U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 205490.
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
ACT
OF 1934
For the transition period from_________ to_____________
Commission file number 0-3718
Equity Growth Systems, inc.
--------------------------
(Exact name of registrant as specified in its charter)
Delaware 11-2050317
-------- ----------
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
1941 Southeast 51st Terrace, Suite 800; Ocala, Florida 34471
----------------------------------------
(Address of principal executive offices)
(352)694-6714
------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such report(s), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
As at September 30, 1998, the registrant had outstanding 4,116,148
shares of Common Stock, par value $0.01.
Transitional Small Business Disclosure Format:
Yes No X
--- ---
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EQUITY GROWTH SYSTEMS, inc.
Index
Page
----
Part I - Financial Information
Item 1. Financial Statements
Accountant's Compilation Report ............................. 2
Balance Sheets .............................................. 3
Statements Income and Accumulated Deficit.................... 4
Statements of Shareholders' Equity............. 5
Statements of Cash Flows..................................... 6
Notes to Financial Statements................................ 7 - 14
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 15
Part II -- Other Information
Item I. Legal Proceedings ............................................. 16
Item 3. Defaults Upon Senior Securities ................................ 19
Item 5. Other Information
1.Change in Control of Registrant
A. Director and CEO Incapacity ................................. 19
B. Biographies of New Directors and Officers ................. 20
2.Acquisition or Disposition of Assets
A. Reorganization as Holding Company ........................... 23
B. New Strategic Plan ......................................... 23
5. Other Events .................................................... 23
Item 6. Index of Exhibits............................................. 24
Signatures................................................... 25
1
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To the Shareholders
Equity Growth Systems, inc.,
Boca Raton, Florida 33987
I have compiled the accompanying balance sheet of Equity Growth Systems, inc.
as of September 30, 1988 and 1997 and the related statements of income and
retained earnings and cash flows for the six months then ended, in
accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified Public
Accountants.
A compilation is limited to presenting in the form of financial
statements information that is the representation of management.
I have not audited or reviewed the accompanying financial statements and,
accordingly, do not express an opinion or any other form of assurance on them.
Leo J. Paul
November 11, 1998
2
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EQUITY GROWTH SYSTEMS, inc.
BALANCE SHEET
September 30, 1998 AND 1997
1998 1997
A S S E T S
CURRENT ASSETS
Cash and cash equivalents $ 6 $ 2,597
Mortgage receivable, current portion
(Note 6 & 7) 154,151 147,945
Promissory notes, current portion
(Note 8) 5,480 5,480
---------- ----------
TOTAL CURRENT ASSETS 159,637 156,022
OTHER ASSETS
Mortgages receivable (Note 6 & 7) 1,004,706 1,158,857
Promissory notes (Note 8) 265,249 239,132
Interest receivable 50,242 47,820
Escrow receivable 98,000 98,000
---------- ----------
TOTAL OTHER ASSETS 1,418,197 1,543,809
---------- ----------
TOTAL ASSETS $1,577,834 $1,699,831
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and other current
liabilities (Note 3) $ 35,409 $ 24,058
Mortgage payable, current portion
(Note 7) 181,636 160,773
Note payable (Note 9) 155,932 105,500
---------- ----------
TOTAL CURRENT LIABILITIES 372,977 290,331
LONG-TERM LIABILITIES
Mortgage payable (Note 7) 857,489 1,084,695
---------- ----------
TOTAL LIABILITIES 1,230,466 1,375,026
---------- ----------
SHAREHOLDERS' EQUITY (Note 13)
Preferred stock-no par value authoriz-
ed-5,000,000 shares; zero issued and
outstanding - -
Common stock-$.01 par value author-
ized-20,000,000 shares; issued and
outstanding-4,116,148 shares in 1998
and 3,771,148 in 1997 41,161 37,711
Capital in excess of par value 2,891,645 2,892,195
Accumulated deficit (2,585,438) (2,605,101)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 347,368 324,805
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $1,577,834 $1,699,831
========== ==========
Read Accountant's Compilation Report
The accompanying notes are an integral part of these financial statements.
3
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EQUITY GROWTH SYSTEMS, inc.
CONDENSED STATEMENT OF INCOME AND ACCUMULATED DEFICIT
Three Months Ended Six Months Ended
September 30, September 30,
1998 1997 1998 1997
-------------------- -------------------
Income $ 40,677 $ 54,785 $ 121,509 $ 168,251
General and Adminis-
trative Expenses 40,226 48,577 141,677 281,025
--------- ---------- ---------- ----------
Net Income (Loss)
Before Provisions for
Income Taxes 451 6,208 (20,168) (112,774)
Provisions for Income
Taxes Note (10) - - - -
---------- ---------- ---------- ----------
Net Income (Loss) 451 6,208 (20,168) (112,774)
Accumulated Deficit-
Beginning (2,582,989) (2,611,309)(2,565,270)(2,492,327)
========== ========== ========== ==========
Accumulated Deficit-
Ending (2,582,538) (2,605,101)(2,585,438)(2,605,101)
========== ========== ========== ==========
Earnings Per Share 0.000 0.002 (0.005) (0.030)
Weighted Average of
Shares Outstanding 4,116,148 3,771,148 4,047,676 3,771,148
---------- ---------- ---------- ----------
Read Accountant's Compilation Report
The accompanying notes are an integral part of these financial statements.
4
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EQUITY GROWTH SYSTEMS, inc.
STATEMENTS OF SHAREHOLDERS' EQUITY
September 30, 1998
Capital in
No. of Common Excess of Accumulated
Shares Stock Par Value Deficit
Balances
January 1, 1995 2,822,072 28,221 $2,881,492 $(2,242,768)
Common Stock Issued 949,076 9,490 10,703
Net (loss) for the
year ended December
31, 1996 (249,559)
---------- ------- ---------- -----------
Balances, December
31, 1996 3,771,148 37,711 2,892,195 (2,492,327)
Common Stock Issued 55,000 550 (550)
Net (loss) for the
year ended December
31, 1997 (72,943)
---------- ------- ---------- -----------
Balances, December
31, 1997 3,826,148 38,211 2,891,645 (2,565,270)
Common Stock Issued 290,000 2,900
Net income for the
six months ended
September 30, 1998 (17,268)
---------- ------- ---------- -----------
Balances
September 30, 1998 4,116,148 41,161 $2,891,645 $2,582,538
========== ======= ========== ===========
Read Accountant's Compilation Report
The accompanying notes are an integral part of these financial statements.
5
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EQUITY GROWTH SYSTEMS, inc.
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED September 30, 1998 AND 1997
1998 1997
Cash Flows From Operating Activities:
Net Profit (Loss) $ (20,168) $(112,774)
Adjustments to Reconcile Net Profit (Loss)
to Net Cash Used for Operating
Depreciation - -
Decrease in other receivable 580 -
Decrease in mortgages and notes
receivable 91,060 357,638
Increase (decrease) in accounts
payable and current liabilities 30,409 (5,378)
Increase (decrease) in mortgage
and notes payable (104,775) (237,851)
-------- --------
Net Cash Provided (Used) by Operations (2,894) 1,635
-------- --------
Cash Flows From Financial Activities
Capital stock issued 2,900 -
Additional paid in capital - -
-------- --------
Net Cash Provided by Financial
Activities 2,900 -
-------- --------
Net Increase (Decrease) in Cash 6 1,635
Cash-Beginning of Year - 962
-------- --------
Cash-End of Period $ 6 $ 2,597
======== ========
Supplemental Cash Flows Information
Cash paid for interest $ 96,909 $101,156
======== ========
Read Accountant's Compilation Report
The accompanying notes are an integral part of these financial statements.
6
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EQUITY GROWTH SYSTEMS, inc.
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business and Organization
The Company (formerly known as InfoTech, Inc.) was organized under the laws
of the State of Delaware on December 8, 1964. The principal business of the
Company is specializing in structuring and marketing mortgaged backed securities
as well as, the acquisition of select commercial real estate for its own
account.
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
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the period.
Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks, and any
highly liquid investments with a maturity of three months or less at the time of
purchase.
The Company maintains cash and cash equivalent balances at a financial
institution which is insured by the Federal Deposit Insurance Corporation up to
$100,000. At September 30, 1998, there is no concentration of credit risk from
uninsured bank balances.
Fixed Assets
The fixed assets are depreciated over their estimated allowable useful
lives, primarily over five to seven years utilizing the modified acceleration
cost recovery system. Expenditures for major renewals and betterments that
extend the useful lives of fixed assets are capitalized. Expenditures for
maintenance and repairs are charged to expenses as incurred.
Income Taxes
In February 1992, the Financial Accounting Standards Board issued a
Statement on Financial Accounting Standards 109 of "Accounting for Income
Taxes". Under Statement 109, deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective bases.
7
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EQUITY GROWTH SYSTEMS, inc.
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Deferred tax assets and liabilities are measured using enacted tax rates in
effect for the year in which those temporary differences are expected to be
recovered or settled. Under Statement 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.
Earnings/Loss Per Shares
Primary earnings per common share are computed by dividing the net income
(loss) by the weighted average number of shares of common stock and common stock
equivalents outstanding during the year. The number of shares used for the six
months ended September 30, 1998 and 1997 were $4,047,676 and $3,771,148,
respectively.
NOTE 2 - PROPERTY, PLANT AND EQUIPMENT
1998 & 1997
Equipment $ 2,022
-------
Less: Accumulated depreciation (2,022)
-
=======
Depreciation expense charged during 1998 and 1997 was $-0- and $-0-,
respectively.
NOTE 3 - SETTLEMENT WITH CREDITORS
On October 31, 1996, the Company issued 200,000 shares of it common stock
in consideration for the cancellation of $107,393 owed by the Corporation to
Diversified Corporate Consulting Group, LLC for professional services rendered
since 1994. Additionally, in June and October of 1997 , the Company issued an
aggregate of 460,000 shares of the Company's $.01 par value common stock for
advisory services performed on its behalf with a value of $4,600.
On August 15, 1995, the Company issued 200,000 shares of the Company's $.01
par value of common stock for significant services to the Corporation at the
request of its President with a value of $2,000.
8
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EQUITY GROWTH SYSTEMS, inc.
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
NOTE 3 - SETTLEMENTS WITH CREDITORS (Continued)
In March of 1995, the Company issued 20,000 shares of the Company's $.01
par value of common stock after the reverse split in payment of legal bills of
$45,734 and 6,072 shares of $.01 par value stock in payment of accounting bill
of $15,360. The remaining balance of $67,832 was written off as the Company was
not able to locate creditors.
NOTE 4 - EMPLOYMENT AGREEMENT
The Company entered into an employment agreement with Edward
Granville-Smith, a chief executive officer for an initial term of five years
commencing June 1, 1995. The Company registered with the Securities and Exchange
Commission to issue 110,000 shares of common stock to Edward Granville-Smith for
compensation for services prior to June 1, 1997. In addition, annual salary is a
sum equal to the lesser of 5% of the Company's annual gross income on a calendar
basis or 15% of its net pre-tax profit as determined for federal income tax
purposes, without taking depreciation or tax credits into account to be paid on
or before March 30, following the calendar for which salary is due; subject to
availability of cash flow. Edward Granville-Smith would also be entitled to an
annual bonus payable in shares of the Company's common stock, determined by
dividing 5% of the Company's pre-tax profits for the subject calendar year by
the average bid price for the Company's common stock during the last five
trading days prior to the end of the last day of each year and the first days of
the new year. During May of 1997, the Company recruited two executive officers,
Messers. Gene R. Moffitt and Donald E. Homan, both with offices in Kansas City,
Missouri. Such recruitment was effected in two parts, first, the Company
exchanged 100,000 shares with each (200,000 shares in the aggregate), for all of
the capital stock in their recently formed corporations (Moffitt Properties,
Ltd., and Homan Equities, Inc., both Missouri corporations), and then the
Company and the subject corporation entered into employment agreements. Each
employment agreement was identical and provides for the following compensation.
(a) An annual bonus payable in shares of the Company's common stock, determined
by dividing 10% of the Company's pre-tax profits for the subject calendar year
by the average bid price for the Company's common stock at during the last five
trading days prior to the end of the last day of each year and
9
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EQUITY GROWTH SYSTEMS, inc.
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
NOTE 4 - EMPLOYMENT AGREEMENT (Continued)
the initial five days of the new year, provided, however, that the
employment agreement shall have been in effect for at least one half of the
subject year; and, provided further that in the event of a reorganization
pursuant to which another entity becomes the Company's parent, the common stock
of such entity shall be issuable hereunder, rather than that of the Company. (b)
An annual cash bonus equal to 40% of the Company's pre-tax profits for the
subject calendar year, provided, however, that the employment agreement shall
have been in effect for at least one half of the subject year. (c) A guaranteed
minimum monthly draw against the annual bonus described above, in a sum equal to
not be less than $6,250; subject to availability of cash flow.
NOTE 5 - CONSULTING AGREEMENTS
The Company had entered into two consulting agreements. One with Bolina
Trading Company, S.A., a Panamanian Corporation and the second one with Warren
A. McFadden. Each consultant serves as a special advisor to Mr. Granville-Smith,
in conjunction with Mr. Granville-Smith's role as an officer and director of the
Company, with special responsibilities in the areas of strategic planning and
raising debt on equity capital required to implement the Company's strategic
plans. The agreements' terms called for Bolina Trading Company, S.A. to receive
as compensation 84,000 shares of the Company's common stock plus $100 per hour
after 520 hours of service per year and Warren A. McFadden to receive as
compensation 110,000 shares of the Company's common stock plus $100 per hour
after 520 hours of service per year. Subsequent to December 31, 1995, all of the
above shares of the Company's common stock were issued. In 1997, the consulting
agreement with Warren A. McFadden was terminated and the 110,000 shares of
common stock he received, which were subsequently acquired by Diversified
Consulting, were used by Diversified as consideration to cancel a $30,000
promissory note liability owed to the Company.
10
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EQUITY GROWTH SYSTEMS, inc.
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
NOTE 6 - INDENTURE OF TRUST AND WRAP AROUND MORTGAGES RECEIVABLE
On June 30, 1995, the Company issued 1,616,000 shares of common stock in
payment of an indenture of trust and wrap around mortgages subject to the
underlying mortgages, from the following partnerships: Pay-West Associates,
Montco Associates, San-Safe Associates and San-Ten Associates.
The indenture of trust consists of (2) two demand notes bearing interest at
prime plus 4%. These notes are payable from the rental of the various properties
less payment on the wrap around mortgages. The payment does not cover the
accrued interest which is added back to the notes.
The wrap around notes bear interest of 9.08% to 12.9041%. The underlying
mortgages bear interest at 9.75%. The difference between payments on the wrap
around mortgages and underlying mortgages are applied to debt service of the
demand notes.
NOTE 7 - MORTGAGES September 30, September 30,
1998 1997
------- -------
Mortgages consist of the following:
Subordinate "wrap" mortgage receivables:
(a) Nevada/California Property 12.9041 $ 609,567 $ 703,842
(b) Oregon Property 9.080% 549,290 602,960
---------- ----------
1,158,857 1,306,802
Less: Current Portion 154,151 147,945
---------- ----------
$1,004,706 $1,158,857
========== ==========
Original Mortgages Payable:
(a) Nevada/California Property 9.750% $ 541,290 $ 678,694
(b) Oregon Property 9.750% 497,757 566,774
---------- ----------
1,039,125 1,245,468
Less: Current Portion 181,636 160,773
---------- ----------
$ 857,489 $1,084,695
========== ==========
11
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EQUITY GROWTH SYSTEMS, inc.
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
NOTE 7 - MORTGAGES (Continued)
(a) The mortgage secures a promissory note and is payable in equal
quarterly installments of $42,701.69 with a final payment of $291,096.92,
maturing January 1, 2001. There is also an underlying "wrap" mortgage that is
payable in equal quarterly installments of $42,826.50, maturing July 1, 2005,
with quarterly payments decreasing to $9,314.75 for the last five years.
(b) The mortgage secures a promissory note and is payable in equal
quarterly installments of $26,409.87 with a final payment of $232,199.50,
maturing January 1, 2002. There is also an underlying "wrap" mortgage that is
payable in equal annual payments of $106,640 maturing December 31, 2002.
NOTE 8 - NOTES RECEIVABLE
1998 1997
Nevada/California Property
Quarterly payments of $868.55
4% above prime, currently 12.40%
original amount $63,000 $165,866 $149,170
Oregon
Quarterly payments of $501.13
4% above prime, currently 12.40%
original amount $38,742
104,863 95,442
-------- --------
270,729 244,612
Less Current Portion 5,480 5,480
-------- --------
$265,249 $239,132
======== ========
NOTE 9 - NOTE PAYABLE
A secured note payable including accrued interest, due on demand on
interest payable quarterly at a rate of 10% per annum. This loan was assumed by
the Company as part of the asset acquisition. The note has a cumulative interest
clause on any short fall in payment being added to the original principal amount
of $104,000
$155,932 $105,500
======== ========
12
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EQUITY GROWTH SYSTEMS, inc.
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
NOTE 10 - INCOME TAXES
As discussed in Note 1, the Company has applied the provisions of Statement
109.
The significant components of deferred income tax expense benefit for the
years ended September 30, 1998 and 1997 arising from net operating losses as
follows:
Deferred tax benefit $11,800 $ 6,200
Valuation allowance 11,800 6,200
------- -------
$ - $ -
======= =======
The Company has operating loss carry forwards in excess of two million
dollars that can be used to offset future taxable income.
NOTE 11 - RELATED PARTY TRANSACTION
The chief executive officer of the Company is also an officer of the
general partner in all the partnerships involved in the wrap around mortgages
subject to the underlying mortgages and promissory notes.
NOTE 12 - COMPENSATION
No officer or director has received any compensation to date, except as
discussed in Note 4.
NOTE 13 - STOCKHOLDERS' EQUITY
On May 18, 1995, the Company adopted a resolution to change the authorized
capitalization as follows:
(a) The 2,000,000 shares of common stock, $0.01 par value then authorized,
all of which were currently outstanding, were reverse split into 200,000 shares,
$0.01 par value; and immediately thereafter;
(b) The Company's authorized common stock was increased from 200,000
shares, $0.01 par value, to 20,000,000 shares of common stock, $0.01 par value,
and
(c) The Company was authorized to issue 5,000,000 shares of preferred
stock, the attributes of which are to be determined by the Company's Board of
Directors from time to time, prior to issuance, in conformity with the
requirements of Sections 151 of the Delaware General Corporation Law.
13
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EQUITY GROWTH SYSTEMS, inc.
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
NOTE 14 - LEGAL MATTERS
The Company is currently not a party to any legal proceedings. Although the
Company is not a party to the following proceedings directly, they involve real
estate located in Kansas and Tennessee in which the Company has an interest.
A. On October 20, 1997, the various parties to a wrap around mortgage
transaction with the Company and the current tenant agreed to settle, but
certain parties reserved claims against each other. The settlement calls for a
payment from the current tenant of $150,000 in exchange for the transfer of a
clear and free title of the underlying real estate. The mortgage holder Fleet
National Bank received $52,000 and the balance to be held in escrow between the
other parties. The Company holds the position that the ultimate disbursement of
a substantial portion of these escrowed funds should be earmarked for the
reduction of the wrap around mortgage and promissory note receivable.
B. The Company was also in default of the mortgage on the property located
in Memphis, Tennessee because it could not satisfy the balloon payment, in the
original amount of $875,300, that was due on December 31, 1996. ($174,801 at
12/31/96). The mortgage holder (Lutheran Brotherhood) had refused to renegotiate
or extend the term of the mortgage and would not accept any further amortization
payments from the lessor of the underlying lease, other than the one made in
December, 1996, which was based upon the old repayment schedule's terms.
Through August 1997, the Company had received funds from Sun West N.O.P.,
the lessor on the underlying lease, which represented the monthly rent payments
made on such lease ($4,609.38) by the tenant of the Memphis Property. Because
the mortgage holder could not accept any amortization payments on their matured
loan from Sun West N.O.P., the Company was using such proceeds to reduce the
related wrap mortgage receivable. In August of 1997, the mortgage holder
foreclosed on the mortgage payable, which resulted in a foreclosure sale of the
Memphis, Tennessee property. As a result of these events of foreclosure, the
Company wrote off the balance on the mortgage payable and the related wrap
mortgage receivable ($251,722) and promissory note receivable ($93,686) at
December 31, 1996. (See note 7 and 8).
14
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EQUITY GROWTH SYSTEMS, inc.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
During the six months ended September 30, 1998, the registrant reported
income of approximately $81,000 as compared to income from all sources of
$113,000 during the prior six months ended.
During the six months ended September 30, 1998, the registrant's cost of
revenue was approximately $99,000 as compared $232,000 during the prior six
months ended. The decrease was attributable to the decrease in interest expense.
During the six months ended September 30, 1998, the registrant reported a
net income of approximately ($18,000) or $(.005) per share, compared to
($119,000) or $(0.032) per share prior to six months ended. The $101,000 in net
loss reflects the decrease in cost of operations.
Liquidity and Capital Resources
As of September 30, 1998, the registrant has a working capital position of
approximately ($195,000) as compared to a working capital position of ($130,000)
as of September 30, 1997. This reflects the write off of the Tennessee and
Kansas wrap around mortgages, notes receivable and underlying mortgages. To
date, the cash flow generated from operations have been adequate to meet the
registrant's mortgage obligations. A shareholder has been contributing funds to
meet various general and administrative expenses required to fulfill all of the
registrant's obligations. No officer of the registrant has been receiving or
accruing compensation at this time.
15
<PAGE>
Part II -- Other Information
As a material subsequent event, as of December 9, 1998, the Company has
changed it's office address and office telephone. The Company will be sharing
space at the office of the Registrant's Secretary and General Counsel at no cost
for the use of space until June 30, 1999. The new address for the Company is
Equity Growth Systems, inc. 1941 SE 51st Terrace, Suite 800; Ocala, Florida
34471. Telephone is 352-694-6714.
Item I. Legal Proceedings
The Company is currently not a party to any legal proceedings. Although the
Company is not a party to the following proceedings directly, they have been
involved in real estate located in Kansas and Tennessee in which the Company has
an interest.
A. First Ken-Co Properties, Inc., v Safeway Stores, Inc., case number
96351021/CL221148, in the Circuit Court for Baltimore County, Maryland (the
"Maryland Case"); and, Associated Wholesale Grocers, Inc., v San Safe
Associates, et. al., case number 97-2072-JWL, in the United States District
Court for the District of Kansas (the "Kansas Case"), and First Ken Co
Properties, Inc. v. J.J. Martin, et. al., case number 98-007033-CC130 in the
Circuit Court of Maryland for Baltimore City, ("Baltimore City Case"). The above
mentioned legal matters are discussed in detail in the 10-KSB for 1997 under
legal proceedings.
In summary, On October 20, 1997, the various parties to a wrap around
mortgage transaction with the Company and the current tenant agreed to settle,
but certain parties reserved claims against each other. The settlement calls for
a payment from the current tenant of $150,000 in exchange for the transfer of a
clear and free title of the underlying real estate. The mortgage holder Fleet
National Bank received $52,000 and the balance to be held in escrow between the
other parties. The Company holds the position that the ultimate disbursement of
a substantial portion of these escrowed funds should be earmarked for the
reduction of the wrap around mortgage and promissory note receivable.
A lawsuit was filed January 7, 1998, entitled, First Ken-Co Properties,
Inc., v. J.J. Martin, et. al., case No. 98-007033-CC130 in the Circuit Court of
Maryland for Baltimore City a copy of which is attached as an Exhibit to 10-KSB
for 1996.
The Baltimore City lawsuit is a Complaint for Declaratory Judgment by First
Ken-Co Properties, Inc. against certain limited partners of San Safe Limited
Partnership, a Maryland Limited Partnership for the purposes of determining
whether San Safe is entitled to receive any monies from the Escrow Fund in view
of the default in the secured promissory note. The Complaint also alleges that
an actual controversy exists between the parties as to whether First Ken-Co is
entitled to receive any further monies by way of accounting and damages from the
Limited Partners of San Safe by reasons of their acts and omissions causing loss
to the property and assets of San Safe.
16
<PAGE>
The attorney for Ken-Co is Attorney David Albright. The filing clerk of the
Circuit Court of Maryland for Baltimore City has orally represented that there
has been no activity in this file since the filing of the case in January, 1998:
No service on Defendants; no responsive pleadings, no Defaults entered. The
condition of this litigation is unknown. The clerk also informed our office that
unless action is taken by January 7, 1999, the case will be dismissed for lack
of prosecution.
B. The Company was also in default of the mortgage on the property located
in Memphis, Tennessee because it could not satisfy the balloon payment, in the
original amount of $875,300, that was due on December 31, 1996. ($174,801 at
12/31/96). The mortgage holder (Lutheran Brotherhood) had refused to renegotiate
or extend the term of the mortgage and would not accept any further amortization
payments from the lessor of the underlying lease, other than the one made in
December, 1996, which was based upon the old repayment schedule's terms. The
above mentioned legal matters are discussed in detail in the 10KSB for 1997
under legal proceedings.
Non Judicial Foreclosure was instituted and finalized in August, 7, 1997.
Copies of the Notice of Foreclosure and advertisement of Foreclosure are
included as exhibits filed with 10K-SB for 1996.
Furthermore, Sound Safe is obligated to pay a wrap around mortgage that is
more than the above described mortgage. The difference between the payment due
and the wrap around mortgage has reduced the amount of a certain debt owed by
San Safe to the Registrant. The Registrant may have a cause of action against
either San Safe or Sound Safe or both for payment of the San Safe indebtedness.
The registrant has used its best efforts to obtain information concerning
the litigation and potential litigation issues now pending and reported above,
however, David Albright, Jr., the lead counsel on most of these issues described
in litigation and potential litigation, has been unwilling to effectively
comment or communicate with Registrant's officers, attorney's and agents
concerning the litigation and potential litigation. It is possible that
Registrant is unaware of certain actions taken by Mr. Albright on behalf of
Registrant concerning litigation or potential litigation.
C. Through August 1997, the Company had received funds from Sun West
N.O.P., the lessor on the underlying lease, which represented the monthly rent
payments made on such lease ($4,609.38) by the tenant of the Memphis Property.
Because the mortgage holder could not accept any amortization payments on their
matured loan from Sun West N.O.P., the Company was using such proceeds to reduce
the related wrap mortgage receivable. In August of 1997, the mortgage holder
foreclosed on the mortgage payable, which resulted in a foreclosure sale of the
Memphis, Tennessee property. As a result of these events of foreclosure, the
Company wrote off the balance on the mortgage payable and the related wrap
mortgage receivable ($251,722) and promissory note receivable ($93,686) at
December 31, 1996. (See note 7 and 8).
D. During August of 1997, Mr. Gene R. Moffitt resigned as the Registrant's
President, Asset Manager and Chief Operating Officer of the Registrant. It is
the Company's position that this resignation violated the terms of his
employment and acquisition agreements, the Registrant is of the opinion that Mr.
Moffitt should voluntarily return all of the Registrant's common stock that has
been issued to him. Should such securities not be voluntarily returned, the
Registrant would probably sue Mr. Moffitt for its return alleging breach of
contract.
E. The Board of Directors of the Registrant dismissed and removed Rafi
Weiss from the position of Senior Vice President of Acquisitions. For whatever
reason, known only to Mr. Weiss, he failed or refused to cooperate with counsel
in an effort to prepare a basic due diligence package concerning this filing. A
copy of the Board of Director's Resolution is attached as an Exhibit to form
10-KSB for the year ending December 31, 1996.
Item 2. Changes in Securities and Use of Proceeds
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(a) As a material subsequent event, during the period commencing November
1, 1998 and ending on or about November 20, 1998, the Registrant issued
1,750,000 shares of its common stock at a price of $0.02 per share (a total of
$35,000) to the persons listed below, in order to pay certain obligations
required to be discharged in order to induce the Registrant's recently elected
officers and directors to become associated with the Registrant, and in order to
secure the assistance of the subscribers in restructuring the Registrant's
operations and strategic plans, required as a result of the medical emergency
suffered by Edward Granville-Smith, until recently the Registrant's sole
director and chief executive officer. No underwriter was used, nor were
commissions paid or offering expenses incurred.
Name Shares Consideration Exemption
Blue Lake Capital Corp. (1) 630,000 $12,600 4(6)
The Yankee Companies, Inc. (1)(2) 435,000 $ 8,750 4(6)
Michelle Tucker, custodian
For Shayna Tucker, a minor 108,750 $ 2,175 4(6)
Michelle Tucker, custodian
For Montana Tucker, a minor 108,750 $ 2,175 4(6)
The Calvo Family Spendthrift
Trust(2) 217,500 $ 4,350 4(6)
G. Richard Chamberlin, Esquire(3) 125,000 $ 2,500 4(6)
Penny Field (3) 62,500 $ 1,250 4(6)
Anthony Q. Joffe (3) 62,500 $ 1,250 4(6)
_______
(1) Blue Lake Capital Corp., is owned by Mrs. Tucker, whose husband owns
50% of the Yankee Companies, Inc..
(2) The Yankee Companies, Inc., is owned 50% by members of the Tucker
family and 50% by the Calvo Family Spendthrift Trust.
(3) Recently elected member of the Registrant's Board of Directors.
Item 3. Defaults upon Senior Securities
The Registrant has no senior securities nor is it directly a debtor under
any mortgages. However, the Registrant has a beneficial interest in certain
properties, or resulting from certain properties, where third parties are
obligors under mortgages and in certain cases the status of such mortgages, or
interest pertaining to said mortgages are foreclosed, disputed or in litigation.
See litigation above and also litigation in 10-KSB for 1997.
Item 5. Other Information
The following information is presented under the Item Number designations
of SEC Form 8-K.
Item 1. Change in Control of Registrant
A Director and CEO Incapacity
During October of 1998, Edward Granville-Smith, then the Registrant's sole
director and chief executive officer started negotiations with principals of the
Yankee Companies, Inc., to obtain its assistance in recruiting additional
officers and directors, arranging for funding and helping to develop an expanded
strategic business plan, based on Mr. Granville-Smith's concern that his
personal health problems were impeding his ability to adequately manage the
Registrant's operations.
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<PAGE>
Based on Mr. Granville-Smith's oral assurances, the Yankee Companies, Inc.,
contacted a number of persons willing to become materially involved in the
Registrant's operations, and, on November 6, 1998, Mr. Granville-Smith, as the
Registrant's sole director, elected the following persons as members of the
Registrant's Board of Directors: Charles J. Scimeca (the Registrant's
secretary), Penny Field, Anthony Q. Joffe and G. Richard Chamberlin (formerly
the Registrant's securities counsel). On November 13, 1998, after learning that
Mr. Granville-Smith, had been incapacitated, Mr. Scimeca, at the suggestion of
Mr. Chamberlin, called a special meeting of the Board of Directors, in order to
replace Mr. Granville-Smith as the Registrant's president and chief executive
officer, principally in order to assure that the Registrant could file this
quarterly report within a reasonable time after its due date. At such meeting,
Mr. Scimeca was elected as the acting president and Mr. Chamberlin was elected
as the acting secretary. In addition, the Board voted to reorganize the
Registrant by reorganizing as a holding company, to ratify the subscription
agreements disclosed in this report, to enter into a formal consulting agreement
with the Yankee Companies, Inc., and to enter into a settlement agreement with
Mr. Granville-Smith, as a result of which all his current agreements with the
Registrant would be terminated. All agreements other than the settlement
agreement have been entered into. The settlement agreement is being negotiated
with Mr. Granville-Smith's son, inlight of Mr. Granville-Smith's incapcity, and
a number of issues remain largely based on lack of familiarity with underlying
facts. Consequently, no assurances can be provided as to whether or not the
settlement agreement will be entered into as proposed or at all. In the event
that no settlement is reached with Mr. Granville-Smith, then the Registrant's
Board of Directors would probably seek to resolve the issues involved (together
with other open issues involving other creditors and former principals of the
Registrant) in a reorganization under Chapter 11 of the United States Bankruptcy
Code.
Copies of the minutes of the Board of Directors' meetings of November 6,
1998 and November 13, 1998, the subscription agreements, the Yankee Companies,
Inc., agreement and the proposed settlement agreement with Mr. Granville-Smith
are filed as exhibits to this report.
B. Biographies of New Directors and Officers
Charges J. Scimeca, age 54, serves as the acting president and as a
director of the Registrant. Since 1982 he has been a licensed real estate
broker. He is managing director of Coast to coast Realty Group, Inc., located in
Sarasota, Florida. The company is involved in residential and commercial real
estate development as well as general real estate brokerage and business
acquisition. He has been involved in real estate transactions totaling over one
billion dollars, representing Fortune 500 clients, such as , Equitable Life
Insurance Company, Walt Disney Corporation, Paramount Studios and TRW Real
Estate Group. From 1980 until 1982, Mr. Scimeca was on sabbatical, exploring
business opportunities in various industries. From 1975 until 1980, Mr. Scimeca
served as chief operating officer for Andy Frain Maintenance & Security, Inc.,
headquartered in Chicago, Illinois. His responsibilities included budgeting and
implementing cleaning services for high rise office, retail and industrial
properties for such notable clients as Standard Brands, JMB Realty, John Hancock
Insurance Company and other Fortune 500 companies. From 1965 until 1975, Mr.
Scimeca was the owner and manager of the Mecca Restaurant, a full-service family
owned multi-unit restaurant business headquartered in Chicago, Illinois. He is a
member of the Clearwater, Sarasota and Manatee County Association of Realtors,
the International Council of Shopping Centers and other local, regional and
national real estate and mortgage related organizations. He holds a degree in
Business Administration.
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<PAGE>
G. Richard Chamberlin. age 52, has since November 1998, served as the
Registrant's secretary, as a member of it's Board of Directors (in which he
serves as Chairman) and also as it's general counsel. From 1973 to 1974 he
served as Trust Officer with Central Bank & Trust Company, Jonesboro, Georgia.
Mr. Chamberlin is a practicing attorney and is a member of the Georgia Bar,
(since 1974), and the Florida Bar, (since 1990). He is also a member of the Bars
for the Federal District Court for the Northern District of Georgia, (since
1974) and the Federal District Court for the Northern District of Florida (since
1995), the Court of Appeals for the State of Georgia, (since 1974) and the
Supreme Court for the State of Georgia (since 1974). Mr. Chamberlin is also a
member of the Bar for the Eleventh District Court of Appeals, (since 1982). He
is a graduate of Eastern Military Academy, Huntington, New York (College Prep
Diploma, 1964); The Citadel, The Military College of South Carolina, (B.A.,
political science, 1968); and the University of Georgia School of Law, (J.D.,
1971). Mr. Chamberlin earned a Certificate from the American Bankers
Association, National Trust School, (1974). Mr. Chamberlin is a two term former
member of the Georgia House of Representatives, (1979-1983). In the State House,
Mr. Chamberlin served on the Following committees: House Journal Committee,
Natural Resources Committee, Special Judiciary Committee and Labor Committee. He
is a former member of the Counsel for National Policy. He is the founder of the
Georgia Roundtable, Inc., and served as President from 1981 to 1986.; He is the
founder of the Georgia Heritage Foundation, and served as President from 1982 to
1986. He is the former Principal of Soul's Harbor Christian Academy, Belleview,
Florida, (1990-1992). Mr. Chamberlin served as National Music Chairman for the
Religious Roundtable, Inc. at the premier event known as the 1992 National
Affairs Briefing in Dallas, Texas wherein President George Bush was the keynote
speaker.
Mr. Chamberlin has received Resolutions of Commendation from the House of
Representatives for the Commonwealth of Kentucky, (1985) and from the House of
Representatives for the State of Georgia, (1982). He presently serves as
President of the Citadel Club of Central Florida, Inc.. Mr. Chamberlin is former
president and director for Atrieties Development Company, Inc., a publicly held
corporation involved in the real estate industry, (1986-87), and has held
licenses as a real estate agent, (Georgia and Florida).
Penny Adams Field, age 43, since November, 1998, serves as a member of
Registrant's Board of Directors.. Penny Adams Field is a principal and
co-founder of Executive Concepts, a management consulting and investment banking
advisory firm. Ms. Adams Field has technical expertise in designing and
implementing financial management systems, acquisition and divestiture models,
cash flow management, information systems assessment and implementations, and
operational and cost system audits. Her background in strategic planning,
performance measurement, comprehensive business planning, and cost structure
analysis add to the breadth and depth of the Executive Concepts team skills. Ms.
Adams Field is an experienced and accredited business valuation specialist and
is a member of the Institute of Business Appraisers. She serves on numerous
not-for- profit and corporate boards. As a management consultant, Ms. Adams
Field has consulted with firms such as Monsanto, Mallinckrodt,
McDonnell-Douglas, MEMC Electronic Materials Company, Maytag, Mark Andy,
CyberTel, and numerous other small firms in the healthcare, manufacturing,
construction, and service industries. Prior to founding Executive Concepts, Ms.
Adams Field was an administrator for the John M. Olin School of Business at
Washington University in St. Louis, where she helped to establish the Executive
Programs division. Her responsibilities included program development in the Far
East. Previous to her administrative role she served at a full-time accounting
faculty instructing in financial accounting and cost management for
undergraduate and graduate programs at the Olin School.
Prior to graduate study at Washington University, Ms. Adams Field worked in
healthcare administration and banking, including positions at Childrens'
Hospital National Medical Center in Washington, D.C. and Harris Bank in Chicago.
After earning a B.B.A. in Accounting and Finance, Ms. Adams Field earned her
M.B.A. from the Olin School of Business at Washington University in St. Louis.
Ms. Adams Field also posted several hours of Ph.D. level coursework in
accounting and finance prior to making a full-time commitment to consulting.
21
<PAGE>
Anthony Q. Joffe, age 56, since November, 1998, serves as a member of
Registrant's Board of Directors. Mr. Joffe holds a degree in Aeronautical
Engineering Management from Boston University, Boston, Massachusetts. Subsequent
to his graduation, Mr. Joffe was employed as the Quality Control Manager for
Cognitronics Corporation, a computer manufacturer, where he was responsible for
overseeing the U.S. Air Force compliance testing program as well as normal
day-to-day management. In 1967, Mr. Joffe was employed by General Electric as a
production engineer in the insulating materials field. In 1970, Mr. Joffe was
employed by King's Electronics, a RF coaxial connector manufacturer, where he
was responsible for major accounts and guided the field sales force.
