Securities and Exchange Commission
Washington, D.C. 20549
Form 8-KSB
Current Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported): March 5, 1999
Equity Growth Systems, inc. (Exact name of registrant as specified
in its charter)
Delaware (State or other jurisdiction of incorporation
0-3718 (Commission File Number)
11-2050317 (IRS Employer Identification No.)
8001 DeSoto Woods Drive; Sarasota, Florida 34243 (Address of principal
executive offices) (Zip Code)
Registrant's telephone number, including area code: (941) 255-9582
Not applicable. (Former name or former address, if changed since
last report)
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Item 2. Acquisition or Disposition of Assets
The Registrant's Board of Directors have authorized its officers to
negotiate consulting agreements with the following corporations, on materially
similar terms, i.e., the Registrant, through its current officers and directors
will assist the client corporations to register their securities with the
Securities and Exchange Commission (the "Commission") under both the Securities
Act of 1933, as amended (the "Securities Act") and the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and thereafter, to initiate trading in
their securities in the over the counter market, all in consideration for the
registration and issuance of a set percentage of the Client corporations' common
stock directly to the Registrant's stockholders, all expenses to be born solely
by the Client corporations. The percentage of securities to be issued to the
Registrant's stockholders, after registration with the Commission, is expected
to vary, as described in the subject consulting agreements, between 10% and 15%.
Current negotiation drafts of the four consulting agreements have been prepared
and are under negotiation; however, no assurances can be provided that they will
be entered into, either on the currently proposed terms, or at all. In order to
avoid potential insider trading based on leakage of these negotiations, the
Registrant has elected to disclose the negotiations at this time, as well as to
file the currently proposed forms of agreements. Copies of the draft consulting
agreements are filed as exhibits to this report (see "Item 7).
The four corporations currently in negotiation with the Registrant are:
The Gaff Group, Inc.
The Gaff Group, Inc., headquartered at 2698 Junipero Avenue, Suite 110;
Long Beach, California 90806-2145. Its telephone number is (562) 989 3820, its
fax number is (562) 492-6533 and its e-mail address is [email protected]. The
Gaff Group is a general contractor servicing Fortune 500 Companies and is
engaged in a variety of real estate development, consulting and marketing
projects, principally in the States of Florida and California.
Sports Collectible Exchange, Inc.
Sports Collectible Exchange, Inc., was recently organized as a Florida
corporation ("SCE") by G. Richard Chamberlin, Esquire, the Registrant's
secretary, general counsel and a member of its Board of Directors, and maintains
temporary offices at 14950 Southeast United States Highway 441; Summerfield,
Florida 34491. Its telephone number is (352) 694-6714; its fax number is (352)
694-9178; and, its current e-mail address is [email protected]. SCE has been
organized to engage in a number of collectible areas including an inventory of
minor league collectibles that will be appraised prior to April 20,1999, at the
request of the Registrant, by Pete Kennedy, of Sarasota, Florida at a wholesale
and probable retail value basis. SCE's management has advised the Registrant's
management that it believes that the wholesale appraisal will be in the range of
$40,000 to $100,000, based on his experience with minor league baseball
collectibles. SCE intends to develop an Internet web site to market minor league
baseball collectibles, including its current inventory, to operate such site
with an initial emphasis on minor league baseball collectibles in a manner
similar to that currently used to trade securities over the Internet, permitting
transactions in its own inventory, purchase of inventory from third parties and
facilitation of transactions between third parties for a small fee (expected to
be a percentage of the transaction). SCE also intends to develop a minor league
collectibles appraisal certification program and to establish a minor league
hall of fame.
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Golden Jersey Products, Inc.
Golden Jersey Products, Inc., is a Florida corporation headquartered at 780
United States Highway 1, Suite 301; Vero Beach, Florida 32962. Its telephone
number is (800) 588-6455; its fax number is (561) 569-6617; and, its e-mail
address is [email protected]. It is engaged in the development of alternatives
to traditional dairy products, modified to reduce health risks. Its all natural
"Replace tm" claims to lower total blood and LDL cholesterol levels without
impairing milk taste.
Suntel Communications Group, Inc.
Suntel Communications Group, Inc., is expected to be organized as a
Delaware holding company to consolidate the operations of Suntel Metro, Inc., a
Florida corporation whose current mailing address is Post Office Box 49750;
Orlando, Florida 32802, and its affiliates owned or controlled by Mr. Richard
Kirkwood. All of the constituent entities will be involved in areas of the
telecommunications industry.
Because all negotiations are in their early stages and the Registrant must
still conduct significant due diligence, it is not prepared to provide details
of the businesses or personnel involved and any inquiries should be directed to
the Client corporations directly.
Item 4. Changes in Registrant's Certifying Accountant
Ms. Penny Adams Field, designated as the Registrant's audit committee by
the Registrant's newly elected directors decided that the Registrant's auditors
should be replaced with auditors selected by her who where in closer geographic
proximity and were members of the AICPA's Securities Practice Section and had
consequently been subjected to required peer review. On March 5, 1999, at Mrs.
Field's recommendation, the Registrant's Board of Directors engaged the firm of
Bowman & Bowman, P.A., Certified Public Accountants with offices at 1705
Colonial Boulevard, Suite D-1; Fort Meyers, Florida 33907, telephone number
(941) 939-2301 and fax number (941) 939-1297, to perform the Registrant's audit
for 1998. The decision to replace Baum & Company, P.A., the Registrant's
auditors for calendar years 1995, 1996 and 1997 should not be deemed to imply
dissatisfaction therewith on any matters but rather, involved the convenience of
Mrs. Field and a determination by the Registrant to adopt the spirit of the
Commission's recent emphasis on the importance of audit committees.
The report of Baum & Company, P.A. on the Registrant's financial
statements as of December 31, 1997 and for period from January 1, 1995 to
December 31, 1997 did not contain an adverse opinion or a disclaimer of opinion
and was not qualified or modified as to uncertainty, audit scope, or accounting
principles other than with reference to its inability to obtain confirmations
involving threatened litigation from David Albright, Esquire, Jr., a Maryland
attorney then serving as litigation counsel in a number of actions in which the
Registrant, although not a party had an interest.
In connection with the audit of the Registrant's financial statements as
of December 31, 1997 and for the period since January 1, 1995 to December 31,
1997, and in the subsequent period, there were no disagreements with Baum &
Company, P.A. in any matters of accounting principles or practices, financial
statement disclosure , or auditing scope or procedures which, if not resolved to
the satisfaction of Baum & Company, P.A., would have caused Baum & Company, P.A.
to make reference to the matter in their report. The Registrant has requested
Baum & Company, P.A. to furnish it a letter addressed to the Commission stating
whether it agrees with the above statements. A copy of that letter will be filed
as an exhibit to this Form 8-KSB.
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Item 5. Other Events
Potential Reorganization
In addition to the foregoing and again, principally in order to avoid
potential insider trading based on leakage of negotiations, the Registrant has
elected to disclose that it is currently discussing a potential reorganization
with Atlanta Lending Services, Inc., a Georgia corporation doing business as
Global Acceptance Corp. and its affiliates ("Global"). Global has been
represented to the Registrant's management as an eight year old diversified
finance company and automobile dealership with more than $44,000,000 in sales
during calendar 1998. Global's current address is 1686 Roswell Road; Marietta,
Georgia 30062, its current telephone number is 800-499-9112, its current fax
number is 800-863-7927 and for its current e-mail please see the website address
listed below. Mr. Jack Smith is the current president of Global, and Mr. Rob
Smith owns the majority of Global's common stock.
The reorganization, if effected as currently contemplated by the
Registrant, would result in Global (including affiliated automobile dealerships)
becoming subsidiaries of the Registrant with Global's current stockholders being
issued a majority of the Registrant's outstanding securities and their designees
being elected to a majority of the seats on the Registrant's Board of Directors,
which would probably be increased to eleven members. Information concerning
Global is maintained on its web site at www.Global Acceptance.com. The
Registrant has not verified any of Global's information as negotiations are in a
very preliminary state and no assurances can be provided that any agreement with
Global will ever be entered into, or the terms on which any agreement may
eventually be effected.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Item Page Description
10.14 (__) Calvo settlement agreement
10.15 (__) Draft agreements with potential consulting clients.
16.__ * Letter re change in Registrant's certifying accountant
99.1 (__) Minutes of directors meeting dated March 3, 1999
- ------
* To be provided by amendment.
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Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Equity Growth Systems, inc.,
A Delaware corporation
(Registrant)
Date: March 5, 1999
By: /s/G. Richard Chamberlin/s/
G. Richard Chamberlin, General Counsel
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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) WILLIAM A. CALVO III, (Calvo), individually and DIVERSIFIED
CORPORATE CONSULTING GROUP, L.L.C., a Delaware Limited Liability Company,
("Diversified"), Equity Growth Systems, Calvo and Diversified being collectively
referred to as the "Parties" and each being sometimes hereinafter generically
referred to as a "Party").
PREAMBLE:
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
Calvo, Diversified and Equity Growth Systems hereby agree to settle all
of their outstanding claims against each other:
A. In full payment of all obligations to Calvo, as an
individual, and Diversified, owed by Equity Growth Systems,
Inc., from the beginning of time until the date of this
Agreement, as well as in consideration for the extinguishment
of all agreements between Equity Growth Systems, Calvo and
Diversified, Equity Growth Systems will, after receipt of a
fully executed, notarized copy of this Agreement, instruct
its transfer agent to issue 150,000 shares of its common
stock to the Yankees Companies, Inc., a Florida Corporation
(Yankees) to which Calvo and Diversified have assigned their
rights to compensation from Equity Growth Systems, and
thereafter deliver the stock certificate evidencing such
shares to Yankees, or whomever Yankees, so chooses, at it's
address as set herein or at an address as the managing
director may direct. This consideration is payment for Calvo
and Diversified's fees and liability in favor of Calvo and
Diversified in the final billing of both totaling,
$150,000.00 representing consulting and/or attorneys' fees.
The common stock is herein conveyed for the consideration of One Dollar
($1.00) per share.
