DISTRIBUTION AND TRUST AGREEMENT
--------------------------------------
1. GENERAL. Comdata's Express Cash Funds Distribution Services (the
--------
"Service") is a means by which your employer may transfer funds owed to
you, such as wages or expense reimbursements, which funds are then, in
turn, made available for access and use by you by use of the Card. Funds
transferred by your employer to Comdata under the Service will, in turn, be
deposited and held in a non-interest bearing trust account located at the
Bank, as trustee, pursuant to a trust agreement existing between Comdata
and the Bank for the benefit of each Cardholder. Comdata and/or the Bank
will cause funds transfer to be made from funds assigned to each Cardholder
in the Comdata accounts or trust account, be applicable and appropriate, in
accordance with instructions received from you by use of your Card (for
example, withdrawal instructions received from the use of the Cad at an
ATMN or purchase instructions received from a point-of-sale network). By
<PAGE>
accepting and/or using the Card, you hereby request and authorize Comdata
and/or the Bank, as applicable, to make such funds transfers from each such
Cardholder's funds in accordance with any such instructions and to pay the
principal amount of any such transactions, including any fee associated
therewith, to the appropriate party or parties.
2. CONSENT TO BE PAID THROUGH THE SERVICE, ACKNOWLEDGEMENTS. (a) Consent to
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Method of Payment. By accepting and/or using the Card, you hereby request
-----------------
and authorize your employer to transfer funds due to you through the
Service as described herein and expressly and voluntarily consent to such
payment and funds distribution method.
(b) No interest Paid on Funds. You acknowledge and agree that funds transferred
--------------------------
to you through the Service will be held in a trust account (which will not
accrue or pay interest for your benefit) at the Bank for your benefit until
used or accessed by you through your use of the Card and that no interest
will be paid on you on such funds. To the extent interest may accrue, if
any, you understand that Comdata or its designee shall be entitle to
receive and keep any such amounts to cover costs associated with the
Service.
(c) Employer Access to Spending Information. You recognize that your employer
-----------------------------------------
may provide you periodic statements regarding purchases and other activity
with respect to your Card. This Card statement delivery method means that
your employer will have access to information about your use of the Card,
including information such as where purchases have been made by you. You
hereby consent to your employer having access to such information for the
purpose of delivering periodic Card statements to you and waive
confidentiality with respect to such information for this purpose.
3. TRANSACTION LIMITATIONS. Withdrawals or use of funds assigned to your Card
-----------------------
may only be made from an ATM, POS, issuance of a Comchek draft, use of
certain long distance telecommunications services or other means approved
by Comdata. Withdrawals or use of funds assigned to your Card may not be
made unless there are sufficient, collected funds attributable to your
Card.
4. DEPOSITS; FUNDS AVAILABILITY. Additional deposits assigned to your Card may
-----------------------------
only be made by direct deposit of your pay or other monies (such as expense
reimbursement) from your employer in any amount or by other electronic
transfer as permitted by Comdata in writing. Deposits by check, cash, other
preauthorized transaction or any other manner are not available through the
Service. Any transfers from your employer to your Card will be immediately
available.
5. FEES. Current fees applicable to use of your Card have been provided to you
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on a Fee Schedule. Fees are assessed at the time of the applicable
transaction and may be changed by Comdata or others from time to time upon
written notice to your employer.
<PAGE>
6. STATEMENTS; ERROR RESOLUTION.You will receive periodic statements showing
------------------------------
all Card activity during the statement cycle, including fees or service
charges imposed. If you believe that your statement contains a mistake or
discrepancy, then you must notify us within sixty (60) days of receipt of
the first statement containing a mistake or discrepancy in order to resolve
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the discrepancy. Otherwise, the statement may be deemed correct.
7. CUSTOMER SERVICE. Customer service is available to assist you in obtaining
-----------------
Card balance information, lost or stolen card assistance and other matters.
The telephone number for customer service is (800)741-2777. Customer
service representatives are available twenty-four (24) hours a day, seven
(7) days a week.
8. TRANSFERABILITY. Your Card is not transferable. You may not assign, pledge
----------------
or otherwise transfer you interest in funds accessible by the Card without
our prior written consent.
9. RIGHT OF SET-OFF. We have a right of set-off against funds that are
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accessible through use of your Card.
10. WARRANTIES; LIMITATION OF LIABILITY. COMDATA AND THE BANK MAKE NO
---------------------------------------
WARRANTIES, WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO ANY SERVICES,
PRODUCTS OR EQUIPMENT PROVIDED HERUNDER, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
COMDATA'S SOLE RESPONSIBILITY TO CARDHOLDERS SHALL BE TO MAKE THE SERVICE
AVAILABLE IN ACCORDANCE WITH THE TERMS OF THIS CARDHOLDER AGREEMENT AND
DISCLOSURE. IN NO EVENT SHALL COMDATA OR THE BANK BE LIABLE TO ANY
CARDHOLDER OR ANY OTHER FIRM OR PERSON FOR CONSEQUENTIAL INCIDENTAL,
SPECIAL OR PUNITIVE DAMAGES, EVEN IF COMDATA OR THE BNK HAD PRIOR KNOWLEDGE
OF THE POSSIBILITY OF SAME.
ELECTRONIC FUNDS TRANSFER DISCLOSURE
------------------------------------
1. CARD ISSUANCE AND RESPONSIBILITIES.(a) You will be issued one Card and you
-----------------------------------
will select a Personal Identification Number ("PIN") for use with your Card
to access funds distributed to your Card. Upon our acceptance of your
written acceptance of this Agreement, you may use your Card to access or
use such funds.
(b) For security purposes, only you will know your PIN. It is not printed on
the Card, and neither our personal nor your employees have access to it.
The Card and the PIN are not transferable and are provided for your
protection and identification during Card related financial transactions
and other uses of the Card.
<PAGE>
(c) You agree that you will; (i) use the Card, PIN and services available
through the Service as instructed; (ii) promptly notify us of any loss or
theft of the Card or disclosure of the PIN; and (iii) accept liability for
misuse of the Card and PIN as described in Section 5 below.
2. CARD USES. By properly using your valid Card and PIN, you may withdraw cash
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at any ATMs bearing the ATM network logo on your Card (i.e., Cirrus) or
other network to which the Card and the Service has access, subject to
applicable limitations. You may also use you Card to purchase goods and
services at POS merchant participating in the POS network(s) to which the
Card has access (i.e., Maestro), subject to applicable limitations.
Further, you can use your Card to purchase a Comchek draft, use long
distance services and obtain other products and services, as may be offered
and authorized by Comdata from time to time.
3. CARD USE LIMITATIONS. There may be a network or ATM owner limitation on the
--------------------
dollar amount of cash withdrawals initiated by the use of your Card during
a given time period. This may limit the minimum and maximum amounts that
you may withdraw through use of your Card. The owner of the ATM may also
charge a fee for the transaction, which is in addition to any fees charged
by us. You will be charged by us a fee per transaction, including balance
inquiries, as stated in our then current Fee Schedule. In using your Card,
you agree not to initial a withdrawal, purchase or other transaction which
will exceed the total amount of funds assigned to your Card at that time.
You authorize us or our designee to verify the balance available on your
Card prior to authorizing or completing a transaction.
4. DOCUMENTATION OF TRANSFERS. (a) Transaction Records. You will get a record
-------------------------- -------------------
each time you use an ATM or POS; (b) Statements. Periodic Card statements
----------
will be made available to you which will show information for each
preauthorized transfer as well as other account activity; and (c) Recurring
---------
Electronic Deposits.
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5. LIABILITIES. (a) Our Liabilities for Failure to Make Transfers. If we do
-----------
not cause the completion of a transfer to or from your account in the
correct amount and manner according to our agreement with your and your
employer, we will be liable for your loses and damages, except as limited
herein. However, there are some exceptions. For example, we will not be
liable under the following circumstances; (i) if through no fault of ours,
you do not have enough money in your account to make the transfer; (ii) if
the ATM where you are making the transfer does not have enough cash; (iii)
if the ATM, POS or other device was not working properly; (iv) if
circumstances beyond our control (such as fire, flood, telecommunications
or computer malfunctions or acts of God) prevent the transfer; (v) if funds
are encumbered through legal process; or (iv) if we receive incomplete or
inaccurate information from governmental or other sources, such as
Automated Clearing Houses.
<PAGE>
(b) Your Liability for Unauthorized Transfers. You agree to use the Card, PIN,
------------------------------------------
ATMs, POS network and other authorized services or products only for the
purposes outlined in this Agreement. You must tell us immediately if you
-----------
believe your Card has been lost, stolen, or if someone has possibly learned
your PIN. Telephoning us is the best way of keeping your possible losses to
a minimum. You could lose all the money assigned to your Card account. If
you tell us within two (2) business days, you can lose no more than $50 if
someone used your Card without your permission. If you do not tell us
within tow (2) business days after you learn of the loss or theft of your
Card, and we prove we could have stopped someone from using your Card
without your permission if you had told us, you could lose as much as $500.
Further, if your Card statement shows transfers that you did not make, tell
us at once. If you do not tell us within sixty (60) days after the
statement was delivered to you, you may not get back any money you lost
after the 60 days, if we can prove that we could have stopped someone from
taking or using the money if you had told us in time.
If you need to report discrepancies or a lost or stolen card, please call
or write either Comdata or the Bank. Our addresses and telephone numbers
are:
First American National Bank Comdata Network, Inc.
First American Center 5301 Maryland Way
Nashville, TN 37238 Brentwood, TN 37027
(800)741-2777
GENERAL TERMS AND CONDITIONS
----------------------------
1. CANCELLATION OF AGREEMENT. We reserve the right, in our sole discretion, to
-------------------------
refuse further funds distributions from your employer to your Card account
and to terminate your Card account and access at any time upon notice to
you. This Agreement may be canceled by either of us at any time by giving
written notice of cancellation. Your cancellation will be effective within
two business days after receipt of any such notice. You will remain
responsible and liable for any transactions initiated prior to the
effective date of the cancellation and any service charges or fees
incurred. Any funds remaining on your Card upon cancellation will be
remitted to you by check or Comcheck draft at the address you provide to us
for such purpose.
2. ENFORCEMENT. If we refer any matter relating to your Card to a lawyer to
-----------
enforce any of the terms of this Agreement, you agree to pay our lawyer's
fees plus court costs, and any other fees or expenses allowed by law in the
event that we are the prevailing party. we can delay enforcing our rights
under this Agreement without losing or waiving them.
<PAGE>
3. CHANGES AND MODIFICATIONS. We may amend or change the terms of this
---------------------------
Agreement and our Fee Schedule at any time by giving [written] notice of
the change and the effective date. We will notify your employer at least 10
days prior to the effective date of any amendment or change in the terms of
this Agreement or the Fee Schedule.
4. GOVERNING LAW; MISCELLANEOUS MATTERS.This Agreement shall be interpreted in
------------------------------------
accordance with the local laws of the State of Tennessee, without regard to
the choice of law rules of such stare. If any of the terms of this
Agreement are determined to be invalid or unenforceable, the remainder of
the Agreement shall survive in full force and effect. This Agreement may be
assigned by us and is binding upon and enforceable against your heirs,
legal representatives or successors.
5. DISCLOSURE OF ACCOUNT INFORMATION. We will keep information about your Card
---------------------------------
account confidential. However, Comdata and/or the Bank will disclose
information to certain parties about your Card activity in the following
situations; (a) to your employee so that Card account statements may be
delivered to you as discussed above; (b) in order to verify the existence
and condition of your account for a third party (such as a credit bureau or
merchant); (c) in order to comply with government agency or court orders;
(d) if you give us written permission to do so; or (e) to lawyers,
accountants, collection agencies, credit bureaus. Financial institutions
and others involved in collection, adjustment, settlement or reporting of
such matters.