In 1973, Mr. Joffe was one of the founders and Vice-President of J.S. Love
Associates, Inc., a commodity brokerage house no longer in operation (then
headquartered in New York City). In 1976, Mr. Joffe formed and served as
President and Chief Operating Officer of London Futures, Ltd., a commodity
broker with 275 employees in nine offices. London Futures, Ltd. was closed in
1979 and Mr. Joffe moved to Florida. From 1979 until 1986, Mr. Joffe was Vice
President of Gramco Holdings, Inc. (and its predecessor companies), a firm which
owned and operated a variety of companies. These companies included five
cemeteries and funeral homes in Broward County, Florida, a 33 acre marina, a
general contracting company, a boat title insurance underwriting firm, three
restaurants, a real estate brokerage company, a mortgage brokerage company and a
leasing company. His responsibilities involved supervision of the day-to-day
operations and new business development. From 1986 to 1991, Mr. Joffe served as
consultant and/or principal to a variety of small businesses in the South
Florida area. In 1989 Mr. Joffe became President of Windy City Capital Corp., a
small publicly traded, reported company that was originally formed as a "blind
pool" for the express purpose of finding an acquisition candidate. Eventually, a
reverse merger was consummated with a computer software company from
Pennsylvania. Mr. Joffe then took the position of President of Rare Earth
Metals, Inc. (and its predecessor companies), a small publicly traded company
which has purchased Spinecare, Inc. a medical clinic in New York. Spinecare
changed its name to Americare Health Group and relocated its state domicile to
Delaware. Since March of 1993, Mr. Joffe has performed consulting services for
First Commodities, Inc., an Atlanta based commodities firm, and has been
involved in fund raising for the Multiple Sclerosis Foundation. He also assisted
Digital Interactive Associates and IVDS Partnership with financial affairs in
conjunction with their successful bid to the Federal Communications Commission
for licenses in the cities of Atlanta, Georgia, Minneapolis/St. Paul, Minnesota,
and Kansas City, Missouri. Mr. Joffe served as the interim president of Madison
Sports & Entertainment Group, Inc., a publicly held Utah corporation then
headquartered in Fort Lauderdale, Florida, from September 1, 1994, until
February 16, 1994, at which time he became its vice president and vice chairman,
chief operating officer, treasurer and chief financial officer until he resigned
in 1996. Since 1996, he has founded a boat financing company and joined
NorthStar Capital ("Northstar") as Managing Director. NorthStar is an investment
banking firm with offices in Stamford, Connecticut and Boca Raton, Florida which
specializes in assisting small to mid size private and publicly traded companies
with business and financial planning; acquisition and divestiture; financial
public relations and market position advice; and, treasury services.
22
<PAGE>
E. Granville-Smith, Jr., age 66, is member of Registrant's Board of
Directors. He was President of Equity Growth Systems, Inc., a Registrant
specializing in structuring and marketing mortgage backed securities as well as
the acquisition of select commercial real estate for its own account. From 1981
to the present, he has been a real estate consultant and principal involved in
various aspects of commercial real estate financing and syndication, both
internationally and domestically. One primary accomplishment during this period
was the successful sale of the real estate assets of some twenty-nine limited
partnerships to both domestic and foreign investors. From 1972 through 1980, he
was Chairman of the Board, Chief Executive Officer and President of United
Equity Corporation, a Registrant which was primarily involved in the
structuring, financing and marketing, through the syndication of various tax
incentive ventures with an aggregate valuation in excess of $100 million. From
1959 through 1972, Mr. Granville-Smith, Jr. built the Washington Insurance
Agency, Inc., and became the Chairman of one of the top one percent of insurance
brokerage houses in the Washington area.
Mr. Granville-Smith, attended Brown University from September, 1951 through
June, 1952 at which time he entered the United States Marine Corps. Upon
discharge from the Marine Corps in 1955, he enrolled in the Georgetown
University School of Foreign Service and graduated in June of 1959 with a
B.S.F.S. degree. Mr. Granville-Smith's professional affiliations include CLU and
CPCL.
Item 2. Acquisition or Disposition of Assets
A. Reorganization as Holding Company
The Registrant's Board of Directors have authorized the reorganization of
the Registrant as a holding company, with all current operations conducted
through a wholly owned operating subsidiary. It is anticipated by the Board of
Directors that the Registrant will seek to acquire additional operating
subsidiaries, with the assistance of its newly elected Directors and the Yankee
Companies, Inc.
B. New Strategic Plan
The Registrant has retained the Yankee Companies to assist it in developing
and implementing a new strategic plan. The Yankee Companies has suggested that
the Registrant's activities be divided into three different areas. First, that
the current real estate operations be segregated in a new subsidiary, to be
presided over by Mr. Scimeca, the Registrant's president. Second, that the
Registrant's new management and directors provide consulting services to third
parties that desire to attain public trading status by assisting them in
preparation of Forms 10 and 10-SB in exchange for securities to be distributed
directly by the client issuer to the Registrant's stockholders. Third, that the
Registrant acquire operating companies that could benefit from the Registrant's
public trading status and from the experience of the Registrant's directors.
The Yankee Companies have also indicated that in light of the incapacity of
Mr. Granville-Smith, the Registrant's ability to continue its prior operations
will be impaired unless new management is able to obtain detailed information of
such operations and to resolve a number of factual questions concerning such
operation, including the matters currently in litigation. The Yankee Companies
have suggested to the Registrant's Board of Directors that a proceeding under
Chapter 11 of the Federal Bankruptcy Code would be the most effective and
definitive manner for attaining such goal and the Board is considering and
evaluating such proposal.
Item 5.Other Events
The Registrant's Board of Directors were advised that the Registrant's
Bylaws on file with the Securities and Exchange Commission had been replaced at
an unknown date and were provided with a copy thereof. Minutes of such
replacement were not available, consequently, a special meeting of the Board was
held and the subject Bylaws were ratified. A copy of the amended and restated
bylaws are filed herewith.
23
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Item 6. Index of Exhibits
Exhibit Page Description
3.2 __ Amended & Restated Bylaws as of December, 1998.
10.22 __ Recent stock subscription agreements
10.23 __ Consulting agreement with the Yankee Companies
10.24 __ Recent settlements and releases with creditors
10.25 __ Proposed Settlement agreement and release with
Mr. Granville-Smith
10.26 __ Stock purchase option agreement with Mr. Scimeca
99.12 __ Written Consent in Lieu of Special Meeting of Board of
Directors for November 6, 1998
99.13 __ Minutes of Special Meeting of Board of Directors for
November 27, 1998
99.14 __ Minutes of Special Meeting of Board of Directors for
December 8, 1998
99.15 __ Amended Notice Special Meeting of Board of Directors
for December 8, 1998
99.16 __ Minutes of Special Meeting of Board of Directors Part 1,
for December 11, 1998
99.17 __ Notice of Special Meeting of Board of Directors for
December 11, 1998
99.18 __ Minutes of Special Meeting of Board of Directors Part 2,
for December 11, 1998
24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant
had duly caused the report to be signed on its behalf by the undersigned
thereunto duly authorized.
Equity Growth Systems, inc.
Dated: December 14, 1998
/s/ Charles J. Scimeca
--------------------------
Charles J. Scimeca
President
25
EXHIBIT 3.2
AMENDED & RESTATED BYLAWS AS OF DECEMBER, 1998
Bylaws
of
Equity Growth Systems, inc.
ARTICLE I
STOCKHOLDERS
SECTION 1. Annual Meetings
(a) (1) The annual meeting of the stockholders of the Corporation
shall be held at the principal office of the Corporation in the
State of Delaware or at such other place within or without the
State of Delaware as may be determined by the Board of Directors
and as may be designated in the notice of such meeting.
(2) The meeting shall be held on the 15th day of July of each year or
on such other day as the Board of Directors may specify.
(3) If said day is a legal holiday, the meeting shall be held on the
next succeeding business day not a legal holiday.
(b) Business to be transacted at such meeting shall be the election of
Directors to succeed those whose terms are expiring and such other
business as may be properly brought before the meeting.
(c) In the event that the annual meeting, by mistake or otherwise, shall not
be called and held as herein provided, a special meeting may be called as
provided for in Section 2 of this Article I in lieu of and for the
purposes of and with the same effect as the annual meeting.
SECTION 2. Special Meetings
(a) A special meeting of the stockholders of the Corporation may be called
for any purpose or purposes at any time by the Chairman or President of
the Corporation, by the Board of Directors or by the holders of not less
than 10% of the outstanding capital stock of the Corporation entitled to
vote at such meeting.
(b) (1) At any time, upon the written direction of any person or
persons entitled to call a special meeting of the stockholders, it
shall be the duty of the Secretary to send notice of such meeting
pursuant to Section 4 of this Article I.
(2) It shall be the responsibility of the person or persons directing
the Secretary to send notice of any special meeting of
stockholders to deliver such direction and a proposed form of
notice to the Secretary not less than 15 days prior to the
proposed date of said meeting.
(c) Special meetings of the stockholders of the Corporation shall be held at
such place, within or without the State of Delaware, on such dates, and
at such time as shall be specified in the notice of such special meeting.
26
<PAGE>
SECTION 3. Adjournment
(a) When the annual meeting is convened, or when any special meeting is
convened, the presiding officer may adjourn it for such period of time as
may be reasonably necessary to reconvene the meeting at another place and
time.
(b) The presiding officer shall have the power to adjourn any meeting of the
stockholders for any proper purpose, including, but not limited to, lack
of a quorum, securing a more adequate meeting place, electing officials
to count and tabulate votes, reviewing any stockholder proposals or
passing upon any challenge which may properly come before the meetings.
(c) (1) When a meeting is adjourned to another time or place,
it shall not be necessary to give any notice of the
adjourned meeting if the time and place to which the
meeting is adjourned are announced at the meeting at
which the adjournment is taken, and any business may
be transacted at the adjourned meeting that might have
been transacted on the original date of the meeting.
(2) If, however, after the adjournment the Board fixes a new record
date for the adjourned meeting, a notice of the adjourned meeting
shall be given in compliance with Section 4(a) of this Article I
to each stockholder of record on the new record date entitled to
vote at such meeting.
SECTION 4. Notice of Meetings; Purpose of Meeting; Waiver
(a) (1) Each stockholder of record entitled to vote at any
meeting shall be given in person, or by first class
mail, postage prepaid, written notice of such meeting
which, in the case of a special meeting, shall set
forth the purpose(s) for which the meeting is called,
not less than 10 or more than 60 days before the date
of such meeting.
(2) If mailed, such notice is to be sent to the
stockholder's address as it appears on the stock
transfer books of the Corporation, unless the
stockholder shall be requested of the Secretary in
writing at least 15 days prior to the distribution of
any required notice that any notice intended for him
or her be sent to some other address, in which case
the notice may be sent to the address so designated.
(3) Notwithstanding any such request by a stockholder, notice sent to
a stockholder's address as it appears on the stock transfer books
of this Corporation as of the record date shall be deemed properly
given.
(4) Any notice of a meeting sent by United States mail shall be deemed
delivered when deposited with proper postage thereon with the
United States Postal Service or in any mail receptacle under its
control.
(b) (1) A stockholder waives notice of any meeting by attendance,
either in person or by proxy, at such meeting or by waiving notice
in writing either before, during or after such meeting.
(2) Attendance at a meeting for the express purpose of objecting that
the meeting was not lawfully called or convened, however, will not
constitute a waiver of notice by a stockholder who states at the
beginning of the meeting, his or her objection that the meeting is
not lawfully called or convened.
(c) A waiver of notice signed by all stockholders entitled to vote at a
meeting of stockholders may also be used for any other proper purpose
including, but not limited to, designating any place within or without
the State of Delaware as the place for holding such a meeting.
(d) Neither the business to be transacted at, nor the purpose of, any regular
or special meeting of stockholders need be specified in any written
waiver of notice.
27
<PAGE>
SECTION 5. Closing of Transfer Books; Record Date; Stockholders'
List
(a) In order to determine the holders of record of the capital stock of the
Corporation who are entitled to notice of meetings, to vote a meeting or
adjournment thereof, or to receive payment of any dividend, or for any
other purpose, the Board of Directors may fix a date not more than 60
days prior to the date set for any of the above-mentioned activities for
such determination of stockholders.
(b) If the stock transfer books shall be closed for the purpose of
determining stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least 10 days immediately
preceding such meeting.
(c) In lieu of closing the stock transfer books, the Board of Directors may
fix in advance a date as the date for any such determination of
stockholders, such date in any case to be not more than 60 days prior to
the date on which the particular action, requiring such determination of
stockholders, is to be taken.
(d) If the stock transfer books are not closed and no record date
is fixed for the determination of stockholders entitled to
notice or to vote at a meeting of stockholders, or to receive
payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the
Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination
of stockholders.
(e) When a determination of stockholders entitled to vote at any meeting of
stockholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof, unless the Board of
Directors fixes a new record date under this Section for the adjourned
meeting.
(f) (1) The officer or agent having charge of the stock
transfer books of the Corporation shall make, as of a
date at least 10 days before each meeting of
stockholders, a complete list of the stockholders
entitled to vote at such meeting or any adjournment
thereof, with the address of each stockholder and the
number and class and series, if any, of shares held by
each stockholder.
(2) Such list shall be kept on file at the registered
office of the Corporation, at the principal place of
business of the Corporation or at the office of the
transfer agent or registrar of the Corporation for a
period of 10 days prior to such meeting and shall be
available for inspection by any stockholder at any
time during usual business hours.
(3) Such list shall also be produced and kept open at the time and
place of any meeting of stockholders and shall be subject to
inspection by any stockholder at any time during the meeting.
(g) The original stock transfer books shall be prima facie evidence as to the
stockholders entitled to examine such list or stock transfer books or to
vote any meeting of stockholders.
(h) If the requirements of Section 5(f) of this Article I have not been
substantially complied with, then, on the demand of any stockholder in
person or by proxy, the meeting shall be adjourned until such
requirements are complied with.
(i) If no demand pursuant to Section 5(h) of this Article I is made, failure
to comply with the requirements of this Section shall not affect the
validity of any action taken at such meeting.
(j) Section 5(g) of this Article I shall be operative only at such time(s) as
the Corporation shall have 6 or more stockholders.
28
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SECTION 6. Quorum
(a) At any meeting of the stockholders of the Corporation, the presence, in
person or by proxy, of stockholders holding a majority of the issued and
outstanding shares of the capital stock of the Corporation entitled to
vote thereat shall be necessary to constitute a quorum for the
transaction of any business.
(b) If a quorum is present, the vote of a majority of the shares represented
at such meeting and entitled to vote on the subject matter shall be the
act of the stockholders.
(c) If there shall not be a quorum at any meeting of the stockholders of the
Corporation, then the holders of a majority of the shares of the capital
stock of the Corporation who shall be present at such meeting, in person
or by proxy, may adjourn such meeting from time to time until holders of
a quorum of the shares of the capital stock shall attend.
(d) At any such adjourned meeting at which a quorum shall be present, any
business may be transacted which might have been transacted at the
meeting as originally scheduled.
SECTION 7. Presiding Officer; Order of Business
(a) (1) Meetings of the stockholders shall be presided over by
the Chairman of the Board, or, if he or she is not
present or there is no Chairman of the Board, by the
President or, if he or she is not present, by the
senior Vice President present or, if neither the
Chairman of the Board, the President, nor a Vice
President is present, the meeting shall be presided
over by a chairman to be chosen by a plurality of the
stockholders entitled to vote at the meeting who are
present, in person or by proxy.
(2) The presiding officer of any meeting of the stockholders may
delegate his or her duties and obligations as the presiding
officer as he or she sees fit.
(b) The Secretary of the Corporation, or, in his or her absence, an Assistant
Secretary shall act as Secretary of every meeting of stockholders, but if
neither the Secretary nor an Assistant Secretary is present, the
presiding officer of the meeting shall choose any person present to act
as secretary of the meeting.
(c) The order of business shall be as follows:
Call of meeting to order.
Proof of notice of meeting.
Reading minutes of last previous stockholders' meeting or a waiver thereof.
Reports of Officers.
Reports of committees.
Election of Directors.
Regular and miscellaneous business.
Special matters.
Adjournment.
(d) (1) Notwithstanding the provisions of Section 7(c) of this Article
I, the order and topics of business to be transacted at any
meeting shall be determined by the presiding officer of the
meeting in his or her sole discretion.
(2) In no event shall any variation in the order of business or
additions and deletions from the order of business as specified in
Section 7(c) of this Article I invalidate any actions properly
taken at any meeting.
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SECTION 8. Voting
(a) Unless otherwise provided for in the Certificate of Incorporation, each
stockholder shall be entitled, at each meeting and upon each proposal to
be voted upon, to one vote for each share of voting stock recorded in his
name on the books of the Corporation on the record date fixed as provided
for in Section 5 of this Article I.
(b) (1) The presiding officer at any meeting of the stockholders shall
have the power to determine the method and means of voting when
any matter is to be voted upon.
(2) The method and means of voting may include, but shall not be
limited to, vote by ballot, vote by hand or vote by voice.
(3) No method of voting may be adopted, however, which fails to take
account of any stockholder`s right to vote by proxy as provided
for in Section 10 of this Article I.
(4) In no event may any method of voting be adopted which would
prejudice the outcome of the vote.
SECTION 9. Action Without Meeting
(a) (1) Any action required to be taken at any annual or
special meeting of stockholders of the Corporation, or
any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken,
shall be signed by the holders of a majority of the
Corporation's outstanding voting stock.
(2) Such instrument may be executed in counterparts or as a unitary
document.
(b) In the event that the action to which the stockholders
consent is such as would have required the filing of a
certificate under the Delaware General Corporation Law, the
effect of such consent shall be as if such action had been
voted on by stockholders at a meeting thereof, however, the
certificate filed under such other section shall state that
written consent has been given in accordance with the
provisions of Section 9 of this Article I.
(c) If stockholder action is taken by written consent in lieu of meeting
signed by less than all of the Corporation's stockholders, then all non
participating stockholders shall be provided with written notice of the
action taken within 10 days after the effective date of the written
instrument taking such action.
(d) No action by written consent in lieu of meeting shall be valid if it is
in contravention of applicable proxy or informational rules adopted
pursuant to the Securities Exchange Act of 1934, as amended, including,
without limitation, the requirements of Section 14 thereof.
SECTION 10. Proxies
(a) Every stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent without a meeting, or his or her duly
authorized attorney-in-fact, may authorize another person or persons to
act for him or her by proxy.
(b) (1) Every proxy must be signed by the stockholder or his or her
attorney-in-fact.
(2) No proxy shall be valid after the expiration of 11 months from the
date thereof unless otherwise provided in the proxy.
(3) Every proxy shall be revocable at the pleasure of the stockholder
executing it, except as otherwise provided in this Section 10.
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(c) The authority of the holder of a proxy to act shall not be revoked by the
incompetence or death of the stockholder who executed the proxy unless,
before the authority is exercised, written notice of any adjudication of
such incompetence or of such death is received by the corporate officer
responsible for maintaining the list of stockholders.
(d) Except when other provisions shall have been made by written agreement
between the parties, the record holder of shares held as pledges or
otherwise as security or which belong to another, shall issue to the
pledgor or to such owner of such shares, upon demand therefor and payment
of necessary expenses thereof, a proxy to vote or take other action
thereon.
(e) A proxy which states that it is irrevocable is irrevocable
when it is held by any of the following or a nominee of any
of the following: (i) a pledgee; (ii) a person who has
purchased or agreed to purchase the shares: (iii) a creditor
or creditors of the Corporation who extend or continue to
extend credit to the Corporation in consideration of the
proxy, if the proxy states that it was given in consideration
of such extension or continuation of credit, the amount
thereof, and the name of the person extending or continuing
credit; (iv) a person who has contracted to perform services
as an officer of the Corporation, if a proxy is required by
the contract of employment, if the proxy states that it was
given in consideration of such contract of employment and
states the name of the employee and the period of employment
contracted for; and (v) a person designated by or under an
agreement as provided in Article XI hereof.
(f) (1) Notwithstanding a provision in a proxy stating that it
is irrevocable, the proxy becomes revocable after the
pledge is redeemed, the debt of the Corporation is
paid, the period of employment provided for in the
contract of employment has terminated, or the
agreement under Article XI hereof has terminated and,
in a case provided for in Section 10(e) (iii) or
Section 10(e) (iv) of this Article I, becomes
revocable three years after the date of the proxy or
at the end of the period, if any, specified therein,
whichever period is less, unless the period of
irrevocability of the proxy as provided in this
Section 10.
(2) This Section 10(f) does not affect the duration of a proxy under
Section 10(b) of this Article I.
(g) A proxy may be revoked, notwithstanding a provision making it
irrevocable, by a purchaser of shares without knowledge of the existence
of the provisions unless the existence of the proxy and its
irrevocability is noted conspicuously on the face or back of the
certificate representing such shares.
(h) (1) If a proxy for the same shares confers authority upon two or
more persons and does not otherwise provide, a majority of such
persons present at the meeting, or if only one is present then
that one, may exercise all the powers conferred by the proxy.
(2) If the proxy holders present at the meeting are equally divided as
to the right and manner of voting in any particular case, the
voting of such shares shall be prorated.
(i) If a proxy expressly so provides, any proxy holder may appoint in writing
a substitute to act in his or her place.
(j) Notwithstanding anything in the Bylaws to the contrary, no proxy shall be
valid if it was obtained in violation of any applicable requirements of
Section 14 of the Securities Exchange Act of 1934, as amended, or the
Rules and Regulations promulgated thereunder.
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SECTION 11. Voting of Shares by Stockholders
(a) (1) Shares standing in the name of another corporation, domestic
or foreign, may be voted by the officer, agent, or proxy
designated by the bylaws of the corporate stockholder; or, in the
absence of any applicable bylaw, by such person as the Board of
Directors of the corporate stockholder may designate.
(2) Proof of such designation may be made by presentation of a
certified copy of the bylaws or other instrument of the corporate
stockholder.
(3) In the absence of any such designation, or in case of conflicting
designation by the corporate stockholder, the chairman of the
board, president, any vice president, secretary and treasurer of
the corporate stockholder, in that order, shall be presumed to
possess authority to vote such shares.
(b) (1) Shares held by an administrator, executor, guardian or
conservator may be voted by him or her, either in person or by
proxy, without a transfer of such shares into his or her name.
(2) Shares standing in the name of a trustee may be voted as shares
held by him or her without a transfer of such shares into his
name.
(c) (1) Shares standing in the name of a receiver may be voted by such
receiver.
(2) Shares held by or under the control of a receiver but not standing
in the name of such receiver, may be voted by such receiver
without the transfer thereof into his name if authority to do so
is contained in an appropriate order of the court by which such
receiver was appointed.
(d) A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the
pledgee.
(e) Shares of the capital stock of the Corporation belonging to the
Corporation or held by it in a fiduciary capacity shall not be voted,
directly or indirectly, at any meeting, and shall not be counted in
determining the total number of outstanding shares.
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ARTICLE II
DIRECTORS
SECTION 1. Board of Directors; Exercise of Corporate Powers
(a) (1) All corporate powers shall be exercised by or under the
authority of, and the business and affairs of the Corporation
shall be managed under the direction of, the Board of Directors
except as may be otherwise provided in the Certificate of
Incorporation or in a stockholders' agreement.
(2) If any such provision is made in the Certificate of
Incorporation or in a stockholders' agreement, the
powers and duties conferred or imposed upon the Board
of Directors shall be exercised or performed to such
extent and by such person or persons as shall be
provided in the Certificate of Incorporation or
stockholders' agreement.
(b) Directors need not be residents of this state or stockholders of the
Corporation unless the Certificate of Incorporation so requires.
(c) The Board of Directors shall have authority to fix the compensation of
Directors unless otherwise provided in the Certificate of Incorporation.
(d) A Director shall perform his or her duties as a Director, including his
or her duties as a member of any committee of the Board upon which he may
serve, in good faith, in a manner he or she reasonably believes to be in
the best interests of the Corporation, and with such care as an
ordinarily prudent person in a like position would use under similar
circumstances.
(e) In performing his or her duties, a Director shall be entitled
to rely on information, opinions, reports or statements,
including without limitation, financial statements and other
financial data, in each case prepared or presented by: (i)
one or more officers or employees of the Corporation whom the
Director reasonably believes to be reliable and competent in
the matters presented; (ii) legal counsel, public
accountants or other persons as to matters which the Director
reasonably believes to be within such persons' professional
or expert competence; or (iii) a committee of the Board upon
which he or she does not serve, duly designated in accordance
with a provision of the Certificate of Incorporation or these
Bylaws, as to matters within its designated authority, which
committee the Director reasonably believes to merit confidence.
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(f) A Director shall not be considered to be acting in good faith if he or
she has knowledge concerning the matter in question that would cause such
reliance described in Section 1(e) of this Article II to be unwarranted.
(g) A person who performs his or her duties in compliance with Section 1 of
this Article II shall have no liability by reason of being or having been
a Director of the Corporation.
(h) A Director of the Corporation who is present at a meeting of the Board of
Directors at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless he or she votes
against such action or abstains from voting in respect thereto because of
an asserted conflict of interest.
SECTION 2. Number; Election; Classification of Directors; Vacancies
(a) (1) The Board of Directors of this Corporation shall consist of
not less than one Director.
(2) The Board shall have authority, from time to time, to increase the
number of Directors or to decrease it to not less than one member,
provided that no decrease in the number of Directors shall deprive
a serving Director of the right to serve throughout the term of
his or her election.
(b) Each person named in the Certificate of Incorporation as a member of the
initial Board of Directors shall serve until his or her successor shall
have been elected and qualified or until his or her earlier resignation,
removal from office, or death.
(c) (1) At the first annual meeting of stockholders and at each annual
meeting thereafter, the stockholders shall elect Directors to hold
office until the next succeeding annual meeting, except in case of
the classification of Directors as permitted by the Delaware
General Corporation Law.
(2) Each Director shall hold office for the term for which he or she
is elected and until his or her successor shall have been elected
and qualified or until his or her earlier resignation, removal
from office, or death.
(d) (1) The stockholders, by amendment to these Bylaws, may
provide that the Directors be divided into not more
than four classes, as nearly equal in number as
possible, whose terms of office shall respectively
expire at different times, but no such term shall
continue longer than four years, and at least one
fourth of the Directors shall be elected annually.
(2) If Directors are classified and the number of Directors is
thereafter changed, any increase or decrease in Directorship shall
be so apportioned among the classes as to make all classes as
nearly equal in number as possible.
(e) (1) Any vacancy occurring in the Board of Directors, including any
vacancy created by reason of an increase in the number of
Directors, may be filled only by the Board of Directors.
(2) A Director elected to fill a vacancy shall hold office only until
the next election of Directors by the stockholders.
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SECTION 3. Removal of Directors
(a) At a meeting of stockholders called expressly for that purpose, any
Director or the entire Board of Directors may be removed, with or without
cause, by the vote of the holders of 60% of the shares then entitled to
vote at an election of Directors; provided that at least one Director
remains in office or one Director is elected as a replacement Director
concurrently with such removal.
(b) In the event that the number of Directors is reduced below
that number mandated in the Certificate of Incorporation as a
result of the removal of one or more Directors by the
stockholders, then the remaining Directors or the
contemporaneously elected replacement Director will promptly
elect replacement Directors, to serve until the next meeting
of the Corporation's stockholders, and until their
replacements have been elected, qualified and assume their
office.
SECTION 4. Director Quorum and Voting
(a) A majority of the Directors fixed in the manner provided in these Bylaws
shall constitute a quorum for the transaction of business.
(b) A majority of the members of an Executive Committee or other committee
shall constitute a quorum for the transaction of business at any meeting
of such Executive Committee or other committee.
(c) The act of a majority of the Directors present at a Board meeting at
which a quorum is present shall be the act of the Board of Directors.
(d) The act of a majority of the members of an Executive Committee present at
an Executive Committee meeting at which a quorum is present shall be the
act of the Executive Committee.
(e) The act of a majority of the members of any other committee present at a
committee meeting at which a quorum is present shall be the act of the
committee.
(f) Directors may, if not contrary to applicable law, vote either in person
or by proxy, provided that the proxy holder must be either another
Director, an officer or a stockholder of the Corporation; however, any
Director who elects to vote by proxy more than three times during any
single fiscal year shall, unless otherwise determined by the Board of
Directors, be automatically removed as a Director.
SECTION 5. Director Conflicts of Interest
(a) No contract or other transaction between this Corporation and
one or more of its Directors or any other corporation, firm,
association or entity in which one or more of its Directors
are Directors or officers or are financially interested shall
be either void or voidable because of such relationship or
interest or because such Director or Directors are present at
the meeting of the Board of Directors or a committee thereof
which authorizes, approves or ratifies such contract or
transaction or because their votes are counted for such
purpose, if:
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(i) The fact of such relationship or interest is disclosed or known to
the Board of Directors or committee which authorizes, approves or
ratifies the contract or transaction by a vote or consent
sufficient for the purpose without counting the votes or consents
of such interested Directors; or
(ii) The fact of such relationship or interest is disclosed or known to
the stockholders entitled to vote and they authorize, approve or
ratify such contract or transaction by vote or written consent; or
(iii) The contract or transaction is fair and reasonable as to the
Corporation at the time it is authorized by the Board, a
committee, or the stockholders.
(b) Interested Directors, whether or not voting, may be counted in
determining the presence of a quorum at a meeting of the Board of
Directors or a committee thereof which authorizes, approves or ratifies
such contract or transaction.
SECTION 6. Executive and Other Committees; Designation; Authority
(a) The Board of Directors, by resolution adopted by the full
Board of Directors, may designate from among its Directors an
Executive Committee and one or more other committees each of
which, to the extent provided in such resolution or in the
Certificate of Incorporation or these Bylaws, shall have and
may exercise all the authority of the Board of Directors,
except that no such committee shall have the authority to :
(i) approve or recommend to stockholders actions or proposals
required by the Delaware General Corporation Law to be
approved by stockholders; (ii) designate candidates for the
office of Director for purposes of proxy solicitation or
otherwise; (iii) fill vacancies on the Board of Directors or
any committee thereof; (iv) amend these Bylaws; (v) authorize
or approve the re-acquisition of shares unless pursuant to a
general formula or method specified by the Board of
Directors; or (vi) authorize or approve the issuance or sale
of, or any contract to issue or sell, shares or designate the
terms of a series of a class of shares, unless the Board of
Directors, having acted regarding general authorization for
the issuance or sale of shares, or any contract therefor,
and, in the case of a series, the designation thereof has
specified a general formula or method by resolution or by
adoption of a stock option or other plan, authorized a
committee to fix the terms upon which such shares may be
issued or sold, including, without limitation, the price, the
rate or manner of payment of dividends, provisions for
redemption, sinking fund, conversion, and voting or
preferential rights, and provisions for other features of a
class of shares, or a series of a class of shares, with full
power in such committee to adopt any final resolution setting
forth all the terms of a series for filing with the
Department of State under the Delaware General Corporation Law.
(b) The Board, by resolution adopted in accordance with Section 6(a) of this
Article II, may designate one or more Directors as alternate members of
any such committee, who may act in the place and stead of any absent
member or members at any meeting of such committee.
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(c) Neither the designation of any such committee, the delegation
thereto of authority, nor action by such committee pursuant
to such authority shall alone constitute compliance by a
member of the Board of Directors, not a member of the
committee in question, with his responsibility to act in good
faith, in manner he reasonably believes to be in the best
interests of the Corporation, and with such care as an
ordinarily prudent person in a like position would use under
similar circumstances.
(d) The Board of Directors shall at every organizational meeting thereof
designate the following committees comprised in each case of a majority
of independent Directors:
(1) An audit committee;
(2) A compensation committee; and
(3) A regulatory compliance committee.
SECTION 7. Place, Time, Notice and Call of Directors' Meeting.
(a) Meetings of the Board of Directors, regular or special, may be held
either within or without the State of Delaware.
(b) (i) A regular meeting of the Board of Directors of the Corporation
shall be held for the election of officers of the Corporation and
for the transaction of such other business as may come before such
meeting as promptly as practicable after the annual meeting of the
stockholders of this Corporation without the necessity of notice
other than this Bylaw.
(ii) Other regular meetings of the Board of Directors of the
Corporation may be held at such places as the Board of Directors
of the Corporation may from time to time resolve without notice
other than such resolution.
(iii) Special meetings of the Board of Directors may be held at any time
upon call of the Chairman of the Board of Directors or a majority
of the Directors of the Corporation, at such time and at such
place as shall be specified in the call thereof.
(iv) (A) Notice of any special meeting of the Board of
Directors must be given at least two days prior
thereto, if by written notice delivered
personally; or at least five days prior
thereto, if mailed; or at least two days prior
thereto, if by telegram; or at least two days
prior thereto, if by telephone or E-mail,
receipt confirmed.
(B) If such notice is given by mail, such notice shall be deemed to
have been delivered when deposited with the United States Postal
Service addressed to the business address of such Director with
postage thereon prepaid.
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(C) If notice be given by telegram, such notice shall be deemed
delivered when the telegram is delivered to the telegraph company.
(D) If notice is given by telephone (including facsimile
transmission), such notice shall be deemed delivered when the call
is completed.
(E) If notice is given by E-mail, such notice shall be deemed
delivered when confirmation of receipt is obtained.
(c) (1) Notice of a meeting of the Board of Directors need not be
given to any Director who signs a waiver of notice either before
or after the meeting.
(2) Attendance of a Director at a meeting shall constitute
a waiver of notice of such meeting and waiver of any
and all objections to the place of the meeting, the
time of the meeting, or the manner in which it has
been called or convened, except when a Director
states, at the beginning of the meeting, any objection
to the transaction of business because the meeting is
not lawfully called or convened.
(d) Neither the business to be transacted at, nor the purpose of, any regular
or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
(e) (1) A majority of the Directors present, whether or not a quorum
exists, may adjourn any meeting of the Board of Directors to
another time and place.
(2) Notice of any such adjourned meeting shall be given to the
Directors who were not present at the time of the adjournment and,
unless the time and place of the adjourned meeting are announced
at the time of the adjournment, to the other Directors.
(f) (1) Members of the Board of Directors may participate in a meeting
of such Board by means of a conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can communicate with each other at
the same time.
(2) Participation by such means shall constitute presence in person at
a meeting.
SECTION 8. Action by Directors Without a Meeting
(a) (1) Any action required by the Delaware General
Corporation Law to be taken at a meeting of the
Directors of the Corporation, or any action which may
be taken at a meeting of the Directors or a committee
thereof, may be taken without a meeting if a consent
in writing, setting forth the action so to be taken,
signed by all of the Directors, or all of the members
of the committee, as the case may be, and is filed in
the minutes of the proceedings of the Board or of the
committee.
(2) Such consent shall have the same effect as a unanimous vote.
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(b) If not contrary to applicable law, Directors may take action
as the Board of Directors or committees thereof through a
written consent to action signed by a number of Directors
sufficient to have carried a vote of the Board of Directors
or committee thereof with all members present and voting;
provided, that all Directors not joining in such written
instrument shall be deemed for all purposes to have cast
dissenting votes, and that all Directors not parties to such
instrument shall receive written notice of all action taken
through such instrument within three days after such
instrument shall have been subscribed by the requisite number
of Directors required for such action.
SECTION 9. Compensation
(a) The Directors and members of the Executive and any other committee of the
Board of Directors shall be entitled to such reasonable compensation for
their services and on such basis as shall be fixed from time to time by
resolution of the Board of Directors.
(b) The Board of Directors and members of any committee of that Board of
Directors shall be entitled to reimbursement for any reasonable expenses
incurred in attending any Board or committee meeting.
(c) Any Director receiving compensation under this Section shall not be
prevented from serving the Corporation in any other capacity and shall
not be prohibited from receiving reasonable compensation for such other
services.
SECTION 10. Resignation
(a) Unless he is the sole serving Director, any Director of the Corporation
may resign at any time by providing the Board of Directors with written
notice indicating the Director's intention to resign and the effective
date thereof.
(b) A sole serving Director of the Corporation must, at least concurrently
with his or her resignation, elect one or more successor Director(s) at
least one of whom must assume his or her office concurrently with the
subject resignation, and the resignation shall be effected by providing
the successor Director(s) with written notice indicating the Director's
intention to resign and the effective date thereof.
ARTICLE III
OFFICERS
SECTION 1. Election; Number; Terms of Office
(a) (1) The officers of the Corporation shall consist of a
Chairman of the Board of Directors whose title may be
designated as "Chairman," a Chief Executive officer, a
President, a Chief Operating Officer, a Chief
Financial Officer, one or more Vice-Presidents, a
Secretary and a Treasurer, each of whom shall be
elected by the Board of Directors at such time and in
such manner as may be prescribed by these Bylaws.
(2) Such other officers and assistant officers and agents as may be
deemed necessary may be elected or appointed by the Board of
Directors.
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(3) The officers of the Corporation shall be hereinafter collectively
referred to as the "Officers."
(b) All Officers and agents, as between themselves and the Corporation, shall
have such authority and perform such duties in the management of the
Corporation as are provided in these Bylaws, or as may be determined by
resolution of the Board of Directors not inconsistent with these Bylaws.
(c) Any two or more offices may be held by the same person, except for the
offices of President and Secretary.
(d) A failure to elect a Chairman of the Board, Chief Executive Officer,
President, Chief Operating Officer, Chief Financial Officer, a Vice
President, a Secretary or a Treasurer shall not affect the existence of
the Corporation.
SECTION 2. Removal
(a) An Officer of the Corporation shall hold office until the election and
qualification of his successor; however, any Officer of the Corporation
may be removed from office by the Board of Directors whenever in its
judgment the best interests of the Corporation will be served thereby.
(b) Such removal shall be without prejudice to the contract rights, if any,
of the person so removed.
(c) Election or appointment of an officer shall not of itself create any
contract right to employment or compensation or create an employer -
employee relationship.
SECTION 3. Vacancies
Any vacancy in any office from any cause may be filled for the unexpired
portion of the term of such office by the Board of Directors.
SECTION 4. Powers and duties
(a) (1) The Chairman of the Board of Directors shall preside over
meetings of the Board of Directors and the stockholders.
(2) Unless a separate Chief Executive Officer is elected, the Chairman
shall exercise the powers hereafter granted to that office.
(3) Unless a Chairman of the Board is specifically elected, the
President shall be deemed to be the Chairman of the Board.
(b) (1) The Chief Executive Officer shall be the principal Officer of
the Corporation to whom all other Officers shall be subordinate.
(2) In the event no Chief Executive Officer is separately elected,
such office shall be assumed by the Chairman of the Board, and if
no such office has been filled, by the President.
(3) Except where by law the signature of the President is
required or unless the Board of Directors shall rule
otherwise, the Chief Executive Officer shall possess
the same power as the President to sign all
certificates, contracts and other instruments of the
Corporation which may be authorized by the Board of
Directors.
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(c) (1) The Chief Operating Officer of the Corporation shall be
responsible for management of the day to day affairs of the
Corporation, subject to compliance with the directions of the
Board of Directors and of the Chief Executive Officer.
(2) He shall be responsible for the general day-to-day supervision of
the business and affairs of the Corporation.
(3) He shall sign or countersign all certificates, contracts or other
instruments of the Corporation, as authorized by the Board of
Directors or as assigned by the Chief Executive Officer.
(4) He may, but need not, be a member of the Board of Directors.
(5) Unless otherwise provided by specific resolution of the Board of
Directors, the President shall be the Chief Operating Officer of
the Corporation.
(d) (1) In the absence of a separately elected or available Chief
Executive Officer or Chairman of the Board, the President shall be
the Chief Executive Officer of the Corporation and shall preside
at all meetings of the stockholders and the Board of Directors.
(2) The Board of Directors will at all times retain the power to
expressly delegate the duties of the President to any other
Officer of the Corporation.
(e) (1) The Chief Financial Officer shall be responsible for
coordinating all financial aspects of the Corporation's
operations, including strategic financial planning, supervision of
the Corporation's Treasurer, Comptroller and outside auditors.
(2) In the event an Audit Committee of the Board of Directors is
designated and serving, he shall be responsible for keeping such
committee fully and timely informed of all matters under its
jurisdiction.
(3) The Chief Financial Officer shall, unless otherwise specifically
provided by the Board of Directors, serve as the Corporation's
principal compliance officer and shall be responsible for
overseeing preparation and filing of all reports of the
Corporation's activities required to be filed, either periodically
or on a special basis with the United States Internal Revenue
Service, the Securities and Exchange Commission and with other
federal, state or local governmental agencies.