B. Diversified and Equity Growth Systems hereby rescinds and relinquishes
all rights under any agreements between Diversified and Equity Growth
Systems, other than those created by this Agreement, relinquishing rights
to anything involving Equity, including, but not limited to, any loans,
bills of sale, corrected bills of sale, contracts or agreements.
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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, from any and all liabilities,
whether current or inchoate, from the beginning of time until the date of this
Agreement, other than any involving Yankees.
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 Calvo and Diversified:
1941 Southeast 51st Terrace, Ocala, Florida 34471
Attention: William A. Calvo III
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.
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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.
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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 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 February, 1999.
Signed, sealed and delivered
In Our Presence:
EQUITY GROWTH SYSTEMS, INC.
- ---------------------------------
_________________________________ By:
- ---------------------------------
Charles J. Scimeca, Acting
President
(CORPORATE SEAL)
DIVERSIFIED:
- ---------------------------------
_________________________________ By:
- ---------------------------------
William A. Calvo III, Managing Member
- ---------------------------------
- --------------------------------- ---------------------------------
William A. Calvo III, Individually
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STATE OF }
COUNTY OF } ss.:
Before me, an individual duly authorized to administer oaths, did
personally appear: Charles J. Scimeca, Acting President for Equity Growth
Systems, inc., a _________resident personally known to me or produced
identification ____________________________________, who being duly sworn, did
confirm that he executed the foregoing Agreement on the date first hereinbefore
set forth, in the capacities indicated. My commission expires on:
(Seal)
--------------------------
Notary Public
STATE OF }
COUNTY OF } ss.:
Before me, an individual duly authorized to administer oaths, did
personally appears: William A Calvo III, individually, and as Managing Member of
Diversified Corporate Consulting Group, L.L.C., who is a Florida resident
personally known to me or produced identification
____________________________________, who being duly sworn, did confirm that he
executed the foregoing Agreement on the date first hereinbefore set forth, in
the capacities indicated. My commission expires on:
(Seal)
--------------------------
Notary Public
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CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into by
and between GAFF GROUP, INC., a California corporation (the "Client") and 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 "Equity Growth," respectively; the
Client and Equity Growth being hereinafter collectively referred to as the
"Parties" and generically as a "Party").
PREAMBLE :
WHEREAS, Client is engaged in the real estate industry, as more
particularly described in the materials annexed hereto and made a part
hereof as composite exhibit 0.1; and
WHEREAS, the Client desires to become a reporting company under federal
securities laws with a publicly traded class of securities; and
WHEREAS, Equity Growth personnel have substantial experience with law,
accounting and the regulatory obligations imposed under federal
securities laws and regulations, and provide assistance to companies that
desire to attain reporting status under Section 12(g) of the Exchange
Act; and
WHEREAS, Equity Growth is agreeable to making its services available to
the Client, on the terms and subject to the conditions hereinafter set
forth:
NOW, THEREFORE, in consideration for Equity Growth'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 acknowledged, the Parties, intending to
be legally bound, hereby agree as follows:
WITNESSETH:
ARTICLE ONE
OBLIGATIONS OF THE PARTIES
1.1 DESCRIPTION OF SERVICES
(A) Equity Growth will assist the Client's legal counsel, or, as
set forth below, provide its own legal counsel, to register
its securities with the Securities and Exchange Commission
(the "SEC"), and thereafter, will assist the Client to make
arrangements required to permit trading of the Client's
securities on the OTC Bulletin Board operated by the National
Association of Securities Dealers, Inc., including
introductions to one or more potential market makers and
assistance in the preparation, filing and management of the
SEC and NASD Rule 15c2-11 compliance filings which will be
required by any broker dealers publishing quotes in the
Client's securities.
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(B) Equity Growth will assist the Client to obtain a CUSIP number for its
securities, to obtain a stock trading symbol and to list the Client in a
Standard & Poors or comparable securities manual complying with the
manual exemption from Blue Sky registration in 15 or more states.
(C) Because of the Client's anticipated status under federal
securities laws, in any circumstances where Equity Growth is
describing the securities of to a third Party, Equity Growth
shall disclose to such person the compensation received from
the Client to the extent required under any applicable laws,
including, without limitation, Section 17(b) of the
Securities Act of 1933, as amended (the "Securities Act");
however, the Parties acknowledge they do not contemplate that
Equity Growth shall be involved in any activities on behalf
of the Client requiring such descriptions or disclosures, or
that the Services involve any activities subject to
regulation under federal or state securities laws, except for
the introduction of the 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, Equity Growth shall not disclose to any third
party any confidential non-public information furnished by the Client or
otherwise obtained by it with respect to the 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" departments of licensed securities firms, etc.;
accordingly, Equity Growth agrees that it will not release
any information or data about the Client to any selected or
limited person(s), entity, or group if Equity Growth is aware
that such information or data has not been generally released
or promulgated.
(B) Equity Growth shall restrict or cease, as directed by the Client, all
efforts on behalf of the Client, including all dissemination of
information regarding the Client, immediately upon receipt of
instructions (in writing by fax or letter) to that effect from the
Client.
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1.4 EQUITY GROWTH'S COMPENSATION
(A) (1) The Client shall issue, directly to Equity Growth's
stockholders of record on the 30th day following the
date of this agreement, pro rata based on their
ownership of common stock in Equity Growth, a quantity
of the Client's common stock equal to 15% of the total
outstanding capital stock of the Client, immediately
following such issuance, subject to anti-dilutive
rights for a period of 12 months following the
original date of issuance (the "Public Shares").
(2) The Public Shares shall be issued either:
(a) in reliance on either Rule 504 of SEC Regulation D or Section 4(6)
of the Securities Act, and comparable provisions of the securities
laws in each of the recipient's state of domicile, or
(b) pursuant to a registration on SEC Form SB-1 or SB-2, or a
notification statement pursuant to SEC Regulation A;
and Equity Growth will assist the Client to prepare and file
required documentation associated therewith, at the Client's
expense.
(3) Prior to the issuance of the Public Shares Equity Growth will
assist the Client to comply with any obligations under SEC Rule
10b-17 pertaining to dividends.
(4) The Parties hereby agree that for auditing, tax, Rule 504 or SEC
filing fee purposes, the reasonable market value of the Public
Shares is the lesser of $50,000 or 15% of the Client's
stockholders equity.
(B) (1) In the event that the Client desires to avail itself
of the legal services of Equity Growth's general
counsel to prepare and file the required SEC
registration statements, it will pay Equity Growth the
sum of $15,000, plus out of pocket costs and expenses,
provided that not more than four amendments thereto
are required, and that the Client provides timely and
complete assistance in responding to SEC comment
letters (additional costs resulting from failure of
such assumptions being billed at such counsel's normal
hourly fees for securities related filings).
(2) Equity Growth believes that the Client will have to pay the
following additional costs in conjunction with the projects
contemplated by this Agreement:
C. Auditing costs, the amount of which the Client is not
competent to determine;
D. The costs of obtaining a CUSIP number and listing with Standard &
Poors or another comparable manual, which is estimated to be
$4,000;
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E. Transfer agent set up and certificate distribution
costs which will vary, based on the agency selected
and the initial services required, but should not
exceed $15,000 for physical delivery of certificates
to each stockholder, assuming that such delivery can
be structured over several months. In the event that
book entry recording in lieu of physical delivery is a
legally available alternative and the costs of
certificates are born by stockholders requesting them,
then the costs can be cut dramatically (in the $5,000
range);
F. Filing fees to the SEC and State regulatory authorities, not
expected to exceed $5,000;
G. Travel, long distance telephone, overnight postage and mailing
expenses, not expected to exceed $2,500.
(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 Equity Growth arranges or provides funding for
Client on terms more beneficial than those reflected in Client's
current principal financing agreements, Equity Growth 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 Equity Growth 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); or
(b) If funding is provided by any person or group of
persons introduced to the Client by Equity Growth or
persons associated with Equity Growth, directly or
indirectly, but is not provided by Equity Growth or
its principals as described in the preceding sub
section, then Equity Growth shall be entitled to an
introduction fee equal to 5% of the aggregate proceeds
so obtained; and
(2) In the event that Equity Growth generates business for the Client,
then, on any sales resulting therefrom, Equity Growth shall be
entitled to a commission equal to 10% of the gross income derived
by the Client therefrom, on a continuing basis.
(3) In the event that Equity Growth or any affiliate thereof arranges
for an acquisition by the Client, then Equity Growth 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.
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(D) The Client will assure that its legal counsel promptly
prepares all reports which then existing holders of the
Client's securities (including Equity Growth, its affiliates
and successors in interest) are required to file with the
Securities and Exchange Commission as a result of the
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.
(E) (1) In addition to payment of fees, the Client will be responsible
for payment of all costs and disbursements associated with Equity
Growth'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 the
Client; or
(c) Approved in writing by the Client; provided, however, that the
refusal by the Client to approve expenditures required for the
proper performance of Equity Growth's services will excuse
performance of such services.
(2) All of Equity Growth's statements will be paid within 10 days
after receipt.
(3) In the event additional time for payment is required, Equity
Growth will have the option of selling the account receivable and
the Client agrees to pay interest thereon at the monthly rate of
1%.
(4) In the event collection activities are required, the Client agrees
to pay all of Equity Growth'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 the Client
and Equity Growth.
1.5 CLIENT'S COMMITMENTS
(A). (1) All work requiring legal review will be submitted for
approval by the Client to the Client's legal counsel
prior to its use.
(2) Final drafts of any matters prepared for use by Equity Growth in
conjunction with the provision of the Services will be reviewed by
the Client and, if legally required, by the 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 the Client and, if
required, the Client's legal counsel, will any documents be filed
with regulatory agencies or provided to Equity Growth or third
parties.
(3) (a) Financial data will be reviewed by competent,
independent, certified public accountants experienced and
qualified in securities related accounting, to be
separately retained by the Client.
(b) Such accountants will be required to review and approve all
financially related filings, prior to release to Equity Growth,
other third parties or submission to the appropriate regulatory
authorities.
