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 Xxxxxxxxxx, Xxxxxxx 00000 ("Pinnacle" or "Company"),
and XXXXXXX X. XXXXXX, an individual residing at 0000 Xxxxxxxxxx Xx.; Xxxx
Xxxxxx, Xxxxxxx 00000 ("Turino") and XXXXXXX XXXXX XXXX, an individual residing
at 0000 00xx Xxx, X.; Xx. Xxxxxxxxxx, Xxxxxxx 00000 ("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.
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
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.
IN WITNESS WHEREOF, the undersigned Parties have signed this agreement,
continuing this page, and pages preceding, effective on the year and date
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first above written.
PINNACLE BUSINESS MANAGEMENT, INC.
By: /s/ Xxxxx Xxxx
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Xxxxx Xxxx, President
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
The spouse acknowledges that this Agreement contains terms which may alter her
rights as provided by Florida law.
Spouse: /s/ Xxxx Xxxxxx
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/s/ Xxxxxxx Xxxxx Xxxx
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Xxxxxxx Xxxxx Xxxx
The spouse acknowledges that this Agreement contains terms which may alter her
rights as provided by Florida law.
Spouse: /s/ Xxxxxx Xxxx Xxxx
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