(f) (1) The Vice President(s), if any, in the order designated by the
Board of Directors, shall exercise the functions of the President
in the event of the absence, disability, death, or refusal to act
of the President.
(2) During the time that any Vice President is properly exercising the
functions of the President, such Vice President shall have all the
powers of and be subject to all restrictions upon the President.
(3) Each Vice President shall have such other duties as are assigned
to him from time to time by the Board of Directors or by the
President of the Corporation and shall be subject to such
specializing designations (e.g., "senior," executive," etc.) as
the Board of Directors may select.
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(g) (1) The Secretary of the Corporation shall keep the minutes of the
meetings of the stockholders of the Corporation, and, unless
provided otherwise by the Chairman at any meeting of the Board of
Directors, the Secretary shall keep the minutes of the meetings of
the Board of Directors of the Corporation.
(2) The Secretary shall be the custodian of the minute books of the
Corporation and such other books and records of the Corporation as
the Board of Directors of the Corporation may direct.
(3) The Secretary of the Corporation shall have the general
responsibility for maintaining the stock transfer books of the
Corporation, or of supervising the maintenance of the stock
transfer books of the Corporation by the transfer agent, if any,
of the Corporation.
(3) The Secretary shall be the custodian of the corporate seal of the
Corporation and shall affix the corporate seal of the Corporation
on contracts and other instruments as the Board of Directors may
direct.
(4) The Secretary shall perform such other duties as are assigned from
time by the Board of Directors, the Chief Executive Officer, the
Chairman, the Chief Operating Officer or the President of the
Corporation.
(h) (1) The Treasurer of the Corporation shall be directly subordinate
to the Chief Financial Officer.
(2) In the absence of a Chief Financial Officer, such office shall be
filled by the Treasurer.
(3) Unless otherwise specified by the Board of Directors, the
Treasurer shall have custody of all funds and securities owned by
the Corporation.
(4) The Treasurer shall cause to be entered regularly in the proper
books of account of the Corporation full and accurate accounts of
the receipts and disbursements of the Corporation.
(5) The Treasurer of the Corporation shall render a statement of the
cash, financial and other accounts of the Corporation whenever he
is directed to render such a statement by the Board of Directors
or by the President of the Corporation.
(6) The Treasurer shall at all reasonable times make available the
Corporation's books and financial accounts to any Director of the
Corporation during normal business hours.
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(7) The Treasurer shall perform all other acts incident to the Office
of Treasurer of the Corporation, and he shall have such other
duties as are assigned to him from time to time by the Board of
Directors, the Chief Executive Officer, the Chairman, the Chief
Operating Officer or the President of the Corporation.
(i) (1) The Corporation's Board of Directors shall designate a person
licensed to practice law in one of the states comprising the
United States as the Corporation's General Counsel and Chief Legal
Officer;
(2) The Corporation's General Counsel and Chief Legal Officer shall
coordinate the Corporation's legal affairs under the directions of
the Board of Directors and in coordination with the Chief
Executive Officer, to whom he or she shall report;
(3) The Board of Directors may appoint such subordinate legal officers
and assign them such functions as it may deem appropriate.
(j) Other subordinate or assistant Officers appointed by the
Board of Directors or by the Chief Executive Officer, the
Chairman, the Chief Operating Officer or the President, if
such authority is delegated to them by the Board of
Directors, shall exercise such powers and perform such duties
as may be delegated to them by the Board of Directors, the
Chief Executive Officer, the Chief Operating Officer or by
the President, as the case may be.
(k) In case of the absence or disability of any Officer of the Corporation
and of any person authorized to act in his place during such period of
absence or disability, the Board of Directors may from time to time
delegate the powers and duties of such Officer or any Director or any
other person whom it may select.
SECTION 5. Salaries
(a) The salaries of all Officers of the Corporation shall, except as
otherwise determined or required by an agreement entered into among all
the stockholders of the Corporation, be fixed by the Board of Directors.
(b) No Officer shall be ineligible to receive such salary by reason of the
fact that he is also a Director of the Corporation and receiving
compensation therefor.
ARTICLE IV
LOANS TO EMPLOYEES AND OFFICERS;
GUARANTEE OF OBLIGATIONS OF EMPLOYEES AND OFFICERS
(a) This Corporation may lend money to, guarantee any obligation of, or
otherwise assist any Officer or other employee of the Corporation or of a
subsidiary, including any Officer or employee who is a Director of the
Corporation or of a subsidiary, whenever, in the judgment of the
Directors, such loan, guarantee or assistance may reasonably be expected
to benefit the Corporation.
(b) The loan, guarantee or other assistance may be with or without interest,
and may be unsecured, or secured in such manner as the Board of Directors
shall approve including, without limitation, a pledge of shares of stock
of the Corporation.
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(c) Nothing in this Article shall be deemed to deny, limit or restrict the
powers of guarantee or warranty of this Corporation at common law or
under any statute.
ARTICLE V
STOCK CERTIFICATES; VOTING TRUSTS; TRANSFERS
SECTION 1. Certificates Representing Shares
(a) (1) Every holder of shares of this Corporation shall be
entitled to one or more certificates, representing all
shares to which he is entitled and such certificates
shall be signed by the Chairman, Chief Executive
Officer, Chief Operating Officer, the President or a
Vice President and the Secretary or an Assistant
Secretary of the Corporation and may be sealed with
the seal of the Corporation or a facsimile thereof.
(2) The signatures of the Chairman, the Chief Executive
Officer, the Chief Operating Officer, the President or
Vice President and the Secretary or Assistant
Secretary may be facsimiles if the certificate is
manually signed on behalf of a transfer agent or a
registrar other than the Corporation itself or an
employee of the Corporation.
(3) In case any Officer who signed or whose facsimile signature has
been placed upon such certificate shall have ceased to be such
Officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if it were executed by the
appropriate Officer at the date of its issuance.
(b) Every certificate representing shares issued by this
Corporation shall, if shares are divided into one or more
classes or series with differing rights, state that the
Corporation will furnish to any stockholder upon request and
without charge a full statement of: (i) the designations,
preferences, limitations, and relative rights of the shares
of each class or series authorized to be issued, and (ii) the
variations in the relative rights and preferences between the
shares of each such series, if the Corporation is authorized
to issue any preferred or special class in series and so far
as the same have been fixed and determined, and the authority
of the Board of Directors to fix and determine, the relative
rights and preferences of subsequent series.
(c) Every certificate representing shares which are restricted as
to sale, disposition or other transfer (including
restrictions based on federal or state securities and other
laws) shall state that such shares are restricted as to
transfer and shall set forth or fairly summarize upon the
certificate, or shall state that the Corporation will furnish
to any stockholder upon request and without charge a full
statement of, such restrictions.
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(d) Each certificate representing shares shall state upon the face thereof:
(i) the name of the Corporation;
(ii) that the Corporation is organized under the laws of the State of
Delaware;
(iii) the name of the person or persons to whom issued;
(iv) the number and class of shares, and the designation of the series,
if any, which such certificate represents; and
(v) the par value of each share represented by such certificate, or a
statement that the shares are without par value.
(e) No certificate shall be issued for any shares until they are
fully paid for and in the event that a certificate is
erroneously issued or compensation paid is subsequently
discovered to be other than as represented (e.g., dishonored
checks, securities of a corporation acquired in a
reorganization where the representations and warranties
provided prove to be materially false, etc.), then the Board
of Directors shall promulgate a certified resolution
detailing the nature of the misrepresented consideration, and
shall submit such certified resolution to the person
responsible for recording and effecting transactions in the
Corporation's securities; whereupon such securities will be
restricted from transfer and treated as no longer outstanding
for all purposes unless the Corporation becomes subject to a
judgment of a court of competent jurisdiction providing
otherwise.
SECTION 2. Transfer Books
(a) The Corporation shall keep at its registered office or
principal place of business or in the office of its transfer
agent or registrar, a book (or books where more than one
kind, class, or series of stock is outstanding) to be known
as the Stock Book, containing the names, alphabetically
arranged, addresses and Social Security numbers of every
stockholder and the number of shares each kind, class or
series of stock held of record.
(b) Where the Stock Book is kept in the office of the transfer agent, the
Corporation shall keep at its principal office copies of the stock lists
prepared from said Stock Book and sent to it from time to time (but not
less frequently than every month) by said transfer agent.
(c) The Stock Book or stock lists shall show the current status of the
ownership of shares of the Corporation provided that, if the transfer
agent of the Corporation be located elsewhere, a reasonable time shall be
allowed for transit or mail.
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SECTION 3. Transfer of Shares
(a) The name(s) and address(es) of the person(s) to whom shares of stock of
this Corporation are issued, shall be entered on the Stock Transfer Books
of the Corporation, with the number of shares and date of issue.
(b) (1) Transfer of shares of the Corporation shall be made on
the Stock Transfer Books of the Corporation by the
Secretary or the transfer agent, subject to compliance
with any restrictions specified on such certificate,
only when the holder of record thereof or the legal
representative of such holder of record or the
attorney-in-fact of such holder of record, authorized
by power of attorney duly executed and filed with the
Secretary or transfer agent of the Corporation, shall
surrender the Certificate representing such shares for
cancellation.
(2) Lost, destroyed or stolen Stock Certificates shall be replaced
pursuant to Section 5 of this Article V.
(c) The person or persons in whose names shares stand on the books of the
Corporation shall be deemed by the Corporation to be the owner of such
shares for all purposes, except as otherwise provided pursuant to
Sections 10 and 11 of Article I, or Section 4 of Article V.
(d) Shares of the Corporation's capital stock shall be freely transferable
without required Board of Directors' consent, unless such shares are
subject to transfer restrictions under Securities and Exchange Commission
Rule 144 or a consent requirement has been imposed pursuant to a binding
written contract subscribed to by the holder or his or her predecessor in
interest.
(e) (1) All transactions in securities subject to any restrictions
imposed under Securities and Exchange Commission Rule 144
("restricted securities" and "Rule 144," respectively) shall, as a
condition to transfer, require the following documentation, to be
reviewed and approved by legal counsel to the Corporation:
(A) An affidavit from the holder (the "Holder") providing
details concerning acquisition of the subject shares;
providing evidence of the date when consideration for
the shares was paid in full; detailing all
transactions in the Corporation's securities during
the immediately preceding 90 days; affirming a present
intent to dispose of the subject securities; affirming
that a Form 144 has been filed with the Securities and
Exchange Commission covering the proposed transaction
(and providing a copy thereof); affirming compliance
with any reporting obligations under Sections 13(d),
13(g) or 16(b) of the Securities Exchange Act of 1934,
as amended, and providing such other facts or
representations as legal counsel to the Corporation
may reasonably require;
(B) A written confirmation by the Corporation's transfer
agent based on records available thereto of all
transactions in the Corporation's securities by the
Holder and anyone with whom the holder is required to
aggregate sales or securities holdings for purposes of
Rule 144, as well as confirmation of the percentage of
outstanding securities of the Corporation held of
record by the Holder and anyone with whom the holder
is required to aggregate sales or securities holdings
for purposes of Rule 144;
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(C) Except as provided below, a written confirmation from the broker
through whom the Holder is effecting the proposed transaction
verifying that the transaction will be effected in full compliance
with Rule 144; and
(D) A legal opinion from counsel to the Holder (who may not also be
the counsel to the Corporation) specifically addressing all
aspects of Rule 144 and detailing the manner in which they are
being complied with or the reasons that they are not applicable.
(2) Transactions in restricted securities that are not being effected
in reliance on Rule 144 shall require, as a condition to transfer,
the following documentation, to be reviewed and approved by legal
counsel to the Corporation:
(A) An affidavit from the holder (the "Holder") providing
details concerning acquisition of the subject shares;
providing evidence of the date when consideration for
the shares was paid in full; the identity and
qualifications of the person to whom the securities
are being transferred; the manner in which such person
has been provided with required information concerning
the Corporation; affirming compliance with any
reporting obligations under Sections 13(d), 13(g) or
16(b) of the Securities Exchange Act of 1934, as
amended, and providing such other facts or
representations as legal counsel to the Corporation
may reasonably require;
(B) A legal opinion from counsel to the Holder (who may
not also be the counsel to the Corporation) addressed
to the Corporation in a manner creating enforceable
privity between such legal counsel and the
Corporation, specifically addressing all aspects of
the exemptions relied on to effect the proposed
transaction without registration under applicable
federal and state securities laws and regulations, and
detailing the manner in which they are being complied
with or the reasons that they are not applicable.
(3) No transactions in the Corporation's restricted
securities failing to materially comply with the
foregoing requirements will be honored, nor will any
holding period required under Rule 144 be deemed to
commence until all such requirements are materially
complied with (material compliance to be determined in
the sole discretion of the Corporation's Board of
Directors).
SECTION 4. Voting Trusts
(a) (10 Any number of stockholders of the Corporation may
create a voting trust for the purpose of conferring
upon a trustee or trustees the right to vote or
otherwise represent their shares, for a period not to
exceed ten years, by: (i) entering into a written
voting trust agreement specifying the terms and
conditions of the voting trust; (ii) depositing a
counterpart of the agreement with the Corporation at
its registered office; and (iii) transferring their
shares to such trustee or trustees for the purposes of
this Agreement.
(2) Prior to the recording of the agreement, the stockholder concerned
shall render the stock certificate(s) described therein to the
Corporate Secretary who shall note on each certificate:
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"This Certificate is subject to the provisions of a
voting trust agreement dated ..........., recorded
in Minute Book ............, of the Corporation.
(b) (1) Upon the transfer of such shares, voting trust certificates
shall be issued by the trustee or trustees to the stockholders who
transfer their shares in trust.
(2) Such trustee or trustees shall keep a record of the
holders of voting trust certificates evidencing a
beneficial interest in the voting trust, giving the
names and addresses of all such holders and the number
and class or the shares in respect of which the voting
trust certificates held by each are issued, and shall
deposit a copy of such record with the Corporation at
its registered office.
(c) The counterpart of the voting trust agreement and the copy of
such record so deposited with the Corporation shall be
subject to the same right of examination by a stockholder of
the Corporation, in person or by agent or attorney, as are
the books and records of the Corporation, and such
counterpart and such copy of such record shall be subject to
examination by any holder of record of voting trust
certificates either in person or by agent or attorney, at any
reasonable time for any proper purpose.
(d) (1) At any time before the expiration of a voting trust
agreement as originally fixed or as extended one or
more times under this Section 4(d), one or more
holders of voting trust certificates may, by agreement
in writing, extend the duration of such voting trust
agreement, nominating the same or substitute trustees,
for an additional period not exceeding 10 years.
(2) Such extension agreement shall not affect the rights
or obligations or persons not parties to the
agreement, and such persons shall be entitled to
remove their shares from the trust and promptly to
have their stock certificates reissued upon the
expiration of the original term of the voting trust
agreement.
(3) The extension agreement shall in every respect comply with and be
subject to all the provisions of this Section 4, applicable to the
original voting trust agreement except that the 10 year maximum
period of duration shall commence on the date of adoption of the
extension agreement.
(e) The trustees under the terms of the agreements entered into under the
provisions of this Section 4, shall not acquire the legal title to the
shares but shall be vested only with the legal right and title to the
voting power which is incident to the ownership of the shares.
(f) Notwithstanding generally applicable prohibitions against a
corporation's voting of treasury stock, if the Corporation is
the trustee under a voting trust, it shall have full
authority to vote such shares in accordance with the terms of
the voting trust agreement, even if such agreement vests
absolute and unfettered voting discretion in the trustee and
notwithstanding that the voting trust was created at the
prompting or direction of the Corporation, its officers or
Directors.
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SECTION 5. Lost, Destroyed, or Stolen Certificates
No Certificate representing shares of stock in the Corporation shall be
issued in place of any Certificate alleged to have been lost, destroyed, or
stolen except on production of evidence, satisfactory to the Board of Directors,
of such loss, destruction or theft, and, if the Board of Directors so requires,
upon the furnishing of an indemnity bond in such amount (but not to exceed twice
the fair market value of the shares represented by the Certificate) and with
such terms and with such surety as the Board of Directors may, in its
discretion, require.
ARTICLE VI
BOOKS AND RECORDS
(a) The Corporation shall keep correct and complete books and records of
account and shall keep minutes of the proceedings of its stockholders,
Board of Directors and committees of Directors.
(b) Any books, records and minutes may be in written form or in any other
form capable of being converted into written form within a reasonable
time.
(c) Any person who shall have been a holder of record of shares,
or the holder of record of voting trust certificates for, at
least five percent of the outstanding shares of any class or
series of the Corporation, upon written demand stating the
purpose thereof, shall; subject to the qualifications
contained in subsection (d) hereof, have the right to
examine, in person or by agent or attorney, at any reasonable
time or times, for any purpose, its relevant books and
records of account, minutes and records of stockholders and
to make extracts therefrom.
(d) (1) No stockholder who within two years has sold or
offered for sale any list of stockholders or of
holders of voting trust certificates for shares of
this Corporation or any other corporation; has aided
or abetted any person in procuring any list of
stockholders or of holders of voting trust
certificates for any such purpose; or has improperly
used any information secured through any prior
examination of the books and records of account,
minutes, or record of stockholders or of holders of
voting trust certificates for shares of the
Corporation of any other corporation; shall be
entitled to examine the documents and records of the
Corporation as provided in Section (c) of this Article
VI.
(2) No stockholder who does not act in good faith or for a proper
purpose in making his demand shall be entitled to examine the
documents and records of the Corporation as provided in Section
(c) of this Article VI.
(e) Unless modified by resolution of the stockholders, this
Corporation shall prepare not later than 90 days after the
close of each fiscal year, audited financial statements,
including all required schedules, prepared in accordance with
Generally Accepted Accounting Principals ("GAAP")
consistently applied; and shall prepare not later than 45
days after the close of each fiscal quarter (other than the
fourth quarter), quarterly unaudited financial statements,
including all required schedules, prepared in accordance with
Generally Accepted Accounting Principals ("GAAP").
(f) Upon the written request of any stockholder or holder of voting trust
certificates for shares of the Corporation, the Corporation shall mail to
such stockholder or holder of voting trust certificates a copy of its
most recent balance sheet and profit and loss statement.
(g) Such financial statements shall be filed and kept for at least five years
in the registered office of the Corporation in the State of Delaware and
shall be subject to inspection during business hours by any stockholder
or holder of voting trust certificates, in person or by agent.
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ARTICLE VII
DIVIDENDS
The Board of Directors of the Corporation may, from time to time,
declare, and the Corporation may pay dividends on its own shares, except when
the Corporation is insolvent or when the payment thereof would render the
Corporation insolvent, subject to the following provisions:
(a) Dividends in cash or property may be declared and paid,
except as otherwise provided in this Article VII, only out of
the unreserved and unrestricted earned surplus of the
Corporation or out of capital surplus, however arising, but
each dividend paid out of capital surplus shall be identified
as a distribution of capital surplus, and the amount per
share paid from such capital surplus shall be disclosed to
the stockholders receiving the same concurrently with the
distribution.
(b) If the Corporation shall engage in the business of exploiting
natural resources or other wasting assets and if the
Certificate so provides, dividends may be declared and paid
in cash out of depletion or similar reserves, but each such
dividend shall be identified as distribution of such reserves
and the amount per share paid from such reserves shall be
disclosed to the stockholders receiving the same concurrently
with the distribution thereof.
(c) Dividends may be declared and paid in the Corporation's treasury shares.
(d) Dividends may be declared and paid in the Corporation's authorized but
unissued shares, out of any unreserved and unrestricted surplus of the
Corporation, upon the following conditions:
(i) If a dividend is payable in the Corporations' own shares having a
par value, such shares shall be issued at not less than the par
value thereof and there shall be transferred to stated capital at
the time such dividend is paid an amount of surplus equal to the
aggregate par value of the shares to be issued as a dividend.
(ii) If a dividend is payable in the Corporations' own
shares without par value, such shares shall be issued
at a stated value fixed by the Board of Directors by
resolution adopted at the time such dividend is
declared, and there shall be transferred to stated
capital at the time such dividend is paid an amount of
surplus equal to the aggregate stated value so fixed
and the amount per share so transferred to stated
capital shall be disclosed to the stockholders
receiving such dividend concurrently with the payment
thereof.
(e) No dividend payable in shares of any class shall be paid to the holders
of shares of any other class unless the Certificate of Incorporation so
provides or such payment is authorized by the affirmative vote or the
written consent of the holders of at least a majority of the outstanding
shares of the class to which the payment is to be made.
(f) A split or division of the issued shares of any class into a greater
number of shares of the same class without increasing the stated capital
of the Corporation shall not be construed to be a stock dividend within
the meaning of this Article VII.
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ARTICLE VIII
SEAL
The Board of Directors shall adopt a Corporate Seal which shall be
circular in form and shall have inscribed thereon the name of the Corporation,
the state of incorporation and the year of incorporation.
ARTICLE IX
INDEMNIFICATION
This Corporation shall indemnify its officers, Directors and authorized
agents for all liabilities incurred directly, indirectly or incidentally to
services performed for the Corporation, to the fullest extent permitted under
Delaware law existing now or hereinafter enacted.
ARTICLE X
MENDMENT OF BYLAWS
The Board of Directors shall have the power to amend, alter, or repeal
these Bylaws, and to adopt new Bylaws.
ARTICLE XI
FISCAL YEAR
The fiscal year of this Corporation shall be determined by the Board of
Directors.
ARTICLE XII
MEDICAL REIMBURSEMENT
SECTION 1. Benefits
(a) The Corporation may, subject to approval of the Board of Directors
reimburse all employees for expenses incurred by themselves and their
dependents, as defined in Section 152 of the Internal Revenue Code of
1986, as amended (the "IRC"), for medical care, as defined in IRC Section
213(e) or any successor section thereto, subject to the conditions and
limitations hereinafter set forth.
(b) It is the intention of the Corporation that the benefits payable to
employees hereunder will be excluded from their gross income pursuant IRC
Section 105 or any successor section thereto.
SECTION 2. Employees Defined
The term "employees" as used in this medical expense plan is hereby
defined to include all individuals employed by the corporation except the
following:
(a) Employees who have not completed three months of service as is provided
in IRC Section 105(h)(3) (b)(i), or any successor section thereto;
(b) Employees who have not attained the age of 25 years;
(c) Employees who are part-time or seasonal as is defined in IRC Section
105(h)(3)(B)(iii) or any successor section thereto;
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(d) Employees who are included in a unit of employees covered by an agreement
between employee representatives and one or more employers found to be a
collective bargaining agreement; where accident and health benefits were
the subject of good faith bargaining between such employee
representatives and such employer(s) as is defined in IRC Section
105(h)(3)(B)(iv) or any successor section thereto;
(e) Employees who are nonresident aliens and who receive no earned income
from the employer which constitutes income from sources within the United
States as is further defined in IRC Section 105(h)(5)(B)(v) or any
successor section thereto.
SECTION 3. Limitations
(a) The Corporation will reimburse any employee no more than $5,000.00 in any
fiscal year for medical care expenses;
(b) Reimbursement or payment provided under this plan will be made by the
Corporation only in the event and to the extent that such reimbursement
or payment is not provided under any insurance policy(ies), whether owned
by the Corporation or the employee, or under any other health and
accident or wage continuation plan;
(c) In the event that there is such an insurance policy or plan in effect
providing for reimbursement in whole or in part, then to the extent of
the coverage under such policy or plan, the Corporation will be relieved
of any and all liability hereunder.
SECTION 4. Submission of Proof
(a) Any employee applying for reimbursement under this plan will submit to
the Corporation, at least quarterly, all bills for medical care,
including premium notices for accident or health insurance, for
verification by the Corporation prior to payment.
(b) Failure to comply herewith, may at the discretion of the Board of
Directors, terminate such employee's right to said reimbursement.
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SECTION 5. Discontinuation
This plan will be subject to termination at any time by vote
of the Board of Directors; provided, however, that medical care
expenses incurred prior to such termination will be reimbursed or
paid in accordance with the terms of this plan.
SECTION 6. Determination
(a) The Chief Executive Officer will determine all questions arising from the
administration and interpretation of the Plan except where reimbursement
is claimed by the Chief Executive Officer.
(b) Where reimbursement is claimed by the Chief Executive Officer
determination will be made by the Board of Directors.
* *
*
The Undersigned, being the duly elected and acting Secretary of the
Corporation, hereby certifies that the foregoing constitute the validly adopted
and true Bylaws of the Corporation, as of the date set forth below.
Dated: December 8th 1998
/s/ G. Richard Chamberlin
-------------------------------
G. Richard Chamberlin
Secretary
(Corporate Seal)
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EXHIBIT 10.22
RECENT STOCK PURCHASE AGREEMENTS
Equity Growth Systems, inc.
Accredited Investor Subscription Agreement
THE SECURITIES REFERRED TO IN THIS OFFERING MEMORANDUM WILL BE SOLD TO, AND
ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE
FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT
IN THE STATE OF FLORIDA, IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE
PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE
ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT
PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER.
These Securities are offered in reliance on the exemption from registration
requirements imposed by the Securities Act of 1933, as amended, provided by
Section 4(6) thereof and on the exemption from the registration requirements
imposed by the State of Florida under Section 517.061(11), Florida Statutes
TERMS:
1. General.
(a) (1) This Subscription is part of a limited subscription by accredited
investors, as that term is defined in Rule 501 of Securities and Exchange
Commission Regulation D promulgated under authority of the Securities Act
of 1933, as amended ("Rule 501", "Regulation D" and the "Act",
respectively) for the acquisition of an aggregate of up to 1,500,000 shares
of the common stock of Equity Growth Systems, inc., a publicly held
Delaware corporation with a class of securities currently registered under
Section 12 of the Securities Exchange Act of 1934, as amended, (the
"Company" and the "Stock").
(2) The hereinafter described subscriber is an "accredited investor" as
that term is defined in Rule 501 of Regulation D.
(3) The issuance of the Stock is to be effected pursuant to the exemptive
provisions of Section 4(6) of the Act, providing for the issuance of
securities solely to accredited investors.
(4) The Company will, immediately following closing on the first
subscription accepted in this limited offering, file a Form D with the
Securities and Exchange Commission, as required to permit the
contemplated subscription.
54
<PAGE>
(b) Current information concerning the Company is contained on the SEC's EDGAR
web site on the Internet, including certified financial statements for the
period ended December 31, 1997, and unaudited quarterly updates thereto for
the period ended June 30, 1999, all of which is hereby incorporated by
reference herein (the "34 Act Reports").
(c) (1) Annexed hereto and made a part hereof as exhibit 1(c) is a schedule
describing the contemplated use of the proceeds of this limited
offering.
(2) The Company may elect to borrow funds required for the purposes
identified in exhibit 1(c) and to repay such loans using proceeds of
this limited offering.
(3) The Company's management is of the opinion that the net proceeds from
the offering ($30,000) would be sufficient to permit the Company to
operate until it acquires one or more compatible businesses and in
conjunction therewith, obtains additional capital. However, unforeseen
circumstances, including favorable opportunities, may develop which may
render the assessment of the Company's management inaccurate.
(4) The Company may temporarily invest any unexpended balances on hand in
government securities, certificates of deposit, money market funds. The
Company intends to make such investments only temporarily in order to
avoid any requirement to register the Company under the Investment
Company Act of 1940. Any income realized from investment of the net
proceeds of this limited offering will be general revenues of the
Company.
(5) The Company shall provide Accredited Subscribers with reports on the
actual use of proceeds on a quarterly basis until all proceeds have
been expended.
THE ESTIMATES IN EXHIBIT 1(C) ARE SUBJECT TO MATERIAL CHANGE IF, IN THE
OPINION OF THE COMPANY'S BOARD OF DIRECTORS, THE ACTUAL OPERA- TIONS OF THE
COMPANY JUSTIFY DIFFERENT EXPENDITURES OR A DIFFERENT AL- LOCATION OF
PRIORITIES.
(d) The Company will not pay any commissions or grant of any discounts in
conjunction therewith.
2. Subscription Consideration.
(a) The undersigned Accredited Subscriber hereby subscribes for 435,000 shares
of the Stock in consideration for $8,700 in the aggregate and will tender
payment in full therefor immediately following receipt of an executed copy
of this Agreement evincing acceptance of this subscription by the Company.
(b) Within 72 hours after receipt of payment for the Stock, the Company's
transfer agent will issue and deliver to the Accredited Subscriber, at the
Company's expense, a certificate for the Stock.
55
<PAGE>
3. Accredited Subscriber's Representations, Warranties and Covenants.
As a material inducement to the Company's consideration of the Accredited
Subscriber's offer to acquire Stock(s), the Accredited Subscriber represents,
warrants and covenants to the Company, as follows:
(a) The Accredited Subscriber is familiar with the requirements for treatment as
an "accredited investor" under Regulation D and Section 4(6) of the
Securities Act of 1933, as amended (the "Act") and meets one or more of the
definitions of an "accredited investor" contained in Rule 501 promulgated
under authority of the Act and has, alone or together with his Offeree's
Representative, if any, (as hereinafter defined) such knowledge and
experience in financial matters that the Accredited Subscriber is capable of
evaluating the relative risks and merits of this subscription;
(b) The Accredited Subscriber acknowledges that he, she or it has, based on his,
her or its own substantial experience, the ability to evaluate the
transactions contemplated hereby and the merits and risks thereof in general
and the suitability of the transaction for the Accredited Subscriber in
particular;
(c) (1) The Accredited Subscriber understands that the offer and issuance
of the Stock is being made without the use of a Private Placement
Memorandum, the Accredited Subscriber having become totally familiar
with the business and condition of the Company and having been provided
with access to all corporate records and personnel, and has availed
himself of such access and has received all exhibits described in this
Agreement.
(2) The Accredited Subscriber is fully aware of the material risks
associated with becoming an investor in the Company and confirms that
he, she or it was previously informed that all documents, records and
books pertaining to this investment have been available from the
Company and that all documents, records and books pertaining to this
transaction requested by the Accredited Subscriber have been made
available to the Accredited Subscriber;
(d) The Accredited Subscriber has had an opportunity to ask questions of and
receive answers from the officers of the Company concerning:
(1) the terms and conditions of this Subscription Agreement and the
transactions contemplated hereby, as well as the affairs of the Company
and related matters; and
(2) any arrangements or proposed arrangements of the Company relating to
any of its Stockholders that are not identical to those relating to all
of its Stockholders;
(e) The Accredited Subscriber has had an opportunity to obtain additional
information necessary to verify the accuracy of the information referred to
in subparagraphs (a), (b), (c) and (d) hereof, as well as to supplement the
information in the 34 Act Reports, as called for by Florida Rule 3E-500.005.
(f) The Accredited Subscriber has provided the Company with the personal and
business financial information concerning himself which he, she or it agrees
demonstrates the Accredited Subscriber's general ability to bear the risks
of the subject transaction and suitability as a subscriber in a private
offering and the Accredited Subscriber hereby affirms the correctness of
such information;
56
<PAGE>
(g) The Accredited Subscriber acknowledges and is aware that:
(1) The Stock is a speculative investment with no assurance that the
Company will be successful, or if successful, that such success will
result in payments to the Accredited Subscriber or to realization of
capital gains by the Accredited Subscriber on disposition of the Stock;
and
(2) The Stock being subscribed for has not been registered under the
Securities Act or under any state securities laws, accordingly the
Accredited Subscriber may have to hold such Stock and may not be able
to liquidate, pledge, hypothecate, assign or transfer such Stock;
(h) The Accredited Subscriber has obtained its own oral opinion from his, her or
its legal counsel to the effect that after an examination of the
transactions associated herewith and the applicable law, no action needs to
be taken by either the Accredited Subscriber or the Company in conjunction
with this Subscription and the issuance of the Stock in conjunction
therewith, other than such actions as have already been taken, in order to
comply with the securities law requirements of the Accredited Subscriber's
state of domicile; and
(i) (1) The Stock will bear a restrictive legend and the Company's transfer
agent will be instructed not to transfer the subject Stock unless it has been
registered pursuant to Section 5 of the Securities Act of 1933, as amended, or
an opinion of counsel satisfactory to legal counsel to the Company and the
Company's president has been provided, to the effect that the proposed
transaction is exempt from registration requirements imposed by the Securities
Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and
any applicable state or foreign laws.
(2) The legend shall read as follows: "The securities represented by this
certificate were issued without registration under the Securities Act of 1933,
as amended, or comparable state laws in reliance on the provisions of Section
4(6) of such act, and comparable state law provisions. These securities may not
be transferred pledged or hypothecated unless they are first registered under
applicable federal, state or foreign laws, or the transaction is demonstrated to
be exempt from such requirements to the Company's satisfaction."
4. Responsibility.
(a) The officers of the Company will endeavor to exercise their best judgment
in the con- duct of all matters arising under this Subscription Agreement;
provided, however, that this provision shall not enlarge, limit or
otherwise affect the liability of the Company or its officers.
(b) The Accredited Subscriber shall indemnify and hold harmless the Company;
any cor- poration or entity affiliated with the Company; the officers,
directors and employees of any of the foregoing; or any professional
adviser thereto, from and against any and all loss, damage, liability or
expense, including costs and reasonable attorney's fees at trial or on
appeal, to which said entities and persons may be subject or which said
entities and persons incur by reason of or in connection with any
misrepresentation made by the Accredited Subscriber, any breach of any of
the Accredited Subscriber's warranties or the Accredited Subscriber's
failure to fulfill any of the covenants or agreements under this
Subscription Agreement.
57
<PAGE>
5. Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements contained herein
shall survive the delivery of and the payment for the Stock being subscribed
for.
6. Notices.
Any and all notices, designations, consents, offers, acceptances or any
other com- munication provided for herein shall be given in writing by
registered or certified mail which shall be addressed in the case of the Company
to Equity Growth Systems, inc.; 3821 B Tamiami Trail, Suite 201; Port Charlotte,
Florida 33949; and, in the case of the Accredited Subscriber, to the address set
forth at the end of this Agreement, or to the address appearing on the books of
the Company or to such other address as may be designated by the Accredited
Subscriber or the Company in writing.
Accredited Subscriber Information
Please Print the following Information
Accredited Subscriber's Name:: The Yankee Companies, Inc.
Accredited Subscriber's Authorized Signatory: * Leonard Miles Tucker, President
Accredited Subscriber's Address: 902 Clint Moore Road, Suite 136
Boca Raton, Florida 33418
Accredited Subscriber's Telephone Number: (561) 998-2025
Accredited Subscriber's Tax ** Number: 59-3532520
- ------
* If applicable (e.g., if the Subscriber is a corporation, partnership, joint
venture, etc.)
** FEIN or Social Security number
7. Miscellaneous.
(a) This Agreement shall be governed by, construed and enforced in accordance
within the laws of the State of Delaware, both substantive, procedural
(except for choice of law provisions) and remedial.
(b) The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
(c) This Agreement shall be binding on and shall inure to the benefit of the
Parties and their respective successors, assigns, executors and
administrators, but this Agreement and the respective rights and obligations
of the Parties hereunder shall not be assumable by any Party hereto without
the prior written consent of the other.
(d) This Agreement represents the entire understanding and agreement between the
Parties hereto with respect to the subject matter hereof; and cannot be
amended, supplemented or modified except by an instrument in writing signed
by the Party against whom enforcement of any such amendment, supplement or
modification is sought.
(e) The failure or any provision of this Agreement shall in no manner affect the
right to enforce the other provisions of same, and the waiver of any Party
of any breach of any provision of this Agreement shall not be construed to
be a waiver by such Party of any succeeding breach of such provision or
waiver by such Party of any breach of any provision.
58
<PAGE>
* * *
IN WITNESS WHEREOF, I have executed this Agreement on behalf of the Ac-
credited Subscriber this ___ day of November, 1998.
ACCREDITED SUBSCRIBER
The Yankee Companies, Inc.
(Print or Type Name)
By: _________________________________
Leonard Miles Tucker, President
SUBSCRIPTION ACCEPTED:
Equity Growth Systems, inc.
Dated: __________________ ___, 1998.
By: _______________________
Edward Granville-Smith
President & Director
Attest: _______________________
Charles J. Scimeca
Director
59
<PAGE>
Exhibit Index
Exhibit Description
1(c) Use of Proceeds
3(f) Investment Letter
60
<PAGE>
FORM OF INVESTMENT LETTER
Date:
Edward Granville-Smith
President
Equity Growth Systems, inc.
3821 Tamiami Trail, Suite 201
Port Charlotte, Florida 33952
Re.: Stock Subscription
Dear Sir:
I hereby certify and warrant that I am acquiring 435,000 shares of Equity
Growth Systems, inc.'s (the "Company") unregistered common stock (the "Stock").
I hereby certify under penalty of perjury that upon receipt of the Stock, I will
be accepting it for my own account for investment purposes without any intention
of selling or distributing all or any part thereof. I represent and warrant that
I qualify as an accredited investor (as that term is defined in rule 501 of
Regulation D promulgated under authority of the Securities Act of 1933, as
amended) or have been specifically excused from such requirement, in writing by
the Company's management, or, in the alternative, that I am sophisticated in
financial affairs, or have relied on the advice of someone sophisticated in
financial affairs, and I able to bear the economic risks of this investment and
I do not have any reason to anticipate any change in my circumstances, financial
or otherwise, nor any other particular occasion or event which should cause me
to sell or distribute, or necessitate or require my sale or distribution of the
Stock.
No one other than me has any beneficial interest in the Stock.
I further certify that I have consulted with my own legal counsel who, after
having been apprized by me of all the material facts surrounding this
transaction, opined to me, for the benefit of the Company, that this transaction
was being effected in full compliance with the applicable securities laws of my
state of domicile.
I agree that I will in no event sell or distribute any of the Stock unless
in the opinion of your counsel (based on an opinion of my legal counsel) the
Stock may be legally sold without registration under the Securities Act of 1933,
as amended, and/or registration and/or other qualification under then-applicable
State and/or Federal statutes, or the Stock shall have been so registered and/or
qualified and an appropriate prospectus, shall then be in effect.
I am fully aware that the Stock is being offered and sold by the corporation
to me in reliance on the exemption provided by Sections 3(b), 4(2) or 4(6) or
the Securities Act of 1933, as amended, which exempts the sale of securities by
an issuer where no public offering is involved, and on my certifications and
warranties.
61
<PAGE>
In connection with the foregoing, I consent to your legending my
certificates represent- ing the Stock to indicate my investment intent and the
restriction on transfer contemplated hereby and to your placing a "stop
transfer" order against the Stock in the Company's stock transfer books until
the conditions set forth herein shall have been met.
I acknowledge by my execution hereof that I have had access to your books,
records and properties, and have inspected the same to my full and complete
satisfaction prior to my acquisition of the Stock. I represent and warrant that
because of my experience in business and investments, I am competent to make an
informed investment decision with respect thereto on the basis of my inspection
of your records and my questioning of your officers.
I further certify that my domicile is located at the address listed in this
letter.
Very truly yours,
The Yankee Companies, Inc.
--------------------
Leonard Miles Tucker, President
62
<PAGE>
Equity Growth Systems, inc.
Accredited Investor Subscription Agreement
THE SECURITIES REFERRED TO IN THIS OFFERING MEMORANDUM WILL BE SOLD TO, AND
ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE
FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT
IN THE STATE OF FLORIDA, IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE
PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE
ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT
PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER.