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(B) (1) The Client shall supply Equity Growth on a regular and
timely basis with all approved data and information
about the Client, its management, its products, and
its operations and the Client shall be responsible for
advising Equity Growth of any fact which would affect
the accuracy of any prior data and information
supplied to Equity Growth.
(2) The Client shall use its best efforts to promptly supply Equity
Growth 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 Equity Growth'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) The Client shall promptly notify Equity Growth 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) The 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 Equity Growth and the Client
acknowledges its awareness that Equity Growth will rely on such
continuing representation in performing its functions under this
Agreement.
(5) Equity Growth, in the absence of notice in writing from the
Client, may rely on the continuing accuracy of material,
information and data supplied by the Client.
ARTICLE TWO
TERM, RENEWALS & EARLIER TERMINATION
2.1 TERM.
This Agreement shall be for an initial term of 180 days, commencing on
the date of its complete execution by all Parties, as evinced in the execution
page hereof, but shall be extended, as required to permit completion of the
projects contemplated hereby (attaining trading status for the Client's
securities as an issuer filing reports with the SEC pursuant to Section 12[g] of
the Exchange Act (the "Initial Term").
2.2 RENEWALS.
Subject to prior agreement as to additional compensation payable to
Equity Growth, 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 Equity
Growth of all amounts due it hereunder, Equity Growth or its
representative shall execute and deliver to the 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 the Client all records, manuals and
written procedures, as may be desired by the Client for the
continued conduct of its business; and
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(B) The Client or its representative shall execute and deliver to
Equity Growth 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 Equity Growth
all records, manuals and written procedures, as may be
desired by Equity Growth for the continued conduct of its
business.
ARTICLE THREE
EQUITY GROWTH'S CONFIDENTIALITY & COMPETITION COVENANTS
3.1 GENERAL PROVISIONS.
(A) Equity Growth 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 the Client's trade secrets,
systems, procedures, manuals, confidential reports;
consequently, as material inducement to the entry into this
Agreement by the Client, Equity Growth 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 Equity
Growth of any of the provisions of this Article Three, the
Client, in addition to and not in limitation of any other
rights, remedies or damages available to the 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 Equity Growth, 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 the Client and its clients as a result of a breach by Equity Growth of the
covenants or agreements contained in this Article Three, and in view of the lack
of an adequate remedy at law to protect the Client's interests, Equity Growth
hereby covenants and agrees that the Client shall have the following additional
rights and remedies in the event of a breach hereof:
(A) Equity Growth 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 the Client or its clients may sustain prior
to the effective enforcement of such injunction, Equity Growth hereby
covenants and agrees to pay over to the 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 the 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 the 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 the Client
and its clients from the injury caused by such breaches would be
injunctive relief.
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3.3 CUMULATIVE REMEDIES.
Equity Growth 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 the Client and its clients are or may be entitled
to, whether at law or in equity, under or pursuant to this Agreement.
3.4 ACKNOWLEDGMENT OF REASONABLENESS.
(A) Equity Growth 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 the 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, Equity Growth hereby covenants,
agrees and directs such court to substitute a reasonable
judicially enforceable limitation in place of any limitation
deemed unenforceable and, Equity Growth 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, Equity Growth 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.
Equity Growth shall not be required to devote all of its business time to
the affairs of the Client, rather it shall devote such time as it is reasonably
necessary in light of its other business commitments.
ARTICLE FOUR
CLIENT'S CONFIDENTIALITY & COMPETITION COVENANTS
4.1 GENERAL PROHIBITIONS
(A) The Client acknowledges that, in and as a result of its
engagement of Equity Growth, the Client will be making use of
confidential information of special and unique nature and
value relating to such matters as Equity Growth'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 Equity Growth,
the 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 Equity Growth, or Equity
Growth's affiliates.
(B) In the event of a breach or threatened breach by the Client
of any of the provisions of this Article Four, Equity Growth,
in addition to and not in limitation of any other rights,
remedies or damages available to Equity Growth, whether at
law or in equity, shall be entitled to a permanent injunction
in order to prevent or to restrain any such breach by the
Client, or by the 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.
4.2 SPECIAL REMEDIES.
In view of the irreparable harm and damage which would undoubtedly occur
to Equity Growth as a result of a breach by the 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 Equity Growth's interests, the Client hereby
covenants and agrees that Equity Growth shall have the following additional
rights and remedies in the event of a breach hereof:
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(A) The 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 Equity Growth may sustain prior to the
effective enforcement of such injunction, the Client hereby covenants and
agrees to pay over to Equity Growth, 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 Equity Growth as a result of such violation, the Parties hereto
agreeing that such liquidated damages are not intended as the
exclusive remedy available to Equity Growth 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 Equity Growth from the injury
caused by such breaches would be injunctive relief.
4.3 CUMULATIVE REMEDIES.
The 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 Equity Growth is or may be entitled to, whether at
law or in equity, under or pursuant to this Agreement.
4.4 ACKNOWLEDGMENT OF REASONABLENESS.
(A) The 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 Equity Growth, 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, the Client hereby covenants, agrees
and directs such court to substitute a reasonable judicially
enforceable limitation in place of any limitation deemed
unenforceable and, the 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, the 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.
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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 EQUITY GROWTH:
8001 DeSoto Woods Drive; Sarasota, Florida 34243 Telephone (941)
358-8182; Fax (941) 358-8423
Attention: Charles J. Scimeca, President
with copies to
THE YANKEE COMPANIES, INC.
902 Clint Moore Road, Suite 136; Boca Raton, Florida 33487
Telephone (561) 998-2025; Fax (561) 998-3425
Attention: Leonard Miles Tucker, President
and
THE YANKEE COMPANIES, INC.1941 Southeast 51st
Terrace; Ocala, Florida 34471
Telephone (352) 694-9179; Fax (352) 694-9178
Attention: Vanessa H. Lindsey, Chief Administrative Officer
TO THE CLIENT:
GAFF GROUP, INC.
2698 Junipero Avenue, Suite 110; Long Beach, California 90806 or at such
address, telephone and fax numbers
as are reflected on the SEC's EDGAR Internet site;
Attention: George A. Frudakis, 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.
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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.
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 Equity Growth and three by the 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 1/2 by the Client and 1/2 by Equity Growth.
(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.
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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.
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, Equity Growth 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, Equity Growth 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 The Yankee Companies, Inc.,
a Florida corporation which serves as a strategic consultant to
Equity Growth ("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 Equity Growth based on
authorship.
(B) The Client hereby acknowledge that neither Yankees nor Equity Growth is a
law firm and that neither 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.
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IN WITNESS WHEREOF, the Parties have executed this Agreement, effective
as of the last date set forth below.
Signed, Sealed & Delivered
In Our Presence
GAFF GROUP, INC.
- ----------------------------
____________________________ By: ____________________________
George A. Frudakis, PRESIDENT
Dated: _____________________
Attest: ____________________________
George A. Frudakis, SECRETARY
{Seal}
EQUITY GROWTH SYSTEMS, INC.
- ----------------------------
____________________________ By: ____________________________
Charles J. Scimeca, PRESIDENT
Dated: _____________________
Attest: ____________________________
G. Richard Chamberlin, SECRETARY
{Seal}
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CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into by
and between GOLDEN JERSEY PRODUCTS, INC., a Florida corporation (the "Client")
and 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 "Equity Growth,"
respectively; the Client and Equity Growth being hereinafter collectively
referred to as the "Parties" and generically as a "Party").
PREAMBLE :
WHEREAS, Client is engaged in the development and marketing of dairy and
dairy substitute products, as more particularly described in the
materials annexed hereto and made a part hereof as composite exhibit 0.1;
and
WHEREAS, the Client desires to become a reporting company under federal
securities laws with a publicly traded class of securities; and
WHEREAS, Equity Growth personnel have substantial experience with law,
accounting and the regulatory obligations imposed under federal
securities laws and regulations, and provide assistance to companies that
desire to attain reporting status under Section 12(g) of the Exchange
Act; and
WHEREAS, Equity Growth is agreeable to making its services available to
the Client, on the terms and subject to the conditions hereinafter set
forth:
NOW, THEREFORE, in consideration for Equity Growth'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 acknowledged, the Parties, intending to
be legally bound, hereby agree as follows:
WITNESSETH:
ARTICLE ONE
OBLIGATIONS OF THE PARTIES
1.1 DESCRIPTION OF SERVICES
(A) Equity Growth will assist the Client's legal counsel, or, as
set forth below, provide its own legal counsel, to register
its securities with the Securities and Exchange Commission
(the "SEC"), and thereafter, will assist the Client to make
arrangements required to permit trading of the Client's
securities on the OTC Bulletin Board operated by the National
Association of Securities Dealers, Inc., including
introductions to one or more potential market makers and
assistance in the preparation, filing and management of the
SEC and NASD Rule 15c2-11 compliance filings which will be
required by any broker dealers publishing quotes in the
Client's securities.
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(B) Equity Growth will assist the Client to obtain a CUSIP number for its
securities, to obtain a stock trading symbol and to list the Client in a
Standard & Poors or comparable securities manual complying with the
manual exemption from Blue Sky registration in 15 or more states.
(C) Because of the Client's anticipated status under federal
securities laws, in any circumstances where Equity Growth is
describing the securities of to a third Party, Equity Growth
shall disclose to such person the compensation received from
the Client to the extent required under any applicable laws,
including, without limitation, Section 17(b) of the
Securities Act of 1933, as amended (the "Securities Act");
however, the Parties acknowledge they do not contemplate that
Equity Growth shall be involved in any activities on behalf
of the Client requiring such descriptions or disclosures, or
that the Services involve any activities subject to
regulation under federal or state securities laws, except for
the introduction of the 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, Equity Growth shall not disclose to any third
party any confidential non-public information furnished by the Client or
otherwise obtained by it with respect to the 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" departments of licensed securities firms, etc.;
accordingly, Equity Growth agrees that it will not release
any information or data about the Client to any selected or
limited person(s), entity, or group if Equity Growth is aware
that such information or data has not been generally released
or promulgated.
(B) Equity Growth shall restrict or cease, as directed by the Client, all
efforts on behalf of the Client, including all dissemination of
information regarding the Client, immediately upon receipt of
instructions (in writing by fax or letter) to that effect from the
Client.