<PAGE>
MasterCard International
Franchise Management
2000 Purchase Street
Purchase, NY
November 2, 1999 CONFIDENTIAL
Mr. William Appleton
Assistant Vice President, Cards
First American National Bank
550 Metroplex Drive
Nashville, TN 37211
Re: Pinnacle Business Management, Inc. Maestro/Cirrus Affinity/Co-Branded
Marketing Program
Dear Mr. Appleton:
Thank you for submitting First American National Bank's application for a
Maestro/Cirrus Affinity/Co-Branded (A/CB) marketing program with Pinnacle
Business Management, Inc. We are pleased to inform you that First American
National Bank may proceed with the A/CB marketing program's development and
launch, although final approval is contingent upon the receipt of all required
documentation.
Based on the information in your application, MasterCard understand the ECash
Maestro/Cirrus Card program will operate as described below. Given this
understanding, we determine the ECash Maestro/Cirrus Card program to be in
compliance with applicable Affinity/Co-Branded Rules as specified in Maestro
International Operating Rules and Cirrus System Rules.
I. Program Design
A. The First American National Bank Pinnacle Business Management, Inc.
program will exclusively offer a Maestro/Cirrus Card product.
B. ECash Maestro/Cirrus cards may be used at any MasterCard Network
displaying the MasterCard, Maestro, and Cirrus brands.
C. Ecash Card MasterCard cardholders will not be offered any specific
affinity/co-branded benefits at this time.
D. First American National Bank is required to provide a card design to
MasterCard International to complete the file for this A/CB marketing
program. Please forward this document at your earliest convenience.
<PAGE>
II. Security Requirements MasterCard International's Security & Risk Management
group has reviewed the Pinnacle Maestro/Cirrus card marketing program. In
addition to the security measures outlined in Pinnacle's October 25, 1999
letter, the following security procedures for card handling and
distribution, and completed cardholder application handling, should be
implemented at all locations involved with the Pinnacle Program.
A. AUDIT CONTROL LOG
The Audit Control Log provides the ability to account for the number
and location of Pinnacle Ecash Maestro/Cirrus Cards at any point
during storage or distribution. At a minimum, the Audit Control Log
should contain the following information.
- description of cards stored and released (i.e., account numbers)
- date and time of each card release
- signature of individual(s) releasing the card
Access to the card stock should be under dual control. Ideally, there
should be one employee who has one access level (i.e. key entry) and
second employee who retains a combination for a secondary lock. Both
employees' names should be indicated on the Audit Control Log. The
Audit Control Log's ability to track the cards also will assist
exception monitoring personnel in identifying potential loss
situations.
B. CARD THEFT
First American National Bank should be notified in the event of a
confirmed or suspected theft of Pinnacle Ecash Maestro/Cirrus Cards.
The information can be used to revise exception monitoring for
tracking and identifying the location of the potential loss.
C. CARD STORAGE
Although the Pinnacle Ecash Maestro/Cirrus Cards are not "live" until
activated by the cardholder, the card storage area must be protected
at all times by using recognized security control devices, limiting
and controlling access and applying acceptable audit control
procedures. These cards should be stored in a safe with dual control
access (dual keys or key & combination). The storage facility area
should be used only for these cards and for no other supplies. This
storage area is considered a high priority security area.
D. COMPLETED CARDHOLDER APPLICATION HANDLING
Completed cardholder applications should be handled in a secure
manner. At the end of each day, all original copies either should be
removed from all locations involved in the Pinnacle Business
Management, Inc. marketing program or should be destroyed with a
shredder.
<PAGE>
III. NOMENCLATURE & MARKETING
A. According the Maestro/Cirrus communications standards, all A/CB
Program communications must prominently refer to the Maestro/Cirrus
debit functionality. Pleas submit all marketing materials for this
Maestro/Cirrus A/CB marketing program for review prior to use.
IV. CARD DESIGN
A. Cad design was not submitted with the A/CB application. Final card
design approval is contingent on receipt of a proof submitted by your
card manufacturer to Ms. Kisha Thorne, Specialist, Card Design
Services who can be reached at telephone 914-249-5713 or fax
914-249-4355.
Please notify MasterCard if First American National Bank adds or modifies any
element of this A/CB marketing program. If you have any questions regarding the
A/CB marketing program, please call Michelle Mitchell, Program Manager,
Affinity/Co-Branded Approval Process at 914-249-5005 or fax at 914-249-4351 or
your regional MasterCard Office.
We are delighted that you have selected Maestro International and Cirrus System,
Incorporated for the First American National Bank Pinnacle Business Management,
Inc. Card program. MasterCard International is ready to make every effort
possible to meet your schedules for launch and to make this exciting new program
a success.
Sincerely,
MasterCard International
/s/
Shari Krikorian
Director
Brand Standards
cc. J. Laubert MasterCard International
<PAGE>
M. H. MEYERSON & CO., INC.
Founded 1960
Brokers & Dealers in Securities
Underwriters
Newport Office Tower
525 Washington Blvd., P.O. Box 260 Jersey City, NJ 07303-0260
201-459-9500 -- 800-888-8118 --- Fax 201-459-9521
Mr. Jeff Turino
Chief Executive Officer
Pinnacle Business Management, Inc.
2963 Gulf to Bay, Suite 265
Clearwater, FL 33759
Dear Mr. Turino:
THIS AGREEMENT (the "AGREEMENT") is made as of August 18, 1999 between
Pinnacle Business Management, Inc. ("PINNCLE") NASDAQ symbol; "PCBM", and M.H.
Meyerson & Co., Inc. ("MEYERSON").
In consideration of the mutual covenants contained herein and intending to
be legally bound thereby, PINNACLE and MEYERSON hereby agree as follows:
1. MEYERSON will perform investment banking services, on a non-exclusive
basis, for PINNACLE on the terms set forth below for a period of five
years from the date hereof. Such services will be performed on a best
efforts basis and will include, without limitation, assistance to
PINNACLE in mergers, acquisitions, and internal capital structuring
and the placement of new debt and equity issues of PINNACLE all with
the objective of accomplishing PINNACLE's business and financial
goals. In each instance, MEYERSON shall endeavor, subject to market
conditions, to assist PINNACLE in identifying corporate candidates for
mergers and acquisitions and sources of private and institutional
funds; to provide planning, structuring, strategic and other advisory
services to PINNACLE; and to assist in negotiations on behalf of
PINNACLE. MEYERSON will have the option to perform all financings to
be done by PINNACLE for as long as this AGREEMENT is in effect. In
each instance, MEYERSON will render such services as to which PINNACLE
and MEYERSON mutually agree and MEYERSON will exert its best efforts
to accomplish the goals agreed to by MEYERSON and PINNACLE.
2. In connection with the performance of this AGREEMENT, MEYERSON and
PINNACLE shall comply with all applicable laws and regulations,
including, without limitation, those of the National Association of
Securities Dealers, Inc. and the Securities and Exchange Commission.
3. In consideration of the services previously rendered and to be
rendered by MEYERSON hereunder, MEYERSON is hereby granted five-year
Warrants to purchase, at a price of $.125 per share, a total of
5,580,000 shares of common Stock of PINNACLE, with demand and piggy
<PAGE>
back registration rights as set forth in paragraph 4 below. Such
Warrants ("MEYERSON Warrants") may be exercised at any time from
August 18, 1999 to and including August 18, 2004. In any event, the
MEYERSON Warrants shall vest and become irrevocable as follows:
2,790,000 immediately upon the signing of this AGREEMENT, 1,395,000
four months after the signing of this AGREEMENT; and the remaining
1,395,000 in six months after the signing of this AGREEMENT. After one
year from the date of this AGREEMENT, MEYERSON shall have, at
MEYERSON's discretion, both a cashless exercise option to exercise the
Warrants and rights of registration as described in 4 below. If the
cashless exercise option is exercised, it would be accomplished by
surrendering the vested Warrants and replacing them with the
equivalent of shares that may be sold under Rule 144. The amount of
shares of common stock of PINNACLE to be issued will be based on the
fair market value per share on the date of exercise and shall be
valued at the average of the daily closing price for the five
consecutive trading days immediately preceding the date of exercise.
The presentation of a copy of this AGREEMENT by MEYERSON, together
with a request that part or all of the Warrant be exercised and a
direction that the appropriate number of shares be withheld to pay the
exercise price, shall be deemed to be the surrender of such number of
shares for purposes of exercising the cashless exercise option.
4. In addition to the exercise format described in paragraph 3 above, an
additional registration route may also be available to MEYERSON, at
their sole discretion, which is as follows; during the period from
August 18, 2000 to August 18, 2004 the holders of at least 51% of: (i)
the MEYERSON Warrants not then exercised; and (ii) the shares
previously issued upon exercise of any of the MEYERSON Warrants
(hereinafter, collectively, the "MEYERSON EQUITY"), may demand, on one
occasion only, that PINNACLE at PINNACLE's expense, promptly file a
Registration Statement under the Securities Act of 1933, as amended
("ACT"), to permit a public offering of the shares of Common Stock
issued and issuable pursuant to exercise of the MEYERSON Warrants (the
"MEYERSON SHARES"). Additionally, if PINNACLE during the period from
August 18, 2000 to August 18, 2004 files a Registration Statement
covering the sale of any of PINNACLE's common stock, then PINNACLE on
each such occasion, at the request of the holders of at least 51% of
the shares and warrants constituting the MEYERSON EQUITY, shall
include in any such Registration Statement, at PINNACLE's expense, the
MEYERSON SHARES, provided that, if the sale of securities by PINNACLE
is being made through an underwriter and the underwriter objects to
inclusion of the MEYERSON SHARES in the Registration Statement, the
MEYERSON SHARES shall not be so included in the Registration Statement
or in any registration statement filed within 90 days after the
effective date of the underwritten Registration Statement.
5. In the event that PINNACLE files to honor the exercise by MEYERSON of
any vested warrants as set forth herein, by failing to deliver the
certificate(s) for the underlying shares of common stock to MEYERSON
<PAGE>
within 10 days after such exercise then MEYERSON may take legal
action, without further notice to PINNACLE to obtain such underlying
shares, and PINNACLE agrees to pay all damages, costs and expenses
incurred by MEYERSON, including reasonable attorneys' fees. In
addition to any other damages sustained by MEYERSON as a result of
PINNACLE's failure to honor such exercise, including any diminution in
the value of the underlying shares over time, PINNACLE agrees that it
will pay MEYERSON interest, at the average prime rate based on New
York City banking levels for the prior six months, on the market value
of the underlying shares as of the 10th day after the exercise, for
the period beginning on the 10th day after the exercise and ending on
the day the certificates for the underlying shares are received by
MEYERSON.
6. In PINNACLE should, at any time, or from time to time hereafter,
effect a stock split, a reverse stock split, a business combination, a
recapitalization or merger, the terms of the MEYERSON Warrant shall be
proportionately adjusted to prevent the dilution or enlargement of the
rights of the MEYERSON interest.
7. The obligation of PINNACLE to register the MEYERSON SHARES, including
the shares issuable upon exercise of the MEYERSON Warrants, pursuant
to the demand or the piggy back registration rights set forth in
paragraph 6 above, shall be without regard to whether the MEYERSON
Warrants have been or will be exercised.
8. PINNACLE agrees that, for a period of three (3) years from the date of
this AGREEMENT, PINNACLE will utilize the registration exemption set
forth in Regulation S under the ACT, nor issue any security with a
downward ratchet dilution program without the consent of MEYERSON,
which consent will not be unreasonably withheld.
9. The AGREEMENT constitutes and entire Warrant Agreement between the
parties and when a copy hereof is presented to PINNACLE's transfer
agent, together with a request that all or part of the MEYERSON
Warrant be exercised and a certified check in the proper amount or a
direction, pursuant to the cashless exercise option, that shares be
withheld to pay for the exercise, the certificates for the appropriate
number of shares of Common Stock shall be promptly issued.
10. Upon the execution of this AGREEMENT, PINNACLE shall include in its
next annual report and filings the highlights and terms of this
investment banking AGREEMENT.
11. Upon the signing of this AGREEMENT, PINNACLE shall pay MEYERSON
$10,000 as a non-accountable and non-refundable expense allowance for
due diligence and general compliance review. MEYERSON shall be
entitled to additional compensation, to be negotiated between MEYERSON
and consummated by PINNACLE or are executed by MEYERSON at PINNACLE's
request, during the term of this AGREEMENT to the extent that such
<PAGE>
compensation is normal and ordinary for such transactions. In
addition, MEYERSON shall be reimbursed by PINNACLE for any reasonable
out-of-pocket expenses that PERSON may incur in connection with
rendering any service to or on behalf of PINNACLE that is approved, in
writing, in advance by PINNACLE's chief Executive Officer.