These Securities are offered in reliance on the exemption from registration
re- quirements imposed by the Securities Act of 1933, as amended, provided by
Section 4(6) thereof and on the exemption from the registration requirements
imposed by the State of Florida under Section 517.061(11), Florida Statutes
TERMS:
1. General.
(a) (1) This Subscription is part of a limited subscription by accredited
investors, as that term is defined in Rule 501 of Securities and Exchange
Commission Regulation D promulgated under authority of the Securities Act of
1933, as amended ("Rule 501", "Regulation D" and the "Act", respectively) for
the acquisition of an aggregate of up to 1,750,000 shares of the common stock of
Equity Growth Systems, inc., a publicly held Delaware corporation with a class
of securities currently registered under Section 12 of the Securities Exchange
Act of 1934, as amended, (the "Company" and the "Stock").
(2) The hereinafter described subscriber is an "accredited investor" as
that term is defined in Rule 501 of Regulation D.
(3) The issuance of the Stock is to be effected pursuant to the exemptive
provisions of Section 4(6) of the Act, providing for the issuance of
securities solely to accredited investors.
(4) The Company will, immediately following closing on the first
subscription accepted in this limited offering, file a Form D with the
Securities and Exchange Commission, as required to permit the
contemplated subscription.
63
<PAGE>
(b) Current information concerning the Company is contained on the SEC's EDGAR
web site on the Internet, including certified financial statements for the
period ended December 31, 1997, and unaudited quarterly updates thereto for
the period ended June 30, 1998, all of which is hereby incorporated by
reference herein (the "34 Act Reports").
(c) (1) Annexed hereto and made a part hereof as exhibit 1(c) is a schedule
describing the contemplated use of the proceeds of this limited
offering.
(2) The Company may elect to borrow funds required for the purposes
identified in exhibit 1(c) and to repay such loans using proceeds of
this limited offering.
(3) The Company's management is of the opinion that the net proceeds from
the offering ($35,000) would be sufficient to permit the Company to
operate until it acquires one or more compatible businesses and in
conjunction therewith, obtains additional capital. However, unforeseen
circumstances, including favorable opportunities, may develop which may
render the assessment of the Company's management inaccurate.
(4) The Company may temporarily invest any unexpended balances on hand in
government securities, certificates of deposit, money market funds. The
Company intends to make such investments only temporarily in order to
avoid any requirement to register the Company under the Investment
Company Act of 1940. Any income realized from investment of the net
proceeds of this limited offering will be general revenues of the
Company.
(5) The Company shall provide Accredited Subscribers with reports on the
actual use of proceeds on a quarterly basis until all proceeds have
been expended.
THE ESTIMATES IN EXHIBIT 1(C) ARE SUBJECT TO MATERIAL CHANGE IF, IN THE
OPINION OF THE COMPANY'S BOARD OF DIRECTORS, THE ACTUAL OPERA- TIONS OF THE
COMPANY JUSTIFY DIFFERENT EXPENDITURES OR A DIFFERENT AL- LOCATION OF
PRIORITIES.
(d) The Company will not pay any commissions or grant of any discounts in
conjunction therewith.
2. Subscription Consideration.
(a) The undersigned Accredited Subscriber hereby subscribes for 62,500 shares of
the Stock in consideration for $1,250 in the aggregate and will tender
payment in full therefor immediately following receipt of an executed copy
of this Agreement evincing acceptance of this subscription by the Company.
(b) Within 72 hours after receipt of payment for the Stock, the Company's
transfer agent will issue and deliver to the Accredited Subscriber, at the
Company's expense, a certificate for the Stock.
64
<PAGE>
3. Accredited Subscriber's Representations, Warranties and Covenants.
As a material inducement to the Company's consideration of the Accredited
Subscriber's offer to acquire Stock(s), the Accredited Subscriber represents,
warrants and covenants to the Company, as follows:
(a) The Accredited Subscriber is familiar with the requirements for treatment as
an "accredited investor" under Regulation D and Section 4(6) of the
Securities Act of 1933, as amended (the "Act") and meets one or more of the
definitions of an "accredited investor" contained in Rule 501 promulgated
under authority of the Act and has, alone or together with his Offeree's
Representative, if any, (as hereinafter defined) such knowledge and
experience in financial matters that the Accredited Subscriber is capable of
evaluating the relative risks and merits of this subscription;
(b) The Accredited Subscriber acknowledges that he, she or it has, based on his,
her or its own substantial experience, the ability to evaluate the
transactions contemplated hereby and the merits and risks thereof in general
and the suitability of the transaction for the Accredited Subscriber in
particular;
(c) (1) The Accredited Subscriber understands that the offer and issuance
of the Stock is being made without the use of a Private Placement
Memorandum, the Accredited Subscriber having become totally familiar
with the business and condition of the Company and having been provided
with access to all corporate records and personnel, and has availed
himself of such access and has received all exhibits described in this
Agreement.
(2) The Accredited Subscriber is fully aware of the material risks
associated with becoming an investor in the Company and confirms that
he, she or it was previously informed that all documents, records and
books pertaining to this investment have been available from the
Company and that all documents, records and books pertaining to this
transaction requested by the Accredited Subscriber have been made
available to the Accredited Subscriber;
(d) The Accredited Subscriber has had an opportunity to ask questions of and
receive answers from the officers of the Company concerning:
(1) the terms and conditions of this Subscription Agreement and the
transactions contemplated hereby, as well as the affairs of the Company
and related matters; and
(2) any arrangements or proposed arrangements of the Company relating to
any of its Stockholders that are not identical to those relating to all
of its Stockholders;
(e) The Accredited Subscriber has had an opportunity to obtain additional
information necessary to verify the accuracy of the information referred to
in subparagraphs (a), (b), (c) and (d) hereof, as well as to supplement the
information in the 34 Act Reports, as called for by Florida Rule 3E-500.005.
(f) The Accredited Subscriber has provided the Company with the personal and
business financial information concerning himself which he, she or it agrees
demonstrates the Accredited Subscriber's general ability to bear the risks
of the subject transaction and suitability as a subscriber in a private
offering and the Accredited Subscriber hereby affirms the correctness of
such information;
65
<PAGE>
(g) The Accredited Subscriber acknowledges and is aware that:
(1) The Stock is a speculative investment with no assurance that the
Company will be successful, or if successful, that such success will
result in payments to the Accredited Subscriber or to realization of
capital gains by the Accredited Subscriber on disposition of the Stock;
and
(2) The Stock being subscribed for has not been registered under the
Securities Act or under any state securities laws, accordingly the
Accredited Subscriber may have to hold such Stock and may not be able
to liquidate, pledge, hypothecate, assign or transfer such Stock;
(h) The Accredited Subscriber has obtained its own oral opinion from his, her or
its legal counsel to the effect that after an examination of the
transactions associated herewith and the applicable law, no action needs to
be taken by either the Accredited Subscriber or the Company in conjunction
with this Subscription and the issuance of the Stock in conjunction
therewith, other than such actions as have already been taken, in order to
comply with the securities law requirements of the Accredited Subscriber's
state of domicile; and
(i) (1) The Stock will bear a restrictive legend and the Company's
transfer agent will be instructed not to transfer the subject Stock
unless it has been registered pursuant to Section 5 of the Securities
Act of 1933, as amended, or an opinion of counsel satisfactory to
legal counsel to the Company and the Company's president has been
provided, to the effect that the proposed transaction is exempt from
registration requirements imposed by the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and any
applicable state or foreign laws.
(2) The legend shall read as follows: "The securities represented by this
certificate were issued without registration under the Securities Act
of 1933, as amended, or comparable state laws in reliance on the
provisions of Section 4(6) of such act, and comparable state law
provisions. These securities may not be transferred pledged or
hypothecated unless they are first registered under applicable federal,
state or foreign laws, or the transaction is demonstrated to be exempt
from such requirements to the Company's satisfaction."
4. Responsibility.
(a) The officers of the Company will endeavor to exercise their best judgment
in the con- duct of all matters arising under this Subscription Agreement;
provided, however, that this provision shall not enlarge, limit or
otherwise affect the liability of the Company or its officers.
(b) The Accredited Subscriber shall indemnify and hold harmless the Company;
any cor- poration or entity affiliated with the Company; the officers,
directors and employees of any of the foregoing; or any professional
adviser thereto, from and against any and all loss, damage, liability or
expense, including costs and reasonable attorney's fees at trial or on
appeal, to which said entities and persons may be subject or which said
entities and persons incur by reason of or in connection with any
misrepresentation made by the Accredited Subscriber, any breach of any of
the Accredited Subscriber's warranties or the Accredited Subscriber's
failure to fulfill any of the covenants or agreements under this
Subscription Agreement.
66
<PAGE>
5. Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements contained herein
shall survive the delivery of and the payment for the Stock being subscribed
for.
6. Notices.
Any and all notices, designations, consents, offers, acceptances or any
other com- munication provided for herein shall be given in writing by
registered or certified mail which shall be addressed in the case of the Company
to Equity Growth Systems, inc.; 8001 DeSoto Woods Drive; Port Charlotte, Florida
33949; and, in the case of the Accredited Subscriber, to the address set forth
at the end of this Agreement, or to the address appearing on the books of the
Company or to such other address as may be designated by the Accredited
Subscriber or the Company in writing.
Accredited Subscriber Information
Please Print the following Information
Accredited Subscriber's Name:: Penny Field
Accredited Subscriber's Authorized Signatory: * Penny Field
Accredited Subscriber's Address: 2424 Long Boat Drive;
Naples, Florida 34104
Accredited Subscriber's Telephone Number: (941) 435-0627
Accredited Subscriber's Tax ** Number: ###-##-####
- ------
* If applicable (e.g., if the Subscriber is a corporation, partnership, joint
venture, etc.)
** FEIN or Social Security number
7. Miscellaneous.
(a) This Agreement shall be governed by, construed and enforced in accordance
within the laws of the State of Delaware, both substantive, procedural
(except for choice of law provisions) and remedial.
(b) The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
(c) This Agreement shall be binding on and shall inure to the benefit of the
Parties and their respective successors, assigns, executors and
administrators, but this Agreement and the respective rights and obligations
of the Parties hereunder shall not be assumable by any Party hereto without
the prior written consent of the other.
(d) This Agreement represents the entire understanding and agreement between the
Parties hereto with respect to the subject matter hereof; and cannot be
amended, supplemented or modified except by an instrument in writing signed
by the Party against whom enforcement of any such amendment, supplement or
modification is sought.
(e) The failure or any provision of this Agreement shall in no manner affect the
right to enforce the other provisions of same, and the waiver of any Party
of any breach of any provision of this Agreement shall not be construed to
be a waiver by such Party of any succeeding breach of such provision or
waiver by such Party of any breach of any provision.
67
<PAGE>
* * *
IN WITNESS WHEREOF, I have executed this Agreement on behalf of the Ac-
credited Subscriber this ___ day of November, 1998.
ACCREDITED SUBSCRIBER
--------------------
Penny Field
SUBSCRIPTION ACCEPTED:
Equity Growth Systems, inc.
Dated: November ___, 1998.
By: _______________________
Charles J. Scimeca
President & Director
68
<PAGE>
Exhibit Index
Exhibit Description
1(c) Use of Proceeds
3(f) Investment Letter
69
<PAGE>
FORM OF INVESTMENT LETTER
Date:
Charles J. Scimeca
President
Equity Growth Systems, inc.
8001 DeSoto Woods Drive
Sarasota, Florida 34243
Re.: Stock Subscription
Dear Sir:
I hereby certify and warrant that I am acquiring 62,500 shares of Equity
Growth Systems, inc.'s (the "Company") unregistered common stock (the "Stock").
I hereby certify under penalty of perjury that upon receipt of the Stock, I will
be accepting it for my own account for investment purposes without any intention
of selling or distributing all or any part thereof. I represent and warrant that
I qualify as an accredited investor (as that term is defined in rule 501 of
Regulation D promulgated under authority of the Securities Act of 1933, as
amended) or have been specifically excused from such requirement, in writing by
the Company's management, or, in the alternative, that I am sophisticated in
financial affairs, or have relied on the advice of someone sophisticated in
financial affairs, and I able to bear the economic risks of this investment and
I do not have any reason to anticipate any change in my circumstances, financial
or otherwise, nor any other particular occasion or event which should cause me
to sell or distribute, or necessitate or require my sale or distribution of the
Stock.
No one other than me has any beneficial interest in the Stock.
I further certify that I have consulted with my own legal counsel who, after
having been apprized by me of all the material facts surrounding this
transaction, opined to me, for the benefit of the Company, that this transaction
was being effected in full compliance with the applicable securities laws of my
state of domicile.
I agree that I will in no event sell or distribute any of the Stock unless
in the opinion of your counsel (based on an opinion of my legal counsel) the
Stock may be legally sold without registration under the Securities Act of 1933,
as amended, and/or registration and/or other qualification under then-applicable
State and/or Federal statutes, or the Stock shall have been so registered and/or
qualified and an appropriate prospectus, shall then be in effect.
I am fully aware that the Stock is being offered and sold by the corporation
to me in reliance on the exemption provided by Sections 3(b), 4(2) or 4(6) or
the Securities Act of 1933, as amended, which exempts the sale of securities by
an issuer where no public offering is involved, and on my certifications and
warranties.
70
<PAGE>
In connection with the foregoing, I consent to your legending my
certificates represent- ing the Stock to indicate my investment intent and the
restriction on transfer contemplated hereby and to your placing a "stop
transfer" order against the Stock in the Company's stock transfer books until
the conditions set forth herein shall have been met.
I acknowledge by my execution hereof that I have had access to your books,
records and properties, and have inspected the same to my full and complete
satisfaction prior to my acquisition of the Stock. I represent and warrant that
because of my experience in business and investments, I am competent to make an
informed investment decision with respect thereto on the basis of my inspection
of your records and my questioning of your officers.
I further certify that my domicile is located at the address listed in this
letter.
Very truly yours,
--------------------
Penny Field
71
<PAGE>
Equity Growth Systems, inc.
Accredited Investor Subscription Agreement
THE SECURITIES REFERRED TO IN THIS OFFERING MEMORANDUM WILL BE SOLD TO, AND
ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE
FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT
IN THE STATE OF FLORIDA, IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE
PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE
ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT
PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER.
These Securities are offered in reliance on the exemption from registration
re- quirements imposed by the Securities Act of 1933, as amended, provided by
Section 4(6) thereof and on the exemption from the registration requirements
imposed by the State of Florida under Section 517.061(11), Florida Statutes
TERMS:
1. General.
(a) (1) This Subscription is part of a limited subscription by accredited
investors, as that term is defined in Rule 501 of Securities and
Exchange Commission Regulation D promulgated under authority of the
Securities Act of 1933, as amended ("Rule 501", "Regulation D" and the
"Act", respectively) for the acquisition of an aggregate of up to
1,750,000 shares of the common stock of Equity Growth Systems, inc., a
publicly held Delaware corporation with a class of securities
currently registered under Section 12 of the Securities Exchange Act
of 1934, as amended, (the "Company" and the "Stock").
(2) The hereinafter described subscriber is an "accredited investor" as
that term is defined in Rule 501 of Regulation D.
(3) The issuance of the Stock is to be effected pursuant to the exemptive
provisions of Section 4(6) of the Act, providing for the issuance of
securities solely to accredited investors.
(4) The Company will, immediately following closing on the first
subscription accepted in this limited offering, file a Form D with the
Securities and Exchange Commission, as required to permit the
contemplated subscription.
72
<PAGE>
(b) Current information concerning the Company is contained on the SEC's EDGAR
web site on the Internet, including certified financial statements for the
period ended December 31, 1997, and unaudited quarterly updates thereto for
the period ended June 30, 1998, all of which is hereby incorporated by
reference herein (the "34 Act Reports").
(c) ( 1) Annexed hereto and made a part hereof as exhibit 1(c) is a schedule
describing the contemplated use of the proceeds of this limited
offering.
(2) The Company may elect to borrow funds required for the purposes
identified in exhibit 1(c) and to repay such loans using proceeds of
this limited offering.
(3) The Company's management is of the opinion that the net proceeds from
the offering ($35,000) would be sufficient to permit the Company to
operate until it acquires one or more compatible businesses and in
conjunction therewith, obtains additional capital. However, unforeseen
circumstances, including favorable opportunities, may develop which may
render the assessment of the Company's management inaccurate.
(4) The Company may temporarily invest any unexpended balances on hand in
government securities, certificates of deposit, money market funds. The
Company intends to make such investments only temporarily in order to
avoid any requirement to register the Company under the Investment
Company Act of 1940. Any income realized from investment of the net
proceeds of this limited offering will be general revenues of the
Company.
(5) The Company shall provide Accredited Subscribers with reports on the
actual use of proceeds on a quarterly basis until all proceeds have
been expended.
THE ESTIMATES IN EXHIBIT 1(C) ARE SUBJECT TO MATERIAL CHANGE IF, IN THE
OPINION OF THE COMPANY'S BOARD OF DIRECTORS, THE ACTUAL OPERA- TIONS OF THE
COMPANY JUSTIFY DIFFERENT EXPENDITURES OR A DIFFERENT AL- LOCATION OF
PRIORITIES.
(d) The Company will not pay any commissions or grant of any discounts in
conjunction therewith.
2. Subscription Consideration.
(a) The undersigned Accredited Subscriber hereby subscribes for 62,500 shares of
the Stock in consideration for $1,250 in the aggregate and will tender
payment in full therefor immediately following receipt of an executed copy
of this Agreement evincing acceptance of this subscription by the Company.
(b) Within 72 hours after receipt of payment for the Stock, the Company's
transfer agent will issue and deliver to the Accredited Subscriber, at the
Company's expense, a certificate for the Stock.
73
<PAGE>
3. Accredited Subscriber's Representations, Warranties and Covenants.
As a material inducement to the Company's consideration of the Accredited
Subscriber's offer to acquire Stock(s), the Accredited Subscriber represents,
warrants and covenants to the Company, as follows:
(a) The Accredited Subscriber is familiar with the requirements for treatment as
an "accredited investor" under Regulation D and Section 4(6) of the
Securities Act of 1933, as amended (the "Act") and meets one or more of the
definitions of an "accredited investor" contained in Rule 501 promulgated
under authority of the Act and has, alone or together with his Offeree's
Representative, if any, (as hereinafter defined) such knowledge and
experience in financial matters that the Accredited Subscriber is capable of
evaluating the relative risks and merits of this subscription;
(b) The Accredited Subscriber acknowledges that he, she or it has, based on his,
her or its own substantial experience, the ability to evaluate the
transactions contemplated hereby and the merits and risks thereof in general
and the suitability of the transaction for the Accredited Subscriber in
particular;
(c) (1) The Accredited Subscriber understands that the offer and issuance
of the Stock is being made without the use of a Private Placement
Memorandum, the Accredited Subscriber having become totally familiar
with the business and condition of the Company and having been provided
with access to all corporate records and personnel, and has availed
himself of such access and has received all exhibits described in this
Agreement.
(2) The Accredited Subscriber is fully aware of the material risks
associated with becoming an investor in the Company and confirms that
he, she or it was previously informed that all documents, records and
books pertaining to this investment have been available from the
Company and that all documents, records and books pertaining to this
transaction requested by the Accredited Subscriber have been made
available to the Accredited Subscriber;
(d) The Accredited Subscriber has had an opportunity to ask questions of and
receive answers from the officers of the Company concerning:
(1) the terms and conditions of this Subscription Agreement and the
transactions contemplated hereby, as well as the affairs of the Company
and related matters; and
(2) any arrangements or proposed arrangements of the Company relating to
any of its Stockholders that are not identical to those relating to all
of its Stockholders;
(e) The Accredited Subscriber has had an opportunity to obtain additional
information necessary to verify the accuracy of the information referred to
in subparagraphs (a), (b), (c) and (d) hereof, as well as to supplement the
information in the 34 Act Reports, as called for by Florida Rule 3E-500.005.
(f) The Accredited Subscriber has provided the Company with the personal and
business financial information concerning himself which he, she or it agrees
demonstrates the Accredited Subscriber's general ability to bear the risks
of the subject transaction and suitability as a subscriber in a private
offering and the Accredited Subscriber hereby affirms the correctness of
such information;
74
<PAGE>
(g) The Accredited Subscriber acknowledges and is aware that:
(1) The Stock is a speculative investment with no assurance that the
Company will be successful, or if successful, that such success will
result in payments to the Accredited Subscriber or to realization of
capital gains by the Accredited Subscriber on disposition of the Stock;
and
(2) The Stock being subscribed for has not been registered under the
Securities Act or under any state securities laws, accordingly the
Accredited Subscriber may have to hold such Stock and may not be able
to liquidate, pledge, hypothecate, assign or transfer such Stock;
(h) The Accredited Subscriber has obtained its own oral opinion from his, her or
its legal counsel to the effect that after an examination of the
transactions associated herewith and the applicable law, no action needs to
be taken by either the Accredited Subscriber or the Company in conjunction
with this Subscription and the issuance of the Stock in conjunction
therewith, other than such actions as have already been taken, in order to
comply with the securities law requirements of the Accredited Subscriber's
state of domicile; and
(i) (1) The Stock will bear a restrictive legend and the Company's
transfer agent will be instructed not to transfer the subject Stock
unless it has been registered pursuant to Section 5 of the Securities
Act of 1933, as amended, or an opinion of counsel satisfactory to
legal counsel to the Company and the Company's president has been
provided, to the effect that the proposed transaction is exempt from
registration requirements imposed by the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and any
applicable state or foreign laws.
(2) The legend shall read as follows: "The securities represented by this
certificate were issued without registration under the Securities Act
of 1933, as amended, or comparable state laws in reliance on the
provisions of Section 4(6) of such act, and comparable state law
provisions. These securities may not be transferred pledged or
hypothecated unless they are first registered under applicable federal,
state or foreign laws, or the transaction is demonstrated to be exempt
from such requirements to the Company's satisfaction."
4. Responsibility.
(a) The officers of the Company will endeavor to exercise their best judgment
in the con- duct of all matters arising under this Subscription Agreement;
provided, however, that this provision shall not enlarge, limit or
otherwise affect the liability of the Company or its officers.
(b) The Accredited Subscriber shall indemnify and hold harmless the Company;
any cor- poration or entity affiliated with the Company; the officers,
directors and employees of any of the foregoing; or any professional
adviser thereto, from and against any and all loss, damage, liability or
expense, including costs and reasonable attorney's fees at trial or on
appeal, to which said entities and persons may be subject or which said
entities and persons incur by reason of or in connection with any
misrepresentation made by the Accredited Subscriber, any breach of any of
the Accredited Subscriber's warranties or the Accredited Subscriber's
failure to fulfill any of the covenants or agreements under this
Subscription Agreement.
75
<PAGE>
5. Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements contained herein
shall sur- vive the delivery of and the payment for the Stock being subscribed
for.
6. Notices.
Any and all notices, designations, consents, offers, acceptances or any
other com- munication provided for herein shall be given in writing by
registered or certified mail which shall be addressed in the case of the Company
to Equity Growth Systems, inc.; 8001 DeSoto Woods Drive; Port Charlotte, Florida
33949; and, in the case of the Accredited Subscriber, to the address set forth
at the end of this Agreement, or to the address appearing on the books of the
Company or to such other address as may be designated by the Accredited
Subscriber or the Company in writing.
Accredited Subscriber Information
Please Print the following Information
Accredited Subscriber's Name:: Anthony Q. Joffe .
Accredited Subscriber's Authorized Signatory: * Anthony Q. Joffe
Accredited Subscriber's Address: 101 Southwest 11th Avenue;
Boca Raton, Florida 33486
Accredited Subscriber's Telephone Number: (561) 392-6010
Accredited Subscriber's Tax ** Number: ###-##-####
- ------
* If applicable (e.g., if the Subscriber is a corporation, partnership, joint
venture, etc.)
** FEIN or Social Security number
7. Miscellaneous.
(a) This Agreement shall be governed by, construed and enforced in accordance
within the laws of the State of Delaware, both substantive, procedural
(except for choice of law provisions) and remedial.
(b) The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
(c) This Agreement shall be binding on and shall inure to the benefit of the
Parties and their respective successors, assigns, executors and
administrators, but this Agreement and the respective rights and obligations
of the Parties hereunder shall not be assumable by any Party hereto without
the prior written consent of the other.
(d) This Agreement represents the entire understanding and agreement between the
Parties hereto with respect to the subject matter hereof; and cannot be
amended, supplemented or modified except by an instrument in writing signed
by the Party against whom enforcement of any such amendment, supplement or
modification is sought.
(e) The failure or any provision of this Agreement shall in no manner affect the
right to enforce the other provisions of same, and the waiver of any Party
of any breach of any provision of this Agreement shall not be construed to
be a waiver by such Party of any succeeding breach of such provision or
waiver by such Party of any breach of any provision.
76
<PAGE>
* * *
IN WITNESS WHEREOF, I have executed this Agreement on behalf of the Ac-
credited Subscriber this ___ day of November, 1998.
ACCREDITED SUBSCRIBER
Anthony Q. Joffe
By: _________________________________
Anthony Q. Joffe
SUBSCRIPTION ACCEPTED:
Equity Growth Systems, inc.
Dated: November ___, 1998.
By: _______________________
Charles J. Scimeca
President & Director
77
<PAGE>
Exhibit Index
Exhibit Description
1(c) Use of Proceeds
3(f) Investment Letter
78
<PAGE>
FORM OF INVESTMENT LETTER
Date:
Charles J. Scimeca
President
Equity Growth Systems, inc.
8001 DeSoto Woods Drive
Sarasota, Florida 34243
Re.: Stock Subscription
Dear Sir:
I hereby certify and warrant that I am acquiring 62,500 shares of Equity
Growth Systems, inc.'s (the "Company") unregistered common stock (the "Stock").
I hereby certify under penalty of perjury that upon receipt of the Stock, I will
be accepting it for my own account for investment purposes without any intention
of selling or distributing all or any part thereof. I represent and warrant that
I qualify as an accredited investor (as that term is defined in rule 501 of
Regulation D promulgated under authority of the Securities Act of 1933, as
amended) or have been specifically excused from such requirement, in writing by
the Company's management, or, in the alternative, that I am sophisticated in
financial affairs, or have relied on the advice of someone sophisticated in
financial affairs, and I able to bear the economic risks of this investment and
I do not have any reason to anticipate any change in my circumstances, financial
or otherwise, nor any other particular occasion or event which should cause me
to sell or distribute, or necessitate or require my sale or distribution of the
Stock.
No one other than me has any beneficial interest in the Stock.
I further certify that I have consulted with my own legal counsel who, after
having been apprized by me of all the material facts surrounding this
transaction, opined to me, for the benefit of the Company, that this transaction
was being effected in full compliance with the applicable securities laws of my
state of domicile.
I agree that I will in no event sell or distribute any of the Stock unless
in the opinion of your counsel (based on an opinion of my legal counsel) the
Stock may be legally sold without registration under the Securities Act of 1933,
as amended, and/or registration and/or other qualification under then-applicable
State and/or Federal statutes, or the Stock shall have been so registered and/or
qualified and an appropriate prospectus, shall then be in effect.
I am fully aware that the Stock is being offered and sold by the corporation
to me in reliance on the exemption provided by Sections 3(b), 4(2) or 4(6) or
the Securities Act of 1933, as amended, which exempts the sale of securities by
an issuer where no public offering is involved, and on my certifications and
warranties.
79
<PAGE>
In connection with the foregoing, I consent to your legending my
certificates represent- ing the Stock to indicate my investment intent and the
restriction on transfer contemplated hereby and to your placing a "stop
transfer" order against the Stock in the Company's stock transfer books until
the conditions set forth herein shall have been met.
I acknowledge by my execution hereof that I have had access to your books,
records and properties, and have inspected the same to my full and complete
satisfaction prior to my acquisition of the Stock. I represent and warrant that
because of my experience in business and investments, I am competent to make an
informed investment decision with respect thereto on the basis of my inspection
of your records and my questioning of your officers.
I further certify that my domicile is located at the address listed in this
letter.
Very truly yours,
--------------------
Anthony Q. Joffe
80
<PAGE>
Equity Growth Systems, inc.
Accredited Investor Subscription Agreement
THE SECURITIES REFERRED TO IN THIS OFFERING MEMORANDUM WILL BE SOLD TO, AND
ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE
FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT
IN THE STATE OF FLORIDA, IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE
PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE
ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT
PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER. These
Securities are offered in reliance on the exemption from registration
requirements imposed by the Securities Act of 1933, as amended, provided by
Section 4(6) thereof and on the exemption from the registration requirements
imposed by the State of Florida under Section 517.061(11), Florida Statutes
TERMS:
1. General.
(a) (1) This Subscription is part of a limited subscription by accredited
investors, as that term is defined in Rule 501 of Securities and
Exchange Commission Regulation D promulgated under authority of the
Securities Act of 1933, as amended ("Rule 501", "Regulation D" and the
"Act", respectively) for the acquisition of an aggregate of up to
1,750,000 shares of the common stock of Equity Growth Systems, inc., a
publicly held Delaware corporation with a class of securities
currently registered under Section 12 of the Securities Exchange Act
of 1934, as amended, (the "Company" and the "Stock").
(2) The hereinafter described subscriber is an "accredited investor" as
that term is defined in Rule 501 of Regulation D.
(3) The issuance of the Stock is to be effected pursuant to the exemptive
provisions of Section 4(6) of the Act, providing for the issuance of
securities solely to accredited investors.
(4) The Company will, immediately following closing on the first
subscription accepted in this limited offering, file a Form D with the
Securities and Exchange Commission, as required to permit the
contemplated subscription.
(b) Current information concerning the Company is contained on the SEC's EDGAR
web site on the Internet, including certified financial statements for the
period ended December 31, 1997, and unaudited quarterly updates thereto for
the period ended June 30, 1999, all of which is hereby incorporated by
reference herein (the "34 Act Reports").
81
<PAGE>
(c) (1) Annexed hereto and made a part hereof as exhibit 1(c) is a schedule
describing the contemplated use of the proceeds of this limited
offering.
(2) The Company may elect to borrow funds required for the purposes
identified in exhibit 1(c) and to repay such loans using proceeds of
this limited offering.
(3) The Company's management is of the opinion that the net proceeds from
the offering ($35,000) would be sufficient to permit the Company to
operate until it acquires one or more compatible businesses and in
conjunction therewith, obtains additional capital. However, unforeseen
circumstances, including favorable opportunities, may develop which may
render the assessment of the Company's management inaccurate.
(4) The Company may temporarily invest any unexpended balances on hand in
government securities, certificates of deposit, money market funds. The
Company intends to make such investments only temporarily in order to
avoid any requirement to register the Company under the Investment
Company Act of 1940. Any income realized from investment of the net
proceeds of this limited offering will be general revenues of the
Company.
(5) The Company shall provide Accredited Subscribers with reports on the
actual use of proceeds on a quarterly basis until all proceeds have
been expended.
THE ESTIMATES IN EXHIBIT 1(C) ARE SUBJECT TO MATERIAL CHANGE IF, IN THE
OPINION OF THE COMPANY'S BOARD OF DIRECTORS, THE ACTUAL OPERA- TIONS OF THE
COMPANY JUSTIFY DIFFERENT EXPENDITURES OR A DIFFERENT AL- LOCATION OF
PRIORITIES.
(d) The Company will not pay any commissions or grant of any discounts in
conjunction therewith.
2. Subscription Consideration.
(a) The undersigned Accredited Subscriber hereby subscribes for 125,000 shares
of the Stock in consideration for $2,500 in the aggregate and will tender
payment in full therefor immediately following receipt of an executed copy
of this Agreement evincing acceptance of this subscription by the Company.
(b) Within 72 hours after receipt of payment for the Stock, the Company's
transfer agent will issue and deliver to the Accredited Subscriber, at the
Company's expense, a certificate for the Stock.
82
<PAGE>
3. Accredited Subscriber's Representations, Warranties and Covenants.
As a material inducement to the Company's consideration of the Accredited
Subscriber's offer to acquire Stock(s), the Accredited Subscriber represents,
warrants and covenants to the Company, as follows:
(a) The Accredited Subscriber is familiar with the requirements for treatment as
an "accredited investor" under Regulation D and Section 4(6) of the
Securities Act of 1933, as amended (the "Act") and meets one or more of the
definitions of an "accredited investor" contained in Rule 501 promulgated
under authority of the Act and has, alone or together with his Offeree's
Representative, if any, (as hereinafter defined) such knowledge and
experience in financial matters that the Accredited Subscriber is capable of
evaluating the relative risks and merits of this subscription;
(b) The Accredited Subscriber acknowledges that he, she or it has, based on his,
her or its own substantial experience, the ability to evaluate the
transactions contemplated hereby and the merits and risks thereof in general
and the suitability of the transaction for the Accredited Subscriber in
particular;
(c) (1) The Accredited Subscriber understands that the offer and issuance
of the Stock is being made without the use of a Private Placement
Memorandum, the Accredited Subscriber having become totally familiar
with the business and condition of the Company and having been provided
with access to all corporate records and personnel, and has availed
himself of such access and has received all exhibits described in this
Agreement.
(2) The Accredited Subscriber is fully aware of the material risks
associated with becoming an investor in the Company and confirms that
he, she or it was previously informed that all documents, records and
books pertaining to this investment have been available from the
Company and that all documents, records and books pertaining to this
transaction requested by the Accredited Subscriber have been made
available to the Accredited Subscriber;
(d) The Accredited Subscriber has had an opportunity to ask questions of and
receive answers from the officers of the Company concerning:
(1) the terms and conditions of this Subscription Agreement and the
transactions contemplated hereby, as well as the affairs of the Company
and related matters; and
(2) any arrangements or proposed arrangements of the Company relating to
any of its Stockholders that are not identical to those relating to all
of its Stockholders;
(e) The Accredited Subscriber has had an opportunity to obtain additional
information necessary to verify the accuracy of the information referred to
in subparagraphs (a), (b), (c) and (d) hereof, as well as to supplement the
information in the 34 Act Reports, as called for by Florida Rule 3E-500.005.
(f) The Accredited Subscriber has provided the Company with the personal and
business financial information concerning himself which he, she or it agrees
demonstrates the Accredited Subscriber's general ability to bear the risks
of the subject transaction and suitability as a subscriber in a private
offering and the Accredited Subscriber hereby affirms the correctness of
such information;
83
<PAGE>
(g) The Accredited Subscriber acknowledges and is aware that:
(1) The Stock is a speculative investment with no assurance that the
Company will be successful, or if successful, that such success will
result in payments to the Accredited Subscriber or to realization of
capital gains by the Accredited Subscriber on disposition of the Stock;
and
(2) The Stock being subscribed for has not been registered under the
Securities Act or under any state securities laws, accordingly the
Accredited Subscriber may have to hold such Stock and may not be able
to liquidate, pledge, hypothecate, assign or transfer such Stock;
(h) The Accredited Subscriber has obtained its own oral opinion from his, her or
its legal counsel to the effect that after an examination of the
transactions associated herewith and the applicable law, no action needs to
be taken by either the Accredited Subscriber or the Company in conjunction
with this Subscription and the issuance of the Stock in conjunction
therewith, other than such actions as have already been taken, in order to
comply with the securities law requirements of the Accredited Subscriber's
state of domicile; and
(i) (1) The Stock will bear a restrictive legend and the Company's
transfer agent will be instructed not to transfer the subject Stock
unless it has been registered pursuant to Section 5 of the Securities
Act of 1933, as amended, or an opinion of counsel satisfactory to
legal counsel to the Company and the Company's president has been
provided, to the effect that the proposed transaction is exempt from
registration requirements imposed by the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and any
applicable state or foreign laws.
(2) The legend shall read as follows: "The securities represented by this
certificate were issued without registration under the Securities Act
of 1933, as amended, or comparable state laws in reliance on the
provisions of Section 4(6) of such act, and comparable state law
provisions. These securities may not be transferred pledged or
hypothecated unless they are first registered under applicable federal,
state or foreign laws, or the transaction is demonstrated to be exempt
from such requirements to the Company's satisfaction."
4. Responsibility.
(a) The officers of the Company will endeavor to exercise their best
judgment in the con- duct of all matters arising under this
Subscription Agreement; provided, however, that this provision shall
not enlarge, limit or otherwise affect the liability of the Company or
its officers.
(b) The Accredited Subscriber shall indemnify and hold harmless the
Company; any cor- poration or entity affiliated with the Company; the
officers, directors and employees of any of the foregoing; or any
professional adviser thereto, from and against any and all loss,
damage, liability or expense, including costs and reasonable
attorney's fees at trial or on appeal, to which said entities and
persons may be subject or which said entities and persons incur by
reason of or in connection with any misrepresentation made by the
Accredited Subscriber, any breach of any of the Accredited
Subscriber's warranties or the Accredited Subscriber's failure to
fulfill any of the covenants or agreements under this Subscription
Agreement.
84
<PAGE>
5. Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements contained herein
shall sur- vive the delivery of and the payment for the Stock being subscribed
for.
6. Notices.
Any and all notices, designations, consents, offers, acceptances or any
other com- munication provided for herein shall be given in writing by
registered or certified mail which shall be addressed in the case of the Company
to Equity Growth Systems, inc.; 3821 B Tamiami Trail, Suite 201; Port Charlotte,
Florida 33949; and, in the case of the Accredited Subscriber, to the address set
forth at the end of this Agreement, or to the address appearing on the books of
the Company or to such other address as may be designated by the Accredited
Subscriber or the Company in writing.
Accredited Subscriber Information
Please Print the following Information
Accredited Subscriber's Name:: G. Richard Chamberlin .
Accredited Subscriber's Authorized Signatory: * G. Richard Chamberlin
Accredited Subscriber's Address: ost Office Box 3370; Belleview, Florida
34421
Accredited Subscriber's Telephone Number: (352) 245-4848
Accredited Subscriber's Tax ** Number: ###-##-####
- ------
* If applicable (e.g., if the Subscriber is a corporation, partnership, joint
venture, etc.)
** FEIN or Social Security number
7. Miscellaneous.
(a) This Agreement shall be governed by, construed and enforced in accordance
within the laws of the State of Delaware, both substantive, procedural
(except for choice of law provisions) and remedial.
(b) The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
(c) This Agreement shall be binding on and shall inure to the benefit of the
Parties and their respective successors, assigns, executors and
administrators, but this Agreement and the respective rights and obligations
of the Parties hereunder shall not be assumable by any Party hereto without
the prior written consent of the other.
(d) This Agreement represents the entire understanding and agreement between the
Parties hereto with respect to the subject matter hereof; and cannot be
amended, supplemented or modified except by an instrument in writing signed
by the Party against whom enforcement of any such amendment, supplement or
modification is sought.
(e) The failure or any provision of this Agreement shall in no manner affect the
right to enforce the other provisions of same, and the waiver of any Party
of any breach of any provision of this Agreement shall not be construed to
be a waiver by such Party of any succeeding breach of such provision or
waiver by such Party of any breach of any provision.
85
<PAGE>
* * *
IN WITNESS WHEREOF, I have executed this Agreement on behalf of the Ac-
credited Subscriber this ___ day of November, 1998.
ACCREDITED SUBSCRIBER
G. Richard Chamberlin
By: _________________________________
G. Richard Chamberlin
SUBSCRIPTION ACCEPTED:
Equity Growth Systems, inc.
Dated: November ___, 1998.
By: _______________________
Charles J. Scimeca
President & Director
86
<PAGE>
Exhibit Index
Exhibit Description
1(c) Use of Proceeds
3(f) Investment Letter
87
<PAGE>
FORM OF INVESTMENT LETTER
Date:
Charles J. Scimeca
President
Equity Growth Systems, inc.