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1.4 EQUITY GROWTH'S COMPENSATION
(A) (1) The Client shall issue, directly to Equity Growth's
stockholders of record on the 30th day following the
date of this agreement, pro rata based on their
ownership of common stock in Equity Growth, a quantity
of the Client's common stock equal to 10% of the total
outstanding capital stock of the Client, immediately
following such issuance, subject to anti-dilutive
rights for a period of 12 months following the
original date of issuance (the "Public Shares").
(2) The Public Shares shall be issued either:
(a) in reliance on either Rule 504 of SEC Regulation D or Section 4(6)
of the Securities Act, and comparable provisions of the securities
laws in each of the recipient's state of domicile, or
(b) pursuant to a registration on SEC Form SB-1 or SB-2, or a
notification statement pursuant to SEC Regulation A;
and Equity Growth will assist the Client to prepare and file
required documentation associated therewith, at the Client's
expense.
(3) Prior to the issuance of the Public Shares Equity Growth will
assist the Client to comply with any obligations under SEC Rule
10b-17 pertaining to dividends.
(4) The Parties hereby agree that for auditing, tax, Rule 504 or SEC
filing fee purposes, the reasonable market value of the Public
Shares is the lesser of $50,000 or 10% of the Client's
stockholders equity.
(B) (1) In the event that the Client desires to avail itself
of the legal services of Equity Growth's general
counsel to prepare and file the required SEC
registration statements, it will pay Equity Growth the
sum of $15,000, plus out of pocket costs and expenses,
provided that not more than four amendments thereto
are required, and that the Client provides timely and
complete assistance in responding to SEC comment
letters (additional costs resulting from failure of
such assumptions being billed at such counsel's normal
hourly fees for securities related filings).
(2) Equity Growth believes that the Client will have to pay the
following additional costs in conjunction with the projects
contemplated by this Agreement:
H. Auditing costs, the amount of which the Client is not
competent to determine;
I. The costs of obtaining a CUSIP number and listing with
Standard & Poors or another comparable manual, which
is estimated to be $4,000;
J. Transfer agent set up and certificate distribution
costs which will vary, based on the agency selected
and the initial services required, but should not
exceed $15,000 for physical delivery of certificates
to each stockholder, assuming that such delivery can
be structured over several months. In the event that
book entry recording in lieu of physical delivery is a
legally available alternative and the costs of
certificates are born by stockholders requesting them,
then the costs can be cut dramatically (in the $5,000
range);
K. Filing fees to the SEC and State regulatory authorities, not
expected to exceed $5,000;
L. Travel, long distance telephone, overnight postage and mailing
expenses, not expected to exceed $2,500.
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(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 Equity Growth arranges or provides funding for
Client on terms more beneficial than those reflected in Client's
current principal financing agreements, Equity Growth 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 Equity Growth 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); or
(b) If funding is provided by any person or group of
persons introduced to the Client by Equity Growth or
persons associated with Equity Growth, directly or
indirectly, but is not provided by Equity Growth or
its principals as described in the preceding sub
section, then Equity Growth shall be entitled to an
introduction fee equal to 5% of the aggregate proceeds
so obtained; and
(2) In the event that Equity Growth generates business for the Client,
then, on any sales resulting therefrom, Equity Growth shall be
entitled to a commission equal to 10% of the gross income derived
by the Client therefrom, on a continuing basis.
(3) In the event that Equity Growth or any affiliate thereof arranges
for an acquisition by the Client, then Equity Growth 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.
(D) The Client will assure that its legal counsel promptly
prepares all reports which then existing holders of the
Client's securities (including Equity Growth, its affiliates
and successors in interest) are required to file with the
Securities and Exchange Commission as a result of the
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.
(E) (1) In addition to payment of fees, the Client will be responsible
for payment of all costs and disbursements associated with Equity
Growth'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 the
Client; or
(c) Approved in writing by the Client; provided, however, that the
refusal by the Client to approve expenditures required for the
proper performance of Equity Growth's services will excuse
performance of such services.
(2) All of Equity Growth's statements will be paid within 10 days
after receipt.
(3) In the event additional time for payment is required, Equity
Growth will have the option of selling the account receivable and
the Client agrees to pay interest thereon at the monthly rate of
1%.
(4) In the event collection activities are required, the Client agrees
to pay all of Equity Growth'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 the Client
and Equity Growth.
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1.5 CLIENT'S COMMITMENTS
(A). (1) All work requiring legal review will be submitted for
approval by the Client to the Client's legal counsel
prior to its use.
(2) Final drafts of any matters prepared for use by Equity Growth in
conjunction with the provision of the Services will be reviewed by
the Client and, if legally required, by the 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 the Client and, if
required, the Client's legal counsel, will any documents be filed
with regulatory agencies or provided to Equity Growth or third
parties.
(3) (a) Financial data will be reviewed by competent,
independent, certified public accountants experienced and
qualified in securities related accounting, to be
separately retained by the Client.
(b) Such accountants will be required to review and approve all
financially related filings, prior to release to Equity Growth,
other third parties or submission to the appropriate regulatory
authorities.
(B) (1) The Client shall supply Equity Growth on a regular and
timely basis with all approved data and information
about the Client, its management, its products, and
its operations and the Client shall be responsible for
advising Equity Growth of any fact which would affect
the accuracy of any prior data and information
supplied to Equity Growth.
(2) The Client shall use its best efforts to promptly supply Equity
Growth 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 Equity Growth'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) The Client shall promptly notify Equity Growth 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) The 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 Equity Growth and the Client
acknowledges its awareness that Equity Growth will rely on such
continuing representation in performing its functions under this
Agreement.
(5) Equity Growth, in the absence of notice in writing from the
Client, may rely on the continuing accuracy of material,
information and data supplied by the Client.
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ARTICLE TWO
TERM, RENEWALS & EARLIER TERMINATION
2.1 TERM.
This Agreement shall be for an initial term of 180 days, commencing on
the date of its complete execution by all Parties, as evinced in the execution
page hereof, but shall be extended, as required to permit completion of the
projects contemplated hereby (attaining trading status for the Client's
securities as an issuer filing reports with the SEC pursuant to Section 12[g] of
the Exchange Act (the "Initial Term").
2.2 RENEWALS.
Subject to prior agreement as to additional compensation payable to
Equity Growth, 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 Equity
Growth of all amounts due it hereunder, Equity Growth or its
representative shall execute and deliver to the 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 the Client all records, manuals and
written procedures, as may be desired by the Client for the
continued conduct of its business; and
(B) The Client or its representative shall execute and deliver to
Equity Growth 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 Equity Growth
all records, manuals and written procedures, as may be
desired by Equity Growth for the continued conduct of its
business.
ARTICLE THREE
EQUITY GROWTH'S CONFIDENTIALITY & COMPETITION COVENANTS
3.1 GENERAL PROVISIONS.
(A) Equity Growth 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 the Client's trade secrets,
systems, procedures, manuals, confidential reports;
consequently, as material inducement to the entry into this
Agreement by the Client, Equity Growth 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.
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(B) In the event of a breach or threatened breach by Equity
Growth of any of the provisions of this Article Three, the
Client, in addition to and not in limitation of any other
rights, remedies or damages available to the 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 Equity Growth, 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 the Client and its clients as a result of a breach by Equity Growth of the
covenants or agreements contained in this Article Three, and in view of the lack
of an adequate remedy at law to protect the Client's interests, Equity Growth
hereby covenants and agrees that the Client shall have the following additional
rights and remedies in the event of a breach hereof:
(A) Equity Growth 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 the Client or its clients may sustain prior
to the effective enforcement of such injunction, Equity Growth hereby
covenants and agrees to pay over to the 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 the 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 the 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 the Client
and its clients from the injury caused by such breaches would be
injunctive relief.
3.3 CUMULATIVE REMEDIES.
Equity Growth 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 the Client and its clients are or may be entitled
to, whether at law or in equity, under or pursuant to this Agreement.
3.4 ACKNOWLEDGMENT OF REASONABLENESS.
(A) Equity Growth 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 the 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, Equity Growth hereby covenants,
agrees and directs such court to substitute a reasonable
judicially enforceable limitation in place of any limitation
deemed unenforceable and, Equity Growth 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.
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(B) In determining the nature of this limitation, Equity Growth 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.
Equity Growth shall not be required to devote all of its business time to
the affairs of the Client, rather it shall devote such time as it is reasonably
necessary in light of its other business commitments.
ARTICLE FOUR
CLIENT'S CONFIDENTIALITY & COMPETITION COVENANTS
4.1 GENERAL PROHIBITIONS
(A) The Client acknowledges that, in and as a result of its
engagement of Equity Growth, the Client will be making use of
confidential information of special and unique nature and
value relating to such matters as Equity Growth'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 Equity Growth,
the 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 Equity Growth, or Equity
Growth's affiliates.
(B) In the event of a breach or threatened breach by the Client
of any of the provisions of this Article Four, Equity Growth,
in addition to and not in limitation of any other rights,
remedies or damages available to Equity Growth, whether at
law or in equity, shall be entitled to a permanent injunction
in order to prevent or to restrain any such breach by the
Client, or by the 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.
4.2 SPECIAL REMEDIES.
In view of the irreparable harm and damage which would undoubtedly occur
to Equity Growth as a result of a breach by the 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 Equity Growth's interests, the Client hereby
covenants and agrees that Equity Growth shall have the following additional
rights and remedies in the event of a breach hereof:
(A) The 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 Equity Growth may sustain prior to the
effective enforcement of such injunction, the Client hereby covenants and
agrees to pay over to Equity Growth, in the event it violates the
covenants and agreements contained in this Article Four, the greater of:
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(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 Equity Growth as a result of such violation, the Parties hereto
agreeing that such liquidated damages are not intended as the
exclusive remedy available to Equity Growth 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 Equity Growth from the injury
caused by such breaches would be injunctive relief.
4.3 CUMULATIVE REMEDIES.
The 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 Equity Growth is or may be entitled to, whether at
law or in equity, under or pursuant to this Agreement.
