STOCK OPTION AGREEMENT
Pinnacle Business Management, Inc. (the "Company" or "Pinnacle") and Xxxxxx &
Associates Strategic Investments, Inc. and/or its designee(s) ("Xxxxxx" 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
Xxxxxx 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
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 Xxxxxx 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
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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 Xxxxxx 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,
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Xxxxxx 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
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 Xxxxxx, 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.
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 Xxxxxx as to the number of shares issued and
outstanding of the Company so that Xxxxxx may comply with applicable
Securities Laws.
15. MISCELLANEOUS
a. Registration Rights. The company shall register the shares of Common
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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
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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
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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.
d. No Minimum Engagement. The company shall not be deemed by the grant of
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the Options (as distinguished from the separate Consulting Services
Agreement) to be required to engage Optionee for any minimum period,
nor is Xxxxxx required to perform any further duties or functions for
the Company.
e. Shareholder Rights Prior to and after Exercise. Optionee shall not
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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
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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
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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
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exercise any Option granted by this Agreement.
IN WITNESS WHEREOF, THIS AGREEMENT IS EXECUTED EFFECTIVE AS OF THE GRANT DATE.
XXXXXX & ASSOCIATES STRATEGIC INVESTMENTS, INC.
By: ____/s/___________________________________
Xxxxx Xxxxxx, President
Address: 00000 Xxxxxxxxxx #000
Xxxxxxx, Xxxxx 00000
PINNACLE BUSINESS MANAGEMENT, INC.
By: ___/s/_____________________________________
Xxxx Xxxxxx, Chief Executive Officer
By: ___/s/_____________________________________
M. Xxxxx Xxxx, President
Address: 2963 Gulf to Xxx Xxxx., Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