8001 DeSoto Woods Drive
Sarasota, Florida 34243
Re.: Stock Subscription
Dear Sir:
I hereby certify and warrant that I am acquiring 125,000 shares of Equity
Growth Systems, inc.'s (the "Company") unregistered common stock (the "Stock").
I hereby certify under penalty of perjury that upon receipt of the Stock, I will
be accepting it for my own account for investment purposes without any intention
of selling or distributing all or any part thereof. I represent and warrant that
I qualify as an accredited investor (as that term is defined in rule 501 of
Regulation D promulgated under authority of the Securities Act of 1933, as
amended) or have been specifically excused from such requirement, in writing by
the Company's management, or, in the alternative, that I am sophisticated in
financial affairs, or have relied on the advice of someone sophisticated in
financial affairs, and I able to bear the economic risks of this investment and
I do not have any reason to anticipate any change in my circumstances, financial
or otherwise, nor any other particular occasion or event which should cause me
to sell or distribute, or necessitate or require my sale or distribution of the
Stock. No one other than me has any beneficial interest in the Stock.
I further certify that I have consulted with my own legal counsel who, after
having been apprized by me of all the material facts surrounding this
transaction, opined to me, for the benefit of the Company, that this transaction
was being effected in full compliance with the applicable securities laws of my
state of domicile.
I agree that I will in no event sell or distribute any of the Stock unless
in the opinion of your counsel (based on an opinion of my legal counsel) the
Stock may be legally sold without registration under the Securities Act of 1933,
as amended, and/or registration and/or other qualification under then-applicable
State and/or Federal statutes, or the Stock shall have been so registered and/or
qualified and an appropriate prospectus, shall then be in effect.
I am fully aware that the Stock is being offered and sold by the corporation
to me in reliance on the exemption provided by Sections 3(b), 4(2) or 4(6) or
the Securities Act of 1933, as amended, which exempts the sale of securities by
an issuer where no public offering is involved, and on my certifications and
warranties.
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In connection with the foregoing, I consent to your legending my
certificates represent- ing the Stock to indicate my investment intent and the
restriction on transfer contemplated hereby and to your placing a "stop
transfer" order against the Stock in the Company's stock transfer books until
the conditions set forth herein shall have been met.
I acknowledge by my execution hereof that I have had access to your books,
records and properties, and have inspected the same to my full and complete
satisfaction prior to my acquisition of the Stock. I represent and warrant that
because of my experience in business and investments, I am competent to make an
informed investment decision with respect thereto on the basis of my inspection
of your records and my questioning of your officers.
I further certify that my domicile is located at the address listed in this
letter.
Very truly yours,
--------------------
G. Richard Chamberlin
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Equity Growth Systems, inc.
Accredited Investor Subscription Agreement
THE SECURITIES REFERRED TO IN THIS OFFERING MEMORANDUM WILL BE SOLD TO, AND
ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE
FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT
IN THE STATE OF FLORIDA, IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE
PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE
ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT
PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER.
These Securities are offered in reliance on the exemption from registration
requirements imposed by the Securities Act of 1933, as amended, provided by
Section 4(6) thereof and on the exemption from the registration requirements
imposed by the State of Florida under Section 517.061(11), Florida Statutes
TERMS:
1. General.
(a) (1) This Subscription is part of a limited subscription by accredited
investors, as that term is defined in Rule 501 of Securities and
Exchange Commission Regulation D promulgated under authority of the
Securities Act of 1933, as amended ("Rule 501", "Regulation D" and the
"Act", respectively) for the acquisition of an aggregate of up to
1,500,000 shares of the common stock of Equity Growth Systems, inc., a
publicly held Delaware corporation with a class of securities
currently registered under Section 12 of the Securities Exchange Act
of 1934, as amended, (the "Company" and the "Stock").
(2) The hereinafter described subscriber is an "accredited investor" as
that term is defined in Rule 501 of Regulation D.
(3) The issuance of the Stock is to be effected pursuant to the exemptive
provisions of Section 4(6) of the Act, providing for the issuance of
securities solely to accredited investors.
(4) The Company will, immediately following closing on the first
subscription accepted in this limited offering, file a Form D with the
Securities and Exchange Commission, as required to permit the
contemplated subscription.
(b) Current information concerning the Company is contained on the SEC's EDGAR
web site on the Internet, including certified financial statements for the
period ended December 31, 1997, and unaudited quarterly updates thereto for
the period ended June 30, 1999, all of which is hereby incorporated by
reference herein (the "34 Act Reports").
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(c) (1) Annexed hereto and made a part hereof as exhibit 1(c) is a schedule
describing the contemplated use of the proceeds of this limited
offering.
(2) The Company may elect to borrow funds required for the purposes
identified in exhibit 1(c) and to repay such loans using proceeds of
this limited offering.
(3) The Company's management is of the opinion that the net proceeds from
the offering ($30,000) would be sufficient to permit the Company to
operate until it acquires one or more compatible businesses and in
conjunction therewith, obtains additional capital. However, unforeseen
circumstances, including favorable opportunities, may develop which may
render the assessment of the Company's management inaccurate.
(4) The Company may temporarily invest any unexpended balances on hand in
government securities, certificates of deposit, money market funds. The
Company intends to make such investments only temporarily in order to
avoid any requirement to register the Company under the Investment
Company Act of 1940. Any income realized from investment of the net
proceeds of this limited offering will be general revenues of the
Company.
(5) The Company shall provide Accredited Subscribers with reports on the
actual use of proceeds on a quarterly basis until all proceeds have
been expended.
THE ESTIMATES IN EXHIBIT 1(C) ARE SUBJECT TO MATERIAL CHANGE IF, IN THE
OPINION OF THE COMPANY'S BOARD OF DIRECTORS, THE ACTUAL OPERA- TIONS OF THE
COMPANY JUSTIFY DIFFERENT EXPENDITURES OR A DIFFERENT AL- LOCATION OF
PRIORITIES.
(d) The Company will not pay any commissions or grant of any discounts in
conjunction therewith.
2. Subscription Consideration.
(a) The undersigned Accredited Subscriber hereby subscribes for 217,500 shares
of the Stock in consideration for $4,350 in the aggregate and will tender
payment in full therefor immediately following receipt of an executed copy
of this Agreement evincing acceptance of this subscription by the Company.
(b) Within 72 hours after receipt of payment for the Stock, the Company's
transfer agent will issue and deliver to the Accredited Subscriber, at the
Company's expense, a certificate for the Stock.
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3. Accredited Subscriber's Representations, Warranties and Covenants.
As a material inducement to the Company's consideration of the Accredited
Subscriber's offer to acquire Stock(s), the Accredited Subscriber represents,
warrants and covenants to the Company, as follows:
(a) The Accredited Subscriber is familiar with the requirements for treatment as
an "accredited investor" under Regulation D and Section 4(6) of the
Securities Act of 1933, as amended (the "Act") and meets one or more of the
definitions of an "accredited investor" contained in Rule 501 promulgated
under authority of the Act and has, alone or together with his Offeree's
Representative, if any, (as hereinafter defined) such knowledge and
experience in financial matters that the Accredited Subscriber is capable of
evaluating the relative risks and merits of this subscription;
(b) The Accredited Subscriber acknowledges that he, she or it has, based on his,
her or its own substantial experience, the ability to evaluate the
transactions contemplated hereby and the merits and risks thereof in general
and the suitability of the transaction for the Accredited Subscriber in
particular;
(c) (1) The Accredited Subscriber understands that the offer and issuance
of the Stock is being made without the use of a Private Placement
Memorandum, the Accredited Subscriber having become totally familiar
with the business and condition of the Company and having been provided
with access to all corporate records and personnel, and has availed
himself of such access and has received all exhibits described in this
Agreement.
(2) The Accredited Subscriber is fully aware of the material risks
associated with becoming an investor in the Company and confirms that
he, she or it was previously informed that all documents, records and
books pertaining to this investment have been available from the
Company and that all documents, records and books pertaining to this
transaction requested by the Accredited Subscriber have been made
available to the Accredited Subscriber;
(d) The Accredited Subscriber has had an opportunity to ask questions of and
receive answers from the officers of the Company concerning:
(1) the terms and conditions of this Subscription Agreement and the
transactions contemplated hereby, as well as the affairs of the Company
and related matters; and
(2) any arrangements or proposed arrangements of the Company relating to
any of its Stockholders that are not identical to those relating to all
of its Stockholders;
(e) The Accredited Subscriber has had an opportunity to obtain additional
information necessary to verify the accuracy of the information referred to
in subparagraphs (a), (b), (c) and (d) hereof, as well as to supplement the
information in the 34 Act Reports, as called for by Florida Rule 3E-500.005.
(f) The Accredited Subscriber has provided the Company with the personal and
business financial information concerning himself which he, she or it agrees
demonstrates the Accredited Subscriber's general ability to bear the risks
of the subject transaction and suitability as a subscriber in a private
offering and the Accredited Subscriber hereby affirms the correctness of
such information;
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<PAGE>
(g) The Accredited Subscriber acknowledges and is aware that:
(1) The Stock is a speculative investment with no assurance that the
Company will be successful, or if successful, that such success will
result in payments to the Accredited Subscriber or to realization of
capital gains by the Accredited Subscriber on disposition of the Stock;
and
(2) The Stock being subscribed for has not been registered under the
Securities Act or under any state securities laws, accordingly the
Accredited Subscriber may have to hold such Stock and may not be able
to liquidate, pledge, hypothecate, assign or transfer such Stock;
(h) The Accredited Subscriber has obtained its own oral opinion from his, her or
its legal counsel to the effect that after an examination of the
transactions associated herewith and the applicable law, no action needs to
be taken by either the Accredited Subscriber or the Company in conjunction
with this Subscription and the issuance of the Stock in conjunction
therewith, other than such actions as have already been taken, in order to
comply with the securities law requirements of the Accredited Subscriber's
state of domicile; and
(i) (1) The Stock will bear a restrictive legend and the Company's
transfer agent will be instructed not to transfer the subject Stock
unless it has been registered pursuant to Section 5 of the Securities
Act of 1933, as amended, or an opinion of counsel satisfactory to
legal counsel to the Company and the Company's president has been
provided, to the effect that the proposed transaction is exempt from
registration requirements imposed by the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and any
applicable state or foreign laws.
(2) The legend shall read as follows: "The securities represented by this
certificate were issued without registration under the Securities Act
of 1933, as amended, or comparable state laws in reliance on the
provisions of Section 4(6) of such act, and comparable state law
provisions. These securities may not be transferred pledged or
hypothecated unless they are first registered under applicable federal,
state or foreign laws, or the transaction is demonstrated to be exempt
from such requirements to the Company's satisfaction."
4. Responsibility.
(a) The officers of the Company will endeavor to exercise their best
judgment in the con- duct of all matters arising under this
Subscription Agreement; provided, however, that this provision shall
not enlarge, limit or otherwise affect the liability of the Company or
its officers.
(b) The Accredited Subscriber shall indemnify and hold harmless the
Company; any cor- poration or entity affiliated with the Company; the
officers, directors and employees of any of the foregoing; or any
professional adviser thereto, from and against any and all loss,
damage, liability or expense, including costs and reasonable
attorney's fees at trial or on appeal, to which said entities and
persons may be subject or which said entities and persons incur by
reason of or in connection with any misrepresentation made by the
Accredited Subscriber, any breach of any of the Accredited
Subscriber's warranties or the Accredited Subscriber's failure to
fulfill any of the covenants or agreements under this Subscription
Agreement.
5. Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements contained herein
shall sur- vive the delivery of and the payment for the Stock being subscribed
for.
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<PAGE>
6. Notices.
Any and all notices, designations, consents, offers, acceptances or any
other com- munication provided for herein shall be given in writing by
registered or certified mail which shall be addressed in the case of the Company
to Equity Growth Systems, inc.; 3821 B Tamiami Trail, Suite 201; Port Charlotte,
Florida 33949; and, in the case of the Accredited Subscriber, to the address set
forth at the end of this Agreement, or to the address appearing on the books of
the Company or to such other address as may be designated by the Accredited
Subscriber or the Company in writing.
Accredited Subscriber Information
Please Print the following Information
Accredited Subscriber's Name: The Calvo Family Spendthrift Trust
Accredited Subscriber's Authorized Signatory: * Cyndi Noyes Calvo, Trustee
Accredited Subscriber's Address: 1941 Southeast 51st Terrace
Ocala, Florida 34471
Accredited Subscriber's Telephone Number: (352) 694-9182
Accredited Subscriber's Tax ** Number: 59-6849665
- ------
* If applicable (e.g., if the Subscriber is a corporation, partnership, joint
venture, etc.)
** FEIN or Social Security number
7. Miscellaneous.
(a) This Agreement shall be governed by, construed and enforced in accordance
within the laws of the State of Delaware, both substantive, procedural
(except for choice of law provisions) and remedial.
(b) The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
(c) This Agreement shall be binding on and shall inure to the benefit of the
Parties and their respective successors, assigns, executors and
administrators, but this Agreement and the respective rights and obligations
of the Parties hereunder shall not be assumable by any Party hereto without
the prior written consent of the other.
(d) This Agreement represents the entire understanding and agreement between the
Parties hereto with respect to the subject matter hereof; and cannot be
amended, supplemented or modified except by an instrument in writing signed
by the Party against whom enforcement of any such amendment, supplement or
modification is sought.
(e) The failure or any provision of this Agreement shall in no manner affect the
right to enforce the other provisions of same, and the waiver of any Party
of any breach of any provision of this Agreement shall not be construed to
be a waiver by such Party of any succeeding breach of such provision or
waiver by such Party of any breach of any provision.
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<PAGE>
* * *
IN WITNESS WHEREOF, I have executed this Agreement on behalf of the Ac-
credited Subscriber this ___ day of November, 1998.
ACCREDITED SUBSCRIBER
The Calvo Family Spendthrift Trust
By: _________________________________
Cyndi N. Calvo, Trustee
SUBSCRIPTION ACCEPTED:
Equity Growth Systems, inc.
Dated: __________________ ___, 1998.
By: _______________________
Edward Granville-Smith
President & Director
Attest: _______________________
Charles J. Scimeca
Director
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Exhibit Index
Exhibit Description
1(c) Use of Proceeds
3(f) Investment Letter
96
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FORM OF INVESTMENT LETTER
Date:
Edward Granville-Smith
President
Equity Growth Systems, inc.
3821 Tamiami Trail, Suite 201
Port Charlotte, Florida 33952
Re.: Stock Subscription
Dear Sir:
I hereby certify and warrant that I am acquiring 217,500 shares of Equity
Growth Systems, inc.'s (the "Company") unregistered common stock (the "Stock").
I hereby certify under penalty of perjury that upon receipt of the Stock, I will
be accepting it for my own account for investment purposes without any intention
of selling or distributing all or any part thereof. I represent and warrant that
I qualify as an accredited investor (as that term is defined in rule 501 of
Regulation D promulgated under authority of the Securities Act of 1933, as
amended) or have been specifically excused from such requirement, in writing by
the Company's management, or, in the alternative, that I am sophisticated in
financial affairs, or have relied on the advice of someone sophisticated in
financial affairs, and I able to bear the economic risks of this investment and
I do not have any reason to anticipate any change in my circumstances, financial
or otherwise, nor any other particular occasion or event which should cause me
to sell or distribute, or necessitate or require my sale or distribution of the
Stock. No one other than me has any beneficial interest in the Stock.
I further certify that I have consulted with my own legal counsel who, after
having been apprized by me of all the material facts surrounding this
transaction, opined to me, for the benefit of the Company, that this transaction
was being effected in full compliance with the applicable securities laws of my
state of domicile.
I agree that I will in no event sell or distribute any of the Stock unless
in the opinion of your counsel (based on an opinion of my legal counsel) the
Stock may be legally sold without registration under the Securities Act of 1933,
as amended, and/or registration and/or other qualification under then-applicable
State and/or Federal statutes, or the Stock shall have been so registered and/or
qualified and an appropriate prospectus, shall then be in effect.
I am fully aware that the Stock is being offered and sold by the corporation
to me in reliance on the exemption provided by Sections 3(b), 4(2) or 4(6) or
the Securities Act of 1933, as amended, which exempts the sale of securities by
an issuer where no public offering is involved, and on my certifications and
warranties.
97
<PAGE>
In connection with the foregoing, I consent to your legending my
certificates represent- ing the Stock to indicate my investment intent and the
restriction on transfer contemplated hereby and to your placing a "stop
transfer" order against the Stock in the Company's stock transfer books until
the conditions set forth herein shall have been met.
I acknowledge by my execution hereof that I have had access to your books,
records and properties, and have inspected the same to my full and complete
satisfaction prior to my acquisition of the Stock. I represent and warrant that
because of my experience in business and investments, I am competent to make an
informed investment decision with respect thereto on the basis of my inspection
of your records and my questioning of your officers.
I further certify that my domicile is located at the address listed in this
letter.
Very truly yours,
The Calvo Family Spendthrift Trust
By: _________________________________
Cyndi N. Calvo, Trustee
98
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Equity Growth Systems, inc.
Accredited Investor Subscription Agreement
THE SECURITIES REFERRED TO IN THIS OFFERING MEMORANDUM WILL BE SOLD TO, AND
ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE
FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT
IN THE STATE OF FLORIDA, IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE
PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE
ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT
PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER.
These Securities are offered in reliance on the exemption from registration
requirements imposed by the Securities Act of 1933, as amended, provided by
Section 4(6) thereof and on the exemption from the registration requirements
imposed by the State of Florida under Section 517.061(11), Florida Statutes
TERMS:
1. General.
(a) (1) This Subscription is part of a limited subscription by accredited
investors, as that term is defined in Rule 501 of Securities and
Exchange Commission Regulation D promulgated under authority of the
Securities Act of 1933, as amended ("Rule 501", "Regulation D" and the
"Act", respectively) for the acquisition of an aggregate of up to
1,500,000 shares of the common stock of Equity Growth Systems, inc., a
publicly held Delaware corporation with a class of securities
currently registered under Section 12 of the Securities Exchange Act
of 1934, as amended, (the "Company" and the "Stock").
(2) The hereinafter described subscriber is an "accredited investor" as
that term is defined in Rule 501 of Regulation D.
(3) The issuance of the Stock is to be effected pursuant to the exemptive
provisions of Section 4(6) of the Act, providing for the issuance of
securities solely to accredited investors.
(4) The Company will, immediately following closing on the first
subscription accepted in this limited offering, file a Form D with the
Securities and Exchange Commission, as required to permit the
contemplated subscription.
(b) Current information concerning the Company is contained on the SEC's EDGAR
web site on the Internet, including certified financial statements for the
period ended December 31, 1997, and unaudited quarterly updates thereto for
the period ended June 30, 1999, all of which is hereby incorporated by
reference herein (the "34 Act Reports").
99
<PAGE>
(c) (1) Annexed hereto and made a part hereof as exhibit 1(c) is a schedule
describing the contemplated use of the proceeds of this limited
offering.
(2) The Company may elect to borrow funds required for the purposes
identified in exhibit 1(c) and to repay such loans using proceeds of
this limited offering.
(3) The Company's management is of the opinion that the net proceeds from
the offering ($30,000) would be sufficient to permit the Company to
operate until it acquires one or more compatible businesses and in
conjunction therewith, obtains additional capital. However, unforeseen
circumstances, including favorable opportunities, may develop which may
render the assessment of the Company's management inaccurate.
(4) The Company may temporarily invest any unexpended balances on hand in
government securities, certificates of deposit, money market funds. The
Company intends to make such investments only temporarily in order to
avoid any requirement to register the Company under the Investment
Company Act of 1940. Any income realized from investment of the net
proceeds of this limited offering will be general revenues of the
Company.
(5) The Company shall provide Accredited Subscribers with reports on the
actual use of proceeds on a quarterly basis until all proceeds have
been expended.
THE ESTIMATES IN EXHIBIT 1(C) ARE SUBJECT TO MATERIAL CHANGE IF, IN THE
OPINION OF THE COMPANY'S BOARD OF DIRECTORS, THE ACTUAL OPERA- TIONS OF THE
COMPANY JUSTIFY DIFFERENT EXPENDITURES OR A DIFFERENT AL- LOCATION OF
PRIORITIES.
(d) The Company will not pay any commissions or grant of any discounts in
conjunction therewith.
2. Subscription Consideration.
(a) The undersigned Accredited Subscriber hereby subscribes for 630,000 shares
of the Stock in consideration for $12,600 in the aggregate and will tender
payment in full therefor immediately following receipt of an executed copy
of this Agreement evincing acceptance of this subscription by the Company.
(b) Within 72 hours after receipt of payment for the Stock, the Company's
transfer agent will issue and deliver to the Accredited Subscriber, at the
Company's expense, a certificate for the Stock.
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<PAGE>
3. Accredited Subscriber's Representations, Warranties and Covenants.
As a material inducement to the Company's consideration of the Accredited
Subscriber's offer to acquire Stock(s), the Accredited Subscriber represents,
warrants and covenants to the Company, as follows:
(a) The Accredited Subscriber is familiar with the requirements for treatment as
an "accredited investor" under Regulation D and Section 4(6) of the
Securities Act of 1933, as amended (the "Act") and meets one or more of the
definitions of an "accredited investor" contained in Rule 501 promulgated
under authority of the Act and has, alone or together with his Offeree's
Representative, if any, (as hereinafter defined) such knowledge and
experience in financial matters that the Accredited Subscriber is capable of
evaluating the relative risks and merits of this subscription;
(b) The Accredited Subscriber acknowledges that he, she or it has, based on his,
her or its own substantial experience, the ability to evaluate the
transactions contemplated hereby and the merits and risks thereof in general
and the suitability of the transaction for the Accredited Subscriber in
particular;
(c) (1) The Accredited Subscriber understands that the offer and issuance
of the Stock is being made without the use of a Private Placement
Memorandum, the Accredited Subscriber having become totally familiar
with the business and condition of the Company and having been provided
with access to all corporate records and personnel, and has availed
himself of such access and has received all exhibits described in this
Agreement.
(2) The Accredited Subscriber is fully aware of the material risks
associated with becoming an investor in the Company and confirms that
he, she or it was previously informed that all documents, records and
books pertaining to this investment have been available from the
Company and that all documents, records and books pertaining to this
transaction requested by the Accredited Subscriber have been made
available to the Accredited Subscriber;
(d) The Accredited Subscriber has had an opportunity to ask questions of and
receive answers from the officers of the Company concerning:
(1) the terms and conditions of this Subscription Agreement and the
transactions contemplated hereby, as well as the affairs of the Company
and related matters; and
(2) any arrangements or proposed arrangements of the Company relating to
any of its Stockholders that are not identical to those relating to all
of its Stockholders;
(e) The Accredited Subscriber has had an opportunity to obtain additional
information necessary to verify the accuracy of the information referred to
in subparagraphs (a), (b), (c) and (d) hereof, as well as to supplement the
information in the 34 Act Reports, as called for by Florida Rule 3E-500.005.
(f) The Accredited Subscriber has provided the Company with the personal and
business financial information concerning himself which he, she or it agrees
demonstrates the Accredited Subscriber's general ability to bear the risks
of the subject transaction and suitability as a subscriber in a private
offering and the Accredited Subscriber hereby affirms the correctness of
such information;
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(g) The Accredited Subscriber acknowledges and is aware that:
(1) The Stock is a speculative investment with no assurance that the
Company will be successful, or if successful, that such success will
result in payments to the Accredited Subscriber or to realization of
capital gains by the Accredited Subscriber on disposition of the Stock;
and
(2) The Stock being subscribed for has not been registered under the
Securities Act or under any state securities laws, accordingly the
Accredited Subscriber may have to hold such Stock and may not be able
to liquidate, pledge, hypothecate, assign or transfer such Stock;
(h) The Accredited Subscriber has obtained its own oral opinion from his, her or
its legal counsel to the effect that after an examination of the
transactions associated herewith and the applicable law, no action needs to
be taken by either the Accredited Subscriber or the Company in conjunction
with this Subscription and the issuance of the Stock in conjunction
therewith, other than such actions as have already been taken, in order to
comply with the securities law requirements of the Accredited Subscriber's
state of domicile; and
(i) (1) The Stock will bear a restrictive legend and the Company's transfer
agent will be instructed not to transfer the subject Stock unless it has
been registered pursuant to Section 5 of the Securities Act of 1933, as
amended, or an opinion of counsel satisfactory to legal counsel to the
Company and the Company's president has been provided, to the effect that
the proposed transaction is exempt from registration requirements imposed
by the Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, and any applicable state or foreign laws.
(2) The legend shall read as follows: "The securities represented by this
certificate were issued without registration under the Securities Act
of 1933, as amended, or comparable state laws in reliance on the
provisions of Section 4(6) of such act, and comparable state law
provisions. These securities may not be transferred pledged or
hypothecated unless they are first registered under applicable federal,
state or foreign laws, or the transaction is demonstrated to be exempt
from such requirements to the Company's satisfaction."
4. Responsibility.
(a) The officers of the Company will endeavor to exercise their best
judgment in the con- duct of all matters arising under this
Subscription Agreement; provided, however, that this provision shall
not enlarge, limit or otherwise affect the liability of the Company or
its officers.
(b) The Accredited Subscriber shall indemnify and hold harmless the
Company; any cor- poration or entity affiliated with the Company; the
officers, directors and employees of any of the foregoing; or any
professional adviser thereto, from and against any and all loss,
damage, liability or expense, including costs and reasonable
attorney's fees at trial or on appeal, to which said entities and
persons may be subject or which said entities and persons incur by
reason of or in connection with any misrepresentation made by the
Accredited Subscriber, any breach of any of the Accredited
Subscriber's warranties or the Accredited Subscriber's failure to
fulfill any of the covenants or agreements under this Subscription
Agreement.
102
<PAGE>
5. Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements contained herein
shall survive the delivery of and the payment for the Stock being subscribed
for.
6. Notices.
Any and all notices, designations, consents, offers, acceptances or any
other com- munication provided for herein shall be given in writing by
registered or certified mail which shall be addressed in the case of the Company
to Equity Growth Systems, inc.; 3821 B Tamiami Trail, Suite 201; Port Charlotte,
Florida 33949; and, in the case of the Accredited Subscriber, to the address set
forth at the end of this Agreement, or to the address appearing on the books of
the Company or to such other address as may be designated by the Accredited
Subscriber or the Company in writing.
Accredited Subscriber Information
Please Print the following Information
Accredited Subscriber's Name:: Blue Lake Capital Corp.
Accredited Subscriber's Authorized Signatory: * Michelle Tucker, President
Accredited Subscriber's Address: 902 Clint Moore Road, Suite 136
Boca Raton, Florida 33487
Accredited Subscriber's Telephone Number: (561) 998-2025
Accredited Subscriber's Tax ** Number: 65-0703836
- ------
* If applicable (e.g., if the Subscriber is a corporation, partnership, joint
venture, etc.)
** FEIN or Social Security number
7. Miscellaneous.
(a) This Agreement shall be governed by, construed and enforced in accordance
within the laws of the State of Delaware, both substantive, procedural
(except for choice of law provisions) and remedial.
(b) The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
(c) This Agreement shall be binding on and shall inure to the benefit of the
Parties and their respective successors, assigns, executors and
administrators, but this Agreement and the respective rights and obligations
of the Parties hereunder shall not be assumable by any Party hereto without
the prior written consent of the other.
(d) This Agreement represents the entire understanding and agreement between the
Parties hereto with respect to the subject matter hereof; and cannot be
amended, supplemented or modified except by an instrument in writing signed
by the Party against whom enforcement of any such amendment, supplement or
modification is sought.
(e) The failure or any provision of this Agreement shall in no manner affect the
right to enforce the other provisions of same, and the waiver of any Party
of any breach of any provision of this Agreement shall not be construed to
be a waiver by such Party of any succeeding breach of such provision or
waiver by such Party of any breach of any provision.
103
<PAGE>
* * *
IN WITNESS WHEREOF, I have executed this Agreement on behalf of the Ac-
credited Subscriber this ___ day of November, 1998.
ACCREDITED SUBSCRIBER
Blue Lake Capital Corp.
By: _________________________________
Michelle Tucker, President
SUBSCRIPTION ACCEPTED:
Equity Growth Systems, inc.
Dated: November ___, 1998.
By: _______________________
Edward Granville-Smith
President & Director
Attest: _______________________
Charles J. Scimeca
Director
104
<PAGE>
Exhibit Index
Exhibit Description
1(c) Use of Proceeds
3(f) Investment Letter
105
<PAGE>
FORM OF INVESTMENT LETTER
Date:
Edward Granville-Smith
President
Equity Growth Systems, inc.
3821 Tamiami Trail, Suite 201
Port Charlotte, Florida 33952
Re.: Stock Subscription
Dear Sir:
I hereby certify and warrant that I am acquiring 630,000 shares of Equity
Growth Systems, inc.'s (the "Company") unregistered common stock (the "Stock").
I hereby certify under penalty of perjury that upon receipt of the Stock, I will
be accepting it for my own account for investment purposes without any intention
of selling or distributing all or any part thereof. I represent and warrant that
I qualify as an accredited investor (as that term is defined in rule 501 of
Regulation D promulgated under authority of the Securities Act of 1933, as
amended) or have been specifically excused from such requirement, in writing by
the Company's management, or, in the alternative, that I am sophisticated in
financial affairs, or have relied on the advice of someone sophisticated in
financial affairs, and I able to bear the economic risks of this investment and
I do not have any reason to anticipate any change in my circumstances, financial
or otherwise, nor any other particular occasion or event which should cause me
to sell or distribute, or necessitate or require my sale or distribution of the
Stock. No one other than me has any beneficial interest in the Stock.
I further certify that I have consulted with my own legal counsel who, after
having been apprized by me of all the material facts surrounding this
transaction, opined to me, for the benefit of the Company, that this transaction
was being effected in full compliance with the applicable securities laws of my
state of domicile.
I agree that I will in no event sell or distribute any of the Stock unless
in the opinion of your counsel (based on an opinion of my legal counsel) the
Stock may be legally sold without registration under the Securities Act of 1933,
as amended, and/or registration and/or other qualification under then-applicable
State and/or Federal statutes, or the Stock shall have been so registered and/or
qualified and an appropriate prospectus, shall then be in effect.
106
<PAGE>
I am fully aware that the Stock is being offered and sold by the corporation
to me in reliance on the exemption provided by Sections 3(b), 4(2) or 4(6) or
the Securities Act of 1933, as amended, which exempts the sale of securities by
an issuer where no public offering is involved, and on my certifications and
warranties.
In connection with the foregoing, I consent to your legending my
certificates represent- ing the Stock to indicate my investment intent and the
restriction on transfer contemplated hereby and to your placing a "stop
transfer" order against the Stock in the Company's stock transfer books until
the conditions set forth herein shall have been met.
I acknowledge by my execution hereof that I have had access to your books,
records and properties, and have inspected the same to my full and complete
satisfaction prior to my acquisition of the Stock. I represent and warrant that
because of my experience in business and investments, I am competent to make an
informed investment decision with respect thereto on the basis of my inspection
of your records and my questioning of your officers.
I further certify that my domicile is located at the address listed in this
letter.
Very truly yours,
Blue Lake Capital Corp.
By: _________________________________
Michelle Tucker, President
107
<PAGE>
Equity Growth Systems, inc.
Accredited Investor Subscription Agreement
THE SECURITIES REFERRED TO IN THIS OFFERING MEMORANDUM WILL BE SOLD TO, AND
ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE
FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT
IN THE STATE OF FLORIDA, IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE
PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE
ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT
PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER.
These Securities are offered in reliance on the exemption from registration
requirements imposed by the Securities Act of 1933, as amended, provided by
Section 4(6) thereof and on the exemption from the registration requirements
imposed by the State of Florida under Section 517.061(11), Florida Statutes
TERMS:
1. General.
(a) (1) This Subscription is part of a limited subscription by accredited
investors, as that term is defined in Rule 501 of Securities and
Exchange Commission Regulation D promulgated under authority of the
Securities Act of 1933, as amended ("Rule 501", "Regulation D" and the
"Act", respectively) for the acquisition of an aggregate of up to
1,500,000 shares of the common stock of Equity Growth Systems, inc., a
publicly held Delaware corporation with a class of securities
currently registered under Section 12 of the Securities Exchange Act
of 1934, as amended, (the "Company" and the "Stock").
(2) The hereinafter described subscriber is an "accredited investor" as
that term is defined in Rule 501 of Regulation D.
(3) The issuance of the Stock is to be effected pursuant to the exemptive
provisions of Section 4(6) of the Act, providing for the issuance of
securities solely to accredited investors.
(4) The Company will, immediately following closing on the first
subscription accepted in this limited offering, file a Form D with the
Securities and Exchange Commission, as required to permit the
contemplated subscription.
(b) Current information concerning the Company is contained on the SEC's EDGAR
web site on the Internet, including certified financial statements for the
period ended December 31, 1997, and unaudited quarterly updates thereto for
the period ended June 30, 1999, all of which is hereby incorporated by
reference herein (the "34 Act Reports").
108
<PAGE>
(c) (1) Annexed hereto and made a part hereof as exhibit 1(c) is a schedule
describing the contemplated use of the proceeds of this limited
offering.
(2) The Company may elect to borrow funds required for the purposes
identified in exhibit 1(c) and to repay such loans using proceeds of
this limited offering.
(3) The Company's management is of the opinion that the net proceeds from
the offering ($30,000) would be sufficient to permit the Company to
operate until it acquires one or more compatible businesses and in
conjunction therewith, obtains additional capital. However, unforeseen
circumstances, including favorable opportunities, may develop which may
render the assessment of the Company's management inaccurate.
(4) The Company may temporarily invest any unexpended balances on hand in
government securities, certificates of deposit, money market funds. The
Company intends to make such investments only temporarily in order to
avoid any requirement to register the Company under the Investment
Company Act of 1940. Any income realized from investment of the net
proceeds of this limited offering will be general revenues of the
Company.
(5) The Company shall provide Accredited Subscribers with reports on the
actual use of proceeds on a quarterly basis until all proceeds have
been expended.
THE ESTIMATES IN EXHIBIT 1(C) ARE SUBJECT TO MATERIAL CHANGE IF, IN THE
OPINION OF THE COMPANY'S BOARD OF DIRECTORS, THE ACTUAL OPERA- TIONS OF THE
COMPANY JUSTIFY DIFFERENT EXPENDITURES OR A DIFFERENT AL- LOCATION OF
PRIORITIES.
(d) The Company will not pay any commissions or grant of any discounts in
conjunction therewith.
2. Subscription Consideration.
(a) The undersigned Accredited Subscriber hereby subscribes for 108,750 shares
of the Stock in consideration for $2,175 in the aggregate and will tender
payment in full therefor immediately following receipt of an executed copy
of this Agreement evincing acceptance of this subscription by the Company.
(b) Within 72 hours after receipt of payment for the Stock, the Company's
transfer agent will issue and deliver to the Accredited Subscriber, at the
Company's expense, a certificate for the Stock.
109
<PAGE>
3. Accredited Subscriber's Representations, Warranties and Covenants.
As a material inducement to the Company's consideration of the Accredited
Subscriber's offer to acquire Stock(s), the Accredited Subscriber represents,
warrants and covenants to the Company, as follows:
(a) The Accredited Subscriber is familiar with the requirements for treatment as
an "accredited investor" under Regulation D and Section 4(6) of the
Securities Act of 1933, as amended (the "Act") and meets one or more of the
definitions of an "accredited investor" contained in Rule 501 promulgated
under authority of the Act and has, alone or together with his Offeree's
Representative, if any, (as hereinafter defined) such knowledge and
experience in financial matters that the Accredited Subscriber is capable of
evaluating the relative risks and merits of this subscription;
(b) The Accredited Subscriber acknowledges that he, she or it has, based on his,
her or its own substantial experience, the ability to evaluate the
transactions contemplated hereby and the merits and risks thereof in general
and the suitability of the transaction for the Accredited Subscriber in
particular;
(c) (1) The Accredited Subscriber understands that the offer and issuance
of the Stock is being made without the use of a Private Placement
Memorandum, the Accredited Subscriber having become totally familiar
with the business and condition of the Company and having been provided
with access to all corporate records and personnel, and has availed
himself of such access and has received all exhibits described in this
Agreement.
(2) The Accredited Subscriber is fully aware of the material risks
associated with becoming an investor in the Company and confirms that
he, she or it was previously informed that all documents, records and
books pertaining to this investment have been available from the
Company and that all documents, records and books pertaining to this
transaction requested by the Accredited Subscriber have been made
available to the Accredited Subscriber;
(d) The Accredited Subscriber has had an opportunity to ask questions of and
receive answers from the officers of the Company concerning:
(1) the terms and conditions of this Subscription Agreement and the
transactions contemplated hereby, as well as the affairs of the Company
and related matters; and
(2) any arrangements or proposed arrangements of the Company relating to
any of its Stockholders that are not identical to those relating to all
of its Stockholders;
(e) The Accredited Subscriber has had an opportunity to obtain additional
information necessary to verify the accuracy of the information referred to
in subparagraphs (a), (b), (c) and (d) hereof, as well as to supplement the
information in the 34 Act Reports, as called for by Florida Rule 3E-500.005.
(f) The Accredited Subscriber has provided the Company with the personal and
business financial information concerning himself which he, she or it agrees
demonstrates the Accredited Subscriber's general ability to bear the risks
of the subject transaction and suitability as a subscriber in a private
offering and the Accredited Subscriber hereby affirms the correctness of
such information;
110
<PAGE>
(g) The Accredited Subscriber acknowledges and is aware that:
(1) The Stock is a speculative investment with no assurance that the
Company will be successful, or if successful, that such success will
result in payments to the Accredited Subscriber or to realization of
capital gains by the Accredited Subscriber on disposition of the Stock;
and
(2) The Stock being subscribed for has not been registered under the
Securities Act or under any state securities laws, accordingly the
Accredited Subscriber may have to hold such Stock and may not be able
to liquidate, pledge, hypothecate, assign or transfer such Stock;
(h) The Accredited Subscriber has obtained its own oral opinion from his, her or
its legal counsel to the effect that after an examination of the
transactions associated herewith and the applicable law, no action needs to
be taken by either the Accredited Subscriber or the Company in conjunction
with this Subscription and the issuance of the Stock in conjunction
therewith, other than such actions as have already been taken, in order to
comply with the securities law requirements of the Accredited Subscriber's
state of domicile; and
(i) (1) The Stock will bear a restrictive legend and the Company's
transfer agent will be instructed not to transfer the subject Stock
unless it has been registered pursuant to Section 5 of the Securities
Act of 1933, as amended, or an opinion of counsel satisfactory to
legal counsel to the Company and the Company's president has been
provided, to the effect that the proposed transaction is exempt from
registration requirements imposed by the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and any
applicable state or foreign laws.
(2) The legend shall read as follows: "The securities represented by this
certificate were issued without registration under the Securities Act
of 1933, as amended, or comparable state laws in reliance on the
provisions of Section 4(6) of such act, and comparable state law
provisions. These securities may not be transferred pledged or
hypothecated unless they are first registered under applicable federal,
state or foreign laws, or the transaction is demonstrated to be exempt
from such requirements to the Company's satisfaction."