4.4 ACKNOWLEDGMENT OF REASONABLENESS.
(A) The 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 Equity Growth, 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, the Client hereby covenants, agrees
and directs such court to substitute a reasonable judicially
enforceable limitation in place of any limitation deemed
unenforceable and, the 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, the 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.
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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 EQUITY GROWTH:
8001 DeSoto Woods Drive; Sarasota, Florida 34243 Telephone (941)
358-8182; Fax (941) 358-8423
Attention: Charles J. Scimeca, President
with copies to
THE YANKEE COMPANIES, INC.
902 Clint Moore Road, Suite 136; Boca Raton, Florida 33487
Telephone (561) 998-2025; Fax (561) 998-3425
Attention: Leonard Miles Tucker, President
and
THE YANKEE COMPANIES, INC.1941 Southeast 51st
Terrace; Ocala, Florida 34471
Telephone (352) 694-9179; Fax (352) 694-9178
Attention: Vanessa H. Lindsey, Chief Administrative Officer
TO THE CLIENT:
GOLDEN JERSEY PRODUCTS, INC.
780 United States Highway 1, Suite 301; Vero Beach, Florida 32962
Telephone (800) 588-6455; Fax (561) 569-6617; and, e-mail
[email protected]
or at such address, telephone and fax numbers
as are reflected on the SEC's EDGAR Internet site;
Attention: Joseph A. DiBruno, 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.
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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.
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 Marion 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 Equity Growth and three by the 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 1/2 by the Client and 1/2 by Equity Growth.
(B) Judgment upon the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof.
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(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.
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, Equity Growth 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, Equity Growth shall, subject to
reasonable reimbursement on a pre-approved budgetary basis, be
responsible for providing its own office facilities and supporting
personnel.
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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 The Yankee Companies, Inc.,
a Florida corporation which serves as a strategic consultant to
Equity Growth ("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 Equity Growth based on
authorship.
(B) The Client hereby acknowledge that neither Yankees nor Equity Growth is a
law firm and that neither 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.
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IN WITNESS WHEREOF, the Parties have executed this Agreement, effective
as of the last date set forth below.
Signed, Sealed & Delivered
In Our Presence
GOLDEN JERSEY PRODUCTS, INC.
- ----------------------------
____________________________ By: ____________________________
Joseph A. DiBruno, PRESIDENT
Dated: _____________________
Attest: ____________________________
Gary D. Deshon, SECRETARY
{Seal}
EQUITY GROWTH SYSTEMS, INC.
- ----------------------------
____________________________ By: ____________________________
Charles J. Scimeca, PRESIDENT
Dated: _____________________
Attest: ____________________________
G. Richard Chamberlin, SECRETARY
{Seal}
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CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into by
and between SUNTEL COMMUNICATIONS GROUP, INC., a Delaware corporation (the
"Client") and 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 "Equity
Growth," respectively; the Client and Equity Growth being hereinafter
collectively referred to as the "Parties" and generically as a "Party").
PREAMBLE :
WHEREAS, Client is a recently organized corporation, acting as a holding
company for two wholly owned subsidiaries each heretofore engaged in
different aspects of the telecommunications industry as more particularly
described in the materials annexed hereto and made a part hereof as
composite exhibit 0.1; and
WHEREAS, the Client desires to become a reporting company under federal
securities laws with a publicly traded class of securities; and
WHEREAS, Equity Growth personnel have substantial experience with law,
accounting and the regulatory obligations imposed under federal
securities laws and regulations, and provide assistance to companies that
desire to attain reporting status under Section 12(g) of the Exchange
Act; and; and
WHEREAS, the Client desires to induce Equity Growth to make
its services available to the Client; and
WHEREAS, Equity Growth is agreeable to making its services available to
the Client, on the terms and subject to the conditions hereinafter set
forth:
NOW, THEREFORE, in consideration for Equity Growth'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 acknowledged, the Parties, intending to
be legally bound, hereby agree as follows:
WITNESSETH:
ARTICLE ONE
OBLIGATIONS OF THE PARTIES
1.1 DESCRIPTION OF SERVICES
(A) Equity Growth will assist the Client's legal counsel, or, as
set forth below, make available Equity Growth's own legal
counsel (at the Client's expense), to register the Client's
securities with the Securities and Exchange Commission (the
"SEC"), and thereafter, will assist the Client to make
arrangements required to permit trading of the Client's
securities on the OTC Bulletin Board operated by the National
Association of Securities Dealers, Inc. (the "NASD"),
including introductions to one or more potential market
makers and assistance in the preparation, filing and
management of the SEC and NASD Rule 15c2-11 compliance
filings which will be required by any broker dealers
publishing quotes in the Client's securities.
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(B) Equity Growth will assist the Client to obtain a CUSIP number for its
securities, to obtain a stock trading symbol and to list the Client in a
Standard & Poors or comparable securities manual complying with the
manual exemption from Blue Sky registration in 15 or more states.
(C) Because of the Client's anticipated status under federal
securities laws, in any circumstances where Equity Growth is
describing the securities of to a third Party, Equity Growth
shall disclose to such person the compensation received from
the Client to the extent required under any applicable laws,
including, without limitation, Section 17(b) of the
Securities Act of 1933, as amended (the "Securities Act");
however, the Parties acknowledge they do not contemplate that
Equity Growth shall be involved in any activities on behalf
of the Client requiring such descriptions or disclosures, or
that the Services involve any activities subject to
regulation under federal or state securities laws, except for
the introduction of the 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, Equity Growth shall not disclose to any third
party any confidential non-public information furnished by the Client or
otherwise obtained by it with respect to the 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" departments of licensed securities firms, etc.;
accordingly, Equity Growth agrees that it will not release
any information or data about the Client to any selected or
limited person(s), entity, or group if Equity Growth is aware
that such information or data has not been generally released
or promulgated.
(B) Equity Growth shall restrict or cease, as directed by the Client, all
efforts on behalf of the Client, including all dissemination of
information regarding the Client, immediately upon receipt of
instructions (in writing by fax or letter) to that effect from the
Client.
1.4 EQUITY GROWTH'S COMPENSATION
(A) (1) The Client shall issue, directly to Equity Growth's
stockholders of record on the 30th day following the
date of this agreement, pro rata based on their
ownership of common stock in Equity Growth, a quantity
of the Client's common stock equal to 10% of the total
outstanding capital stock of the Client, immediately
following such issuance, subject to anti-dilutive
rights for a period of 12 months following the
original date of issuance (the "Public Shares").
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(2) The Public Shares shall be issued either:
(a) in reliance on either Rule 504 of SEC Regulation D or Section 4(6)
of the Securities Act, and comparable provisions of the securities
laws in each of the recipient's state of domicile, or
(b) pursuant to a registration on SEC Form SB-1 or SB-2, or a
notification statement pursuant to SEC Regulation A;
and Equity Growth will assist the Client to prepare and file
required documentation associated therewith, at the Client's
expense.
(3) Prior to the issuance of the Public Shares Equity Growth will
assist the Client to comply with any obligations under SEC Rule
10b-17 pertaining to dividends.
(4) The Parties hereby agree that for auditing, tax, Rule 504 or SEC
filing fee purposes, the reasonable market value of the Public
Shares is the lesser of $50,000 or 10% of the Client's
stockholders equity.
(B) (1) In the event that the Client desires to avail itself
of the legal services of Equity Growth's general
counsel to prepare and file the required SEC
registration statements, it will pay Equity Growth the
sum of $15,000, plus out of pocket costs and expenses,
provided that not more than four amendments thereto
are required, and that the Client provides timely and
complete assistance in responding to SEC comment
letters (additional costs resulting from failure of
such assumptions being billed at such counsel's normal
hourly fees for securities related filings).
(2) Equity Growth believes that the Client will have to pay the
following additional costs in conjunction with the projects
contemplated by this Agreement:
M. Auditing costs, the amount of which the Client is not
competent to determine;
N. The costs of obtaining a CUSIP number and listing with Standard &
Poors or another comparable manual, which is estimated to be
$4,000;
O. Transfer agent set up and certificate distribution
costs which will vary, based on the agency selected
and the initial services required, but should not
exceed $15,000 for physical delivery of certificates
to each stockholder, assuming that such delivery can
be structured over several months. In the event that
book entry recording in lieu of physical delivery is a
legally available alternative and the costs of
certificates are born by stockholders requesting them,
then the costs can be cut dramatically (in the $5,000
range);
P. Filing fees to the SEC and State regulatory authorities, not
expected to exceed $5,000;
Q. Travel, long distance telephone, overnight postage and mailing
expenses, not expected to exceed $2,500.
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(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 Equity Growth arranges or provides funding for
Client on terms more beneficial than those reflected in Client's
current principal financing agreements, Equity Growth 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 Equity Growth 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); or
(b) If funding is provided by any person or group of
persons introduced to the Client by Equity Growth or
persons associated with Equity Growth, directly or
indirectly, but is not provided by Equity Growth or
its principals as described in the preceding sub
section, then Equity Growth shall be entitled to an
introduction fee equal to 5% of the aggregate proceeds
so obtained; and
(2) In the event that Equity Growth generates business for the Client,
then, on any sales resulting therefrom, Equity Growth shall be
entitled to a commission equal to 10% of the gross income derived
by the Client therefrom, on a continuing basis.
(3) In the event that Equity Growth or any affiliate thereof arranges
for an acquisition by the Client, then Equity Growth 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.
(D) The Client will assure that its legal counsel promptly
prepares all reports which then existing holders of the
Client's securities (including Equity Growth, its affiliates
and successors in interest) are required to file with the
Securities and Exchange Commission as a result of the
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.
(E) (1) In addition to payment of fees, the Client will be responsible
for payment of all costs and disbursements associated with Equity
Growth'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 the
Client; or
(c) Approved in writing by the Client; provided, however, that the
refusal by the Client to approve expenditures required for the
proper performance of Equity Growth's services will excuse
performance of such services.
(2) All of Equity Growth's statements will be paid within 10 days
after receipt.
(3) In the event additional time for payment is required, Equity
Growth will have the option of selling the account receivable and
the Client agrees to pay interest thereon at the monthly rate of
1%.