12. PINNACLE agrees to indemnify and hold MEYERSON and its directors,
officers and employees harmless from and against any and all losses,
claims, damages, liabilities, costs or expenses arising out of any
action or cause of action brought against MEYERSON in connection with
its rendering services under this AGREEMENT except for any losses,
claims, damages, liabilities, costs or expenses resulting from any
violation by MEYERSON of applicable laws and regulations including,
without limitation, those of the National Association of Securities
Dealers, Inc., the Securities and Exchange Commission or any state
securities commission or from any act of MEYERSON involving willful
misconduct and except that PINNACLE shall not be liable for any amount
paid in settlement of any claim that is settled without its prior
written consent.
13. MEYERSON agrees to indemnify and hold PINNACLE and its directors,
officers and employees harmless from and against any and all losses
claims, damages, liabilities, costs or expenses resulting from any
violation by MEYERSON of applicable laws and regulations including,
without limitation, those the National Association of Securities
Dealers, Inc., the Securities and Exchange Commission or any state
securities commission or from any act of MEYERSON involving willful
misconduct.
14. Within 90 days of the date of this AGREEMENT, a representative of
MEYERSON will visit the corporate headquarters of PINNACLE. PINNACLE
will submit to MEYERSON a current business plan setting forth how
PINNACLE plans to proceed over the next two (2) years.
15. Nothing contained in this AGREEMENT shall be construed to constitute
MEYERSON as a partner, employee, or agent of PINNACLE; nor shall
either party have any authority to bind the other in any respect, in
being intended that MEYERSON is, and shall remain an independent
contractor.
16. This AGREEMENT may not be assigned by either party hereto, except that
MEYERSON may assign any or all of its Warrants to its employees, and
shall be interpreted in accordance with the laws of the State of New
Jersey applicable to agreements negotiated, entered into, and
performed wholly within the State of New Jersey, and shall be binding
upon the successors of the parties. Either party may terminate this
AGREEMENT at any time, however, legally vested Warrants will remain
with MEYERSON.
<PAGE>
17. If any paragraph, sentence, clause or phrase of this AGREEMENT is for
any reason declared to be illegal, invalid, unconstitutional, void or
unenforceable, all other paragraphs, sentences, clauses or phrases
hereof not so held shall be and remain in full force and effect.
18. None of the terms of this AGREEMENT shall be deemed to be waived or
modified except by an express agreement in writing signed by the party
against whom enforcement of such waiver or modification is sought. The
failure of either party at any time to require performance by the
other party of any provision hereof shall, in no way, affect the full
right to require such performance at any time thereafter. Nor shall
the waiver by either party of a breach of any provision hereof be
taken or held to be a waiver of any succeeding breach of such
provision or as a waiver of the provision itself.
19. Any dispute, claim or controversy arising out of or relating to this
AGREEMENT, or the breach thereof, shall be settled by arbitration in
Jersey City, New Jersey, in accordance with the commercial Arbitration
Rules of the American Arbitration Association. The parties hereto
agree that they will abide by and perform any award rendered by the
arbitrator(s) and that judgment upon any such award may be entered in
any Court, state or federal, having jurisdiction over the party
against whom the judgment is being entered. Any arbitration demand,
summons, complaint, other process, notice of motion, or other
application to an arbitration panel, Court or Judge, and any
arbitration award or judgment may be served upon any party hereto by
registered or certified mail, or by personal service, provided a
reasonable time for appearance or answer is allowed.
20. For purposes of compliance with laws pertaining to potential inside
information being distributed unauthorized to anyone, all
communications regarding PINNACLE; confidential information should
only be directed to Martin H. Meyerson, Chairman, Michael Silvestri,
President, or Joseph Messina, Vice President, Compliance. If
information is being faxed, our confidential compliance fax number is
(201) 459-9534 for communication use.
IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT as of
the day and year set forth above.
M.H. MEYERSON & CO., INC. PINNACLE BUSINESS MANAGEMENT, INC.
By: /S/ Michael Silvestri By: /S/ Jeff Turino
------------------------------ -----------------------------------
Michael Silvestri Jeff Turino
President Chief Executive Officer
<PAGE>
Exhibit 10.5.1
EMPLOYMENT AGREEMENT
DATED OCTOBER 14, 1997
BETWEEN
PINNACLE BUSINESS MANAGEMENT, INC.
AND
JEFFREY G. TURINO
Michael Bruce Hall ("Executive") and Pinnacle Business Management Inc. a Nevada
corporation ("Company") hereby agrees to "The Employment Agreement" as follows:
1. Term
Pinnacle Business Management Inc. shall employ Jeffrey G. Turino and
Jeffrey G. Turino accepts such employment beginning on the date of October 14th
1997 and ending October 13, 2002, upon the terms and conditions set forth
herein, unless earlier terminated in accordance with provisions herein.
Notwithstanding the foregoing, if this Agreement shall not have been terminated
in accordance with the provisions herein on or before October 13th 2002, the
remaining term of the Agreement shall be extended such that at each and every
moment of time thereafter, the remaining term shall be one year unless (a) the
Agreement is terminated earlier in accordance with the provisions herein.
2. Duties
Executive shall devote substantially all of his time and best efforts to
the performance of the duties of that position so long as his employment in that
position shall be continued by PBM. Company agrees to nominate Executive for
election to the Board as a member of the management slate at each annual meeting
of stockholders during his employment hereunder at which Executive's director
class comes up for election. Executive shall report directly and solely to the
Company's Board of Directors ("Board"). Executive agrees to serve on the Board
if elected. Notwithstanding the above, Executive shall be permitted to serve as
a Director or Trustee of other organizations, provided such service does not
pose a conflict of interest or prevent Executive from effectively performing his
duties under this Agreement.
3. Salary
Executive shall be employed by the Company in a full time salaried
position, as its President. Executive shall receive an annual base salary of
$104,000 with additional increases at least annually as deemed necessary by the
Board, in its discretion. In the event the company cannot meet the executives
compensation the executive may either defer the compensation and accrue the
salary or take the difference in common stock at the rate of one share for each
dollar not received in the first year. In years two through five stock at a
rate equal to shares purchased by the dollar difference of the paid versus non
paid salary at an average price of the last thirty days in the trading year of
the stock.
4. Bonus
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(a) Executive shall, as provided in, and subject to, paragraph (e) below,
receive an incentive bonus for Company's fiscal years ending December 31,
1997. And December 31, 1998, in an amount equal to 5% of that portion of
the pre tax income of Company for each such fiscal year as reported by the
Company for that fiscal year, or 50% of annual salary compensation which
ever is more.
(b) Executive shall, as provided in, and subject to, paragraph (e) below,
receive an incentive bonus for each fiscal year of Company which shall
end after December 31, 1997 and on or before the termination of this
Agreement and for such additional periods as are provided in paragraph
(e) below, in an amount equal to 5% of that portion of the pre tax
income of Company for each such fiscal year as reported by the Company
for that fiscal year.
(c) In the event that there shall be a combination of the Company with
another company or a capital restructuring of the Company, or any
other occurrence similar to any of the foregoing, and as a result
thereof the amount or value of the bonuses payable pursuant to either
of both of the bonus formulas set forth in paragraphs (a) and (b)
above would be, or could reasonably be expected to be, significantly
affected thereby, appropriate(s) will, at the request or either party,
be negotiated to establish a substitute formula or formulas, or if the
parties cannot agree as to whether or not an occurrence which would
give rise to the right of either party to request adjustment(s)
pursuant to the foregoing has occurred, the parties shall submit such
matter to arbitration by a qualified individual investment banker with
at least ten years' experience in corporate finance with a major
investment banking firm. Neither said firm or said individual shall
have had dealings with either party during the preceding five years.
Upon failure to agree upon the selection of the arbitrator, each party
shall submit a panel of five qualified arbitrators, of the other party
may strike three from other's list, and the arbitrator shall be
selected by a lot from the remaining four names. The arbitrator shall
have the authority only to determine (I) whether the matter is
arbitrable under the conditions of this subparagraph (c) and (ii) the
substitute formula or formulas that will yield and equitable and
comparable result in accordance with the foregoing.
(d) Each incentive bonus shall be payable (i) 30 days following the date
Company's audited consolidated statement of income for the applicable
fiscal year becomes available or (ii) on the January 2 following the
end of that fiscal year, whichever is later (the "Bonus Payment
Date").
(e) Executive shall be entitled to receive the bonus provided for in
paragraph (a) or paragraph (b) above, as the case may be, for each
fiscal year during which he is employed hereunder and, in addition,
for the next twenty-four months after termination of his employment,
except that said post-termination bonus coverage (I) shall only extend
for twelve months after termination if Executive takes employment with
another major Title Loan, Real Estate or competitive company within
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twelve months of termination and (ii) shall not apply if Executive has
been discharged for good cause. The bonus formula set forth in
paragraph (a) above shall be applicable to any part or all of any
period prior to December 31, 1998 in respect of which a
post-termination bonus is payable, and the formula set forth in
paragraph (b) above shall be applicable to any part or all of any
period after December 31, 1998 in respect of which a post-termination
bonus is payable.
5. Bonus Payments
(a) Bonuses for the fiscal years ending December 31, 1997 and December 31,
1998 shall be payable in cash.
(b) Bonuses for fiscal years ending after December 31, 1998 shall be
payable in cash or a combination of cash and Restricted Stock (as
hereinafter defined) as follows: that portion of the bonus for each
such fiscal year which does not exceed the Liquid Cash Available.
Wherewith if the amount of the bonus calculated in accordance with
Section 4(b) hereof shall exceed the Liquid Cash Available, the
remaining unpaid portion of such bonus shall (except at otherwise
provided in Section 12(a) (ii) hereof be payable in Restricted Stock.
For purposes of the foregoing, the term "Liquid Cash Available" shall
mean, the unallocated money available in the Operating Checking
Account.
(c) For purposes of this Agreement the term "Restricted Stock" shall mean
shares of Company common stock which are issued to Executive pursuant
to Company's 1997 Stock Incentive Plan (the "Plan") in accordance
with, and subject to, the following terms, restrictions, and
conditions:
(i) All shares of Restricted Stock shall be subject to forfeiture
(i.e., all right, title, and interest of Executive in such shares
shall cease and such shares shall be returned to Company with no
compensation of any nature being paid therefore to Executive), if
Executive's employment with Company is terminated for good cause
as defined in Section 10(a)(iii). Any shares of Restricted Stock
issued to Executive after December 31, 2002 shall be deemed to
have been issued subject to restrictions which shall have
expired, and accordingly, will be free of all restrictions
hereunder.
(ii) During the Restricted Period, Executive will have voting right
and will receive dividends (if available) and other distributions
with respect to shares of Restricted Stock issued to him but will
not be permitted to sell, pledge, assign, convey, transfer, or
otherwise alienate or hypothecate such shares.
<PAGE>
(iii)All restrictions on the shares of Restricted Stock issued to
Executive hereunder will immediately lapse in the event of the
death of Executive or disability of Executive resulting in a
termination of employment by company pursuant to Section
10(a)(ii) hereof.
(iv) All restrictions on the stock will lapse immediately in the event
company enters into an agreement pursuant to which either the
Company or all or substantially all of its assets are to be sold
or combined with another entity (regardless of whether or not
such sale or combination is subject to the satisfaction of
conditions precedent or subsequent) and as a consequence thereof,
the market for public trading of Company common stock would be,
or could reasonably be expected to be, eliminated or materially
impaired.
(v) Executive shall enter into an escrow agreement providing that the
certificate(s) representing Restricted Stock issued to him will
remain in the physical custody of company (or and escrow holder
selected by Company) until all restrictions are removed or
expire.