4. Responsibility.
(a) The officers of the Company will endeavor to exercise their best
judgment in the con- duct of all matters arising under this
Subscription Agreement; provided, however, that this provision shall
not enlarge, limit or otherwise affect the liability of the Company or
its officers.
(b) The Accredited Subscriber shall indemnify and hold harmless the
Company; any cor- poration or entity affiliated with the Company; the
officers, directors and employees of any of the foregoing; or any
professional adviser thereto, from and against any and all loss,
damage, liability or expense, including costs and reasonable
attorney's fees at trial or on appeal, to which said entities and
persons may be subject or which said entities and persons incur by
reason of or in connection with any misrepresentation made by the
Accredited Subscriber, any breach of any of the Accredited
Subscriber's warranties or the Accredited Subscriber's failure to
fulfill any of the covenants or agreements under this Subscription
Agreement.
111
<PAGE>
5. Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements contained herein
shall survive the delivery of and the payment for the Stock being subscribed
for.
6. Notices.
Any and all notices, designations, consents, offers, acceptances or any
other com- munication provided for herein shall be given in writing by
registered or certified mail which shall be addressed in the case of the Company
to Equity Growth Systems, inc.; 3821 B Tamiami Trail, Suite 201; Port Charlotte,
Florida 33949; and, in the case of the Accredited Subscriber, to the address set
forth at the end of this Agreement, or to the address appearing on the books of
the Company or to such other address as may be designated by the Accredited
Subscriber or the Company in writing.
Accredited Subscriber Information
Please Print the following Information
Accredited Subscriber's Name:: Michelle Tucker, custodian under the
UGTMA for Shayna Tucker, her daughter
Accredited Subscriber's Authorized Signatory: * Michelle Tucker, Custodian
Accredited Subscriber's Address: 902 Clint Moore Road, Suite 136
Boca Raton, Florida 33418
Accredited Subscriber's Telephone Number: (561) 998-2025
Accredited Subscriber's Tax ** Number: ###-##-####
- ------
* If applicable (e.g., if the Subscriber is a corporation, partnership, joint
venture, etc.)
** FEIN or Social Security number
7. Miscellaneous.
(a) This Agreement shall be governed by, construed and enforced in accordance
within the laws of the State of Delaware, both substantive, procedural
(except for choice of law provisions) and remedial.
(b) The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
(c) This Agreement shall be binding on and shall inure to the benefit of the
Parties and their respective successors, assigns, executors and
administrators, but this Agreement and the respective rights and obligations
of the Parties hereunder shall not be assumable by any Party hereto without
the prior written consent of the other.
(d) This Agreement represents the entire understanding and agreement between the
Parties hereto with respect to the subject matter hereof; and cannot be
amended, supplemented or modified except by an instrument in writing signed
by the Party against whom enforcement of any such amendment, supplement or
modification is sought.
(e) The failure or any provision of this Agreement shall in no manner affect the
right to enforce the other provisions of same, and the waiver of any Party
of any breach of any provision of this Agreement shall not be construed to
be a waiver by such Party of any succeeding breach of such provision or
waiver by such Party of any breach of any provision.
112
<PAGE>
* * *
IN WITNESS WHEREOF, I have executed this Agreement on behalf of the Ac-
credited Subscriber this ___ day of November, 1998.
ACCREDITED SUBSCRIBER
Michelle Tucker, custodian under the UGTMA for Shayna Tucker, her daughter
By: _________________________________
Michelle Tucker, Custodian
SUBSCRIPTION ACCEPTED:
Equity Growth Systems, inc.
Dated: __________________ ___, 1998.
By: _______________________
Edward Granville-Smith
President & Director
Attest: _______________________
Charles J. Scimeca
Director
113
<PAGE>
Exhibit Index
Exhibit Description
1(c) Use of Proceeds
3(f) Investment Letter
114
<PAGE>
FORM OF INVESTMENT LETTER
Date:
Edward Granville-Smith
President
Equity Growth Systems, inc.
3821 Tamiami Trail, Suite 201
Port Charlotte, Florida 33952
Re.: Stock Subscription
Dear Sir:
I hereby certify and warrant that I am acquiring 108,750 shares of Equity
Growth Systems, inc.'s (the "Company") unregistered common stock (the "Stock").
I hereby certify under penalty of perjury that upon receipt of the Stock, I will
be accepting it for my own account for investment purposes without any intention
of selling or distributing all or any part thereof. I represent and warrant that
I qualify as an accredited investor (as that term is defined in rule 501 of
Regulation D promulgated under authority of the Securities Act of 1933, as
amended) or have been specifically excused from such requirement, in writing by
the Company's management, or, in the alternative, that I am sophisticated in
financial affairs, or have relied on the advice of someone sophisticated in
financial affairs, and I able to bear the economic risks of this investment and
I do not have any reason to anticipate any change in my circumstances, financial
or otherwise, nor any other particular occasion or event which should cause me
to sell or distribute, or necessitate or require my sale or distribution of the
Stock.
No one other than me has any beneficial interest in the Stock.
I further certify that I have consulted with my own legal counsel who, after
having been apprized by me of all the material facts surrounding this
transaction, opined to me, for the benefit of the Company, that this transaction
was being effected in full compliance with the applicable securities laws of my
state of domicile.
I agree that I will in no event sell or distribute any of the Stock unless
in the opinion of your counsel (based on an opinion of my legal counsel) the
Stock may be legally sold without registration under the Securities Act of 1933,
as amended, and/or registration and/or other qualification under then-applicable
State and/or Federal statutes, or the Stock shall have been so registered and/or
qualified and an appropriate prospectus, shall then be in effect.
115
<PAGE>
I am fully aware that the Stock is being offered and sold by the corporation
to me in reliance on the exemption provided by Sections 3(b), 4(2) or 4(6) or
the Securities Act of 1933, as amended, which exempts the sale of securities by
an issuer where no public offering is involved, and on my certifications and
warranties.
In connection with the foregoing, I consent to your legending my
certificates represent- ing the Stock to indicate my investment intent and the
restriction on transfer contemplated hereby and to your placing a "stop
transfer" order against the Stock in the Company's stock transfer books until
the conditions set forth herein shall have been met.
I acknowledge by my execution hereof that I have had access to your books,
records and properties, and have inspected the same to my full and complete
satisfaction prior to my acquisition of the Stock. I represent and warrant that
because of my experience in business and investments, I am competent to make an
informed investment decision with respect thereto on the basis of my inspection
of your records and my questioning of your officers.
I further certify that my domicile is located at the address listed in this
letter.
Very truly yours,
Michelle Tucker, custodian under the UGTMA for Shayna Tucker, her daughter
--------------------
Michelle Tucker, Custodian
116
<PAGE>
Equity Growth Systems, inc.
Accredited Investor Subscription Agreement
THE SECURITIES REFERRED TO IN THIS OFFERING MEMORANDUM WILL BE SOLD TO, AND
ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE
FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT
IN THE STATE OF FLORIDA, IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE
PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE
ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT
PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER.
These Securities are offered in reliance on the exemption from registration
requirements imposed by the Securities Act of 1933, as amended, provided by
Section 4(6) thereof and on the exemption from the registration requirements
imposed by the State of Florida under Section 517.061(11), Florida Statutes
TERMS:
1. General.
(a) (1) This Subscription is part of a limited subscription by accredited
investors, as that term is defined in Rule 501 of Securities and
Exchange Commission Regulation D promulgated under authority of the
Securities Act of 1933, as amended ("Rule 501", "Regulation D" and the
"Act", respectively) for the acquisition of an aggregate of up to
1,500,000 shares of the common stock of Equity Growth Systems, inc., a
publicly held Delaware corporation with a class of securities
currently registered under Section 12 of the Securities Exchange Act
of 1934, as amended, (the "Company" and the "Stock").
(2) The hereinafter described subscriber is an "accredited investor" as
that term is defined in Rule 501 of Regulation D.
(3) The issuance of the Stock is to be effected pursuant to the exemptive
provisions of Section 4(6) of the Act, providing for the issuance of
securities solely to accredited investors.
(4) The Company will, immediately following closing on the first
subscription accepted in this limited offering, file a Form D with the
Securities and Exchange Commission, as required to permit the
contemplated subscription.
(b) Current information concerning the Company is contained on the SEC's EDGAR
web site on the Internet, including certified financial statements for the
period ended December 31, 1997, and unaudited quarterly updates thereto for
the period ended June 30, 1999, all of which is hereby incorporated by
reference herein (the "34 Act Reports").
117
<PAGE>
(c) (1) Annexed hereto and made a part hereof as exhibit 1(c) is a schedule
describing the contemplated use of the proceeds of this limited
offering.
(2) The Company may elect to borrow funds required for the purposes
identified in exhibit 1(c) and to repay such loans using proceeds of
this limited offering.
(3) The Company's management is of the opinion that the net proceeds from
the offering ($30,000) would be sufficient to permit the Company to
operate until it acquires one or more compatible businesses and in
conjunction therewith, obtains additional capital. However, unforeseen
circumstances, including favorable opportunities, may develop which may
render the assessment of the Company's management inaccurate.
(4) The Company may temporarily invest any unexpended balances on hand in
government securities, certificates of deposit, money market funds. The
Company intends to make such investments only temporarily in order to
avoid any requirement to register the Company under the Investment
Company Act of 1940. Any income realized from investment of the net
proceeds of this limited offering will be general revenues of the
Company.
(5) The Company shall provide Accredited Subscribers with reports on the
actual use of proceeds on a quarterly basis until all proceeds have
been expended.
THE ESTIMATES IN EXHIBIT 1(C) ARE SUBJECT TO MATERIAL CHANGE IF, IN THE
OPINION OF THE COMPANY'S BOARD OF DIRECTORS, THE ACTUAL OPERA- TIONS OF THE
COMPANY JUSTIFY DIFFERENT EXPENDITURES OR A DIFFERENT AL- LOCATION OF
PRIORITIES.
(d) The Company will not pay any commissions or grant of any discounts in
conjunction therewith.
2. Subscription Consideration.
(a) The undersigned Accredited Subscriber hereby subscribes for 108,750 shares
of the Stock in consideration for $2,175 in the aggregate and will tender
payment in full therefor immediately following receipt of an executed copy
of this Agreement evincing acceptance of this subscription by the Company.
(b) Within 72 hours after receipt of payment for the Stock, the Company's
transfer agent will issue and deliver to the Accredited Subscriber, at the
Company's expense, a certificate for the Stock.
118
<PAGE>
3. Accredited Subscriber's Representations, Warranties and Covenants.
As a material inducement to the Company's consideration of the Accredited
Subscriber's offer to acquire Stock(s), the Accredited Subscriber represents,
warrants and covenants to the Company, as follows:
(a) The Accredited Subscriber is familiar with the requirements for treatment as
an "accredited investor" under Regulation D and Section 4(6) of the
Securities Act of 1933, as amended (the "Act") and meets one or more of the
definitions of an "accredited investor" contained in Rule 501 promulgated
under authority of the Act and has, alone or together with his Offeree's
Representative, if any, (as hereinafter defined) such knowledge and
experience in financial matters that the Accredited Subscriber is capable of
evaluating the relative risks and merits of this subscription;
(b) The Accredited Subscriber acknowledges that he, she or it has, based on his,
her or its own substantial experience, the ability to evaluate the
transactions contemplated hereby and the merits and risks thereof in general
and the suitability of the transaction for the Accredited Subscriber in
particular;
(c) (1) The Accredited Subscriber understands that the offer and issuance
of the Stock is being made without the use of a Private Placement
Memorandum, the Accredited Subscriber having become totally familiar
with the business and condition of the Company and having been provided
with access to all corporate records and personnel, and has availed
himself of such access and has received all exhibits described in this
Agreement.
(2) The Accredited Subscriber is fully aware of the material risks
associated with becoming an investor in the Company and confirms that
he, she or it was previously informed that all documents, records and
books pertaining to this investment have been available from the
Company and that all documents, records and books pertaining to this
transaction requested by the Accredited Subscriber have been made
available to the Accredited Subscriber;
(d) The Accredited Subscriber has had an opportunity to ask questions of and
receive answers from the officers of the Company concerning:
(1) the terms and conditions of this Subscription Agreement and the
transactions contemplated hereby, as well as the affairs of the Company
and related matters; and
(2) any arrangements or proposed arrangements of the Company relating to
any of its Stockholders that are not identical to those relating to all
of its Stockholders;
(e) The Accredited Subscriber has had an opportunity to obtain additional
information necessary to verify the accuracy of the information referred to
in subparagraphs (a), (b), (c) and (d) hereof, as well as to supplement the
information in the 34 Act Reports, as called for by Florida Rule 3E-500.005.
(f) The Accredited Subscriber has provided the Company with the personal and
business financial information concerning himself which he, she or it agrees
demonstrates the Accredited Subscriber's general ability to bear the risks
of the subject transaction and suitability as a subscriber in a private
offering and the Accredited Subscriber hereby affirms the correctness of
such information;
119
<PAGE>
(g) The Accredited Subscriber acknowledges and is aware that:
(1) The Stock is a speculative investment with no assurance that the
Company will be successful, or if successful, that such success will
result in payments to the Accredited Subscriber or to realization of
capital gains by the Accredited Subscriber on disposition of the Stock;
and
(2) The Stock being subscribed for has not been registered under the
Securities Act or under any state securities laws, accordingly the
Accredited Subscriber may have to hold such Stock and may not be able
to liquidate, pledge, hypothecate, assign or transfer such Stock;
(h) The Accredited Subscriber has obtained its own oral opinion from his, her or
its legal counsel to the effect that after an examination of the
transactions associated herewith and the applicable law, no action needs to
be taken by either the Accredited Subscriber or the Company in conjunction
with this Subscription and the issuance of the Stock in conjunction
therewith, other than such actions as have already been taken, in order to
comply with the securities law requirements of the Accredited Subscriber's
state of domicile; and
(i) (1) The Stock will bear a restrictive legend and the Company's
transfer agent will be instructed not to transfer the subject Stock
unless it has been registered pursuant to Section 5 of the Securities
Act of 1933, as amended, or an opinion of counsel satisfactory to
legal counsel to the Company and the Company's president has been
provided, to the effect that the proposed transaction is exempt from
registration requirements imposed by the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and any
applicable state or foreign laws.
(2) The legend shall read as follows: "The securities represented by this
certificate were issued without registration under the Securities Act
of 1933, as amended, or comparable state laws in reliance on the
provisions of Section 4(6) of such act, and comparable state law
provisions. These securities may not be transferred pledged or
hypothecated unless they are first registered under applicable federal,
state or foreign laws, or the transaction is demonstrated to be exempt
from such requirements to the Company's satisfaction."
4. Responsibility.
(a) The officers of the Company will endeavor to exercise their best
judgment in the con- duct of all matters arising under this
Subscription Agreement; provided, however, that this provision shall
not enlarge, limit or otherwise affect the liability of the Company or
its officers.
(b) The Accredited Subscriber shall indemnify and hold harmless the
Company; any cor- poration or entity affiliated with the Company; the
officers, directors and employees of any of the foregoing; or any
professional adviser thereto, from and against any and all loss,
damage, liability or expense, including costs and reasonable
attorney's fees at trial or on appeal, to which said entities and
persons may be subject or which said entities and persons incur by
reason of or in connection with any misrepresentation made by the
Accredited Subscriber, any breach of any of the Accredited
Subscriber's warranties or the Accredited Subscriber's failure to
fulfill any of the covenants or agreements under this Subscription
Agreement.
5. Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements contained
herein shall sur- vive the delivery of and the payment for the Stock being
subscribed for.
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6. Notices.
Any and all notices, designations, consents, offers, acceptances or
any other com- munication provided for herein shall be given in writing by
registered or certified mail which shall be addressed in the case of the
Company to Equity Growth Systems, inc.; 3821 B Tamiami Trail, Suite 201;
Port Charlotte, Florida 33949; and, in the case of the Accredited
Subscriber, to the address set forth at the end of this Agreement, or to
the address appearing on the books of the Company or to such other address
as may be designated by the Accredited Subscriber or the Company in
writing.
Accredited Subscriber Information
Please Print the following Information
Accredited Subscriber's Name:: Michelle Tucker, custodian under the
UGTMA for Shayna Tucker, her daughter
Accredited Subscriber's Authorized Signatory: * Michelle Tucker, Custodian
Accredited Subscriber's Address: 902 Clint Moore Road, Suite 136
Boca Raton, Florida 33418
Accredited Subscriber's Telephone Number: (561) 998-2025
Accredited Subscriber's Tax ** Number: ###-##-####
- ------
* If applicable (e.g., if the Subscriber is a corporation, partnership, joint
venture, etc.)
** FEIN or Social Security number
7. Miscellaneous.
(a) This Agreement shall be governed by, construed and enforced in accordance
within the laws of the State of Delaware, both substantive, procedural
(except for choice of law provisions) and remedial.
(b) The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.
(c) This Agreement shall be binding on and shall inure to the benefit of the
Parties and their respective successors, assigns, executors and
administrators, but this Agreement and the respective rights and obligations
of the Parties hereunder shall not be assumable by any Party hereto without
the prior written consent of the other.
(d) This Agreement represents the entire understanding and agreement between the
Parties hereto with respect to the subject matter hereof; and cannot be
amended, supplemented or modified except by an instrument in writing signed
by the Party against whom enforcement of any such amendment, supplement or
modification is sought.
(e) The failure or any provision of this Agreement shall in no manner affect the
right to enforce the other provisions of same, and the waiver of any Party
of any breach of any provision of this Agreement shall not be construed to
be a waiver by such Party of any succeeding breach of such provision or
waiver by such Party of any breach of any provision.
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* * *
IN WITNESS WHEREOF, I have executed this Agreement on behalf of the Ac-
credited Subscriber this ___ day of November, 1998.
ACCREDITED SUBSCRIBER
Michelle Tucker, custodian under the UGTMA for Shayna Tucker, her daughter
By: _________________________________
Michelle Tucker, Custodian
SUBSCRIPTION ACCEPTED:
Equity Growth Systems, inc.
Dated: __________________ ___, 1998.
By: _______________________
Edward Granville-Smith
President & Director
Attest: _______________________
Charles J. Scimeca
Director
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Exhibit Index
Exhibit Description
1(c) Use of Proceeds
3(f) Investment Letter
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FORM OF INVESTMENT LETTER
Date:
Edward Granville-Smith
President
Equity Growth Systems, inc.
3821 Tamiami Trail, Suite 201
Port Charlotte, Florida 33952
Re.: Stock Subscription
Dear Sir:
I hereby certify and warrant that I am acquiring 108,750 shares of Equity
Growth Systems, inc.'s (the "Company") unregistered common stock (the "Stock").
I hereby certify under penalty of perjury that upon receipt of the Stock, I will
be accepting it for my own account for investment purposes without any intention
of selling or distributing all or any part thereof. I represent and warrant that
I qualify as an accredited investor (as that term is defined in rule 501 of
Regulation D promulgated under authority of the Securities Act of 1933, as
amended) or have been specifically excused from such requirement, in writing by
the Company's management, or, in the alternative, that I am sophisticated in
financial affairs, or have relied on the advice of someone sophisticated in
financial affairs, and I able to bear the economic risks of this investment and
I do not have any reason to anticipate any change in my circumstances, financial
or otherwise, nor any other particular occasion or event which should cause me
to sell or distribute, or necessitate or require my sale or distribution of the
Stock. No one other than me has any beneficial interest in the Stock.
I further certify that I have consulted with my own legal counsel who, after
having been apprized by me of all the material facts surrounding this
transaction, opined to me, for the benefit of the Company, that this transaction
was being effected in full compliance with the applicable securities laws of my
state of domicile.
I agree that I will in no event sell or distribute any of the Stock unless
in the opinion of your counsel (based on an opinion of my legal counsel) the
Stock may be legally sold without registration under the Securities Act of 1933,
as amended, and/or registration and/or other qualification under then-applicable
State and/or Federal statutes, or the Stock shall have been so registered and/or
qualified and an appropriate prospectus, shall then be in effect.
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I am fully aware that the Stock is being offered and sold by the corporation
to me in reliance on the exemption provided by Sections 3(b), 4(2) or 4(6) or
the Securities Act of 1933, as amended, which exempts the sale of securities by
an issuer where no public offering is involved, and on my certifications and
warranties.
In connection with the foregoing, I consent to your legending my
certificates represent- ing the Stock to indicate my investment intent and the
restriction on transfer contemplated hereby and to your placing a "stop
transfer" order against the Stock in the Company's stock transfer books until
the conditions set forth herein shall have been met.
I acknowledge by my execution hereof that I have had access to your books,
records and properties, and have inspected the same to my full and complete
satisfaction prior to my acquisition of the Stock. I represent and warrant that
because of my experience in business and investments, I am competent to make an
informed investment decision with respect thereto on the basis of my inspection
of your records and my questioning of your officers.
I further certify that my domicile is located at the address listed in this
letter.
Very truly yours,
Michelle Tucker, custodian under the UGTMA for Shayna Tucker, her daughter
--------------------
Michelle Tucker, Custodian
125
EXHIBIT 10.23
CONSULTING AGREEMENT WITH THE YANKEE COMPANIES
Consulting Agreement
This Consulting Agreement (the "Agreement") is made and entered into by and
between Equity Growth Systems, inc., a publicly held Delaware corporation with a
class of equity securities registered under Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and currently trading on
the over the counter bulletin board operated by but not a part of NASDAQ
("Client"); and, The Yankee Companies, Inc., a Florida corporation ("Yankees";
Client and Yankees being hereinafter collectively referred to as the "Parties"
and generically as a "Party").
Preamble :
WHEREAS, Client is engaged in the business more particularly described in
the reports filed by Client with the Securities and Exchange Commission
("SEC" or "Commission"), as disclosed in the SEC's EDGAR web site on the
Internet at "http//sec.gov/Archives/edgar/data; and
WHEREAS, Yankees has substantial strategic business experience, acumen and
contacts, and Client desires to avail itself of Yankees' services in
conjunction with development and implementation of strategic plans designed
to increase profitability, expand operations, and to assure attainment of
such goals by securing Yankees's assistance to develop proper investment
banking relationships, develop ongoing access to debt and equity capital
markets, and develop growth through acquisition of complementary business
operations; and
WHEREAS, Client's current business plans have been negatively effected by
the health of Edward Granville-Smith, until recently its sole director and
principal officer, as well as the person most knowledgeable as to Client's
business, and Client desires engage Yankees to assist it to restructure its
management and its strategic business plans; and
WHEREAS, Yankees is agreeable to making its services available to Client, on
the terms and subject to the conditions hereinafter set forth:
NOW, THEREFORE, in consideration for Yankees's agreement to render the
hereinafter described services as well as of the premises, the sum of
TEN ($10) DOLLARS, and other good and valuable consideration, the
receipt and adequacy of which is hereby acknow- ledged, the Parties,
intending to be legally bound, hereby agree as follows:
Witnesseth:
ARTICLE ONE
OBLIGATIONS OF THE PARTIES
1.1 Description of Services
(A) Yankees's areas of expertise include corporate structure, organization and
reorganization; mergers, acquisitions and divestitures; strategic corporate
development; corporate financial and equity analysis; market strategy
planning and implementation; corporate communication, financial public
relations and stockholder relations consulting; business plan development
and implementation; marketing sales and analysis; executive and professional
recruitment; coordination and supervision of professional services;
development and implementation of regulatory compliance procedures (the
"Services").
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(B) During the Initial Term of this Agreement (as hereinafter defined), Yankees
shall provide Client with the Services, on a reasonable, as required basis,
consistent with Yankees's other business activities.
(C) Because of Client's status under federal securities laws, in any
circumstances where Yankees is describing the securities of Client to a
third Party, Yankees shall disclose to such person the compensation received
from Client to the extent required under any applicable laws, including,
without limitation, Section 17(b) of the Securities Act of 1933, as amended;
however, the Parties acknowledge they do not contemplate that Yankees shall
be involved in any activities on behalf of Client requiring such
descriptions or disclosures, or that the Services involve any activities
subject to regulation under federal or state securities laws other than the
prohibitions of the Foreign Corrupt Practices Act, except for the
introduction of Client and its principals to licensed broker dealers in
securities, securities analysts and appropriate corporate information and
stockholder relations specialists.
1.2 Fiduciary Obligation to Client
In rendering its services, Yankees shall not disclose to any third party any
confidential non-public information furnished by Client or otherwise obtained by
it with respect to Client.
1.3 Limitations on Services
(A) The Parties recognize that certain responsibilities and obligations
are imposed by federal and state securities laws and by the applicable
rules and regulations of stock exchanges, the National Association of
Securities Dealers, Inc. (collectively with its subsidiaries being
hereinafter referred to as the "NASD"), in-house "due diligence" or
"compliance" depart- ments of licensed securities firms, etc.;
accordingly, Yankees agrees that it will not release any information
or data about Client to any selected or limited person(s), entity, or
group if the Consultant is aware that such information or data has not
been generally released or promulgated.
(B) Yankees shall restrict or cease, as directed by Client, all efforts on
behalf of Client, including all dissemination of information regarding
Client, immediately upon receipt of instructions (in writing by fax or
letter) to that effect from Client.
1.4 Consultant's Compensation
(A) Except as described below with reference to certain of the services
described above, which are to be completed within the initial 365 days of
this Agreement:
(1) Yankees will bill at its standard hourly rates for all work as to which
a prior written arrangement with different terms has not been entered
into, however, no hourly billable services will be provided except at
Client's specific request.
(2) Any documents prepared by Yankees or provided to Client's advisors, at
Client's request, on existing forms will be subject to a $50 per page
initial licensing fee augmented by the time spent in personalizing the
subject form.
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(B) Notwithstanding the provisions of Section 1.4(a) above, during the first 365
days of this Agreement (the "Initial Term"), Yankees will accept and Client
will pay to Yankees:
(1) Options (the "Class A Options") to purchase shares of Client's
outstanding or reserved common stock (all reserved common stock being
treated as outstanding for purposes of such calculation), on the
following terms (the"Stock Signing Fee."):
(a) The quantity of Client common stock subject to the Class A Options
shall be equal to 10% of Client's outstanding or reserved common
stock, immediately following complete exercise of all the Class A
Options;
(b) The Class A Option term will commence on the 60th day after execution
of this Agreement and will terminate at the close of business on the
45th business day after the Class A Options and the shares of common
stock into which they can be exercised are registered for sale to the
public under applicable federal and state securities laws, however,
Yankees shall have the option of exercising the Class A Options prior
to such registration at a 50% discount from the otherwise applicable
exercise price, subject to the resale restrictions imposed by SEC Rule
144, but subject to the piggy back and registration provisions, as
reflected in the form of warrant agreement annexed hereto and made a
part hereof as composite exhibit 1.4(B), which form shall constitute
the basis for and terms of the Class A Options, other than as
specifically modified hereby.
(c) The exercise price of the Class A Options will be based on the number
of shares outstanding at the time of exercise, pro rated in accordance
with the following formula: in the event that an aggregate of
6,000,000 shares of capital stock are outstanding or reserved for
future issuance under reasonably definable terms (e.g. options,
warrants, pending acquisitions, obligations under employment
agreements, etc.), then the number of shares purchasable would be
600,000 and the exercise price would be $0.10 per share, any increase
or decrease in the outstanding and reserved shares resulting in a
corresponding adjustment to the Class A Option exercise quantity and
price;
(d) Yankees shall have the right to cashless exercise of the options, as
reflected in the form of warrant agreement annexed hereto and made a
part hereof as composite exhibit 1.4(B).
(2) If, for any reason (other than a stock split also affecting Yankees's
shares issued as the Stock Signing Fee) Client's outstanding securities
exceed those contemplated as the basis for determining the Class A
Option exercise prices within 12 months following the end of the
exercise term, then additional shares in an amount to such difference
on a pro rated basis (based on the options exercised) shall be issued
to Yankees.
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(3) The foregoing compensation is in lieu of document license fees and of
required cash payments for up to an aggregate of 200 hours of Yankees's
hourly fees during the initial six month term of this Agreement (but
not those of its associated entities), and, for tax purposes, shall be
valued at an aggregate of $20,000.
(4) Client has been informed that a portion of the Stock Signing Fee will
be transferred by Yankees to third party independent consultants who
will assist Yankees in the performance of its duties hereunder.
(5) The Class A Options may be exercised, in whole or in part, there being
no minimum exercise requirements.
(C) In addition to the compensation described above with reference to services
during the Initial Term of this Agreement and whether or not the following
services are rendered during such Initial Term:
(1) In the event that Yankees arranges or provides funding for Client on
terms more beneficial than those reflected in Client's current
principal financing agreements, copies of which are included among
Client's records available through the SEC's EDGAR web site, the
subject Consultant shall be entitled, at its election, to either:
(a) A fee equal to 25% of such savings, on a continuing basis; or
(b) If equity funding is provided though Yankees or any affiliates thereof,
a discount of 10% from the bid price for the subject equity securities,
if they are issuable as free trading securities, or, a discount of 50%
from the bid price for the subject equity securities, if they are
issuable as restricted securities (as the term restricted is used for
purposes of SEC Rule 144); and
(2) In the event that Yankees generates business for Client, then, on any
sales resulting therefrom, Yankees shall be entitled to a commission
equal to 10% of the gross income derived by Client therefrom, on a
continuing basis.
(3) In the event that Yankees or any affiliate thereof arranges for an
acquisition by Client, then Yankees shall be entitled to compensation
equal to 10% of the compensation paid for such acquisition, in addition
to any compensation negotiated and received from the acquired entity or
its affiliates.
(4) In addition to all other compensation reflected in this Agreement,
Client shall, on and after the 365 day period following execution of
this Agreement, pay to Yankees the sum of $5,000 per month, on or
before the monthly anniversary date of this Agreement, throughout the
balance of this Agreement or any renewals thereof, the first such
payment to be tendered by Client on or before the 395th day following
execution of this Agreement (the "Cash Consulting Fee"); provided,
however, that at Client option, it may apply such payments to exercise
of the Class A Options, whereupon Client shall issue to Yankees the
quantity of common stock called for pursuant to the foregoing Class A
Option exercise provisions.
(D) Client will assure that its legal counsel promptly prepares all reports
which then existing holders of Client's securities (including Yankees, its
affiliates and successors in interest) are required to file with the
Securities and Exchange Commission as a result of Client's reporting status,
including Securities and Exchange Commission Forms 3, 4 and 5, Schedules
13(d) and Schedules 13(g), and shall submit all such reports to the subject
stockholders for prompt execution and timely filing with the Securities and
Exchange Commission.
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(E) (1) In addition to payment of fees, Client will be responsible for
payment of all costs and disbursements associated with Yankees's
services either:
(a) Involving less than $50 per item and $200 in the aggregate during the
preceding 30 day period; or
(b) Reflected in an operating budget approved by Client; or
(c) Approved in writing by Client; provided, however, that the refusal by
Client to approve expenditures required for the proper performance of
Yankees's services will excuse performance of such services.
(2) All of Yankees's statements will be paid within 10 days after receipt.
(3) In the event additional time for payment is required, Yankees will have
the option of selling the account receivable and Client agrees to pay
interest thereon at the monthly rate of 1%.
(4) In the event collection activities are required, Client agrees to pay
all of Yankees's out of pocket costs associated therewith.
(5) There will be no change or waiver of the provisions contained herein,
unless such charge is in writing and signed by Client and Yankees.
1.5 Client's Commitments
(A).(1) All work requiring legal review will be submitted for approval by
Client to Client's legal counsel prior to its use.
(2) Final drafts of any matters prepared for use by Yankees in conjunction
with the provision of the Services will be reviewed by Client and, if
legally required, by Client's legal counsel, to assure that:
(a) All required information has been provided;
(b) All materials are presented accurately; and,
(c) That no materials required to render information provided "not
misleading" are omitted.
(2) Only after such review and approval by Client and, if required,
Client's legal counsel, will any documents be filed with regulatory
agencies or provided to Yankees or third parties.
(3) (a) Financial data will be reviewed by competent, independent,
certified public accountants to be separately retained by Client.
(b) Such accountants will be required to review and approve all
financially related filings, prior to release to Yankees, other
third parties or submission to the appropriate regulatory
authorities.
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(B) (1) Client shall supply Yankees on a regular and timely basis with all
approved data and information about Client, its management, its
products, and its operations and Client shall be responsible for
advising Yankees of any fact which would affect the accuracy of any
prior data and information supplied to Yankees.
(2) Client shall use its best efforts to promptly supply Yankees with full
and complete copies of all filings with all federal and state
securities agencies; with full and complete copies of all shareholder
reports and communications whether or not prepared with Yankees's
assistance, with all data and information supplied to any analyst,
broker-dealer, market maker, or other member of the financial
community; and with all product/services brochures, sales materials,
etc.
(3) Client shall promptly notify Yankees of the filing of any registration
statement for the sale of securities and/or of any other event which
triggers any restrictions on publicity.
(4) Client shall be deemed to make a continuing representation of the
accuracy of any and all material facts, material, information, and data
which it supplies to Yankees and Client acknowledges its awareness that
Yankees will rely on such continuing representation in performing its
functions under this Agreement.
(5) Yankees, in the absence of notice in writing from Client, may rely on
the continuing accuracy of material, information and data supplied by
Client.
ARTICLE TWO
TERM, RENEWALS & EARLIER TERMINATION
2.1 Term.
This Agreement shall be for an initial term of 730 days, commencing on the
date of its complete execution by all Parties, as evinced in the execution page
hereof (the "Initial Term").
2.2 Renewals.
This Agreement shall be renewed automatically, after expiration of the
original term, on a continuing annual basis, unless the Party wishing not to
renew this Agreement provides the other Party with written notice of its
election not to renew ("Termination Election Notice") on or before
the 30th day prior to termination of the then current term.
2.3 Final Settlement.
(A) Upon termination of this Agreement and payment to Yankees of all amounts due
it hereunder, Yankees or its representative shall execute and deliver to
Client a receipt for such sums and a release of all claims, except such
claims as may have been submitted pursuant to the terms of this Agreement
and which remain unpaid, and, shall forthwith tender to Client all records,
manuals and written procedures, as may be desired by Client for the
continued conduct of its business; and
(B) Client or its representative shall execute and deliver to Yankees a receipt
for all materials returned and a release of all claims, except such claims
as may have been submitted pursuant to the terms of this Agreement and which
remain unpaid, and, shall forthwith tender to Yankees all records, manuals
and written procedures, as may be desired by Yankees for the continued
conduct of its business.
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ARTICLE THREE
CONSULTANT'S CONFIDENTIALITY & COMPETITION COVENANTS
3.1 General Provisions.
(A) Yankees acknowledges that, in and as a result of its entry into this
Agreement, it will be making use of confidential information of special and
unique nature and value relating to such matters as Client's trade secrets,
systems, procedures, manuals, confidential reports; consequently, as
material inducement to the entry into this Agreement by Client, Yankees
hereby covenants and agrees that it shall not, at anytime during the term of
this Agreement, any renewals thereof and for two years following the terms
of this Agreement, directly or indirectly, use, divulge or disclose, for any
purpose whatsoever, any of such confidential information which has been
obtained by or disclosed to it as a result of its entry into this Agreement
or provision of services hereunder.
(B) In the event of a breach or threatened breach by Yankees of any of the
provisions of this Article Three, Client, in addition to and not in
limitation of any other rights, remedies or damages available to Client,
whether at law or in equity, shall be entitled to a permanent injunction in
order to prevent or to restrain any such breach by such Consultant, or by
its partners, directors, officers, stockholders, agents, representatives,
servants, employers, employees, affiliates and/or any and all persons
directly or indirectly acting for or with it.
3.2 Special Remedies.
In view of the irreparable harm and damage which would undoubtedly occur to
Client and its clients as a result of a breach by Yankees of the covenants or
agreements contained in this Article Three, and in view of the lack of an
adequate remedy at law to protect Client's interests, Yankees hereby covenants
and agrees that Client shall have the following additional rights and remedies
in the event of a breach hereof:
(A) Yankees hereby consents to the issuance of a permanent injunction enjoining
it from any violations of the covenants set forth in this Article Three; and
(B) Because it is impossible to ascertain or estimate the entire or exact cost,
damage or injury which Client or its clients may sustain prior to the
effective enforcement of such injunction, Yankees hereby covenants and
agrees to pay over to Client, in the event it violates the covenants and
agreements contained in this Article Three, the greater of:
(1) Any payment or compensation of any kind received by it because of such
violation before the issuance of such injunction, or
(2) The sum of One Thousand Dollars per violation, which sum shall be
liquidated damages, and not a penalty, for the injuries suffered by
Client or its clients as a result of such violation, the Parties hereto
agreeing that such liquidated damages are not intended as the exclusive
remedy available to Client for any breach of the covenants and
agreements contained in this Article Three, prior to the issuance of
such injunction, the Parties recognizing that the only adequate remedy
to protect Client and its clients from the injury caused by such
breaches would be injunctive relief.
3.3 Cumulative Remedies.
Yankees hereby irrevocably agrees that the remedies described in this
Article Three shall be in addition to, and not in limitation of, any of the
rights or remedies to which Client and its clients are or may be entitled to,
whether at law or in equity, under or pursuant to this Agreement.
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3.4 Acknowledgment of Reasonableness.
(A) Yankees hereby represents, warrants and acknowledges that its members or
officers and directors have carefully read and considered the provisions of
this Article Three and, having done so, agrees that the restrictions set
forth herein are fair and reasonable and are reasonably required for the
protection of the interests of Client, its members, officers, directors,
consultants, agents and employees; consequently, in the event that any of
the above-described restrictions shall be held unenforceable by any court of
competent jurisdiction, Yankees hereby covenants, agrees and directs such
court to substitute a reasonable judicially enforceable limitation in place
of any limitation deemed unenforceable and, Yankees hereby covenants
and agrees that if so modified, the covenants contained in this Article
Three shall be as fully enforceable as if they had been set forth herein
directly by the Parties.
(B) In determining the nature of this limitation, Yankees hereby acknowledges,
covenants and agrees that it is the intent of the Parties that a court
adjudicating a dispute arising hereunder recognize that the Parties desire
that these covenants not to compete or circumvent be imposed and maintained
to the greatest extent possible.
3.5 Exclusivity.
Yankees shall not be required to devote all of its business time to the
affairs of Client, rather it shall devote such time as it is reasonably
necessary in light of its other business commitments.
ARTICLE FOUR
Client' CONFIDENTIALITY & COMPETITION COVENANTS
4.1 General Prohibitions
(A) Client acknowledges that, in and as a result of its engagement of Yankees,
Client will be making use of confidential information of special and unique
nature and value relating to such matters as Yankees's business contacts,
professional advisors, trade secrets, systems, procedures, manuals,
confidential reports, lists of clients, potential customers and funders;
consequently, as material inducement to the entry into this Agreement by
Yankees, Client hereby covenants and agrees that it shall not, at anytime
during the term of this Agreement, any renewals thereof an for two years
following the terms of this Agreement, directly or indirectly, use, divulge
or disclose, for any purpose whatsoever, any of such confidential
information which has been obtained by or disclosed to it as a result of its
employment of Yankees, or Yankees's affiliates.
(B) In the event of a breach or threatened breach by Client of any of the
provisions of this Article Four, Yankees, in addition to and not in
limitation of any other rights, remedies or damages available to Yankees,
whether at law or in equity, shall be entitled to a permanent injunction in
order to prevent or to restrain any such breach by Client, or by Client's
partners, directors, officers, stockholders, agents, representatives,
servants, employers, employees, affiliates and/or any and all persons
directly or indirectly acting for or with it.