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(4) In the event collection activities are required, the Client agrees
to pay all of Equity Growth'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 the Client
and Equity Growth.
1.5 CLIENT'S COMMITMENTS
(A). (1) All work requiring legal review will be submitted for
approval by the Client to the Client's legal counsel
prior to its use.
(2) Final drafts of any matters prepared for use by Equity Growth in
conjunction with the provision of the Services will be reviewed by
the Client and, if legally required, by the 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 the Client and, if
required, the Client's legal counsel, will any documents be filed
with regulatory agencies or provided to Equity Growth or third
parties.
(3) (a) Financial data will be reviewed by competent,
independent, certified public accountants experienced and
qualified in securities related accounting, to be
separately retained by the Client.
(b) Such accountants will be required to review and approve all
financially related filings, prior to release to Equity Growth,
other third parties or submission to the appropriate regulatory
authorities.
(B) (1) The Client shall supply Equity Growth on a regular and
timely basis with all approved data and information
about the Client, its management, its products, and
its operations and the Client shall be responsible for
advising Equity Growth of any fact which would affect
the accuracy of any prior data and information
supplied to Equity Growth.
(2) The Client shall use its best efforts to promptly supply Equity
Growth 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 Equity Growth'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) The Client shall promptly notify Equity Growth 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) The 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 Equity Growth and the Client
acknowledges its awareness that Equity Growth will rely on such
continuing representation in performing its functions under this
Agreement.
(5) Equity Growth, in the absence of notice in writing from the
Client, may rely on the continuing accuracy of material,
information and data supplied by the Client.
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ARTICLE TWO
TERM, RENEWALS & EARLIER TERMINATION
2.1 TERM.
This Agreement shall be for an initial term of 180 days, commencing on
the date of its complete execution by all Parties, as evinced in the execution
page hereof, but shall be extended, as required to permit completion of the
projects contemplated hereby (attaining trading status for the Client's
securities as an issuer filing reports with the SEC pursuant to Section 12[g] of
the Exchange Act (the "Initial Term").
2.2 RENEWALS.
Subject to prior agreement as to additional compensation payable to
Equity Growth, 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 Equity
Growth of all amounts due it hereunder, Equity Growth or its
representative shall execute and deliver to the 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 the Client all records, manuals and
written procedures, as may be desired by the Client for the
continued conduct of its business; and
(B) The Client or its representative shall execute and deliver to
Equity Growth 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 Equity Growth
all records, manuals and written procedures, as may be
desired by Equity Growth for the continued conduct of its
business.
ARTICLE THREE
EQUITY GROWTH'S CONFIDENTIALITY & COMPETITION COVENANTS
3.1 GENERAL PROVISIONS.
(A) Equity Growth 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 the Client's trade secrets,
systems, procedures, manuals, confidential reports;
consequently, as material inducement to the entry into this
Agreement by the Client, Equity Growth 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 Equity
Growth of any of the provisions of this Article Three, the
Client, in addition to and not in limitation of any other
rights, remedies or damages available to the 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 Equity Growth, 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.
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3.2 SPECIAL REMEDIES.
In view of the irreparable harm and damage which would undoubtedly occur
to the Client and its clients as a result of a breach by Equity Growth of the
covenants or agreements contained in this Article Three, and in view of the lack
of an adequate remedy at law to protect the Client's interests, Equity Growth
hereby covenants and agrees that the Client shall have the following additional
rights and remedies in the event of a breach hereof:
(A) Equity Growth 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 the Client or its clients may sustain prior
to the effective enforcement of such injunction, Equity Growth hereby
covenants and agrees to pay over to the 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 the 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 the 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 the Client
and its clients from the injury caused by such breaches would be
injunctive relief.
3.3 CUMULATIVE REMEDIES.
Equity Growth 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 the Client and its clients are or may be entitled
to, whether at law or in equity, under or pursuant to this Agreement.
3.4 ACKNOWLEDGMENT OF REASONABLENESS.
(A) Equity Growth 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 the 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, Equity Growth hereby covenants,
agrees and directs such court to substitute a reasonable
judicially enforceable limitation in place of any limitation
deemed unenforceable and, Equity Growth 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, Equity Growth 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.
Equity Growth shall not be required to devote all of its business time to
the affairs of the Client, rather it shall devote such time as it is reasonably
necessary in light of its other business commitments.
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ARTICLE FOUR
CLIENT'S CONFIDENTIALITY & COMPETITION COVENANTS
4.1 GENERAL PROHIBITIONS
(A) The Client acknowledges that, in and as a result of its
engagement of Equity Growth, the Client will be making use of
confidential information of special and unique nature and
value relating to such matters as Equity Growth'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 Equity Growth,
the 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 Equity Growth, or Equity
Growth's affiliates.
(B) In the event of a breach or threatened breach by the Client
of any of the provisions of this Article Four, Equity Growth,
in addition to and not in limitation of any other rights,
remedies or damages available to Equity Growth, whether at
law or in equity, shall be entitled to a permanent injunction
in order to prevent or to restrain any such breach by the
Client, or by the 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.
4.2 SPECIAL REMEDIES.
In view of the irreparable harm and damage which would undoubtedly occur
to Equity Growth as a result of a breach by the 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 Equity Growth's interests, the Client hereby
covenants and agrees that Equity Growth shall have the following additional
rights and remedies in the event of a breach hereof:
(A) The 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 Equity Growth may sustain prior to the
effective enforcement of such injunction, the Client hereby covenants and
agrees to pay over to Equity Growth, 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 Equity Growth as a result of such violation, the Parties hereto
agreeing that such liquidated damages are not intended as the
exclusive remedy available to Equity Growth 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 Equity Growth from the injury
caused by such breaches would be injunctive relief.
4.3 CUMULATIVE REMEDIES.
The 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 Equity Growth is or may be entitled to, whether at
law or in equity, under or pursuant to this Agreement.
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4.4 ACKNOWLEDGMENT OF REASONABLENESS.
(A) The 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 Equity Growth, 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, the Client hereby covenants, agrees
and directs such court to substitute a reasonable judicially
enforceable limitation in place of any limitation deemed
unenforceable and, the 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, the 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.
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 EQUITY GROWTH:
8001 DeSoto Woods Drive; Sarasota, Florida 34243 Telephone (941)
358-8182; Fax (941) 358-8423
Attention: Charles J. Scimeca, President
with copies to
THE YANKEE COMPANIES, INC.
902 Clint Moore Road, Suite 136; Boca Raton, Florida 33487
Telephone (561) 998-2025; Fax (561) 998-3425
Attention: Leonard Miles Tucker, President
and
THE YANKEE COMPANIES, INC.1941 Southeast 51st
Terrace; Ocala, Florida 34471
Telephone (352) 694-9179; Fax (352) 694-9178
Attention: Vanessa H. Lindsey, Chief Administrative Officer
TO THE CLIENT:
SUNTEL COMMUNICATIONS GROUP, INC.
Post Office Box 49750; Orlando, Florida 32802
Telephone (407) ___-____; Fax (407) ___-____; and, e-mail
[email protected]
or at such address, telephone and fax numbers
as are reflected on the SEC's EDGAR Internet site;
Attention: Richard Kirkwood, 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.
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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.
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 Marion 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 Equity Growth and three by the 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 1/2 by the Client and 1/2 by Equity Growth.
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(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.
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, Equity Growth 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, Equity Growth shall, subject to
reasonable reimbursement on a pre-approved budgetary basis, be
responsible for providing its own office facilities and supporting
personnel.
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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 The Yankee Companies, Inc.,
a Florida corporation which serves as a strategic consultant to
Equity Growth ("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 Equity Growth based on
authorship.
(B) The Client hereby acknowledge that neither Yankees nor Equity Growth is a
law firm and that neither 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.
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IN WITNESS WHEREOF, the Parties have executed this Agreement, effective
as of the last date set forth below.
Signed, Sealed & Delivered
In Our Presence
SUNTEL COMMUNICATIONS GROUP, INC.
- ----------------------------
____________________________ By: ____________________________
Richard Kirkwood, PRESIDENT
Dated: _____________________
Attest: ____________________________
____________________, SECRETARY
{Seal}
EQUITY GROWTH SYSTEMS, INC.
- ----------------------------
____________________________ By: ____________________________
Charles J. Scimeca, PRESIDENT
Dated: _____________________
Attest: ____________________________
G. Richard Chamberlin, SECRETARY
{Seal}
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CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into by
and between SPORTS COLLECTIBLES EXCHANGE, INC., a Florida corporation (the
"Client") and 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 "Equity
Growth," respectively; the Client and Equity Growth being hereinafter
collectively referred to as the "Parties" and generically as a "Party").
PREAMBLE :
WHEREAS, Client is engaged in the sports collectible business which it
intends to expand into the following areas: Internet collectibles
trading; certification program for sports collectible appraisers; a minor
league baseball hall of fame; and, development and maintenance of sports
collectibles price guides, all, initially concentrating on minor league
baseball ; and
WHEREAS, the Client desires to become a reporting company under federal
securities laws with a publicly traded class of securities; and
WHEREAS, Equity Growth personnel have substantial experience with law,
accounting and the regulatory obligations imposed under federal
securities laws and regulations, and provide assistance to companies that
desire to attain reporting status under Section 12(g) of the Exchange
Act; and
WHEREAS, Equity Growth is agreeable to making its services available to
the Client, on the terms and subject to the conditions hereinafter set
forth:
NOW, THEREFORE, in consideration for Equity Growth'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 acknowledged, the Parties, intending to
be legally bound, hereby agree as follows:
WITNESSETH:
ARTICLE ONE
OBLIGATIONS OF THE PARTIES
1.1 DESCRIPTION OF SERVICES
(A) Equity Growth will assist the Client's legal counsel, or, as
set forth below, provide its own legal counsel, to register
its securities with the Securities and Exchange Commission
(the "SEC"), and thereafter, will assist the Client to make
arrangements required to permit trading of the Client's
securities on the OTC Bulletin Board operated by the National
Association of Securities Dealers, Inc., including
introductions to one or more potential market makers and
assistance in the preparation, filing and management of the
SEC and NASD Rule 15c2-11 compliance filings which will be
required by any broker dealers publishing quotes in the
Client's securities.
