EXHIBIT 10.10
Document is copied.
X. X. XXXXXXXX & CO., INC.
Founded 1960
Brokers & Dealers in Securities
Underwriters
Newport Office Tower
000 Xxxxxxxxxx Xxxx., X.X. Xxx 000 Xxxxxx Xxxx, XX 00000-0000
000-000-0000 -- 000-000-0000 --- Fax 000-000-0000
Xx. Xxxx Xxxxxx
Chief Executive Officer
Pinnacle Business Management, Inc.
0000 Xxxx xx Xxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Dear Xx. Xxxxxx:
THIS AGREEMENT (the "AGREEMENT") is made as of August 18, 1999 between
Pinnacle Business Management, Inc. ("PINNCLE") NASDAQ symbol; "PCBM", and X.X.
Xxxxxxxx & Co., Inc. ("XXXXXXXX").
In consideration of the mutual covenants contained herein and intending to
be legally bound thereby, PINNACLE and XXXXXXXX hereby agree as follows:
1. XXXXXXXX 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, XXXXXXXX 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. XXXXXXXX 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, XXXXXXXX will render such
services as to which PINNACLE and XXXXXXXX mutually agree and
XXXXXXXX will exert its best efforts to accomplish the goals
agreed to by XXXXXXXX and PINNACLE.
2. In connection with the performance of this AGREEMENT, XXXXXXXX
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 XXXXXXXX hereunder, XXXXXXXX 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 back
registration rights as set forth in paragraph 4 below. Such
Warrants ("XXXXXXXX Warrants") may be exercised at any time from
August 18, 1999 to and including August 18, 2004. In any event,
the XXXXXXXX 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, XXXXXXXX shall have, at XXXXXXXX'x 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 XXXXXXXX, 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
XXXXXXXX, 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 XXXXXXXX Warrants not then exercised;
and (ii) the shares previously issued upon exercise of any of the
XXXXXXXX Warrants (hereinafter, collectively, the "XXXXXXXX
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 XXXXXXXX Warrants (the "XXXXXXXX
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 XXXXXXXX
EQUITY, shall include in any such Registration Statement, at
PINNACLE's expense, the XXXXXXXX SHARES, provided that, if the
sale of securities by PINNACLE is being made through an
underwriter and the underwriter objects to inclusion of the
XXXXXXXX SHARES in the Registration Statement, the XXXXXXXX
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
XXXXXXXX of any vested warrants as set forth herein, by failing
to deliver the certificate(s)
for the underlying shares of common stock to XXXXXXXX within 10
days after such exercise then XXXXXXXX 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 XXXXXXXX, including reasonable attorneys'
fees. In addition to any other damages sustained by XXXXXXXX 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 XXXXXXXX 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 XXXXXXXX.
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
XXXXXXXX Warrant shall be proportionately adjusted to prevent the
dilution or enlargement of the rights of the XXXXXXXX interest.
7. The obligation of PINNACLE to register the XXXXXXXX SHARES,
including the shares issuable upon exercise of the XXXXXXXX
Warrants, pursuant to the demand or the piggy back registration
rights set forth in paragraph 6 above, shall be without regard to
whether the XXXXXXXX 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 XXXXXXXX, 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
XXXXXXXX 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 XXXXXXXX
$10,000 as a non-accountable and non-refundable expense allowance
for due diligence and general compliance review. XXXXXXXX shall
be entitled to additional compensation, to be negotiated between
XXXXXXXX and consummated by PINNACLE or are executed by XXXXXXXX
at PINNACLE's request, during the term of this
AGREEMENT to the extent that such compensation is normal and
ordinary for such transactions. In addition, XXXXXXXX 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 XXXXXXXX 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 XXXXXXXX in
connection with its rendering services under this AGREEMENT
except for any losses, claims, damages, liabilities, costs or
expenses resulting from any violation by XXXXXXXX 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 XXXXXXXX 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. XXXXXXXX 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 XXXXXXXX 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 XXXXXXXX
involving willful misconduct.
14. Within 90 days of the date of this AGREEMENT, a representative of
XXXXXXXX will visit the corporate headquarters of PINNACLE.
PINNACLE will submit to XXXXXXXX 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 XXXXXXXX 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 XXXXXXXX is, and shall remain
an independent contractor.
16. This AGREEMENT may not be assigned by either party hereto, except
that XXXXXXXX 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 XXXXXXXX.
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 Xxxxxx X. Xxxxxxxx, Chairman, Xxxxxxx
Xxxxxxxxx, President, or Xxxxxx Xxxxxxx, Vice President,
Compliance. If information is being faxed, our confidential
compliance fax number is (000) 000-0000 for communication use.
IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT as of
the day and year set forth above.
X.X. XXXXXXXX & CO., INC. PINNACLE BUSINESS MANAGEMENT, INC.
By: /s/ By: /s/
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Xxxxxxx Xxxxxxxxx Xxxx Xxxxxx
President Chief Executive Officer