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4.2 Special Remedies.
In view of the irreparable harm and damage which would undoubtedly occur to
Yankees as a result of a breach by Client of the covenants or agreements
contained in this Article Four, and in view of the lack of an adequate remedy at
law to protect Yankees's interests, Client hereby covenants and agrees that
Yankees shall have the following additional rights and remedies in the event of
a breach hereof:
(A) Client hereby consents to the issuance of a permanent injunction enjoining
it from any violations of the covenants set forth in this Article Four is
and
(B) Because it is impossible to ascertain or estimate the entire or exact cost,
damage or injury which Yankees may sustain prior to the effective
enforcement of such injunction, Client hereby covenants and agrees to pay
over to Yankees, in the event it violates the covenants and agreements
contained in this Article Four, the greater of:
(1) Any payment or compensation of any kind received by it because of such
violation before the issuance of such injunction, or
(2) The sum of One Thousand Dollars per violation, which sum shall be
liquidated damages, and not a penalty, for the injuries suffered by
Yankees as a result of such violation, the Parties hereto agreeing that
such liquidated damages are not intended as the exclusive remedy
available to Yankees for any breach of the covenants and agreements
contained in this Article Four, prior to the issuance of such
injunction, the Parties recognizing that the only adequate remedy to
protect Yankees from the injury caused by such breaches would be
injunctive relief.
4.3 Cumulative Remedies.
Client hereby irrevocably agrees that the remedies described in this Article
Four shall be in addition to, and not in limitation of, any of the rights or
remedies to which Yankees is or may be entitled to, whether at law or in equity,
under or pursuant to this Agreement.
4.4 Acknowledgment of Reasonableness.
(A) Client hereby represents, warrants and acknowledges that its officers and
directors have carefully read and considered the provisions of this Article
Four and, having done so, agree that the restrictions set forth herein are
fair and reasonable and are reasonably required for the protection of the
interests of Yankees, its members, officers, directors, consultants, agents
and employees; consequently, in the event that any of the above-described
restrictions shall be held unenforceable by any court of competent
jurisdiction, Client hereby covenants, agrees and directs such court to
substitute a reasonable judicially enforceable limitation in place of any
limitation deemed unenforceable and, Client hereby covenants and agrees that
if so modified, the covenants contained in this Article Four shall be as
fully enforceable as if they had been set forth herein directly by the
Parties.
(B) In determining the nature of this limitation, Client hereby acknowledges,
covenants and agrees that it is the intent of the Parties that a court
adjudicating a dispute hereunder recognize that the Parties desire that
these covenants not to compete or circumvent be imposed and maintained to
the greatest extent possible.
134
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ARTICLE FIVE
MISCELLANEOUS
5.1 Notices.
All notices, demands or other written communications hereunder shall be in
writing, and unless otherwise provided, shall be deemed to have been duly given
on the first business day after mailing by United States registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
To Yankees:
902 Clint Moore Road, Suite 136; Boca Raton, Florida 3418
Telephone (561) 998-2025; Fax (561) 998-3425
Attention: Leonard Miles Tucker, President
and
1941 Southeast 51st Terrace; Ocala, Florida 34471
Telephone (352) 694-9179; Fax (352) 694-9178
Attention: Vanessa H. Mitchem, Chief Administrative Officer
To Client:
Equity Growth Systems, inc.
At such address, telephone and fax numbers
as are reflected on the SEC's EDGAR Internet site;
Attention: Charles J. Scimeca, President & Chief Executive Officer
in each case, with copies to such other address or to such other persons as any
Party shall designate to the others for such purposes in the manner hereinabove
set forth.
5.2 Amendment.
No modification, waiver, amendment, discharge or change of this Agreement
shall be valid unless the same is in writing and signed by Parties.
5.3 Merger.
(A) This instrument, together with the instruments referred to herein, contains
all of the understandings and agreements of the Parties with respect to the
subject matter discussed herein.
(B) All prior agreements whether written or oral are merged herein and shall be
of no force or effect.
5.4 Survival.
The several representations, warranties and covenants of the Parties
contained herein shall survive the execution hereof and shall be effective
regardless of any investigation that may have been made or may be made by or on
behalf of any Party.
5.5 Severability.
If any provision or any portion of any provision of this Agreement, other
than a conditions precedent, if any, or the application of such provision or any
portion thereof to any person or circumstance shall be held invalid or
unenforceable, the remaining portions of such provision and the remaining
provisions of this Agreement or the application of such provision or portion of
such provision as is held invalid or unenforceable to persons or circumstances
other than those to which it is held invalid or unenforceable, shall not be
affected thereby.
135
<PAGE>
5.6 Governing Law and Venue.
This Agreement shall be construed in accordance with the laws of the State
of Florida and any proceeding arising between the Parties in any matter
pertaining or related to this Agreement shall, to the extent permitted by law,
be held in Palm Beach County, Florida.
5.7 Dispute Resolution in lieu of Litigation.
(A) In the event of any dispute arising under this Agreement, or the negotiation
thereof or inducements to enter into the Agreement, the dispute shall, at
the request of any Party, be exclusively resolved through the following
procedures:
(1) (a) First, the issue shall be submitted to mediation before a
mediation service in Palm Beach County, Florida to be selected by
lot from six alternatives to be provided, three by Yankees and
three by Client.
(b) The mediation efforts shall be concluded within ten business days after
their initiation unless the Parties unanimously agree to an extended
mediation period;
(2) In the event that mediation does not lead to a resolution of the
dispute then at the request of any Party, the Parties shall submit the
dispute to binding arbitration before an arbitration service located in
Palm Beach County, Florida, to be selected by lot, from six
alternatives to be provided, in the manner set forth above for
selection of a mediator;
(3) (A) Expenses of mediation shall be borne by the Parties equally if
successful but if unsuccessful, expenses of mediation and of
arbitration shall be borne by the Party or Parties against whom
the arbitration decision is rendered.
(B) If the terms of the arbitral award do not establish a prevailing Party,
then the expenses of unsuccessful mediation and arbitration shall be
borne by Client and by Yankees.
(B) Judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof.
(C) In any action between the Parties to enforce any of the terms of this
Agreement or any other matter arising from this Agreement, the prevailing
Party shall be entitled to recover its costs and expenses, including
reasonable attorneys' fees up to and including all negotiations, trials and
appeals, whether or not litigation is initiated.
5.8 Benefit of Agreement.
The terms and provisions of this Agreement shall be binding upon and inure
to the benefit of the Parties, jointly and severally, their successors, assigns,
personal representatives, estate, heirs and legatees.
5.9 Captions.
The captions in this Agreement are for convenience and reference only and in
no way define, describe, extend or limit the scope of this Agreement or the
intent of any provisions hereof.
5.10 Number and Gender.
All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the Party or
Parties, or their personal representatives, successors and assigns may require.
5.11 Further Assurances.
The Parties hereby agree to do, execute, acknowledge and deliver or cause to
be done, executed, acknowledged or delivered and to perform all such acts and
deliver all such deeds, assignments, transfers, conveyances, powers of attorney,
assurances, stock certificates and other documents, as may, from time to time,
be required herein to effect the intent and purpose of this Agreement.
136
<PAGE>
5.12 Status.
(A) Nothing in this Agreement shall be construed or shall constitute a
partnership, joint venture, employer-employee relationship, lessor-lessee
relationship, or principal-agent relationship.
(B) Throughout the term of this Agreement, Yankees shall serve an independent
contractor, as that term is defined by the United States Internal Revenue
Service, and in conjunction therewith, shall be responsible for all of his
own tax reporting and payment obligations.
(C) In amplification of the foregoing, Yankees shall, subject to reasonable
reimbursement on a pre-approved budgetary basis, be responsible for
providing its own office facilities and supporting personnel.
5.13 Counterparts.
(A) This Agreement may be executed in any number of counterparts delivered
through facsimile transmission.
(B) All executed counterparts shall constitute one Agreement notwithstanding
that all signatories are not signatories to the original or the same
counterpart.
5.14 License.
(A) (1) This Agreement is the property of Yankees.
(2) The use hereof by the Parties is authorized hereby solely for purposes
of this transaction and, the use of this form of agreement or of any
derivation thereof without Yankees' prior written permission is
prohibited.
(3) This Agreement shall not be construed more stringently or interpreted
less favorably against Yankees' based on authorship.
(B) Each of the Parties hereby acknowledge that Yankees is not a law firm and
has not provided it with any advice, legal or otherwise, in conjunction with
this Agreement, but rather, has suggested that it rely solely on its own
experience and advisors in evaluating or interpreting this Agreement.
In Witness Whereof, the Parties have executed this Agreement, effective as
of the last date set forth below.
Signed, Sealed & Delivered
In Our Presence
Equity Growth Systems, inc.
____________________________ By: ____________________________
Charles J. Scimeca, President
Dated: _____________________
The Yankee Companies, Inc.
____________________________ By: ____________________________
Leonard Miles Tucker, President
Dated: _____________________
137
<PAGE>
EXHIBIT 10.24
RECENT SETTLEMENTS AND RELEASES WITH CREDITORS
Settlement Agreement
This Settlement Agreement (the "Agreement") is made and entered into by and
among Equity Growth Systems, inc., a publicly held Delaware corporation with a
class of securities registered under Section 12(g) of the Securities and
Exchange Act of 1934, as amended ("Equity Growth Systems" and the "Exchange
Act," respectively) and Liberty Transfer Co., it's affiliates, agents or assigns
hereinafter referred to as "Liberty ", who for longer than the past 5 years has
served as a stock transfer company and consultant for Equity Growth Systems
being collectively referred to as the "Parties" and each being sometimes
hereinafter generically referred to as a "Party").
Preamble:
WHEREAS, Liberty has provided acted as a stock transfer agentcert and has
provided consulting services for the benefit of the Company and has submitted in
writing it's claim for payment for services rendered and all costs incurred in
the amount of approximately $9,100.00 for services rendered, and has offered to
settle all claims he may have under employment, accounting, consulting and
creditor relationships with Equity Growth Systems, as hereinafter described:
NOW, THEREFORE, in consideration of the premises, as well as the mutual
covenants hereinafter set forth, the Parties, intending to be legally bound,
hereby agree as follows:
Witnesseth:
First: Terms of Settlement
Liberty and Equity Growth Systems hereby agree to settle all of their
outstanding claims against each other and their members, partners, officers,
directors, agents and affiliates, on the following terms:
C. In full payment of all obligations to Liberty and it's affiliates owed by
Equity Growth Systems, Inc., and its affiliates, from the beginning of time
until the date of this Agreement, as well as in consideration for the
extinguishment of all agreements between them, Equity Growth Systems will,
within 7 days after receipt of a copy of this signed agreement shall pay to
Liberty the sum of $3,600.00.
D. Liberty hereby relinquishes all rights under any agreements between him or
his affiliates and Equity Growth Systems and its affiliates, other than
those created by this Agreement.
E. Liberty will cooperate with present and successor management and present and
future accounting firms or persons concerning work that Liberty has
performed for the Company.
Second Mutual Releases
In consideration for the exchange of covenants reflected above but excepting
only the obligations created by this Agreement, the Parties hereby each release,
discharge and forgive the other, and each of the others' members, officers,
directors, partners, agents and employees from any and all liabilities, whether
current or inchoate, from the beginning of time until the date of this
Agreement.
Third: Miscellaneous
138
<PAGE>
3.1 Amendment.
No modification, waiver, amendment, discharge or change of this Agreement
shall be valid unless the same is evinced by a written instrument, subscribed by
the Party against which such modification, waiver, amendment, discharge or
change is sought.
3.2 Notice.
All notices, demands or other communications given hereunder shall be in
writing and shall be deemed to have been duly given on the first business day
after mailing by United States registered or unaudited mail, return receipt
requested, postage prepaid, addressed as follows:
To Equity Growth Systems:
902 Clint Moore Road, Suite 136; Boca Raton, Florida 33487
Attention: Charles J. Scimeca, President.
To :
Liberty Transfer Co.
23 Green Street, Box 558
Huntington, New York 11743
or such other address or to such other person as any Party shall designate to
the other for such purpose in the manner hereinafter set forth.
3.3 Merger.
This instrument, together with the instruments referred to herein, contains
all of the understandings and agreements of the Parties with respect to the
subject matter discussed herein. All prior agreements whether written or oral
are merged herein and shall be of no force or effect.
3.4 Survival.
The several representations, warranties and covenants of the Parties
contained herein shall survive the execution hereof and shall be effective
regardless of any investigation that may have been
made or may be made by or on behalf of any Party.
3.5 Severability.
If any provision or any portion of any provision of this Agreement, other
than one of the conditions precedent or subsequent, or the application of such
provision or any portion thereof to any person or circumstance shall be held
invalid or unenforceable, the remaining portions of such provision and the
remaining provisions of this Agreement or the application of such provision or
portion of such provision as is held invalid or unenforceable to persons or
circumstances other than those to which it is held invalid or unenforceable,
shall not be affected thereby.
3.6 Governing Law.
This Agreement shall be construed in accordance with the laws of the State
of Florida and any proceedings pertaining directly or indirectly to the rights
or obligations of the Parties hereunder shall, to the extent legally permitted,
be held in Palm Beach County, Florida.
139
<PAGE>
3.7 Indemnification.
Each Party hereby irrevocably agrees to indemnify and hold the other Parties
harmless from any and all liabilities and damages (including legal or other
expenses incidental thereto), contingent, current, or inchoate to which they or
any one of them may become subject as a direct, indirect or incidental
consequence of any action by the indemnifying Party or as a consequence of the
failure of the indemnifying Party to act, whether pursuant to requirements of
this Agreement or otherwise; provided that, such claims are asserted by third
parties unrelated to the Parties. In the event it becomes necessary to enforce
this indemnity through an attorney, with or without litigation, the successful
Party shall be entitled to recover from the indemnifying Party, all costs
incurred including reasonable attorneys' fees throughout any negotiations,
trials or appeals, whether or not any suit is instituted. 3.8 Litigation.
In any action between the Parties to enforce any of the terms of this
Agreement or any other matter arising from this Agreement, the prevailing Party
shall be entitled to recover its costs and expenses, including reasonable
attorneys' fees up to and including all negotiations, trials and appeals,
whether or not litigation is initiated.
3.9 Benefit of Agreement.
The terms and provisions of this Agreement shall be binding upon and inure
to the benefit of the Parties, their successors, assigns, personal
representatives, estate, heirs and legatees.
3.10 Captions.
The captions in this Agreement are for convenience and reference only and in
no way define, describe, extend or limit the scope of this Agreement or the
intent of any provisions hereof.
3.11 Number and Gender.
All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the Party or
Parties, or their personal representatives, successors and assigns may require.
3.12 Further Assurances.
The Parties agree to do, execute, acknowledge and deliver or cause to be
done, executed, acknowledged or delivered and to perform all such acts and
deliver all such deeds, assignments, transfers, conveyances, powers of attorney,
assurances, stock certificates and other documents, as may, from time to time,
be required herein to effect the intent and purpose of this Agreement.
3.13 Status.
Nothing in this Agreement shall be construed or shall constitute a
partnership, joint venture, employer-employee relationship, lessor-lessee
relationship, or principal-agent relationship, rather, the relationships
established hereby are those of settling debtor and creditor.
140
<PAGE>
3.14 Counterparts.
(a) This Agreement may be executed in any number of counterparts.
(b) All executed counterparts shall constitute one Agreement notwithstanding
that all signatories are not signatories to the original or the same
counterpart.
(c) Execution by exchange of facsimile transmission shall be deemed legally
sufficient to bind the signatory; however, the Parties shall, for aesthetic
purposes, prepare a fully executed original version of this Agreement, which
shall be the document filed with the Securities and Exchange Commission.
* *
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
effective as of the ____ day of November, 1998.
Signed, sealed and delivered
In Our Presence:
Equity Growth Systems, inc.
- ---------------------------------
_________________________________ By:
---------------------------------
Charles J. Scimeca, President
(CORPORATE SEAL)
Liberty :
- ---------------------------------
- --------------------------------- ---------------------------------
Liberty Transfer Co.
Al Sander, for the firm
141
<PAGE>
Settlement Agreement
This Settlement Agreement (the "Agreement") is made and entered into by
and among Equity Growth Systems, inc., a publicly held Delaware corporation with
a class of securities registered under Section 12(g) of the Securities and
Exchange Act of 1934, as amended ("Equity Growth Systems" and the "Exchange
Act," respectively) and Baum & Company, P.A., a Florida Corporation, hereinafter
referred to as "Baum", it's affiliates, agents or assigns, who for longer than
the past 5 years has served as an accountant and consultant for Equity Growth
Systems being collectively referred to as the "Parties" and each being sometimes
hereinafter generically referred to as a "Party").
Preamble:
WHEREAS, Baum has provided certain accounting and consulting services for
the benefit of the Company and has submitted in writing his claim for payment
for services rendered and all costs incurred in the amount of $8,000.00 for
services rendered, and has offered to settle all claims he may have under
employment, accounting, consulting and creditor relationships with Equity Growth
Systems, as hereinafter described:
NOW, THEREFORE, in consideration of the premises, as well as the mutual
covenants hereinafter set forth, the Parties, intending to be legally bound,
hereby agree as follows:
Witnesseth:
First: Terms of Settlement
Baum and Equity Growth Systems hereby agree to settle all of their
outstanding claims against each other and their members, partners, officers,
directors, agents and affiliates, on the following terms:
F. In full payment of all obligations to Baum and his affiliates owed by Equity
Growth Systems, Inc., and its affiliates, from the beginning of time until
the date of this Agreement, as well as in consideration for the
extinguishment of all agreements between them, Equity Growth Systems will,
within 7 days after receipt of a copy of this signed agreement shall pay to
Baum the sum of $2,000.00.
G. Baum hereby relinquishes all rights under any agreements between him or his
affiliates, agents or assigns, and Equity Growth Systems and its affiliates,
other than those created by this Agreement.
H. Baum will cooperate with present and successor management and present and
future accounting firms or persons concerning work that Baum has performed
for the Company.
Second Mutual Releases
In consideration for the exchange of covenants reflected above but excepting
only the obligations created by this Agreement, the Parties hereby each release,
discharge and forgive the other, and each of the others' members, officers,
directors, partners, agents and employees from any and all liabilities, whether
current or inchoate, from the beginning of time until the date of this
Agreement.
Third: Miscellaneous
142
<PAGE>
3.1 Amendment.
No modification, waiver, amendment, discharge or change of this Agreement
shall be valid unless the same is evinced by a written instrument, subscribed by
the Party against which such modification, waiver, amendment, discharge or
change is sought.
3.2 Notice.
All notices, demands or other communications given hereunder shall be in
writing and shall be deemed to have been duly given on the first business day
after mailing by United States registered or unaudited mail, return receipt
requested, postage prepaid, addressed as follows:
To Equity Growth Systems:
902 Clint Moore Road, Suite 136; Boca Raton, Florida 33487
Attention: Charles J. Scimeca, President.
To Baum:
Baum & Company, P.A.
1515 University Drive, Suite 209
Coral Springs, Florida 33071
or such other address or to such other person as any Party shall designate to
the other for such purpose in the manner hereinafter set forth.
3.3 Merger.
This instrument, together with the instruments referred to herein, contains
all of the understandings and agreements of the Parties with respect to the
subject matter discussed herein. All prior agreements whether written or oral
are merged herein and shall be of no force or effect.
3.4 Survival.
The several representations, warranties and covenants of the Parties
contained herein shall survive the execution hereof and shall be effective
regardless of any investigation that may have been made or may be made by or on
behalf of any Party.
3.5 Severability.
If any provision or any portion of any provision of this Agreement, other
than one of the conditions precedent or subsequent, or the application of such
provision or any portion thereof to any person or circumstance shall be held
invalid or unenforceable, the remaining portions of such provision and the
remaining provisions of this Agreement or the application of such provision or
portion of such provision as is held invalid or unenforceable to persons or
circumstances other than those to which it is held invalid or unenforceable,
shall not be affected thereby.
3.6 Governing Law.
This Agreement shall be construed in accordance with the laws of the State
of Florida and any proceedings pertaining directly or indirectly to the rights
or obligations of the Parties hereunder shall, to the extent legally permitted,
be held in Palm Beach County, Florida.
143
<PAGE>
3.7 Indemnification.
Each Party hereby irrevocably agrees to indemnify and hold the other Parties
harmless from any and all liabilities and damages (including legal or other
expenses incidental thereto), contingent, current, or inchoate to which they or
any one of them may become subject as a direct, indirect or incidental
consequence of any action by the indemnifying Party or as a consequence of the
failure of the indemnifying Party to act, whether pursuant to requirements of
this Agreement or otherwise; provided that, such claims are asserted by third
parties unrelated to the Parties. In the event it becomes necessary to enforce
this indemnity through an attorney, with or without litigation, the successful
Party shall be entitled to recover from the indemnifying Party, all costs
incurred including reasonable attorneys' fees throughout any negotiations,
trials or appeals, whether or not any suit is instituted.
3.8 Litigation.
In any action between the Parties to enforce any of the terms of this
Agreement or any other matter arising from this Agreement, the prevailing Party
shall be entitled to recover its costs and expenses, including reasonable
attorneys' fees up to and including all negotiations, trials and appeals,
whether or not litigation is initiated.
3.9 Benefit of Agreement.
The terms and provisions of this Agreement shall be binding upon and inure
to the benefit of the Parties, their successors, assigns, personal
representatives, estate, heirs and legatees.
3.10 Captions.
The captions in this Agreement are for convenience and reference only and in
no way define, describe, extend or limit the scope of this Agreement or the
intent of any provisions hereof.
3.11 Number and Gender.
All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the Party or
Parties, or their personal representatives, successors and assigns may require.
3.12 Further Assurances.
The Parties agree to do, execute, acknowledge and deliver or cause to be
done, executed, acknowledged or delivered and to perform all such acts and
deliver all such deeds, assignments, transfers, conveyances, powers of attorney,
assurances, stock certificates and other documents, as may, from time to time,
be required herein to effect the intent and purpose of this Agreement.
3.13 Status.
Nothing in this Agreement shall be construed or shall constitute a
partnership, joint venture, employer-employee relationship, lessor-lessee
relationship, or principal-agent relationship, rather, the relationships
established hereby are those of settling debtor and creditor.
144
<PAGE>
3.14 Counterparts.
(a) This Agreement may be executed in any number of counterparts.
(b) All executed counterparts shall constitute one Agreement notwithstanding
that all signatories are not signatories to the original or the same
counterpart.
(c) Execution by exchange of facsimile transmission shall be deemed legally
sufficient to bind the signatory; however, the Parties shall, for aesthetic
purposes, prepare a fully executed original version of this Agreement, which
shall be the document filed with the Securities and Exchange Commission.
* *
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
ef- fective as of the ____ day of November, 1998.
Signed, sealed and delivered
In Our Presence:
Equity Growth Systems, inc.
- ---------------------------------
_________________________________ By:
---------------------------------
Charles J. Scimeca, President
(CORPORATE SEAL)
Baum:
- ---------------------------------
- --------------------------------- ---------------------------------
Saul B. Baum & Company
Joel Baum, for the firm
145
<PAGE>
Settlement Agreement
This Settlement Agreement (the "Agreement") is made and entered into by and
among Equity Growth Systems, inc., a publicly held Delaware corporation with a
class of securities registered under Section 12(g) of the Securities and
Exchange Act of 1934, as amended ("Equity Growth Systems" and the "Exchange
Act," respectively) and Saul B. Lipson & Company, a Florida Corporation,
hereinafter referred to as "Lipson", it's affiliates, agents, assigns who for
longer than the past 5 years has served as an accountant and consultant for
Equity Growth Systems being collectively referred to as the "Parties" and each
being sometimes hereinafter generically referred to as a "Party").
Preamble:
WHEREAS, Lipson has provided certain accounting and consulting services for
the benefit of the Company and has submitted in writing his claim for payment
for services rendered and all costs incurred in the amount of $8,000.00.00 for
services rendered and has offered to settle all claims he may have under
employment, accounting, consulting and creditor relationships with Equity Growth
Systems, as hereinafter described:
NOW, THEREFORE, in consideration of the premises, as well as the mutual
covenants hereinafter set forth, the Parties, intending to be legally bound,
hereby agree as follows:
Witnesseth:
First: Terms of Settlement
Lipson and Equity Growth Systems hereby agree to settle all of their
outstanding claims against each other and their members, partners, officers,
directors, agents and affiliates, on the following terms:
I. In full payment of all obligations to Lipson and his affiliates owed by
Equity Growth Systems, Inc., and its affiliates, from the beginning of time
until the date of this Agreement, as well as in consideration for the
extinguishment of all agreements between them, Equity Growth Systems will,
within 7 days after receipt of a copy of this signed agreement shal pay to
Lipson the sum of $2,000.00.
J. Lipson hereby relinquishes all rights under any agreements between him or
his affiliates and Equity Growth Systems and its affiliates, other than
those created by this Agreement.
K. Lipson will cooperate with present and successor management and present and
future accounting firms or persons concerning work that Lipson has performed
for the Company.
Second Mutual Releases
In consideration for the exchange of covenants reflected above but excepting
only the obligations created by this Agreement, the Parties hereby each release,
discharge and forgive the other, and each of the others' members, officers,
directors, partners, agents and employees from any and all liabilities, whether
current or inchoate, from the beginning of time until the date of this
Agreement.
Third: Miscellaneous
146
<PAGE>
3.1 Amendment.
No modification, waiver, amendment, discharge or change of this Agreement
shall be valid unless the same is evinced by a written instrument, subscribed by
the Party against which such modification, waiver, amendment, discharge or
change is sought.
3.2 Notice.
All notices, demands or other communications given hereunder shall be in
writing and shall be deemed to have been duly given on the first business day
after mailing by United States registered or unaudited mail, return receipt
requested, postage prepaid, addressed as follows:
To Equity Growth Systems:
902 Clint Moore Road, Suite 136; Boca Raton, Florida 33487
Attention: Charles J. Scimeca, President.
To : Mr. Lipson:
Saul B. Lipson & Company
1515 University Drive, Suite 222
Coral Springs, Florida 33031
or such other address or to such other person as any Party shall designate to
the other for such purpose in the manner hereinafter set forth.
3.3 Merger.
This instrument, together with the instruments referred to herein, contains
all of the understandings and agreements of the Parties with respect to the
subject matter discussed herein. All prior agreements whether written or oral
are merged herein and shall be of no force or effect.
3.4 Survival.
The several representations, warranties and covenants of the Parties
contained herein shall survive the execution hereof and shall be effective
regardless of any investigation that may have been made or may be made by or on
behalf of any Party.
147
<PAGE>
3.5 Severability.
If any provision or any portion of any provision of this Agreement, other
than one of the conditions precedent or subsequent, or the application of such
provision or any portion thereof to any person or circumstance shall be held
invalid or unenforceable, the remaining portions of such provision and the
remaining provisions of this Agreement or the application of such provision or
portion of such provision as is held invalid or unenforceable to persons or
circumstances other than those to which it is held invalid or unenforceable,
shall not be affected thereby.
3.6 Governing Law.
This Agreement shall be construed in accordance with the laws of the State
of Florida and any proceedings pertaining directly or indirectly to the rights
or obligations of the Parties hereunder shall, to the extent legally permitted,
be held in Palm Beach County, Florida.
3.7 Indemnification.
Each Party hereby irrevocably agrees to indemnify and hold the other Parties
harmless from any and all liabilities and damages (including legal or other
expenses incidental thereto), contingent, current, or inchoate to which they or
any one of them may become subject as a direct, indirect or incidental
consequence of any action by the indemnifying Party or as a consequence of the
failure of the indemnifying Party to act, whether pursuant to requirements of
this Agreement or otherwise; provided that, such claims are asserted by third
parties unrelated to the Parties. In the event it becomes necessary to enforce
this indemnity through an attorney, with or without litigation, the successful
Party shall be entitled to recover from the indemnifying Party, all costs
incurred including reasonable attorneys' fees throughout any negotiations,
trials or appeals, whether or not any suit is instituted.
3.8 Litigation.
In any action between the Parties to enforce any of the terms of this
Agreement or any other matter arising from this Agreement, the prevailing Party
shall be entitled to recover its costs and expenses, including reasonable
attorneys' fees up to and including all negotiations, trials and appeals,
whether or not litigation is initiated.
3.9 Benefit of Agreement.
The terms and provisions of this Agreement shall be binding upon and inure
to the benefit of the Parties, their successors, assigns, personal
representatives, estate, heirs and legatees.
3.10 Captions.
The captions in this Agreement are for convenience and reference only and in
no way define, describe, extend or limit the scope of this Agreement or the
intent of any provisions hereof.
3.11 Number and Gender.
All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the Party or
Parties, or their personal representatives, successors and assigns may require.
3.12 Further Assurances.
The Parties agree to do, execute, acknowledge and deliver or cause to be
done, executed, acknowledged or delivered and to perform all such acts and
deliver all such deeds, assignments, transfers, conveyances, powers of attorney,
assurances, stock certificates and other documents, as may, from time to time,
be required herein to effect the intent and purpose of this Agreement.
3.13 Status.
Nothing in this Agreement shall be construed or shall constitute a
partnership, joint venture, employer-employee relationship, lessor-lessee
relationship, or principal-agent relationship, rather, the relationships
established hereby are those of settling debtor and creditor.
148
<PAGE>
3.14 Counterparts.
(a) This Agreement may be executed in any number of counterparts.
(b) All executed counterparts shall constitute one Agreement notwithstanding
that all signatories are not signatories to the original or the same
counterpart.
(c) Execution by exchange of facsimile transmission shall be deemed legally
sufficient to bind the signatory; however, the Parties shall, for aesthetic
purposes, prepare a fully executed original version of this Agreement, which
shall be the document filed with the Securities and Exchange Commission.
* *
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
ef- fective as of the ____ day of November, 1998.
Signed, sealed and delivered
In Our Presence:
Equity Growth Systems, inc.
- ---------------------------------
_________________________________ By:
---------------------------------
Charles J. Scimeca, President
(CORPORATE SEAL)
Mr. Lipson:
- ---------------------------------
- --------------------------------- ---------------------------------
Saul B. Lipson & Company
Saul B Lipson, for the firm
149
<PAGE>
Settlement Agreement
This Settlement Agreement (the "Agreement") is made and entered into by and
among Equity Growth Systems, inc., a publicly held Delaware corporation with a
class of securities registered under Section 12(g) of the Securities and
Exchange Act of 1934, as amended ("Equity Growth Systems" and the "Exchange
Act," respectively) and Leo J. Paul, his affiliates, agents, or assigns, and any
entity Mr. Paul may do business as an officer, director, stockholder, or
partner, Hereinafter referred to as Mr. Paul, who for longer than the past 5
years has served as an accountant and consultant for Equity Growth Systems being
collectively referred to as the "Parties" and each being sometimes hereinafter
generically referred to as a "Party").
Preamble:
WHEREAS, Mr. Paul has provided certain accounting and consulting services
for the benefit of the Company and has submitted in writing his claim for
payment for services rendered and all costs incurred in the amount of $22,500.00
for services rendered, and has offered to settle all claims he may have under
employment, consulting and creditor relationships with Equity Growth Systems, as
hereinafter described:
NOW, THEREFORE, in consideration of the premises, as well as the mutual
covenants hereinafter set forth, the Parties, intending to be legally bound,
hereby agree as follows:
Witnesseth:
First: Terms of Settlement
Mr. Paul and Equity Growth Systems hereby agree to settle all of their
outstanding claims against each other and their members, partners, officers,
directors, agents and affiliates, on the following terms:
L. In full payment of all obligations to Mr. Paul and his affiliates owed by
Equity Growth Systems, Inc., and its affiliates, from the beginning of time
until the date of this Agreement, as well as in consideration for the
extinguishment of all agreements between them, Equity Growth Systems will,
within 7 days after receipt of a copy of this signed agreement shall pay to
Mr. Paul the sum of $9,000.00.
M. Mr. Paul hereby relinquishes all rights under any agreements between him or
his affiliates and Equity Growth Systems and its affiliates, other than
those created by this Agreement.
N. Mr. Paul will cooperate with present and successor management and present
and future accounting firms or persons concerning work that Mr. Paul has
performed for the Company.
Second Mutual Releases
In consideration for the exchange of covenants reflected above but excepting
only the obligations created by this Agreement, the Parties hereby each release,
discharge and forgive the other, and each of the others' members, officers,
directors, partners, agents and employees from any and all liabilities, whether
current or inchoate, from the beginning of time until the date of this
Agreement.
Third: Miscellaneous
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3.1 Amendment.
No modification, waiver, amendment, discharge or change of this Agreement
shall be valid unless the same is evinced by a written instrument, subscribed by
the Party against which such modification, waiver, amendment, discharge or
change is sought.
3.2 Notice.
All notices, demands or other communications given hereunder shall be in
writing and shall be deemed to have been duly given on the first business day
after mailing by United States registered or unaudited mail, return receipt
requested, postage prepaid, addressed as follows:
To Equity Growth Systems:
902 Clint Moore Road, Suite 136; Boca Raton, Florida 33487
Attention: Charles J. Scimeca, President.
To Mr. Paul:
Leo J. Paul
407 Lincoln Road
Ste 4-C
Miami, Florida 33139
or such other address or to such other person as any Party shall designate to
the other for such purpose in the manner hereinafter set forth.
3.3 Merger.
This instrument, together with the instruments referred to herein, contains
all of the understandings and agreements of the Parties with respect to the
subject matter discussed herein. All prior agreements whether written or oral
are merged herein and shall be of no force or effect.
3.4 Survival.
The several representations, warranties and covenants of the Parties
contained herein shall survive the execution hereof and shall be effective
regardless of any investigation that may have been made or may be made by or on
behalf of any Party.
3.5 Severability.
If any provision or any portion of any provision of this Agreement, other
than one of the conditions precedent or subsequent, or the application of such
provision or any portion thereof to any person or circumstance shall be held
invalid or unenforceable, the remaining portions of such provision and the
remaining provisions of this Agreement or the application of such provision or
portion of such provision as is held invalid or unenforceable to persons or
circumstances other than those to which it is held invalid or unenforceable,
shall not be affected thereby.
3.6 Governing Law.
This Agreement shall be construed in accordance with the laws of the State
of Florida and any proceedings pertaining directly or indirectly to the rights
or obligations of the Parties hereunder shall, to the extent legally permitted,
be held in Palm Beach County, Florida.
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<PAGE>
3.7 Indemnification.
Each Party hereby irrevocably agrees to indemnify and hold the other Parties
harmless from any and all liabilities and damages (including legal or other
expenses incidental thereto), contingent, current, or inchoate to which they or
any one of them may become subject as a direct, indirect or incidental
consequence of any action by the indemnifying Party or as a consequence of the
failure of the indemnifying Party to act, whether pursuant to requirements of
this Agreement or otherwise; provided that, such claims are asserted by third
parties unrelated to the Parties. In the event it becomes necessary to enforce
this indemnity through an attorney, with or without litigation, the successful
Party shall be entitled to recover from the indemnifying Party, all costs
incurred including reasonable attorneys' fees throughout any negotiations,
trials or appeals, whether or not any suit is instituted.
3.8 Litigation.
In any action between the Parties to enforce any of the terms of this
Agreement or any other matter arising from this Agreement, the prevailing Party
shall be entitled to recover its costs and expenses, including reasonable
attorneys' fees up to and including all negotiations, trials and appeals,
whether or not litigation is initiated.
3.9 Benefit of Agreement.
The terms and provisions of this Agreement shall be binding upon and inure
to the benefit of the Parties, their successors, assigns, personal
representatives, estate, heirs and legatees.
3.10 Captions.
The captions in this Agreement are for convenience and reference only and in
no way define, describe, extend or limit the scope of this Agreement or the
intent of any provisions hereof.
3.11 Number and Gender.
All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the Party or
Parties, or their personal representatives, successors and assigns may require.
3.12 Further Assurances.
The Parties agree to do, execute, acknowledge and deliver or cause to be
done, executed, acknowledged or delivered and to perform all such acts and
deliver all such deeds, assignments, transfers, conveyances, powers of attorney,
assurances, stock certificates and other documents, as may, from time to time,
be required herein to effect the intent and purpose of this Agreement.
3.13 Status.
Nothing in this Agreement shall be construed or shall constitute a
partnership, joint venture, employer-employee relationship, lessor-lessee
relationship, or principal-agent relationship, rather, the relationships
established hereby are those of settling debtor and creditor.
152
<PAGE>
3.14 Counterparts.
(a) This Agreement may be executed in any number of counterparts.
(b) All executed counterparts shall constitute one Agreement notwithstanding
that all signatories are not signatories to the original or the same
counterpart.
(c) Execution by exchange of facsimile transmission shall be deemed legally
sufficient to bind the signatory; however, the Parties shall, for aesthetic
purposes, prepare a fully executed original version of this Agreement, which
shall be the document filed with the Securities and Exchange Commission.
* *
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
ef- fective as of the ____ day of November, 1998.
Signed, sealed and delivered
In Our Presence:
Equity Growth Systems, inc.
- ---------------------------------
_________________________________ By:
---------------------------------
Charles J. Scimeca, Acting President
(CORPORATE SEAL)
Mr. Paul:
- ---------------------------------
- ------------------------------- By:
_____________________________________
Leo J. Paul
153
<PAGE>
EXHIBIT 10.25
PROPOSED SETTLEMENT AGREEMENT AND RELEASE WITH MR. GRANVILLE-SMITH
Proposed Settlement Agreement
This Settlement Agreement (the "Agreement") is made and entered into by and
among Equity Growth Systems, inc., a publicly held Delaware corporation with a
class of securities registered under Section 12(g) of the Securities and
Exchange Act of 1934, as amended ("Equity Growth Systems" and the "Exchange
Act," respectively) and Edward Granville-Smith, a Florida resident who for
longer than the past three years has served as the sole director and the chief
executive officer of Equity Growth Systems (the "Retiring Principal;" Equity
Growth Systems and the Retiring Principal being collectively referred to as the
"Parties" and each being sometimes hereinafter generically referred to as a
"Party").
Preamble:
WHEREAS, the Retiring Principal desires to retire from his official roles as
an officer and director of Equity Growth Systems and in order to induce new
individuals to assume successor roles, has offered to settle all claims he may
have under employment, consulting and creditor relationships
with Equity Growth Systems, as hereinafter described:
NOW, THEREFORE, in consideration of the premises, as well as the mutual
covenants hereinafter set forth, the Parties, intending to be legally bound,
hereby agree as follows:
Witnesseth:
First: Terms of Settlement
The Retiring Principal and Equity Growth Systems hereby agree to settle all
of their outstanding claims against each other and their members, partners,
officers, directors, agents and affiliates, on the following terms:
O. In full payment of all obligations to the Retiring Principal and his
affiliates owed by Equity Growth Systems, Inc., and its affiliates, from the
beginning of time until the date of this Agreement, as well as in
consideration for the extinguishment of all agreements between them, Equity
Growth Systems will, within 72 hours after receipt of a copy of the Bolina
Note (as hereinafter described), pay to the Retiring Principal the sum of
$5,000.
P. The Retiring Principal hereby relinquishes all rights under any agreements
between him or his affiliates and Equity Growth Systems and its affiliates,
other than those created by this Agreement.
Q. The Retiring Principal will, subject to physical capabilities and limitations
based on his health:
8. Cooperate with successor management to terminate all agreements with
former officers, directors and consultants not specifically ratified by
new management and in recovery of securities issued pursuant thereto,
including, without limitation, Messrs.