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(B) Equity Growth will assist the Client to obtain a CUSIP number for its
securities, to obtain a stock trading symbol and to list the Client in a
Standard & Poors or comparable securities manual complying with the
manual exemption from Blue Sky registration in 15 or more states.
(C) Because of the Client's anticipated status under federal
securities laws, in any circumstances where Equity Growth is
describing the securities of to a third Party, Equity Growth
shall disclose to such person the compensation received from
the Client to the extent required under any applicable laws,
including, without limitation, Section 17(b) of the
Securities Act of 1933, as amended (the "Securities Act");
however, the Parties acknowledge they do not contemplate that
Equity Growth shall be involved in any activities on behalf
of The Client requiring such descriptions or disclosures, or
that the Services involve any activities subject to
regulation under federal or state securities laws, except for
the introduction of the 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, Equity Growth shall not disclose to any third
party any confidential non-public information furnished by the Client or
otherwise obtained by it with respect to the 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" departments of licensed securities firms, etc.;
accordingly, Equity Growth agrees that it will not release
any information or data about the Client to any selected or
limited person(s), entity, or group if Equity Growth is aware
that such information or data has not been generally released
or promulgated.
(B) Equity Growth shall restrict or cease, as directed by the Client, all
efforts on behalf of the Client, including all dissemination of
information regarding the Client, immediately upon receipt of
instructions (in writing by fax or letter) to that effect from the
Client.
1.4 EQUITY GROWTH'S COMPENSATION
(A) (1) The Client shall issue, directly to Equity Growth's
stockholders of record on the 30th day following the
date of this agreement, pro rata based on their
ownership of common stock in Equity Growth, a quantity
of the Client's common stock equal to 15% of the total
outstanding capital stock of the Client, immediately
following such issuance, subject to anti-dilutive
rights for a period of 12 months following the
original date of issuance (the "Public Shares").
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(2) The Public Shares shall be issued either:
(a) in reliance on either Rule 504 of SEC Regulation D or Section 4(6)
of the Securities Act, and comparable provisions of the securities
laws in each of the recipient's state of domicile, or
(b) pursuant to a registration on SEC Form SB-1 or SB-2, or a
notification statement pursuant to SEC Regulation A;
and Equity Growth will assist the Client to prepare and file
required documentation associated therewith, at the Client's
expense.
(3) Prior to the issuance of the Public Shares Equity Growth will
assist the Client to comply with any obligations under SEC Rule
10b-17 pertaining to dividends.
(4) The Parties hereby agree that for auditing, tax, Rule 504 or SEC
filing fee purposes, the reasonable market value of the Public
Shares is the greater of $15,000 or 15% of the Client's
stockholders equity.
(B) (1) In the event that the Client desires to avail itself
of the legal services of Equity Growth's general
counsel to prepare and file the required SEC
registration statements, it will pay Equity Growth the
sum of $15,000, plus out of pocket costs and expenses,
provided that not more than four amendments thereto
are required, and that the Client provides timely and
complete assistance in responding to SEC comment
letters (additional costs resulting from failure of
such assumptions being billed at such counsel's normal
hourly fees for securities related filings).
(2) Equity Growth believes that the Client will have to pay the
following additional costs in conjunction with the projects
contemplated by this Agreement:
R. Auditing costs, the amount of which the Client is not
competent to determine;
S. The costs of obtaining a CUSIP number and listing with Standard &
Poors or another comparable manual, which is estimated to be
$4,000;
T. Transfer agent set up and certificate distribution
costs which will vary, based on the agency selected
and the initial services required, but should not
exceed $15,000 for physical delivery of certificates
to each stockholder, assuming that such delivery can
be structured over several months. In the event that
book entry recording in lieu of physical delivery is a
legally available alternative and the costs of
certificates are born by stockholders requesting them,
then the costs can be cut dramatically (in the $5,000
range);
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U. Filing fees to the SEC and State regulatory authorities, not
expected to exceed $5,000;
V. Travel, long distance telephone, overnight postage and mailing
expenses, not expected to exceed $2,500.
(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 Equity Growth arranges or provides funding for
Client on terms more beneficial than those reflected in Client's
current principal financing agreements, Equity Growth 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 Equity Growth 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); or
(b) If funding is provided by any person or group of
persons introduced to the Client by Equity Growth or
persons associated with Equity Growth, directly or
indirectly, but is not provided by Equity Growth or
its principals as described in the preceding sub
section, then Equity Growth shall be entitled to an
introduction fee equal to 5% of the aggregate proceeds
so obtained; and
(2) In the event that Equity Growth generates business for the Client,
then, on any sales resulting therefrom, Equity Growth shall be
entitled to a commission equal to 10% of the gross income derived
by the Client therefrom, on a continuing basis.
(3) In the event that Equity Growth or any affiliate thereof arranges
for an acquisition by the Client, then Equity Growth 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.
(D) The Client will assure that its legal counsel promptly
prepares all reports which then existing holders of the
Client's securities (including Equity Growth, its affiliates
and successors in interest) are required to file with the
Securities and Exchange Commission as a result of the
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.
(E) (1) In addition to payment of fees, the Client will be responsible
for payment of all costs and disbursements associated with Equity
Growth'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 the
Client; or
(c) Approved in writing by the Client; provided, however, that the
refusal by the Client to approve expenditures required for the
proper performance of Equity Growth's services will excuse
performance of such services.
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(2) All of Equity Growth's statements will be paid within 10 days
after receipt.
(3) In the event additional time for payment is required, Equity
Growth will have the option of selling the account receivable and
the Client agrees to pay interest thereon at the monthly rate of
1%.
(4) In the event collection activities are required, the Client agrees
to pay all of Equity Growth'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 the Client
and Equity Growth.
1.5 CLIENT'S COMMITMENTS
(A). (1) All work requiring legal review will be submitted for
approval by the Client to the Client's legal counsel
prior to its use.
(2) Final drafts of any matters prepared for use by Equity Growth in
conjunction with the provision of the Services will be reviewed by
the Client and, if legally required, by the 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 the Client and, if
required, the Client's legal counsel, will any documents be filed
with regulatory agencies or provided to Equity Growth or third
parties.
(3) (a) Financial data will be reviewed by competent,
independent, certified public accountants experienced and
qualified in securities related accounting, to be
separately retained by the Client.
(b) Such accountants will be required to review and approve all
financially related filings, prior to release to Equity Growth,
other third parties or submission to the appropriate regulatory
authorities.
(B) (1) The Client shall supply Equity Growth on a regular and
timely basis with all approved data and information
about the Client, its management, its products, and
its operations and the Client shall be responsible for
advising Equity Growth of any fact which would affect
the accuracy of any prior data and information
supplied to Equity Growth.
(2) The Client shall use its best efforts to promptly supply Equity
Growth 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 Equity Growth'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.
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(3) The Client shall promptly notify Equity Growth 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) The 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 Equity Growth and the Client
acknowledges its awareness that Equity Growth will rely on such
continuing representation in performing its functions under this
Agreement.
(5) Equity Growth, in the absence of notice in writing from the
Client, may rely on the continuing accuracy of material,
information and data supplied by the Client.
ARTICLE TWO
TERM, RENEWALS & EARLIER TERMINATION
2.1 TERM.
This Agreement shall be for an initial term of 180 days, commencing on
the date of its complete execution by all Parties, as evinced in the execution
page hereof, but shall be extended, as required to permit completion of the
projects contemplated hereby (attaining trading status for the Client's
securities as an issuer filing reports with the SEC pursuant to Section 12[g] of
the Exchange Act (the "Initial Term").
2.2 RENEWALS.
Subject to prior agreement as to additional compensation payable to
Equity Growth, 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 Equity
Growth of all amounts due it hereunder, Equity Growth or its
representative shall execute and deliver to the 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 the Client all records, manuals and
written procedures, as may be desired by the Client for the
continued conduct of its business; and
(B) The Client or its representative shall execute and deliver to
Equity Growth 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 Equity Growth
all records, manuals and written procedures, as may be
desired by Equity Growth for the continued conduct of its
business.
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ARTICLE THREE
EQUITY GROWTH'S CONFIDENTIALITY & COMPETITION COVENANTS
3.1 GENERAL PROVISIONS.
(A) Equity Growth 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 the Client's trade secrets,
systems, procedures, manuals, confidential reports;
consequently, as material inducement to the entry into this
Agreement by the Client, Equity Growth 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 Equity
Growth of any of the provisions of this Article Three, the
Client, in addition to and not in limitation of any other
rights, remedies or damages available to the 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 Equity Growth, 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 the Client and its clients as a result of a breach by Equity Growth of the
covenants or agreements contained in this Article Three, and in view of the lack
of an adequate remedy at law to protect the Client's interests, Equity Growth
hereby covenants and agrees that the Client shall have the following additional
rights and remedies in the event of a breach hereof:
(A) Equity Growth 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 the Client or its clients may sustain prior
to the effective enforcement of such injunction, Equity Growth hereby
covenants and agrees to pay over to the 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 the 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 the 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 the Client
and its clients from the injury caused by such breaches would be
injunctive relief.
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3.3 CUMULATIVE REMEDIES.
Equity Growth 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 the Client and its clients are or may be entitled
to, whether at law or in equity, under or pursuant to this Agreement.
3.4 ACKNOWLEDGMENT OF REASONABLENESS.
(A) Equity Growth 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 the 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, Equity Growth hereby covenants,
agrees and directs such court to substitute a reasonable
judicially enforceable limitation in place of any limitation
deemed unenforceable and, Equity Growth 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, Equity Growth 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.
Equity Growth shall not be required to devote all of its business time to
the affairs of the Client, rather it shall devote such time as it is reasonably
necessary in light of its other business commitments.