(vi) Each certificate representing Restricted Stock issued to
Executive will bear a legend making appropriate reference to the
terms, conditions, and restrictions imposed. Any attempt to
dispose of Restricted Stock in contravention of such terms,
conditions and restrictions, irrespective of whether the
certificate contains such a legend, shall be ineffective and any
disposition purported to be effected thereby shall be void.
(vii)Any shares or other securities received by Executive as a stock
dividend on, or as a result of stock splits, combinations,
exchanges of shares, reorganizations, mergers, consolidations or
otherwise with respect to shares of Restricted Stock shall have
the same terms, conditions, and restrictions and bear the same
legend as Restricted Stock.
(d) In determining the number of shares of Restricted Stock to be issued
in respect of any bonus, the Restricted Stock will be valued on the
basis of the average closing price of Company common stock during the
period starting on the third business day and ending on the twelfth
business day following the release for publication by Company of its
annual summary statement of sales and earnings for the applicable
fiscal year (as such release is defined by Rule 16-b-3 (e)(1)(ii)
promulgated by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended).
(e) Company shall in due course after the execution of this Agreement (and
in no event later than the date Restricted Stock is first required to
be issued to Executive hereunder) adopt rules pursuant to the Plan
regarding restricted stock which shall reflect the foregoing
provisions and such other provisions as are in the reasonable opinion
of Company's counsel customary with respect to restricted stock. In
the event that the Plan should for any reason become unavailable for
<PAGE>
the issuance of Restricted Stock, Company shall cause the shares of
Restricted Stock required to be issued to Executive hereunder to be
issued pursuant to another plan of Company on substantially the same
terms and conditions as such Restricted Stock would have been issued
under the plan.
6. Stock Options
(a) Executive shall be granted options pursuant to the Plan to purchase
(I) beginning with a compensation base of 500,000 shares of Company
common stock having an exercise price equal to $.50 per-share (the "A
Options") in 1998 and (ii) 500,000 shares of Company common stock
having an exercise price equal to $1.00 per share in 1999 through the
year 2002 (the "B Option"). Seventy five percent of both the A Options
and the B Options will vest in increments as nearly equal as possible
on October 14th 2002. The remaining twenty-five percent of both the A
Options and the B Options will vest in increments as nearly equal as
possible on October 8th each year starting October 14th 1999, and
continuing through October 8th 2002. Such options shall be subject to,
and governed by, the terms and provisions of the Plan except to the
extent of modifications of such options which are permitted by the
Plan and which are expressly provided for herein. (i) Executive's
options may be increased (in the A&B Options) by a percentage amount,
to reflect the percentage of fiscal year growth that the company may
achieve.
(b) Executive agrees to enter into a stock option agreement with Company
containing the terms and provisions of such options together with such
other terms and conditions as counsel for the Company may reasonable
require to assure compliance with applicable state or federal law and
stock exchange requirements in connection with the issuance of Company
stock upon exercise of options to be granted as provided herein, or as
may be required to comply with the Plan.
(c) If Company has not already done so, company shall register Executive's
shares pursuant to the appropriate form of registration statement
under the Securities Act o 1933 and shall maintain such registration
statement's effectiveness as all required times.
<PAGE>
(d) Company shall, to the extent permitted by law, may make loans to
Executive in reasonable amounts on reasonable terms and conditions
during his employment by Company to facilitate the exercise of the
options granted to him as described above.
7. Benefits
(a) Executive shall be entitled to receive all benefits generally made
available to other executives of company.
(b) Company shall maintain during the term hereof a minimum of a
$1,000,000 split dollar life insurance policy on his life unless a
physical examination (which he agrees to take) shows that he is
uninsurable.
(c) Company shall maintain a full medical coverage for Executives, spouse
and children.
(d) Personal liability insurance.
(e) Company Car Lease
(f) Regional Professional Sports Season tickets for gifts
(g) Free Financial Counseling, Legal and Accounting advice
(h) Health, or Country Club Membership
(i) Paid sick leave
(j) Vacations of up to six weeks per year or longer as the Board may
authorize during which time Executive's compensation shall be paid in
full and he shall continue to participate in all other rights and
benefits.
(k) Travel Expenses inclusive of Airline VIP Clubs
(l) Relocation Expenses.
(i) Employer shall reimburse the Executive for reasonable expenses
incurred in relocation, but not confined to: all costs of the
physical move; en route travel expenses, including hotel and
meals; temporary living expenses for Executive and family,
including meals, for up to fifteen (15) weeks; three (3) house
hunting trips for the Executive and family; weekly commuting
expenses until Executive has moved; closing costs and commission
involved in selling Executive's former residence and purchasing a
residence in the area of company's desired location. An
<PAGE>
additional amount to cover federal, state, and local taxes
incurred as a result of the relocation. Company may provide
temporary financing while the Executive is trying to obtain
permanent financing.
(ii) Creative Time: The company recognizes the value of creativity of
the Executive if he is allowed "creative time" in an environment
that suits and stimulates the executive. The company will pay all
costs of this time off including meals and lodging for one
weekend each quarter in an area of the executives choice to boost
and recharge his creative abilities. These activities are
including but not limited to recreational activities, religious
retreats, health spas or any other activity deemed necessary by
the executive.
8. Reimbursement for Expenses
Executive shall be expected to incur various business expenses customarily
incurred by person holding like positions, including but not limited to
traveling, entertainment and similar expenses, all of which are to be incurred
by Executive for the benefit of Company. Subject to company's policy regarding
the reimbursement and non-reimbursement of all such expenses), Company shall
reimburse Executive for such expenses from time to time, at Executive's request,
and Executive shall account to Company for such expenses.
9. Protection of Company's Interests
(a) During the term of this Agreement Executive shall not directly or
indirectly engage in competition with, or not own any interest in any
business which competes with, any business of Company or any of its
subsidiaries; provided, however, that the provisions of this Section 9
shall not prohibit his ownership of not more than 5% of voting stock
of any publicly held corporation unless approved by the board.
(b) Except for actions taken in the course of his employment hereunder, at
no time shall Executive divulge, furnish or make accessible to any
person any information of a confidential or proprietary nature
obtained by him while in the employ of Company. Upon termination of
his employment by Company, Executive shall return to the Company all
such information which exists in writing or other physical form and
all copies thereof in his possession or under his control.
(c) Company, its successors and assigns, shall, in additions to
Executive's services, be entitled to receive and own all of the
results and proceeds of said services (including, without limitation,
literary material and other intellectual property) produced or created
during the term of Executive's employment hereunder. Executive will,
at the request of Company, execute such assignments, certificates of
<PAGE>
other instruments as Company may from time to time deem necessary or
desirable to evidence, establish, maintain, protect, enforce or defend
its right or title to any such material.
(d) Executive recognizes that the services to be rendered by him hereunder
are of a character giving them peculiar value, the loss of which
cannot be adequately compensated for in damages, and in the event of a
breach of this Agreement by Executive, Company shall be entitled to
equitable relief by way of injunction or by any other legal or
equitable remedies.
10. Termination by Company
(a) Company shall have the right to terminate this Agreement after January
1, 2000 under the following circumstances. The company cannot
terminate the executive prior to this date. (the company recognizes
the value of the Executives role in the critical first two years
following the merger with a public shell).
(i) Upon the death of Executive
(ii) Upon notice from Company to Executive in the event of an illness
or other disability which has incapacitated him from performing
his duties for twelve consecutive months as determined in good
faith by the board.
(iii)For good cause upon notice from Company, Termination by Company
of Executive's employment for "good cause" as used in this
Agreement shall be limited to gross negligence or malfeasance by
Executive in the performance of his duties under this agreement
or the voluntary resignation by Executive as an employee of the
company without the prior written consent of the Company.
(iv) For creating private deals at the expense of Company, not for the
benefit of the Company and realizing all of the profits without
the knowledge or approval of the Board.
(b) If this Agreement is terminated pursuant to Section 10(a) above,
Executive's rights and Company's obligations hereunder shall forthwith
terminate except as expressly provided in this Agreement.
(c) If this Agreement is terminated pursuant to Section 10(a)(I) or (ii)
hereof, Executive or his estate shall be entitled to receive 100% of
his base salary for the balance of the term of this Agreement,
together with the bonus provided for in Section 4(e) hereof. Company
may purchase insurance to cover all or any part of its obligations set
forth in the preceding sentence, and Executive agrees to take a
physical examination to facilitate the obtaining of such insurance. If
<PAGE>
the physical examination shows that Executive is uninsurable, such
death and disability benefits shall not be provided (except for
bonus), and Executive shall receive only normal Company levels of
death and disability benefits.
(d) Whenever compensation is payable to Executive hereunder during a time
when he is partially or totally disabled and such disability (except
for the provisions hereof) would entitle him to disability income or
to salary continuation payments from Company according to the terms of
any plan now or hereafter provided by Company or according to any
Company policy in effect at the time of such disability, the
compensation payable to him hereunder shall be inclusive of any such
disability income or salary continuation and shall not be in addition
thereto. If disability income is payable directly to Executive under
an insurance policy paid for by Company, the amounts paid to him by
said insurance company shall be considered to be part of the payments
to be made by Company to him pursuant to this Section 10, and shall
not be in addition thereto.
(e) Under this agreement pursuant to sections 10(a)(b)(c)(d) the
termination of an Executive's contract for "Good Cause" shall be
determined and enforced by an unanimous decision by the Board of
Directors.
(f) If the Executive had relocated his home for the benefit of the
Company, upon his termination for "Good Cause" the Company will
purchase his home at fair market value (if within 5 year period of
moving) and relocated him at Company to his original home location.
11. Termination by Executive
Executive shall have the right to terminate his employment under this
agreement upon 30 days' notice to company given within 60 days following the
occurrence of any o the following events:
(i) Executive is not elected or retained as President and Director of
company.
(ii) Company acts to materially reduce Executive's duties and
responsibilities hereunder. Executive's duties and responsibilities
shall not be deemed materially reduced for purposes hereof solely by
virtue of he fact that Company is (or substantially all of its assets
are) sold to, or is combined with, another entity provided that (a)
Executive shall continue to have the same duties and responsibilities
with respect to Company's Loan and Real Estate business and (b)
Executive shall report directly to the chief executive officer and
board of directors of the entity (or individual) that requires Company
or its assets.
<PAGE>
(iii)Company acts to change the geographic location of the performance of
Executive's duties from the Tampa Bay metropolitan area.
12. Consequences of Breach of Company
(a) If this Agreement is terminated pursuant to Section 11 hereof, or if
Company shall terminate Executive's employment under this Agreement in
any other way that is a breach of this Agreement by Company, the
following shall apply:
(i) Executive shall receive a cash payment equal to the present value
(based on a discount rate of 9%) of Executive's base salary
hereunder for the remainder of the term, payable within 39 days
of the date of such termination.
(ii) Executive shall be entitled to bonus payments as provided in
Sections 4 and 5 above (it being understood, however that all
such bonus payments, if made pursuant to this clause, shall be
paid in cash regardless of whether or not such payments exceed
the Cash Limit).
(iii)All stock options and Restricted Stock granted by Company to
executive under the Plan or granted by Company to Executive prior
to the date hereof shall accelerate and become immediately
exercisable.
(b) The parties believe that because of the limitations of Section 11(ii)
the above payments do not constitute "Excess Parachute Payments" under
Section 280G of the Internal Revenue Code of 1954, as amended (the
"Code"). Notwithstanding such belief, if any benefit under the
preceding paragraph is determined to be an "Excess Parachute Payment"
the Company shall pay Executive an additional amount ("Tax Payment")
such that (x) the excess of all Excess Parachute Payments (including
payments under this sentence) over the sum of excise tax thereon under
section 4999 of the Code and income tax thereon under Subtitle A of
the Code and under applicable state law is equal to (y) the excess of
all Excess Parachute Payments (excluding payments under this sentence)
over income tax thereon under Subtitle A of the Code and under
applicable state law, provided that the company shall not be obligated
to make a Tax Payment in excess o the value of 6.6667 compensation
years. For the purposes hereof, the value of a "Compensation Year",
including stock options and bonus entitlements, is defined as equal to
two times the base salary set for in Section 3.