Holman, Moffitt and Salyer;
9. Cooperate with successor management to negotiate with and identify
creditors;
10. Make management aware of Equity Growth Systems business operations and
provide assistance in its continuation or termination; and,
11. Upon resumption of normal physical capabilities, resume a more active
role in management, subject to negotiation of reasonable compensation
arrangements.
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<PAGE>
R. The Retiring Principal will, as soon as possible after execution of this
Agreement, provide to Leonard Miles Tucker of Boca Raton, Florida, copies of
the notes reflected in correspondence from Equity Growth Systems to WEFT
Trust dated June 14, 1996 (hereinafter and heretofore collectively referred
to as the Bolina Note[s]"), together with an estoppel letter pertaining
thereto from Mr. Spellman, the principal of the WEFT Trust, attesting to the
current status of all obligations pertaining thereto or arising thereunder.
S. The Retiring Principal hereby represents and warrants that, to the best of
his knowledge under his current physical and mental circumstances, Equity
Growth Systems has no liabilities not reflected in the financial statements
heretofore filed by it with the securities and Exchange Commission, except
as specified in exhibit 1-D annexed hereto and made a part hereof.
Second Mutual Releases
In consideration for the exchange of covenants reflected above but excepting
only the obligations created by this Agreement, the Parties hereby each release,
discharge and forgive the other, and each of the others' members, officers,
directors, partners, agents and employees from any and all liabilities, whether
current or inchoate, from the beginning of time until the date of this
Agreement.
Third: Miscellaneous
3.1 Amendment.
No modification, waiver, amendment, discharge or change of this Agreement
shall be valid unless the same is evinced by a written instrument, subscribed by
the Party against which such modification, waiver, amendment, discharge or
change is sought.
3.2 Notice.
All notices, demands or other communications given hereunder shall be in
writing and shall be deemed to have been duly given on the first business day
after mailing by United States registered or unaudited mail, return receipt
requested, postage prepaid, addressed as follows:
To Equity Growth Systems:
902 Clint Moore Road, Suite 136; Boca Raton, Florida 33487
Attention: Charles J. Scimeca, Acting President.
To the Retiring Principal:
Edward Granville-Smith.
3821 B Tamiami Trail, Suite 201; Port Charlotte, Florida 33949
or such other address or to such other person as any Party shall designate to
the other for such purpose in the manner hereinafter set forth.
3.3 Merger.
This instrument, together with the instruments referred to herein, contains
all of the understandings and agreements of the Parties with respect to the
subject matter discussed herein. All prior agreements whether written or oral
are merged herein and shall be of no force or effect.
3.4 Survival.
The several representations, warranties and covenants of the Parties
contained herein shall survive the execution hereof and shall be effective
regardless of any investigation that may have been
made or may be made by or on behalf of any Party.
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<PAGE>
3.5 Severability.
If any provision or any portion of any provision of this Agreement, other
than one of the conditions precedent or subsequent, or the application of such
provision or any portion thereof to any person or circumstance shall be held
invalid or unenforceable, the remaining portions of such provision and the
remaining provisions of this Agreement or the application of such provision or
portion of such provision as is held invalid or unenforceable to persons or
circumstances other than those to which it is held invalid or unenforceable,
shall not be affected thereby.
3.6 Governing Law.
This Agreement shall be construed in accordance with the laws of the State
of Florida and any proceedings pertaining directly or indirectly to the rights
or obligations of the Parties hereunder shall, to the extent legally permitted,
be held in Palm Beach County, Florida.
3.7 Indemnification.
Each Party hereby irrevocably agrees to indemnify and hold the other Parties
harmless from any and all liabilities and damages (including legal or other
expenses incidental thereto), contingent, current, or inchoate to which they or
any one of them may become subject as a direct, indirect or incidental
consequence of any action by the indemnifying Party or as a consequence of the
failure of the indemnifying Party to act, whether pursuant to requirements of
this Agreement or otherwise; provided that, such claims are asserted by third
parties unrelated to the Parties. In the event it becomes necessary to enforce
this indemnity through an attorney, with or without litigation, the successful
Party shall be entitled to recover from the indemnifying Party, all costs
incurred including reasonable attorneys' fees throughout any negotiations,
trials or appeals, whether or not any suit is instituted.
3.8 Litigation.
In any action between the Parties to enforce any of the terms of this
Agreement or any other matter arising from this Agreement, the prevailing Party
shall be entitled to recover its costs and expenses, including reasonable
attorneys' fees up to and including all negotiations, trials and appeals,
whether or not litigation is initiated.
3.9 Benefit of Agreement.
The terms and provisions of this Agreement shall be binding upon and inure
to the benefit of the Parties, their successors, assigns, personal
representatives, estate, heirs and legatees.
3.10 Captions.
The captions in this Agreement are for convenience and reference only and in
no way define, describe, extend or limit the scope of this Agreement or the
intent of any provisions hereof.
3.11 Number and Gender.
All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the Party or
Parties, or their personal representatives, successors and assigns may require.
3.12 Further Assurances.
The Parties agree to do, execute, acknowledge and deliver or cause to be
done, executed, acknowledged or delivered and to perform all such acts and
deliver all such deeds, assignments, transfers, conveyances, powers of attorney,
assurances, stock certificates and other documents, as may, from time to time,
be required herein to effect the intent and purpose of this Agreement.
156
<PAGE>
3.13 Status.
Nothing in this Agreement shall be construed or shall constitute a
partnership, joint venture, employer-employee relationship, lessor-lessee
relationship, or principal-agent relationship, rather, the relationships
established hereby are those of settling debtor and creditor.
3.14 Counterparts.
(a) This Agreement may be executed in any number of counterparts.
(b) All executed counterparts shall constitute one Agreement notwithstanding
that all signatories are not signatories to the original or the same
counterpart.
(c) Execution by exchange of facsimile transmission shall be deemed legally
sufficient to bind the signatory; however, the Parties shall, for aesthetic
purposes, prepare a fully executed original version of this Agreement, which
shall be the document filed with the Securities and Exchange Commission.
3.15 License.
(a) This Agreement is the property of the Yankee Companies, Inc, a Florida
corporation ("Yankees").
(b) The use hereof by the Parties is authorized hereby solely for purposes of
this transaction and, the use of this form of agreement or of any derivation
thereof without Yankees' prior written permission is prohibited.
(c) The Parties hereby acknowledge that Yankees is not a law firm or regulated
entity and has not provided any Party with any advice concerning this
Agreement, rather, it has informed each Party, as a condition to their use
of this form that they must obtain independent legal advice.
* * *
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
effective as of the ____ day of December, 1998.
Signed, sealed and delivered
In Our Presence:
Equity Growth Systems, inc.
- ---------------------------------
_________________________________ By:
---------------------------------
Charles J. Scimeca, Acting President
(CORPORATE SEAL)
The Retiring Principal:
- ---------------------------------
- --------------------------------- ---------------------------------
Edward Granville-Smith by Mark Granville-
Smith, his son and attorney-in-fact acting by
virtue of his power of attorney, a copy of
which is annexed hereto and made a part
hereof, immediately following this signature
page.
157
<PAGE>
EXHIBIT 10.26
STOCK PURCHASE OPTION AGREEMENT WITH MR. SCIMECA
Equity Growth Systems, inc.
COMMON STOCK PURCHASE WARRANT
No sale, offer to sell or transfer of the securities represented by this
certificate or any interest therein shall be made unless a registration
statement under the Federal Securities Act of 1933, as amended, with respect to
such transaction is then in effect, or the issuer has received an opinion of
counsel satisfactory to it that such transfer does not require registration
under that Act.
Unless extended as hereinafter provided, this Warrant will be void after 3:00
p.m. Eastern Standard or Daylight Savings Time on December 31, 2002.
THIS CERTIFIES THAT, for the value received Charles J. Scimeca, a Florida
resident whose social security number is ###-##-#### and who has a mailing
address at c/o Coast to Coast Realty Group, Inc., 8001 DeSoto Woods Drive;
Sarasota, Florida 34243, or registered assigns (the "Holder"), is entitled to
subscribe for and purchase from Equity Growth Systems, inc., incorporated under
the laws of the State of Delaware (the "Company"), at any time from the date
hereof until 3:00 p.m. Eastern Standard or Daylight Savings Time on December 31,
2000, at a price of $0.02 per share, up to 200,000 fully paid and non-assessable
shares of the Company's common stock, $0.001 par value (the "Holder's Shares").
TERMS:
1. Form of Exercise
This Warrant may be exercised by the holder hereof, in whole or in part (but
not as to a fractional Warrant or share of Common Stock), by the surrender of
this Warrant properly endorsed, at the principal office of the Company`s
transfer agent, Liberty Transfer Co., with a mailing address at Post Office Box
558; Huntington, New York 11743-0558 (or such other office or agency as the
Company may designate in writing to the Warrant holder, at the address of such
holder appearing on the books of the Company), and payment to it, for the
account of the Company, by cash, certified check or bank draft, of the purchase
price for the Holder's Shares to be purchased. The Company agrees that the
Holder's Shares so purchased shall be issued to the Warrant holder within a
reasonable time, not exceeding 10 days after this Warrant shall have been
exercised, and unless this Warrant has expired, a new Warrant representing the
number of Holder's Shares, if any, with respect to which this Warrant shall not
then have been exercised, shall also be issued to the Warrant holder hereof
within such time.
2. Restrictions on Transfer
In no event shall this Warrant be sold, transferred, assigned or
hypothecated except in conformity with the applicable provisions of the
Securities Act of 1933, as amended (the "Act"), or any similar federal statute
then in force, and all applicable blue sky laws.
3. Registration Requirements
(a) The holder of this Warrant, by acceptance hereof, agrees that, prior to the
disposition of any Holder's Shares purchased upon the exercise hereof, under
circumstances that might require registration of such Holder's Shares under
the Act, or any similar federal statute then in force, such holder will give
written notice to the Company expressing such holder's intention of
effecting such disposition, and describing briefly such holder's intention
as to the disposition to be made of Holder's Shares issued upon exercise
hereof.
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<PAGE>
(b) Promptly upon receiving such notice, the Company shall present copies
thereof to its counsel and
the provisions of the following subdivisions shall apply:
(i) If, in the opinion of such counsel, the proposed disposition does not
require registration under the Act or qualification pursuant to
Regulation A promulgated under the Act, or any similar federal statute
then in force, of the Holder's Shares issuable or issued upon the
exercise of this Warrant, the Company shall, as promptly as
practicable, notify the holder hereof of such opinion, whereupon such
holder shall be entitled to dispose of such Holder's Shares issued upon
the exercise hereof, all in accordance with the terms of the notice
delivered by such holder to the Company.
(ii) If, in the opinion of such counsel, such proposed disposition requires
such registration or qualification under the Act, or similar federal
statute then in effect, of the Holder's Shares issuable or issued upon
the exercise of this Warrant, then the Holder may not engage in any
transactions except in compliance with all applicable laws.
4. Indemnification
The Company agrees to indemnify and hold harmless the holder of this
Warrant, or the Holder's Shares issuable or issued upon the exercise hereof,
from and against any claims and liabilities caused by any untrue statement of a
material fact, or omission to state a material fact required to be stated, in
any such registration statement, prospectus, notification or offering circular
under Regulation A, except insofar as such claims or liabilities are caused by
any such untrue statement or omission based on information furnished in writing
to the Company by such holder, or by any other such holder affiliated with the
holder who seeks indemnification, as to which the holder hereof, by acceptance
hereof, agrees to indemnify and hold harmless the Company.
5. Company's Covenants
The Company covenants and agrees that all Holder's Shares that may be issued
upon the exercise of this Warrant will, upon issuance, be validly issued, fully
paid and non-assessable, and free from all taxes, liens and charges with respect
to the issue thereof (other than taxes relating to any transfer occurring
contemporaneously with such issue). The Company further covenants and agrees
that, during the period within which this Warrant may be exercised, the Company
will at all times have authorized and reserved a sufficient quantity of its
Holder's Shares and its Common Stock to provide for the exercise of this
Warrant.
6. Definitions
As used herein, the term "Common Stock" shall mean and include the Company's
Common Stock authorized on the date hereof and shall also include any capital
stock of any class of the Company thereafter authorized that shall not be
limited to a fixed sum or percentage in respect of the rights of the holders
thereof to participate in dividends and in the distribution of assets upon the
voluntary or involuntary liquidation, dissolution or winding-up of the Company;
provided, however, that the shares purchasable pursuant to this Warrant shall
include only shares of the such class referred to in the first paragraph hereof
designated in the Company's Articles of Incorporation as Common Stock on the
date of the original issue of the Warrants, or, in case of any reorganization,
reclassification, consolidation, merger or sale of assets of the character
referred to in Paragraph 6 hereof, the Common Stock or assets provided for in
such Paragraph.
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7. Exchange
This Warrant is exchangeable, upon its surrender by the registered holder at
such office or agency of the Company as may be designated by the Company, for
new Warrants of like tenor, representing, in the aggregate, the right to
subscribe for and purchase hereunder, each of such new Warrants to represent the
right to subscribe for and purchase such number of Holder's Shares as shall be
designated by the registered holder at the time of such surrender. Upon receipt
of evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of any such loss, theft or
destruction, upon delivery of a bond of indemnity satisfactory to the Company,
or, in the case of such mutilation, upon surrender or cancellation of this
Warrant, the Company will issue to the registered holder a new Warrant of like
tenor, in lieu of this Warrant, representing the right to subscribe for and
purchase the number of Holder's Shares that may be subscribed for and purchased
hereunder. Nothing herein is intended to authorize the transfer of this Warrant
except as permitted under Paragraph 2.
8. Holder's Covenants
Every holder hereof, by accepting the same, agrees with any subsequent
holder hereof and with the Company that this Warrant and all rights hereunder
are issued and shall be held subject to all of the terms, conditions,
limitations and provisions set forth in this Warrant, and further agrees that
the Company and its transfer agent may deem and treat the registered holder of
this Warrant as the absolute owner hereof for all purposes and shall not be
affected by any notice to the contrary.
9. Notices
All notices required hereunder shall be given by certified mail, return
receipt requested, postage prepaid. If given by the holder hereof, such notice
should be addressed to the Company in care of its secretary and general counsel,
G. Richard Chamberlin, Esquire, 1941 Southeast 51st Terrace, Suite 800; Ocala,
Florida 34471, or such other address as the Company may designate in writing to
the holder hereof; and if given by the Company, such notice should be addressed
to the holder at the address of the holder shown on the books of the Company.
10. Governing Law
The validity, construction and enforcement of this Warrant shall be governed
by the laws of the State of Delaware and jurisdiction is hereby vested in the
Courts of said State in the event of the institution of any legal action under
this Warrant.
* * *
IN WITNESS WHEREOF, Equity Growth Systems, inc. has caused this Warrant to
be signed by its duly authorized officers under its corporate seal, to be dated
December___, 1998.
Equity Growth Systems, inc.
By: _______________________
Charles J. Scimeca, President
Attest: _______________________
G. Richard Chamberlin, Esquire
Secretary & General Counsel
(Corporate Seal)
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Equity Growth Systems, inc.
Holder's Shares Purchase Warrant
EXERCISE FORM
Date: _________ ___, ____
The Undersigned hereby irrevocably elects to exercise the subject Warrant to
the extent of purchasing ___ Holder's Shares and hereby makes payment of
$______, the actual exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Please type or print in block letters
---------------------
(Name)
--------------------------------
--------------------------------
(Address)
* * *
Signature: _______________________
NOTICE: The signatures to this partial assignment of Warrant
must correspond with the name as written upon the face
of the Warrant in every particular, without alteration
or enlargement or any change whatever.
Signature Guaranteed:
IMPORTANT: SIGNATURE MUST BE GUARANTEED BY A FIRM WHICH IS
A MEMBER OF A REGISTERED NATIONAL EXCHANGE OR
BY A COMMERCIAL BANK OR A TRUST COMPANY!
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ASSIGNMENT FORM
FOR VALUE RECEIVED, ____________ hereby sells, assigns and transfer unto:
(Please type or print in block letters)
--------------------
(Name)
--------------------------------
--------------------------------
(Address)
the right to purchase Holder's Shares represented by this Warrant to the extent
of ___ Holder's Shares to which the within Warrant relates, and does hereby
irrevocably constitute and appoint ________________ attorney, to transfer the
same on the books of the Company with full power of
substitution in the premises.
Dated: _____________ ___, _____
Signature: _______________________
NOTICE: The signatures to this partial assignment of Warrant
must correspond with the name as written upon the face
of the Warrant in every particular, without alteration
or enlargement or any change whatever.
Signature Guaranteed:
IMPORTANT: SIGNATURE MUST BE GUARANTEED BY A FIRM WHICH IS
A MEMBER OF A REGISTERED NATIONAL EXCHANGE OR
BY A COMMERCIAL BANK OR A TRUST COMPANY!
162
<PAGE>
EXHIBIT 99.12
WRITTEN CONSENT IN LIEU
OF SPECIAL MEETING OF BOARD OF DIRECTORS
The Undersigned, being the sole members of the board of directors of Equity
Growth Systems, inc., a publicly held Delaware corporation with a class of
securities registered under Section 12(g) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and with information thereon, including
copies of its current articles of incorporation and bylaws publicly available on
the Securities and Exchange Commission's Internet web site through the EDGAR
system (the "Corporation"), pursuant to authority granted under Section Sections
141(f) or 228 of the Delaware General Corporation Law, and as permitted by the
Corporation's constituent instruments, hereby take the following actions and
adopt the following resolutions:
WITNESSETH:
RESOLVED, that the following persons are hereby elected, effective
immediately to serve as members of the Corporation's Board of Directors, to
serve in such positions starting on the first business day following the date of
this instrument until their successors assume their office immediately following
the next annual meeting of the Corporation's stockholders, or until their
resignations are earlier accepted:
Name
Edward Granville-Smith *
Charles J. Scimeca *
Anthony Q. Joffe
Penny Field
G. Richard Chamberlin, and be it FURTHER
- ------
Re-elected.
RESOLVED, that Leonard Miles Tucker, a resident of Boca Raton, Florida, be
authorized to open financial accounts at banks, savings and loan associations
and securities brokerage firms, on behalf of the Corporation, and that he be
designated as the appropriate signatory for the Corporation on any such
accounts, and be it FURTHER
RESOLVED, that the Corporation transfer all funds and securities currently
held in financial accounts into accounts established by Mr. Tucker pursuant to
authorization of this instrument.
IN WITNESS WHEREOF, the undersigned have caused this instrument to be
executed, effective as of the 6th day of November, 1998.
Equity Growth Systems, inc.
A Delaware Corporation
------------------------------
Edward Granville-Smith
Director
------------------------------
Charles J. Scimeca
Director
163
<PAGE>
EXHIBIT 99.13
MINUTES OF SPECIAL MEETING OF BOARD OF DIRECTORS
FOR NOVEMBER 27, 1998
Equity Growth Systems, inc.
A publicly held Delaware corporation
Minutes of Special Meeting of Board of Directors
A special meeting of the Board of Directors for Equity Growth Systems, inc.
(the "Board" and the "Company," respectively), was held by telephone conference
on November 27, 1998, at 10:30 A.M., after provision of notice to all members by
telephone and facsimile transmission. A copy of such notice is appended hereto
as exhibit "A". All exhibits were provided to the participants by facsimile
transmission.
The following Directors were present at the telephone conference meeting
held on November 27, 1998: Mr. Scimeca, Mr. Joffe, Ms. Field, Mr. Chamberlin.
The following Directors were absent: Mr. Edward "Ted" Granville-Smith.
Unable to attend for health reasons.
The meeting was called for the following purposes:
1) ratification of agreement dated May 6, 1998 for service rendered by
Carrington Capital Corporation; and
2) the approval of subscription agreements and direction to General
Counsel to issue opinion letters for transfer of stock upon payment for
stock by each subscriber; and
3) authorization to Yankee Companies and certain directors to compromise
certain debts and liabilities of the Company; and
4) authorization for the transfer of 50,000 shares of the company's common
stock to the Yankee Companies for reimbursement for stock transferred
by the Calvo Family Spendthrift Trust to Carrington Capital
Corporation, for the benefit of the Company.
1. On May 6, 1998, the Company entered an agreement with Carrington Capital
Corporation for services agreeing to transfer 50,000 shares of .01 common stock
as follows: 25,000 shares as of May 6, 1998, and an additional 25,000 shares
once trading of the shares commenced on the OTCBB. The stock began trading on
November 18, 1998. This agreement should be ratified by the Board of Directors.
Agreement is attached as Exhibit "B"
2. At Mr Granville-Smith's request, The Yankee Companies, Inc, formed a
small investment group (compromised of Yankee and persons associated therewith),
which entered into a series of subscription agreements with the Corporation
designed to provide emergency capital required to discharge current obligations.
Signed copies for which are attached hereto in the composite Exhibit "C".
3. Numerous individuals and entities claim certain compensation for
services rendered or claim to be otherwise creditors of the Company, a list of
whom is attached and marked Exhibit "D". The Company President has requested
that the Board authorize The Yankee Companies, Inc., to compromise the debts
listed on Exhibit "D" except for the debt with William A. Calvo, III who is a
principal with The Yankee Companies, Inc and who has indicated to the Company
President that a conflict of interest exists only as to his own claim for fees.
The Company President requests that the Board of Directors authorize him and
Director Tony Joffe and Director Penny Fields to negotiate on behalf of the
Company any compromise with Mr. Calvo.
164
<PAGE>
4. Earlier this year, at Mr Granville-Smith's request, the Calvo Family
Spendthrift Trust transferred to Carrington Capital Corporation 50,000 shares of
privately owned stock in the Company as an enticement for Carrington to
participate with the Company. The newly elected President has requested the
Company reimburse the Yankee Companies, Inc., with the issuance of 50,000 shares
of Common Stock.
Mr. Chamberlin was elected by the members participating to act as the Chairman
of the meeting and also acted as secretary, and after discussions and due
procedures, the Board (except for Mr. Granville Smith, who was medically unable
to attend) unanimously adopted the following resolutions:
1 Resolved, The agreement dated May 6, 1998, entered with Carrington Capital
Corporation for services rendered agreeing to transfer 50,000 shares of .01
common stock as follows: 25,000 shares as of May 6, 1998, and an additional
25,000.00 shares once trading of the shares commenced on the OTCBB is hereby
ratified. Furthermore the Transfer Agent is hereby directed to issue to
Carrington Capital Corporation the above described shares of the Company's
Common Stock.
Please Initial: Mr. Chamberlin: ___ Mr. Scimeca: ___ Mr. Joffe: ___
Ms. Field: ___
2. Resolved, That the Corporation's entry into the Subscription Agreements
attached hereto are hereby ratified and that the Board authorizes it's
officers to execute any signed or unsigned Subscription Agreement not yet
executed but attached hereto except that each Director will refrain from
voting for the Subscription Agreement for himself or herself.
Please Initial: Mr. Chamberlin: ___ Mr. Scimeca: ___ Mr. Joffe: ___
Ms. Field: ___
3. The Board hereby directs that the transfer agent issue to the
following persons an amount of the Company's Common Stock as follows:
Blue Lake Capital Corp. 630,000
Michelle Tucker custodian for Shayna Tucker 108,750
Michelle Tucker custodian for Montana Tucker 108,750
The Yankee Companies 435,000
The Calvo Family Spendthrift Trust 217,500
G. Richard Chamberlin 125,000
Anthony Q. Joffe 62,500
Penny L. Adams Field 62,500
Please Initial: Mr. Chamberlin: ___ Mr. Scimeca: ___ Mr. Joffe: ___
Ms. Field: ___
4. Resolved, The Board hereby authorizes the Yankee Companies, Inc., to
compromise the debts listed on Exhibit "E,
Please Initial: Mr. Chamberlin: ___ Mr. Scimeca: ___ Mr. Joffe: ___
Ms. Field: ___
165
<PAGE>
5. Resolved, The Board hereby directs that the transfer agent issue to
The Yankee Companies 50,000 shares of the Company's Common Stock.
Please Initial: Mr. Chamberlin: ___ Mr. Scimeca: ___ Mr. Joffe: ___
Ms. Field: ___
6. Resolved, that the Corporation's transfer agent place stop transfer
notations among its stop transfer records prohibiting any transactions
in the subject certificates except in full compliance with the terms
of the subject legend evinced by written instructions from the
President of the Corporation or a court order provided by the holder;
and be it further
Please Initial: Mr. Chamberlin: ___ Mr. Scimeca: ___ Mr. Joffe: ___
Ms. Field: ___
7. Resolved, that the Corporation's officers and transfer agent be, and they
are hereby, authorized, empowered and directed to take all actions either
necessary or expedient to accomplish all of the foregoing directives.
Please Initial: Mr. Chamberlin: ___ Mr. Scimeca: ___ Mr. Joffe: ___
Ms. Field: ___
8. Resolved, that the Corporation's Board of Director's shall have
Director's meetings every other alternate Friday at 10:30 A.M. beginning
January 8, 1999. In the Month of December the Board shall have a regular
monthly meeting on Friday, December 11, 1998 at 10:30 A.M. All meetings
will be by conference call unless otherwise specified in a Notice of
Director's Meeting.
Please Initial: Mr. Chamberlin: ___ Mr. Scimeca: ___ Mr. Joffe: ___
Ms. Field: ___
Having adopted the foregoing resolutions, upon motion duly made, seconded and
unanimously adopted, the Board meeting was terminated.
The foregoing, based on our best recollection and notes, constitute the
actions taken at such special meeting of the Board, and by our execution of
these minutes and initials on each page and under each resolution adopted, we do
so confirm, effective as of this ___th day of December, 1998.
------------
G. Richard Chamberlin
Chairman and Secretary of the Meeting
Director
--------------
Charles J. Scimeca
Director
------------
Anthony Q. Joffe
Director
-------------
Penny Field
Director
166
<PAGE>
Exhibit "A"
List of new subscribers for Equity Growth Systems, inc.
Subscriber: Shares: Consideration
Blue Lake Capital Corp. 630,000 $12,600
Michelle Tucker custodian for Shayna Tucker 108,750 $ 2,750
Michelle Tucker custodian for Montana Tucker 108,750 $ 2,750
The Yankee Companies 435,000 $ 8,700
The Calvo Family Spendthrift Trust 217,500 $ 4,350
The Yankee Companies 50,000 $ *
G. Richard Chamberlin 125,000 $ 2,500
Anthony Q. Joffe 62,500 $ 1,250
Penny L. Adams Field 62,500 $ 1,250
Carrington Caital Corporartion 25,000
all of the above shares to be subject to Rule 144 and as such should be properly
legended by the stock transfer agent.
* Reimbursement for 50,000 shares paid by The Calvo Family Spendthrift Trust to
Carrington Capital Corporation for the benefit of the Company.
167
<PAGE>
Exhibit "B"
List of known outstanding payables for Equity Growth Systems, inc.
1. Liberty Stock Transfer Company $ 7,200.00
2. Leo J. Paul $ 22,500.00
3. Joel Baum, Saul Lipson $ 8,000.00
4. Coutro & Co $ 1,600.00
5. G. Richard Chamberlin, Esq $ 276.27
6. Jerry Spellman $130,000.00
7. William A. Calvo III $ 50,000.00
8. William A. Calvo III $100,000.00
168
<PAGE>
EXHIBIT 99.14
MINUTES OF SPECIAL MEETING OF BOARD OF DIRECTORS
FOR DECEMBER 8, 1998
Equity Growth Systems, inc.
A publicly held Delaware corporation
Minutes of Special Meeting of Board of Directors
A special meeting of the Board of Directors for Equity Growth Systems, inc.
(the "Board" and the "Company," respectively), was held by telephone conference
on December 8, 1998, at 10:30 A.M., after provision of notice to all members by
telephone and facsimile transmission. A copy of such notice is appended hereto
as exhibit "A". All exhibits were provided to the participants by facsimile
transmission.
The following Directors were present at the telephone conference meeting
held on December 8, 1998: Mr. Scimeca, Mr. Joffe, Ms. Field, Mr. Chamberlin.
The following Directors were absent: Mr. Edward "Ted" Granville-Smith.
Unable to attend for health reasons.
The meeting was called for the following purposes:
1) Adopting, Ratifying, Confirming New By-Laws and Repealing old By-Laws,.
Wherefore, It appears by the records of the Corporation that confusion
exists as to the By- Laws presently in operation for the Company;
Wherefore, It appears that the former Sole Director of the Company, due to
illness, is unable clarify the confusion that exists with regard to the By-Laws
in operation;
Wherefore, it appears that the last By-Laws of record were those By-Laws
filed on Form 10- K for the fiscal year ending December 31, 1991, however the
directors have reason to believe that the By-laws have been since amended but
cannot be located;
Mr. Chamberlin was elected by the members participating to act as the
Chairman of the meeting and also acted as secretary, and after discussions and
due procedures, the Board (except for Mr. Granville Smith, who was medically
unable to attend) unanimously adopted the following resolutions:
1 Resolved, That the By-Laws attached herewith and dated December 8, 1998 are
hereby adopted, ratified, and confirmed. Furthermore all previous By-Laws,
amended or otherwise, are hereby repealed this date
Please Initial: Mr. Chamberlin: ___ Mr. Scimeca: ___ Mr. Joffe: ___
Ms. Field: ___
Having adopted the foregoing resolutions, upon motion duly made, seconded and
unanimously adopted, the Board meeting was terminated.
The foregoing, based on our best recollection and notes, constitute the
actions taken at such special meeting of the Board, and by our execution of
these minutes and initials on each page and under each resolution adopted, we do
so confirm, effective as of this ___th day of December, 1998.
------------
G. Richard Chamberlin
Chairman and Secretary of the Meeting
Director
--------------
Charles J. Scimeca
Director
------------
Anthony Q. Joffe
Director
-------------
Penny Field
Director
169
<PAGE>
Exhibit "A" Copy of By-Laws dated December 8, 1998.
170
<PAGE>
EXHIBIT 99.15
AMENDED NOTICE OF SPECIAL MEETING OF BOARD OF DIRECTORS
FOR DECEMBER 8, 1998
Equity Growth Systems, inc.
A publicly held Delaware corporation
Amended Notice of Special Meeting of Board of Directors
By Facsimile Transmission to:
Edward Granville-Smith 941-766- 8529 (fax)
G. Richard Chamberlin 352-694-9178 (fax)
Charles J. Scimeca 941-358-8423 (fax)
Anthony Q. Joffe 561-392-6070 (fax)
Penny Field 941-435-9359 (fax)
A special meeting of the Board of Directors for Equity Growth Systems, inc.
(the "Board" and the "Corporation," respectively), will be held by telephone
conference on the 8th day of December, 1998, at 10:30 A.M., notice being
provided to all members by telephone and facsimile transmission.
Exhibits referred to at such meeting will be provided to the participants
by facimile transmissionl or by U.S mail or by E-mail. The meeting is required
for the following purposes: 1) Adopting, Ratifying, Confirming New By- Laws and
Repealing Old By-Laws Please contact G. Richard Chamberlin, Esquire, at (352)
694-6714 to make arrangements to participate.
Very truly yours
Equity Growth Systems, inc.
-------------
G. Richard Chamberlin
Secretary
171
<PAGE>
EXHIBIT 99.16
MINUTES OF SPECIAL MEETING OF BOARD OF DIRECTORS
PART 1 FOR DECEMBER 11 1998
Equity Growth Systems, inc.
A publicly held Delaware corporation
Minutes of Special Meeting of Board of Directors
A special meeting of the Board of Directors for Equity Growth Systems, inc.
(the "Board" and the "Company," respectively), was held by telephone conference
on December 11, 1998, at 10:30 A.M., after provision of notice to all members by
telephone and facsimile transmission. A copy of such notice is appended hereto
as exhibit "A". All exhibits were provided to the participants
by facsimile transmission.
The following Directors were present at the telephone conference meeting
held on December 11, 1998: Mr. Scimeca, Mr. Joffe, Ms. Field, Mr. Chamberlin.
The following Directors were absent: Mr. Edward "Ted" Granville-Smith.
Unable to attend for health reasons.
1) ratifying and approving option to purchase Company common stock through
executed Common Stock Purchase Warrant between the Company and Charles J.
Scimeca dated December 9, 1998.
12. Wherefore, It appears by the statements of Charles Scimeca that he has
made reasonable expenditures on behalf of the Company and has expended
substantial time on behalf of the Company in preparing the 1997 KSB and
other documents;
13. Wherefore Mr. Scimeca shall not seek reimbursement for past expenditures
or investment in time or assets and by signing this resolution so
acknowledge that he waives and all rights, title and interest he may have
for any reimbursement for expenses or for time expended on behalf of the
Company prior to November 1, 1998.
14. Wherefore, Mr. Scimeca is interested in purchasing 200,000 shares of
Common Stock of the Company for .02 Cents per share;
Mr. Chamberlin was elected by the members participating to act as the
Chairman of the meeting and also acted as secretary, and after discussions and
due procedures, :
1 Resolved, That the Common Stock Purchase Agreement attached hereto and made
apart hereof and marked Exhibit "B" between Charles J. Scimeca and the Company
dated December 9, 1998 is hereby adopted, ratified, and confirmed and that Mr.
Scimeca shall have the right to purchase 200,000 shares of the Company's
common stock for .02 per share on or before 3:00 P.M., December 31, 2000.
Please Initial: Mr. Chamberlin: ___ Mr. Joffe: ___ Ms. Field: ___
2. Resolved, The Board hereby directs that at the appropriate time of exercise ,
the transfer agent issue to The Yankee Companies 50,000 shares of the Company's
Common Stock. And at the appropriate time, the Corporation's transfer agent
place stop transfer notations among its stop transfer records prohibiting any
transactions in the subject certificates except in full compliance with the
terms of the subject legend evinced by written instructions from the President
and Secretary of the Corporation or a court order provided by the holder; and be
it further
Please Initial: Mr. Chamberlin: ___ Mr. Joffe: ___ Ms. Field: ___
172
<PAGE>
3. Resolved, that the Corporation's officers and transfer agent be, and they are
hereby, authorized, empowered and directed to take all actions either necessary
or expedient to accomplish all of the foregoing directives.
Please Initial: Mr. Chamberlin: ___ Mr. Joffe: ___ Ms. Field: ___
Having adopted the foregoing resolutions, upon motion duly made, seconded and
unanimously adopted, the Board meeting was terminated.
The foregoing, based on our best recollection and notes, constitute the
actions taken at such special meeting of the Board, and by our execution of
these minutes and initials on each page and under each resolution adopted, we do
so confirm, effective as of this ___th day of December, 1998.
------------
G. Richard Chamberlin
Chairman and Secretary of the Meeting
Director
--------------
Charles J. Scimeca
(For purposes of waiving further claims of Back pay
or back expenditures but otherwise abstains from voting
for reason of conflict of interest.
Director
---------
Anthony Q. Joffe
Director
-------------
Penny Field
Director
173
<PAGE>
Exhibit "A" Copy of By-Laws dated December 8, 1998.
174
<PAGE>
EXHIBIT 99.17
NOTICE OF SPECIAL MEETING OF BOARD OF DIRECTORS
FOR DECEMBER 11, 1998
Equity Growth Systems, inc.
A publicly held Delaware corporation
Notice of Special Meeting of Board of Directors
By Facsimile Transmission to:
Edward Granville-Smith 941-766- 8529 (fax)
G. Richard Chamberlin 352-694-9178 (fax)
Charles J. Scimeca 941-358-8423 (fax)
Anthony Q. Joffe 561-392-6070 (fax)
Penny Field 941-435-9359 (fax)
A special meeting of the Board of Directors for Equity Growth Systems, inc.
(the "Board" and the "Corporation," respectively), will be held by telephone
conference on the 11th day of December, 1998, at 10:30 A.M., notice being
provided to all members by telephone and facsimile transmission. Exhibits
referred to at such meeting will be provided to the participants by facimile
transmissionl or by U.S mail or by E-mail.
The meeting is required for the following purposes: 1) issuance of option
to purchase 200,000 shares of Company Common Stock to Charles Schimeca
Please contact G. Richard Chamberlin, Esquire, at (352) 694-6714 to make
arrangements to participate.
Dated: December 8, 1998.
Very truly yours
Equity Growth Systems, inc.
-------------
G. Richard Chamberlin
Secretary
175
<PAGE>
EXHIBIT 99.18
MINUTES OF SPECIAL MEETING OF BOARD OF DIRECTORS
PART 2 FOR DECEMBER 11, 1998
Equity Growth Systems, inc.
A publicly held Delaware corporation
Minutes of Special Meeting of Board of Directors
A special meeting of the Board of Directors for Equity Growth Systems, inc.
(the "Board" and the "Company," respectively), was held by telephone conference
on December 11, 1998, at 10:30 A.M., after provision of notice to all members by
telephone and facsimile transmission. A copy of such notice is appended hereto
as exhibit "A". All exhibits were provided to the participants by facsimile
transmission.
The following Directors were present at the telephone conference meeting
held on December 11, 1998: Mr. Scimeca, Mr. Joffe, Ms. Field, Mr. Chamberlin.
The following Directors were absent: Mr. Edward "Ted" Granville-Smith.
Unable to attend for health reasons.
1) election of officers.
Wherefore, It appears that the Board has not formerly elected officers, and
it is necessary for officers to be elected.
Wherefore the President of the Company is presently incapacitated and
unable to function as an officer for the Company.
Mr. Chamberlin was elected by the members participating to act as the
Chairman of the meeting and also acted as secretary, and after discussions and
due procedures, :
1 Resolved, That the following persons are elected as the sole officers for
the Company:
Acting President Charles J. Scimeca
Acting Secretary G. Richard Chamberlin
Please Initial: Mr. Chamberlin: ___ Mr. Scimeca, Mr. Joffe: ___ Ms. Field: ___
2. Resolved, That Mr. Edward "Ted" Granville Smith, Jr., is hereby removed
as an officer of the Company. The Board will consider is re-election as an
officer atl such time his health improves and he indicates to the Board his
desire to serve as an officer of the Company. Mr. Don Homan is r hereby removed
as an officer of the Company. The Board will reconsider his re-election should
Mr Homan indicate a desire to serve as an officer of the Company.
Please Initial: Mr. Chamberlin: ___ Mr. Scimeca, Mr. Joffe: ___ Ms. Field: ___
176
<PAGE>
3. Resolved, that all official acts taken by Charles J. Scimeca as acting
president or as president of the Company since November 7, 1998 to present and
all official acts taken by G. Richard Chamberlin as acting secretary or as
secretary of the Company since November 7, 1998 to present, are hereby ratified
and approved and the powers of each officer shall relate back to each offical
act by said officer.
Please Initial: Mr. Chamberlin: ___ Mr. Scimeca, Mr. Joffe: ___ Ms. Field: ___
The foregoing, based on our best recollection and notes, constitute the
actions taken at such special meeting of the Board, and by our execution of
these minutes and initials on each page and under each resolution adopted, we do
so confirm, effective as of this ___th day of December, 1998.
------------
G. Richard Chamberlin
Chairman and Secretary of the Meeting
Director
--------------
Charles J. Scimeca
---------
Anthony Q. Joffe
Director
-------------
Penny Field
Director
177
<PAGE>
Exhibit "A"
Copy of By-Laws dated December 8, 1998.
178
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<PERIOD-END> SEP-30-1998
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<COMMON> 41,161
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