13. Remedies
<PAGE>
Company recognizes that because of Executive's special talents, stature and
opportunities in the corporate management environment, and because of the
creative nature of and compensation practices of said industry and the material
impact that individual projects can have on and the company's results of
operations, in the event of termination by Company hereunder (except under
Section 10(a)), or in the event of termination by Executive under Section 11,
before the end of the agree term, Company acknowledges and agrees that the
provisions for the consequences of such termination, do not constitute a
penalty, and such payments and benefits shall not be limited or reduced by
amounts Executive might earn or be able to earn from any other employment or
ventures during the remainder of the agreed term of this Agreement.
14. CONFLICT RESOLUTION
In case of any dispute between the Executive and the Company as to the
amount of additional compensation payable to the Executive in respect of any
fiscal year, determination of the amount so payable will be determined by an
independent accountant so hired by the Company, made at the request of any party
shall be binding and conclusive on all parties hereto. In the event that any
action, suit or other proceeding in law or in equity is brought to enforce the
provisions of this agreement, and such action results in the awarding of a
judgment in favor of the Company, all expenses of the Company in conjunction
with said action shall be payable by the Executive.
15. BINDING AGREEMENT
This instrument shall be binding upon and inure to the benefit of
Executive, his heirs, distributees and assigns and company, its successor and
assigns. Executive may not, without the express written permission of the
Company, assign or pledge any rights or obligations hereunder to any person,
firm or corporation.
16. AMENDMENT; WAIVER
This instrument contains the entire agreement of the parties with respect
to the employment of Executive by Company. No amendment or modification of
this agreement shall be valid unless evidenced by a written instrument executed
by the parties hereto. No waiver by either party of any breach by the other
party of any provision or condition of this Agreement shall be deemed a waiver
of any similar or dissimilar provision or condition at the same or any prior or
subsequent time.
17. GOVERNING LAW
(a) This agreement shall be governed by and construed in accordance with
the laws of the State of Nevada.
<PAGE>
(b) The parties are aware that Executive's obligation to provide services
to Company hereunder for the full term of this agreement (with a
minimum of two years and approximately five years) The parties agree
that this Agreement (together with certain additional documents and
agreements specifically referred to herein) shall constitute the sole
and conclusive basis for establishing Executive's compensation for all
services are provided by him hereunder, regardless of from the date
hereof, notwithstanding the further provision of tract employment may
be referred to as affording a "presumptive measure of compensation"
for services under such contract. Executive hereby confirms his intent
to provide services to the Company under this Agreement for the full
term thereof.
18. NOTICES
All notices which a party is required or may desire to give to the other
party under or; in connection with this Agreement shall be given in writing by
addressing the same to the other party as follows:
If to Executive to:
Jeffrey G. Turino
6825 14th Ave. N.
St. Petersburg, Florida 33710
If to Company to:
Pinnacle Business Management Inc.
2963 Gulf To Bay Blvd. Suite 265
Clearwater Florida 33759
or at such other places may be designated in writing by like notice. Any notice
shall be deemed to have been given within 46 hours after being addressed as
required herein and deposited, first class postage prepaid, in the United States
mail.
IN WITNESS THEREOF, the parties have executed this agreement this 1st day of
December, 1997, effective as of the day and year first above written.
_______/s/__________________________
Jeffrey G. Turino
President Pinnacle Business Management, Inc.
________/s/_________________________
Jeffery G. Turino
C.E.O. Pinnacle Business Management, Inc.
<PAGE>
Exhibit 10.5.2
EMPLOYMENT AGREEMENT
DATED OCTOBER 14, 1997
BETWEEN
PINNACLE BUSINESS MANAGEMENT, INC.
AND
MICHAEL BRUCE HALL
Michael Bruce Hall ("Executive") and Pinnacle Business Management Inc. a Nevada
corporation ("Company") hereby agrees to "The Employment Agreement" as follows:
1. Term
Pinnacle Business Management Inc. shall employ Michael Bruce Hall and
Michael Bruce Hall accepts such employment beginning on the date of October 14th
1997 and ending October 13, 2002, upon the terms and conditions set forth
herein, unless earlier terminated in accordance with provisions herein.
Notwithstanding the foregoing, if this Agreement shall not have been terminated
in accordance with the provisions herein on or before October 13th 2002, the
remaining term of the Agreement shall be extended such that at each and every
moment of time thereafter, the remaining term shall be one year unless (a) the
Agreement is terminated earlier in accordance with the provisions herein.
2. Duties
Executive shall devote substantially all of his time and best efforts to
the performance of the duties of that position so long as his employment in that
position shall be continued by PBM. Company agrees to nominate Executive for
election to the Board as a member of the management slate at each annual meeting
of stockholders during his employment hereunder at which Executive's director
class comes up for election. Executive shall report directly and solely to the
Company's Board of Directors ("Board"). Executive agrees to serve on the Board
if elected. Notwithstanding the above, Executive shall be permitted to serve as
a Director or Trustee of other organizations, provided such service does not
pose a conflict of interest or prevent Executive from effectively performing his
duties under this Agreement.
3. Salary
Executive shall be employed by the Company in a full time salaried
position, as its President. Executive shall receive an annual base salary of
$104,000 with additional increases at least annually as deemed necessary by the
Board, in its discretion. In the event the company cannot meet the executives
compensation the executive may either defer the compensation and accrue the
salary or take the difference in common stock at the rate of one share for each
dollar not received in the first year. In years two through five stock at a
rate equal to shares purchased by the dollar difference of the paid versus non
paid salary at an average price of the last thirty days in the trading year of
the stock.
<PAGE>
4. Bonus
(a) Executive shall, as provided in, and subject to, paragraph (e) below,
receive an incentive bonus for Company's fiscal years ending December
31, 1997. And December 31, 1998, in an amount equal to 5% of that
portion of the pre tax income of Company for each such fiscal year as
reported by the Company for that fiscal year, or 50% of annual salary
compensation which ever is more.
(b) Executive shall, as provided in, and subject to, paragraph (e) below,
receive an incentive bonus for each fiscal year of Company which shall
end after December 31, 1997 and on or before the termination of this
Agreement and for such additional periods as are provided in paragraph
(e) below, in an amount equal to 5% of that portion of the pre tax
income of Company for each such fiscal year as reported by the Company
for that fiscal year.
(c) In the event that there shall be a combination of the Company with
another company or a capital restructuring of the Company, or any
other occurrence similar to any of the foregoing, and as a result
thereof the amount or value of the bonuses payable pursuant to either
of both of the bonus formulas set forth in paragraphs (a) and (b)
above would be, or could reasonably be expected to be, significantly
affected thereby, appropriate(s) will, at the request or either party,
be negotiated to establish a substitute formula or formulas, or if the
parties cannot agree as to whether or not an occurrence which would
give rise to the right of either party to request adjustment(s)
pursuant to the foregoing has occurred, the parties shall submit such
matter to arbitration by a qualified individual investment banker with
at least ten years' experience in corporate finance with a major
investment banking firm. Neither said firm or said individual shall
have had dealings with either party during the preceding five years.
Upon failure to agree upon the selection of the arbitrator, each party
shall submit a panel of five qualified arbitrators, of the other party
may strike three from other's list, and the arbitrator shall be
selected by a lot from the remaining four names. The arbitrator shall
have the authority only to determine (I) whether the matter is
arbitrable under the conditions of this subparagraph (c) and (ii) the
substitute formula or formulas that will yield and equitable and
comparable result in accordance with the foregoing.
(d) Each incentive bonus shall be payable (i) 30 days following the date
Company's audited consolidated statement of income for the applicable
fiscal year becomes available or (ii) on the January 2 following the
end of that fiscal year, whichever is later (the "Bonus Payment
Date").
(e) Executive shall be entitled to receive the bonus provided for in
paragraph (a) or paragraph (b) above, as the case may be, for each
fiscal year during which he is employed hereunder and, in addition,
for the next twenty-four months after termination of his employment,
except that said
<PAGE>
post-termination bonus coverage (I) shall only extend for twelve
months after termination if Executive takes employment with another
major Title Loan, Real Estate or competitive company within twelve
months of termination and (ii) shall not apply if Executive has been
discharged for good cause. The bonus formula set forth in paragraph
(a) above shall be applicable to any part or all of any period prior
to December 31, 1998 in respect of which a post-termination bonus is
payable, and the formula set forth in paragraph (b) above shall be
applicable to any part or all of any period after December 31, 1998 in
respect of which a post-termination bonus is payable.
5. Bonus Payments
(a) Bonuses for the fiscal years ending December 31, 1997 and December 31,
1998 shall be payable in cash.
(b) Bonuses for fiscal years ending after December 31, 1998 shall be
payable in cash or a combination of cash and Restricted Stock (as
hereinafter defined) as follows: that portion of the bonus for each
such fiscal year which does not exceed the Liquid Cash Available.
Wherewith if the amount of the bonus calculated in accordance with
Section 4(b) hereof shall exceed the Liquid Cash Available, the
remaining unpaid portion of such bonus shall (except at otherwise
provided in Section 12(a) (ii) hereof be payable in Restricted Stock.
For purposes of the foregoing, the term "Liquid Cash Available" shall
mean, the unallocated money available in the Operating Checking
Account.
(c) For purposes of this Agreement the term "Restricted Stock" shall mean
shares of Company common stock which are issued to Executive pursuant
to Company's 1997 Stock Incentive Plan (the "Plan") in accordance
with, and subject to, the following terms, restrictions, and
conditions:
(i) All shares of Restricted Stock shall be subject to forfeiture
(i.e., all right, title, and interest of Executive in such shares
shall cease and such shares shall be returned to Company with no
compensation of any nature being paid therefore to Executive), if
Executive's employment with Company is terminated for good cause
as defined in Section 10(a)(iii). Any shares of Restricted Stock
issued to Executive after December 31, 2002 shall be deemed to
have been issued subject to restrictions which shall have
expired, and accordingly, will be free of all restrictions
hereunder.
(ii) During the Restricted Period, Executive will have voting right
and will receive dividends (if available) and other distributions
with respect to shares of Restricted Stock issued to him but will
not be permitted to sell, pledge, assign, convey, transfer, or
otherwise alienate or hypothecate such shares.
<PAGE>
(iii)All restrictions on the shares of Restricted Stock issued to
Executive hereunder will immediately lapse in the event of the
death of Executive or disability of Executive resulting in a
termination of employment by company pursuant to Section
10(a)(ii) hereof.
(iv) All restrictions on the stock will lapse immediately in the event
company enters into an agreement pursuant to which either the
Company or all or substantially all of its assets are to be sold
or combined with another entity (regardless of whether or not
such sale or combination is subject to the satisfaction of
conditions precedent or subsequent) and as a consequence thereof,
the market for public trading of Company common stock would be,
or could reasonably be expected to be, eliminated or materially
impaired.
(v) Executive shall enter into an escrow agreement providing that the
certificate(s) representing Restricted Stock issued to him will
remain in the physical custody of company (or and escrow holder
selected by Company) until all restrictions are removed or
expire.
(vi) Each certificate representing Restricted Stock issued to
Executive will bear a legend making appropriate reference to the
terms, conditions, and restrictions imposed. Any attempt to
dispose of Restricted Stock in contravention of such terms,
conditions and restrictions, irrespective of whether the
certificate contains such a legend, shall be ineffective and any
disposition purported to be effected thereby shall be void.
(vii)Any shares or other securities received by Executive as a stock
dividend on, or as a result of stock splits, combinations,
exchanges of shares, reorganizations, mergers, consolidations or
otherwise with respect to shares of Restricted Stock shall have
the same terms, conditions, and restrictions and bear the same
legend as Restricted Stock.
(d) In determining the number of shares of Restricted Stock to be issued
in respect of any bonus, the Restricted Stock will be valued on the
basis of the average closing price of Company common stock during the
period starting on the third business day and ending on the twelfth
business day following the release for publication by Company of its
annual summary statement of sales and earnings for the applicable
fiscal year (as such release is defined by Rule 16-b-3 (e)(1)(ii)
promulgated by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended).
<PAGE>
(e) Company shall in due course after the execution of this Agreement (and
in no event later than the date Restricted Stock is first required to
be issued to Executive hereunder) adopt rules pursuant to the Plan
regarding restricted stock which shall reflect the foregoing
provisions and such other provisions as are in the reasonable opinion
of Company's counsel customary with respect to restricted stock. In
the event that the Plan should for any reason become unavailable for
the issuance of Restricted Stock, Company shall cause the shares of
Restricted Stock required to be issued to Executive hereunder to be
issued pursuant to another plan of Company on substantially the same
terms and conditions as such Restricted Stock would have been issued
under the plan.
6. Stock Options
(a) Executive shall be granted options pursuant to the Plan to purchase
(I) beginning with a compensation base of 500,000 shares of Company
common stock having an exercise price equal to $.50 per-share (the "A
Options") in 1998 and (ii) 500,000 shares of Company common stock
having an exercise price equal to $1.00 per share in 1999 through the
year 2002 (the "B Option"). Seventy five percent of both the A Options
and the B Options will vest in increments as nearly equal as possible
on October 14th 2002. The remaining twenty-five percent of both the A
Options and the B Options will vest in increments as nearly equal as
possible on October 8th each year starting October 14th 1999, and
continuing through October 8th 2002. Such options shall be subject to,
and governed by, the terms and provisions of the Plan except to the
extent of modifications of such options which are permitted by the
Plan and which are expressly provided for herein. (i) Executive's
options may be increased (in the A&B Options) by a percentage amount,
to reflect the percentage of fiscal year growth that the company may
achieve.
(b) Executive agrees to enter into a stock option agreement with Company
containing the terms and provisions of such options together with such
other terms and conditions as counsel for the Company may reasonable
require to assure compliance with applicable state or federal law and
stock exchange requirements in connection with the issuance of Company
stock upon exercise of options to be granted as provided herein, or as
may be required to comply with the Plan.
(c) If Company has not already done so, company shall register Executive's
shares pursuant to the appropriate form of registration statement
under the Securities Act o 1933 and shall maintain such registration
statement's effectiveness as all required times.
<PAGE>
(d) Company shall, to the extent permitted by law, may make loans to
Executive in reasonable amounts on reasonable terms and conditions
during his employment by Company to facilitate the exercise of the
options granted to him as described above.
7. Benefits
(a) Executive shall be entitled to receive all benefits generally made
available to other executives of company.
(b) Company shall maintain during the term hereof a minimum of a
$1,000,000 split dollar life insurance policy on his life unless a
physical examination (which he agrees to take) shows that he is
uninsurable.
(c) Company shall maintain a full medical coverage for Executives, spouse
and children.
(d) Personal liability insurance.
(e) Company Car Lease
(f) Regional Professional Sports Season tickets for gifts
(g) Free Financial Counseling, Legal and Accounting advice
(h) Health, or Country Club Membership
(i) Paid sick leave
(j) Vacations of up to six weeks per year or longer as the Board may
authorize during which time Executive's compensation shall be paid in
full and he shall continue to participate in all other rights and
benefits.
(k) Travel Expenses inclusive of Airline VIP Clubs
(l) Relocation Expenses.
(i) Employer shall reimburse the Executive for reasonable expenses
incurred in relocation, but not confined to: all costs of the
physical move; en route travel expenses, including hotel and
meals; temporary living expenses for Executive and family,
including meals, for up to fifteen (15) weeks; three (3) house
hunting trips for the Executive and family; weekly commuting
expenses until Executive has moved; closing costs and commission
involved in selling Executive's former residence and purchasing a
<PAGE>
residence in the area of company's desired location. An
additional amount to cover federal, state, and local taxes
incurred as a result of the relocation. Company may provide
temporary financing while the Executive is trying to obtain
permanent financing.
(ii) Creative Time: The company recognizes the value of creativity of
the Executive if he is allowed "creative time" in an environment
that suits and stimulates the executive. The company will pay all
costs of this time off including meals and lodging for one
weekend each quarter in an area of the executives choice to boost
and recharge his creative abilities. These activities are
including but not limited to recreational activities, religious
retreats, health spas or any other activity deemed necessary by
the executive.
8. Reimbursement for Expenses
Executive shall be expected to incur various business expenses customarily
incurred by person holding like positions, including but not limited to
traveling, entertainment and similar expenses, all of which are to be incurred
by Executive for the benefit of Company. Subject to company's policy regarding
the reimbursement and non-reimbursement of all such expenses), Company shall
reimburse Executive for such expenses from time to time, at Executive's request,
and Executive shall account to Company for such expenses.
9. Protection of Company's Interests
(a) During the term of this Agreement Executive shall not directly or
indirectly engage in competition with, or not own any interest in any
business which competes with, any business of Company or any of its
subsidiaries; provided, however, that the provisions of this Section 9
shall not prohibit his ownership of not more than 5% of voting stock
of any publicly held corporation unless approved by the board.
(b) Except for actions taken in the course of his employment hereunder, at
no time shall Executive divulge, furnish or make accessible to any
person any information of a confidential or proprietary nature
obtained by him while in the employ of Company. Upon termination of
his employment by Company, Executive shall return to the Company all
such information which exists in writing or other physical form and
all copies thereof in his possession or under his control.
(c) Company, its successors and assigns, shall, in additions to
Executive's services, be entitled to receive and own all of the
results and proceeds of said services (including, without limitation,
literary material and other intellectual property) produced or created
during the term of Executive's employment hereunder. Executive will,
at the request of Company, execute such assignments, certificates of
<PAGE>
other instruments as Company may from time to time deem necessary or
desirable to evidence, establish, maintain, protect, enforce or defend
its right or title to any such material.
(d) Executive recognizes that the services to be rendered by him hereunder
are of a character giving them peculiar value, the loss of which
cannot be adequately compensated for in damages, and in the event of a
breach of this Agreement by Executive, Company shall be entitled to
equitable relief by way of injunction or by any other legal or
equitable remedies.
10. Termination by Company
(a) Company shall have the right to terminate this Agreement after January
1, 2000 under the following circumstances. The company cannot
terminate the executive prior to this date. (the company recognizes
the value of the Executives role in the critical first two years
following the merger with a public shell).
(i) Upon the death of Executive
(ii) Upon notice from Company to Executive in the event of an illness
or other disability which has incapacitated him from performing
his duties for twelve consecutive months as determined in good
faith by the board.
(iii)For good cause upon notice from Company, Termination by Company
of Executive's employment for "good cause" as used in this
Agreement shall be limited to gross negligence or malfeasance by
Executive in the performance of his duties under this agreement
or the voluntary resignation by Executive as an employee of the
company without the prior written consent of the Company.
(iv) For creating private deals at the expense of Company, not for the
benefit of the Company and realizing all of the profits without
the knowledge or approval of the Board.
(b) If this Agreement is terminated pursuant to Section 10(a) above,
Executive's rights and Company's obligations hereunder shall forthwith
terminate except as expressly provided in this Agreement.
(c) If this Agreement is terminated pursuant to Section 10(a)(I) or (ii)
hereof, Executive or his estate shall be entitled to receive 100% of
his base salary for the balance of the term of this Agreement,
together with the bonus provided for in Section 4(e) hereof. Company
may purchase insurance to cover all or any part of its obligations set
forth in the preceding sentence, and Executive agrees to take a
<PAGE>
physical examination to facilitate the obtaining of such insurance. If
the physical examination shows that Executive is uninsurable, such
death and disability benefits shall not be provided (except for
bonus), and Executive shall receive only normal Company levels of
death and disability benefits.
(d) Whenever compensation is payable to Executive hereunder during a time
when he is partially or totally disabled and such disability (except
for the provisions hereof) would entitle him to disability income or
to salary continuation payments from Company according to the terms of
any plan now or hereafter provided by Company or according to any
Company policy in effect at the time of such disability, the
compensation payable to him hereunder shall be inclusive of any such
disability income or salary continuation and shall not be in addition
thereto. If disability income is payable directly to Executive under
an insurance policy paid for by Company, the amounts paid to him by
said insurance company shall be considered to be part of the payments
to be made by Company to him pursuant to this Section 10, and shall
not be in addition thereto.
(e) Under this agreement pursuant to sections 10(a)(b)(c)(d) the
termination of an Executive's contract for "Good Cause" shall be
determined and enforced by an unanimous decision by the Board of
Directors.
(f) If the Executive had relocated his home for the benefit of the
Company, upon his termination for "Good Cause" the Company will
purchase his home at fair market value (if within 5 year period of
moving) and relocated him at Company to his original home location.
11. Termination by Executive
Executive shall have the right to terminate his employment under this
agreement upon 30 days' notice to company given within 60 days following the
occurrence of any o the following events:
(i) Executive is not elected or retained as President and Director of
company.
(ii) Company acts to materially reduce Executive's duties and
responsibilities hereunder. Executive's duties and responsibilities
shall not be deemed materially reduced for purposes hereof solely by
virtue of he fact that Company is (or substantially all of its assets
are) sold to, or is combined with, another entity provided that (a)
Executive shall continue to have the same duties and responsibilities
with respect to Company's Loan and Real Estate business and (b)
Executive shall report directly to the chief executive officer and
board of directors of the entity (or individual) that requires Company
or its assets.
<PAGE>
(iii)Company acts to change the geographic location of the performance of
Executive's duties from the Tampa Bay metropolitan area.
12. Consequences of Breach of Company
(a) If this Agreement is terminated pursuant to Section 11 hereof, or if
Company shall terminate Executive's employment under this Agreement in
any other way that is a breach of this Agreement by Company, the
following shall apply:
(i) Executive shall receive a cash payment equal to the present value
(based on a discount rate of 9%) of Executive's base salary
hereunder for the remainder of the term, payable within 39 days
of the date of such termination.
(ii) Executive shall be entitled to bonus payments as provided in
Sections 4 and 5 above (it being understood, however that all
such bonus payments, if made pursuant to this clause, shall be
paid in cash regardless of whether or not such payments exceed
the Cash Limit).
(iii)All stock options and Restricted Stock granted by Company to
executive under the Plan or granted by Company to Executive prior
to the date hereof shall accelerate and become immediately
exercisable.
(b) The parties believe that because of the limitations of Section 11(ii)
the above payments do not constitute "Excess Parachute Payments" under
Section 280G of the Internal Revenue Code of 1954, as amended (the
"Code"). Notwithstanding such belief, if any benefit under the
preceding paragraph is determined to be an "Excess Parachute Payment"
the Company shall pay Executive an additional amount ("Tax Payment")
such that (x) the excess of all Excess Parachute Payments (including
payments under this sentence) over the sum of excise tax thereon under
section 4999 of the Code and income tax thereon under Subtitle A of
the Code and under applicable state law is equal to (y) the excess of
all Excess Parachute Payments (excluding payments under this sentence)
over income tax thereon under Subtitle A of the Code and under
applicable state law, provided that the company shall not be obligated
to make a Tax Payment in excess o the value of 6.6667 compensation
years. For the purposes hereof, the value of a "Compensation Year",
including stock options and bonus entitlements, is defined as equal to
two times the base salary set for in Section 3.
<PAGE>
13. Remedies
Company recognizes that because of Executive's special talents, stature and
opportunities in the corporate management environment, and because of the
creative nature of and compensation practices of said industry and the material
impact that individual projects can have on and the company's results of
operations, in the event of termination by Company hereunder (except under
Section 10(a)), or in the event of termination by Executive under Section 11,
before the end of the agree term, Company acknowledges and agrees that the
provisions for the consequences of such termination, do not constitute a
penalty, and such payments and benefits shall not be limited or reduced by
amounts Executive might earn or be able to earn from any other employment or
ventures during the remainder of the agreed term of this Agreement.
14. CONFLICT RESOLUTION
In case of any dispute between the Executive and the Company as to the
amount of additional compensation payable to the Executive in respect of any
fiscal year, determination of the amount so payable will be determined by an
independent accountant so hired by the Company, made at the request of any party
shall be binding and conclusive on all parties hereto. In the event that any
action, suit or other proceeding in law or in equity is brought to enforce the
provisions of this agreement, and such action results in the awarding of a
judgment in favor of the Company, all expenses of the Company in conjunction
with said action shall be payable by the Executive.
15. BINDING AGREEMENT
This instrument shall be binding upon and inure to the benefit of
Executive, his heirs, distributees and assigns and company, its successor and
assigns. Executive may not, without the express written permission of the
Company, assign or pledge any rights or obligations hereunder to any person,
firm or corporation.
16. AMENDMENT; WAIVER
This instrument contains the entire agreement of the parties with respect
to the employment of Executive by Company. No amendment or modification of
this agreement shall be valid unless evidenced by a written instrument executed
by the parties hereto. No waiver by either party of any breach by the other
party of any provision or condition of this Agreement shall be deemed a waiver
of any similar or dissimilar provision or condition at the same or any prior or
subsequent time.
17. GOVERNING LAW
(a) This agreement shall be governed by and construed in accordance with
the laws of the State of Nevada.
<PAGE>
(b) The parties are aware that Executive's obligation to provide services
to Company hereunder for the full term of this agreement (with a minimum of two
years and approximately five years) The parties agree that this Agreement
(together with certain additional documents and agreements specifically referred
to herein) shall constitute the sole and conclusive basis for establishing
Executive's compensation for all services are provided by him hereunder,
regardless of from the date hereof, notwithstanding the further provision of
tract employment may be referred to as affording a "presumptive measure of
compensation" for services under such contract. Executive hereby confirms his
intent to provide services to the Company under this Agreement for the full term
thereof.
18. NOTICES
All notices which a party is required or may desire to give to the other
party under or; in connection with this Agreement shall be given in writing by
addressing the same to the other party as follows:
If to Executive to:
Michael Bruce Hall
6825 14th Ave. N.
St. Petersburg, Florida 33710
If to Company to:
Pinnacle Business Management Inc.
2963 Gulf To Bay Blvd. Suite 265
Clearwater Florida 33759
or at such other places may be designated in writing by like notice. Any notice
shall be deemed to have been given within 46 hours after being addressed as
required herein and deposited, first class postage prepaid, in the United States
mail.
IN WITNESS THEREOF, the parties have executed this agreement this 1st day of
December, 1997, effective as of the day and year first above written.
_______/s/__________________________
Michael Bruce Hall
President Pinnacle Business Management, Inc.
________/s/_________________________
Jeffery G. Turino
C.E.O. Pinnacle Business Management, Inc.
<PAGE>
Exhibit 10.5.3
AGREEMENT AND RELEASE
THIS AGREEMENT is made on the 28th day of February, 2000, between PINNACLE
BUSINESS MANAGEMENT, INC., a Nevada corporation, located at 2963 Gulf to Bay
Blvd, Suites 265 and 210 Clearwater, Florida 33759 ("Pinnacle" or "Company"),
and JEFFREY G. TURINO, an individual residing at 6501 Ridgecrest Dr.; Port
Richie, Florida 34668 ("Turino") and MICHAEL BRUCE HALL, an individual residing
at 6825 14th Ave, N.; St. Petersburg, Florida 33710 ("Hall"). Turino and Hall
are referred together as the "Executives."
ARTICLE I
INTRODUCTION
1.01 Pinnacle, incorporated in 1997, has entered into an employment agreement
effective October 14, 1997 with each of the Executives ("Agreement"). Under
the terms of the Agreement, the Executive is committed to expend
substantially all of his professional time for the benefit of the Company.
In consideration, each Executive receives per year $104,000 in salary; 5%
of the Company's pretax income as bonus (with a minimum of $52,000 in bonus
in 1998); and stock options for the purchase of 1,000,000 shares of
Pinnacle stock. The Company also agrees to purchase and keep in force
$1,000,000 in life insurance on each Executive.
1.02 The Agreement contemplated, and states, that the purpose for Pinnacle is to
engage in the real estate investment and loan businesses. The Company never
acquired the resources necessary to engage in the real estate investment
business. Pinnacle, however, conducted an active title loan business. In
1998 and 1999, laws were enacted that virtually eliminated the possibility
of a profitable title loan business, through no fault of the Executives.
1.03 The Company was not able to pay the Executives their full compensation, in
cash or in stock. Each Executive was paid $55,000 in 1997; $65,464 in 1998,
and $61,728 in 1999. The Company did not perform the terms of the
agreement. Among others, it never adopted the incentive stock option plan
nor did it purchase life insurance on the Executives.
1.04 The Executives performed beyond the terms of the Agreement by researching
and developing a new line of business a "payday deferred deposit services"
business ("PayCheck"). Further, the Executives negotiated a contract with
Mail Boxes Etc., USA, Inc. to use their MBE Centers (defined in the MBE
agreement) as a distribution system for the PayCheck business. This is a
promising new line of business.
1.05 Pinnacle stock has traded on the Over the Counter Bulletin Board. Effective
March 9, 2000, a new rule will take effect, effectively delisting Pinnacle
stock. The stock price, presently around $.12 per share is expected to fall
since there will be no market for the stock. The executives have caused a
Form 10 to be drafted and filed. Further, the Executives are seeking out
and investigating other companies as possible merger candidates. A merger
might provide an entry into the Securities and Exchange Commission
disclosure system, enabling relisting of the Company's stock. It might also
provide liquidity to the Company. Possible merger partners, however, are
unwilling to consider companies with contingent or unliquidated
liabilities.
1.06 The Company and the Executives agree that the Agreement has not been
performed in accordance with its terms. The Executives may have claims in
litigation against the Company. The Executives, however, both served on the
Board of Directors of the Company and it is impossible to ascertain to what
extent the Executives had any control or power to affect the decisions of
the Company. Nevertheless, this situation could create a contingent
liability that would make merging with Pinnacle unattractive.
<PAGE>
1.07 In addition, this is a critical juncture in the history of the Company. The
MBE Agreement offers enormous potential, but the financial condition of the
Company is very serious. The Company has incurred a great deal of debt.
Further, the income of the business has been invested in the implementation
of the PayCheck line of business. This business is technology and people
intensive, but the Company has not acquired hard assets that could be
liquidated and distributed to investors. As a result, the Company's
creditors and investors are unlikely to receive a yield, unless the
Executives stay with the business and continue to develop the PayCheck
business. The Executives could leave, on the basis that the terms of the
Agreement have been breached.
1.08 Therefore, the Company and the Executives seek to enter into this
agreement, to document the terms of their agreement, to make provision for
payment, and release all claims realized or unrealized, arising from the
Agreement, under the terms and conditions set forth herein.
ARTICLE II
ISSUE OF STOCK
2.01 The Company agrees to issue to Turino and Hall 27,500,000 shares of Company
stock each. The shares are restricted stock under the terms of Rule 144,
issued under Rule 506, Regulation D, promulgated under the Securities Act
of 1933 ("Shares"). The Executives understand that transfer of the Shares
is restricted for two years and agree that the Shares will not be
registered for offering during the first year "lock-up period." The
Executives acknowledge that the book value of the Shares is currently
negative and that there is no market for the stock, nor ascertainable
value.
ARTICLE III
RELEASE
NOW THEREFORE, for and in consideration of the premises hereof, the above
recitals and other good and valuable consideration, the receipt and sufficiency
of all of which is hereby expressly acknowledged, the parties hereto agree as
follows:
3.01 Upon receipt of the Shares, the Executives waive any right under the
Agreement to compensation, bonuses, and stock options earned before January
1, 2000. Turino and Hall hereby agree and acknowledge that, effective upon
receipt of the shares of stock referred to in paragraph 2.01, there are no
existing claims or defenses, personal or otherwise, or rights of setoff,
deferred compensation in cash or stock. The Executives further release any
claim arising with respect to this Release, the Shares or to the Agreement.
The Executives each for himself, and his respective predecessors,
successors, and assigns, his employees, agents and servants, and all
persons, natural or corporate, in privity with them or any of them, from
any and all claims or causes of action of any kind whatsoever, at common
law, statutory or otherwise, which the Executives, or either of them, has
now or might have in the future, known or unknown, now existing or which
might arise hereafter, directly or indirectly attributable to the
performance of the Agreement before the date of this Release.
3.02 Upon execution of this agreement, the Company hereby waives any and all
claims known or unknown against Turino and Hall arising with respect to
this Release, the Shares, or to the Agreement. This release binds the
Company's affiliates, predecessors, successors, and assigns, his employees,
agents and servants, and all persons, natural or corporate in privity with
them or any of them.
3.03 It is expressly understood and agreed that the terms hereof are contractual
and not merely recitals, and that the agreements herein contained and the
consideration herein transferred is to compromise doubtful claims, and that
no releases made or other consideration given hereby or in connection
herewith shall be construed as an admission of liability. Each party hereto
represents and warrants that the consideration to each of them for entering
<PAGE>
into this Release and the transactions contemplated hereby is sufficient
and equal to the value of all claims, demands, actions and causes of action
herein relinquished, released, renounced, abandoned, acquitted, waived or
discharged, and that this Release is in full settlement, satisfaction and
discharge of any and all such claims, demands, actions, and causes of
action that such party may have or be entitled to against the Company, its
affiliates, predecessors, assigns, legal representatives, officers,
directors, employees, attorneys and agents.
3.04 The Executives each represents and warrants that he has all power and
authority to enter into, execute and deliver this Release, all proceedings
required to be taken to authorize the execution, delivery and performance
of this release and the agreements and undertakings relating hereto and the
transactions contemplated hereby have been validly and properly taken and
this Release constitutes a valid and binding obligation of each party
hereto in the capacity in which executed. Each party further respectively
represents and warrants that it enters into this Release freely of its own
accord without reliance on any representations of any kind or character not
set forth herein. Each party enters into this release upon the advice of
and in concurrence with its own legal counsel, and the Company is
represented by separate legal counsel from that of either Executive.
ARTICLE IV
AMENDMENT OF THE EMPLOYMENT AGREEMENT
4.01 The Executives agree to continue employment under the terms of the
Agreement until 2002 as if no breach of the Agreement occurred.
4.02 The Agreement is hereby amended. All provisions creating stock options and
the promise of the Company to adopt an incentive stock option as part of
the Agreement is deleted. All references to compensation due the Executives
before January 1, 2000 is deleted. The Company acknowledges that the
compensation paid the Executives was duly earned and paid. The Executives
waive the right to any further deferred compensation earned before January
1, 2000 under the terms of the Agreement.
4.03 The Company still intends to purchase life insurance on the Executives. The
Executives agree that the Company is required to purchase insurance only
after the Company has a positive Total Assets, Net Assets, and Net Income.
All other provisions of the Agreement still apply, and will continue to
apply throughout the remainder of the Agreement's term.
ARTICLE V
MISCELLANEOUS PROVISIONS
5.01 No change in or additions to this agreement may be made, and compliance
with any covenant or provision herein or therein set forth may not be
omitted or waived, unless the parties shall so agree in writing.
5.02 All representations and warranties made in this agreement shall survive the
execution hereof and delivery of the Shares.
5.03 The invalidity or unenforceability of any provision hereof shall in no way
affect the validity or enforceability of any other provision.
<PAGE>
IN WITNESS WHEREOF, the undersigned Parties have signed this agreement,
continuing this page, and ___ pages preceding, effective on the year and date
first above written.
PINNACLE BUSINESS MANAGEMENT, INC.
By: /s/ Bruce Hall
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Bruce Hall, President
/s/ Jeffrey G. Turino
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Jeffrey G. Turino
The spouse acknowledges that this Agreement contains terms which may alter her
rights as provided by Florida law.
Spouse: /s/ Mary Turino
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/s/ Michael Bruce Hall
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Michael Bruce Hall
The spouse acknowledges that this Agreement contains terms which may alter her
rights as provided by Florida law.
Spouse:/s/ Jackie Lynn Hall
- ---------------------------
<PAGE>
STOCK OPTION AGREEMENT
Pinnacle Business Management, Inc. (the "Company" or "Pinnacle") and Gordon &
Associates Strategic Investments, Inc. and/or its designee(s) ("Gordon" or the
"Optionee"), to be effective as of the 19th day of May 1999 (the "Grant Date").
1. PURPOSE. The company and Optionee have entered into a Consulting
Services Agreement dated May 19, 1999 pursuant to which the Company
agreed to issue shares of common stock, $.001 par value and options to
purchase shares of common stock for providing a strategic and valuable
contact for the Company's business. In order to meet its obligations
under the Consulting Services Agreement, the Company desires to enter
into this Stock Option Agreement to more fully evidence the intent of
the Company to issue stock options and to reward Optionee for its
efforts in contributing to the growth of the Company.
2. NATURE OF OPTION. The options are intended a constitute non-qualified
stock option.
3. GRANT OF OPTIONS. The Company grants to Optionee stock options (the
"Options") to purchase up to a total of 35,322,578 shares of the
Company's common stock, par value $.001 per share (the "Common
Stock"), at such time(s) and at such price(s) as set forth on Exhibit
"A" attached to Consulting Services Agreement and any amendments
thereto (hereinafter referred to as Exhibit "A").
4. VESTING AND EXERCISE OF OPTIONS. The Options vest and are immediately
exercisable upon the occurrence of the opening of facilities at
certain Mailbox, Etc. locations and/or the Company achieving certain
closing prices for its Common Stock, as more fully set forth on
Exhibit "A".
5. ADJUSTMENTS IN THE EVENT OF CERTAIN TRANSACTION. In the event of a
stock dividend, stock split or a combination, reverse stock split, or
other change in the Company's capitalization, or other distribution to
common stockholders other than __________ cash dividends, after the
effective date of this Agreement, the Options will be adjusted
accordingly; provided that in no event will the exercise prices be
increased.
6. ADJUSTMENTS IN THE EVENT OF SIGNIFICANT TRANSACTIONS. In the event
Gordon introduces, initiates, or consults to the Company regarding an
event of a consolidation or merger in which the Company is not the
surviving corporation or which results in the acquisition of
substantially all of the Company's outstanding stock, or in the event
of the sale or transfer of substantially all the Company's assets or a
dissolution or liquidation of the Company, or in the event of a
<PAGE>
transaction that would effectively take the Company private or result
in the Company de-listing its shares of stock ("Significant
Transaction"), all outstanding options under this Agreement as of the
effective date of the Significant Transaction shall immediately vest
and become exercisable in full and Gordon shall participate in such
Significant Transaction as a stockholder and the Company shall
immediately upon such exercise issue and deliver shares of Common
Stock representing the Options.
7. EXERCISE PRICE.
a. Registered Shares: In the event that the shares of Common Stock
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covered by the Options are registered and free trading at the time of
exercise, the exercise prices of the Options are at such prices as set
forth on Exhibit "A".
b. Unregistered Shares: In the event the shares of Common Stock covered
--------------------
by the Options are not registered and free trading, then the Company
will carry a zero interest promissory note for a period of time
sufficient for Gordon to have the opportunity to sell, in accordance
with the restrictive stock sale provisions of the Consulting Services
Agreement, an amount of registered free trading securities sufficient
to pay the exercise price per Exhibit "A".
c. Significant Transaction: In the event of a Significant Transaction,
------------------------
Gordon will pay the exercise price of the lesser of twenty-five cents
($.25) per share or 30% of the average closing bid price for the
thirty trading days prior to the first day of which either the company
enters into an agreement to execute a significant Transaction or
disseminates any news release, announcement or other information to
the public or the Company's shareholders related to the Significant
Transaction. In the event of a Significant Transaction the company
will carry a zero interest promissory note for a period of time
sufficient for the events of the Significant Transaction to either
provide Optionee cash and/or the opportunity to sell, in accordance
with the restrictive stock sale provisions of the Consulting Services
Agreement, an amount of registered free trading securities sufficient
to pay the exercise price.
8. TERM OF OPTIONS. This Option Agreement is valid for the same term as the
Consulting Services Agreement.
9. METHOD OF EXERCISING OPTION. The Options are exercisable by delivering a
written notice signed by the Optionee to the Secretary of the Company,
which shall specify the number of shares to be acquired by virtue of the
exercise of the options. The Optionee shall further deliver the federal tax
identification numbers or social security numbers of the Optionee, the
method of payment elected and the amount thereof, and the exact name in
<PAGE>
which the shares will be registered. The Optionee may withdraw notice of
exercise of the Option at any time before close of business on the business
day preceding the exercise date. If a person or persons other than the
Optionee exercises the Option, such other person or persons must sign such
notice.
10. DELIVERY OF SHARES. Upon the exercise of any options under this Agreement,
the Company will deliver to Gordon, within ten (10) business days, the
stock certificates evidencing the options exercised.
11. METHOD OF PAYMENT.
Registered Shares: If the shares are registered and free trading, payment
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of the exercise price for the shares purchased under the Options shall be
delivered to the Secretary of The Company, within ten (10) business days
after receipt of shares covered by the exercised options, by any
combination of the following:
a. Cash;
b. Certified Check;
c. Cashier's Check;
d. Wire Transfer;
e. Shares of Common Stock. Shares of common stock owned by the Optionee
and valued at the closing price of the common stock at the date that
the payment is due by the Optionee and shall contain all proper
endorsements;
f. Broker-Dealer. The Options are exercisable by a broker-dealer acting
on behalf of the Optionee if the broker-dealer receivers the following
from the Optionee or the Company:
i. This Option Agreement; and
ii. Written instructions, signed by the Optionee, requesting the
Company to deliver the Shares to the broker-dealer on behalf of
such Optionee and specifying the account into which such Shares
should be deposited.
Unregistered Shares or Significant Transaction: If the shares are not
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registered and free trading or in the event of a Significant Transaction
the payment of the exercise price will be made in accordance with the
provisions of paragraph 7 (b) or (c) herein and delivered to the Secretary
of the Company. When payment is required it shall be made in accordance
with (a), (b), (c), (d), (e), or (f) of this paragraph.
12. RIGHT OF EXERCISE. The Options are exercisable at any time during the term
of this Option Agreement, in whole or in part, to acquire those Shares that
have vested in accordance with this Option Agreement; provided, however,
that this Option may only be exercisable to acquire whole shares of Common
Stock.
<PAGE>
13. APPROVAL. If required by applicable law, the Company will obtain board of
director and shareholder approval of this Option Agreement pursuant to
which the options are covered. The resolutions of the Board of Directors
and Shareholders will authorize the Company to reserve for issuance under
the Stock Option Plan 35,322,578 shares of the Company's Common Stock.
14. SECURITIES REPRESENTATION. The Company is obligated to have previously
registered the shares of Common Stock covered by these Options, however, as
of the date of this Agreement the shares of Common Stock have not been
registered but this in no way eliminates or modifies the Company's
obligation to register all shares of common Stock subject to the Options.
However, Optionee understands that until such shares are registered there
are certain restrictions upon the sale and transfer of such shares and Rule
144 and/or Rule 701 under the Securities Act of 1933 may be available in
connection with any resale of shares of Common Stock. Optionee hereby
represents (and promises to so represent upon any exercise under this
Option) that as of the dates any unregistered shares of Common Stock are
hereafter acquired by Optionee, such unregistered shares shall be acquired
for Optionee's own account, for investment and not with a view to be
distribution thereof.
Company represents and warrants that upon the exercise of Options, the
Company will notify Gordon as to the number of shares issued and
outstanding of the Company so that Gordon may comply with applicable
Securities Laws.
15. MISCELLANEOUS
a. Registration Rights. The company shall register the shares of Common
---------------------
Stock represented by the Options with the Securities and Exchange
Commission pursuant to a registration statement (Securities Acts of
1933 and 1934) as soon as practicable following execution of this
Agreement and in any event no later than one (1) month following the
execution date of this Agreement.
b. Notification. The Company shall notify the Optionee that the
------------
registration statement has been filed within five business days after
such filing. The Company shall include in such registration statement
all shares of Common Stock subject to this Option Agreement,
regardless of whether such shares of Common Stock have been the
subject of an exercise or are currently vested.
c. Modification. This Agreement may not be modified, changed or
------------
terminated verbally, and may only be modified, changed or terminated
by an agreement in writing signed by the party against whom
enforcement of any such change of termination is sought. Any
modification or change or termination of this Agreement shall not
operate to deny or otherwise take away any right of the Optionee to
exercise the Options to the extent of the vested rights set forth
herein.
<PAGE>
d. No Minimum Engagement. The company shall not be deemed by the grant of
---------------------
the Options (as distinguished from the separate Consulting Services
Agreement) to be required to engage Optionee for any minimum period,
nor is Gordon required to perform any further duties or functions for
the Company.
e. Shareholder Rights Prior to and after Exercise. Optionee shall not
-------------------------------------------------
have any rights as a shareholder with respect to any shares covered by
the Options until the date of the exercise of each of the Options and
tender of payment pursuant to the terms and conditions for payment
hereunder. No adjustment shall be made for dividends or other rights
related to shares of Common Stock for which the record date is prior
to the date the Option is exercised. The delay or refusal on the part
of the Company in issuing the stock certificates evidencing the shares
of Common Stock subject to an exercise of the Options shall not result
in a limitation, restriction or denial of the Optionee's rights as a
shareholder of the Company subsequent to such exercise.
f. Governing Law. The laws of the State of Texas shall govern the
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validity, construction and performance of this agreement. Any
invalidity of any provision of this Agreement shall not affect the
validity of any provision.
g. Notice. All offers, notices, demands, requests, acceptances or other
------
communications hereunder shall be in writing and shall be deemed to
have been duly made or given if mailed by registered or certified
mail, return receipt requested. Any such notice mailed to the Company
shall be addressed to its principal office, and any notice mailed to
Optionee shall be addressed to Optionee's residence address as it
appears on the signature page hereof or the books and records of the
Company or to such other address as either party may hereafter
designate in writing to the other.
h. Third Party Beneficiaries. This Agreement shall inure to the benefit
--------------------------
of and bind the legal representatives, successors and assigns of the
parties hereto.
i. No Obligation to Exercise. To Optionee shall have no obligation to
----------------------------
exercise any Option granted by this Agreement.
IN WITNESS WHEREOF, THIS AGREEMENT IS EXECUTED EFFECTIVE AS OF THE GRANT DATE.
GORDON & ASSOCIATES STRATEGIC INVESTMENTS, INC.
<PAGE>
By: ____/s/___________________________________
Denis Gordon, President
Address: 11191 Westheimer #330
Houston, Texas 77024
PINNACLE BUSINESS MANAGEMENT, INC.
By: ___/s/_____________________________________
Jeff Turino, Chief Executive Officer
By: ___/s/_____________________________________
M. Bruce Ball, President
Address: 2963 Gulf to Bay Blvd., Suite 265
Clearwater, Florida 33759
<PAGE>
SUBSIDIARIES OF THE REGISTRANT
1. Fast Title Loans, Inc.
Florida Corporation, chartered 1996
Conducts business under the name "Fast Title Loans."
2. Fast PayCheck Advance of Florida, Inc.
Florida Corporation, chartered 1998
Conducts business under the name "Fast PayCheck."
3. Summit Property, Inc.
Florida Corporation, chartered 1997
Summit Property, Inc., is an inactive company.
INDEPENDENT AUDITOR'S REPORT
To The Board of Directors of Pinnacle Business Management, Inc.
We hereby consent to the use in this Form 8-K of our report dated
February 28, 2000 relating to the financial statements of
Pinnacle Business Management, Inc.
/S/ BAGELL, JOSEPHS, LEVINE, FIRESTONE & CO., L.L.C.
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BAGELL, JOSEPHS, LEVINE, FIRESTONE & CO., L.L.C
Certified Public Accountants
March 6, 2000
BAGELL, JOSEPHS, LEVINE, FIRESTONE & COMPANY, L.L.C.
High Ridge Commons
Suite 400-403
200 Haddonfield Berlin Road
Gibbsboro, NJ 08026
February 18, 2000
Ms. Lee Walthall, Esquire
VIA Fax: 713-654-1341
Dear Ms. Walthall:
This is to inform you that we are engaged to perform the independent audit for
Pinnacle Business Management, Inc. as of December 31, 1999. Based on the client
information we have at this time it would take unreasonable effort and expense
in producing such audited statements by the end of March, 2000.
Sincerely,
/s/ Neil I. Levine
Neil I. Levine
Certified Public Accountant
NIL/bs