ARTICLE FOUR
CLIENT'S CONFIDENTIALITY & COMPETITION COVENANTS
4.1 GENERAL PROHIBITIONS
(A) The Client acknowledges that, in and as a result of its
engagement of Equity Growth, the Client will be making use of
confidential information of special and unique nature and
value relating to such matters as Equity Growth'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 Equity Growth,
the 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 Equity Growth, or Equity
Growth's affiliates.
(B) In the event of a breach or threatened breach by the Client
of any of the provisions of this Article Four, Equity Growth,
in addition to and not in limitation of any other rights,
remedies or damages available to Equity Growth, whether at
law or in equity, shall be entitled to a permanent injunction
in order to prevent or to restrain any such breach by the
Client, or by the 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 Equity Growth as a result of a breach by the 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 Equity Growth's interests, the Client hereby
covenants and agrees that Equity Growth shall have the following additional
rights and remedies in the event of a breach hereof:
(A) The 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 Equity Growth may sustain prior to the
effective enforcement of such injunction, the Client hereby covenants and
agrees to pay over to Equity Growth, 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 Equity Growth as a result of such violation, the Parties hereto
agreeing that such liquidated damages are not intended as the
exclusive remedy available to Equity Growth 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 Equity Growth from the injury
caused by such breaches would be injunctive relief.
4.3 CUMULATIVE REMEDIES.
The 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 Equity Growth is or may be entitled to, whether at
law or in equity, under or pursuant to this Agreement.
4.4 ACKNOWLEDGMENT OF REASONABLENESS.
(A) The 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 Equity Growth, 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, the Client hereby covenants, agrees
and directs such court to substitute a reasonable judicially
enforceable limitation in place of any limitation deemed
unenforceable and, the 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, the 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.
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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 EQUITY GROWTH:
8001 DeSoto Woods Drive; Sarasota, Florida 34243 Telephone (941)
358-8182; Fax (941) 358-8423
Attention: Charles J. Scimeca, President
with copies to
THE YANKEE COMPANIES, INC.
902 Clint Moore Road, Suite 136; Boca Raton, Florida 33487
Telephone (561) 998-2025; Fax (561) 998-3425
Attention: Leonard Miles Tucker, President
and
THE YANKEE COMPANIES, INC.1941 Southeast 51st
Terrace; Ocala, Florida 34471
Telephone (352) 694-9179; Fax (352) 694-9178
Attention: Vanessa H. Lindsey, Chief Administrative Officer
TO THE CLIENT:
SPORTS COLLECTIBLES EXCHANGE, INC.
14950 Southeast United States Highway 441; Summerfield, Florida 34491
Telephone (352) 694-6714; Fax (352) 694-9178; and, e-mail
[email protected]
or at such address, telephone and fax numbers
as are reflected on the SEC's EDGAR Internet site;
Attention: G. Richard Chamberlin, 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.
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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.
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 Marion 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 Marion County, Florida to be
selected by lot from six alternatives to be provided, three
by Equity Growth and three by the 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 Marion 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 1/2 by the Client and 1/2 by Equity Growth.
(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.
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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.
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, Equity Growth 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, Equity Growth 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 The Yankee Companies, Inc.,
a Florida corporation which serves as a strategic consultant to
Equity Growth ("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 Equity Growth based on
authorship.
(B) The Client hereby acknowledge that neither Yankees nor Equity Growth is a
law firm and that neither 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.
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IN WITNESS WHEREOF, the Parties have executed this Agreement, effective
as of the last date set forth below.
Signed, Sealed & Delivered
In Our Presence
SPORTS COLLECTIBLES EXCHANGE, INC.
- ----------------------------
____________________________ By: ____________________________
G. Richard Chamberlin, PRESIDENT
Dated: _____________________
Attest: ____________________________
Vanessa H. Lindsay, SECRETARY
{Seal}
EQUITY GROWTH SYSTEMS, INC.
- ----------------------------
____________________________ By: ____________________________
Charles J. Scimeca, PRESIDENT
Dated: _____________________
Attest: ____________________________
G. Richard Chamberlin, SECRETARY
{Seal}
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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 March 3, 1999, at 2:00 P.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 March 3, 1999: Mr. Scimeca, Mr.
Joffe, Ms. Field, Mr. Chamberlin, Mr. Mark Granville- Smith
as attorney in fact for Mr. Edward "Ted" Granville-Smith,
Jr.
The following Directors were absent: None.
The meeting was called for the following purposes:
Also present as a guest for the purposes of a short
presentation to the board was Charles J. Champion on behalf
of Suntel Total Network, Inc.. After Mr. Champion completed
his presentation, Mr. Champion was excused and the Board then
addressed the following business:
1. WHEREAS, it appears that time is of the essence for retaining
an auditor for the purposes of filing a timely 10-KSB for
1998; and
2. WHEREAS, the newly elected corporate management team has reviewed the
relationship of the company and Ted Granville-Smith, Jr., entities
associated with Mr. Granville-Smith, Jr., and Jerry Spellman, including
entities associated with Mr. Spellman; and
3. WHEREAS, Mr. Spellman has represented that he and/or entities he is
associated, have collectively provided at least $130,000 in capital to or
for the direct benefit of Equity Growth Systems under arrangements with
Ted Granville-Smith, Jr., calling for Equity Growth Systems to assure
repayment thereof (the "Spellman Loans"); and
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4. WHEREAS, Ted Granville-Smith, Jr., has represented (himself and through
his attorney in fact) that he and/or entities he is associated, has
provided at least $17,000 in capital to or for the direct benefit of
Equity Growth Systems under arrangements calling for Equity Growth
Systems to assure repayment thereof ; and
5. WHEREAS, Ted Granville-Smith, Jr., and the entities he is
associated, and Spellman and the entities he is associated,
have proposed that the Spellman Loans and the Granville-Smith
Loans be discharged through rescission of the series of
agreements between Granville-Smith, Jr. in a number of
capacities and Equity Growth Systems pursuant to which Equity
Growth Systems acquired rights to a number of real estate
assets, as a result of which, pursuant to agreements between
Granville-Smith, Jr., and Spellman, they would assume all
ownership rights theretofore are vested in Equity Growth
Systems, inc.; and
6. WHEREAS, in light of the complexities involved in the LP Assets, which
only Granville-Smith, Jr. and Spellman understand, disassociation
therefrom in exchange for cancellation of all obligations to the other
Parties, from whatever source, including, without limitation, employment
and consulting agreements, promissory notes, loans, etc., appears to be
in the best interests of the stockholders; and
7. WHEREAS, in the effort to reasonably address the issues involved, Mr.
Spellman has been less than forthright in providing evidences of the
alleged indebtedness of the Company or providing an accounting concerning
the alleged indebtedness, and therefore it appears necessary that a
determination of the amount of indebtedness, if any should be determined
by a Court of Competent Jurisdiction; and
8. WHEREAS, time is of the essence for the purposes of addressing certain
issues concerning the negotiation, execution of the
Spellman/Granville-Smith, Jr. Settlement Recission Agreement and that
possible litigation as to Jerry Spellman and entities or affiliates
associated with Mr. Spellman may be appropriate and necessary; and
9. WHEREAS, certain companies have indicated an interest in negotiating
certain consulting agreements with the company for the purposes of
becoming reporting companies under federal securities laws using the
Company's assistance; and
10. WHEREAS, the company is positioned to provide assistance to
such companies in accomplishing their goals; and
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11. WHEREAS, Atlanta Lending Services, Inc., doing business as Global
Acceptance Corporation has indicated a desire to go public and said
company is interested in discussing with the company various options
concerning a reorganization with the Company.
12. WHEREAS, due to unusual activity in the Companies Securities, the Yankee
Companies, Inc., has recommended to the board, with the concurrence of
General Counsel, that an 8-K be filed immediately discussing the current
status of 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, the Board (except for Mr. Granville Smith, who was medically
unable to attend) unanimously adopted the following resolutions:
1 RESOLVED, that since time is of the essence, Director Penny Field is
hereby authorized through March 5, 1999 at 10:00 A.M. to negotiate a
reasonable retainer agreement calling for no more than $5,000.00 in total
compensation, with an auditor of choice, for the purposes of preparing
financials suitable for the filing of 10-KSB for 1998. Should Penny Field
be unable to secure an auditor in a timely fashion, Director Charles
Scimeca is directed to negotiate a reasonable retainer agreement for no
more than $5,000.00 in total compensation with Baum & Company, P.A., the
auditors that prepared financials for the 10-KSB for 1996, and 1997. The
negotiated retainer agreement will then be circulated to board members
for the purposes of board approval.
Please Initial:
Mr. Scimeca: ___ Mr. Joffe: ___ Ms. Field: ___, Mr. Granville-Smith:
___ , Mr. Chamberlin: __.
2. RESOLVED; that since time is of the essence, Director Charles
Scimeca in conjunction with the Yankee Companies, Inc. is
hereby authorized to finish negotiation, with content
substantially similar to the content of the consulting
agreements attached hereto and marked as Exhibit, "B, C, D, E
", and subject to reasonable due diligence examination of
each entity, on behalf of the Company, and to enter
consulting agreements with those companies seeking the
services of Equity for the purposes of becoming reporting
companies under federal securities laws wherein; however,
Mr. Scimeca will not finalize any consulting agreement with
any such company wherein he has a personal interest nor will
Yankee negotiate with any company wherein a principal of
Yankee has personal interest. Companies which Mr. Scimeca
and the Yankee shall begin negotiations with are: Jersey
Products, Inc., Suntel Total Network, Inc., companies which
Yankee will negotiate without Mr. Scimeca is Gaff, Inc., ( a
company in which Mr. Scimeca has a conflict of interests,
and companies which Mr. Scimeca will negotiate without Yankee
is Sports Collectibles Exchange, Inc., (In which Mr.
Chamberlin and Mr. Calvo have a conflict of interest). Each
negotiated consulting agreement will be individually approved
by the board.
Please Initial:
Mr. Scimeca: ___ Mr. Joffe: ___ Ms. Field: ___, Mr. Granville-Smith:
___ , Mr. Chamberlin: __.
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3. RESOLVED, that Director Charles Scimeca is hereby authorized
to finalize negotiations and execute on behalf of the company
the Spellman/Granville-Smith Settlement Recission Agreement,
as attached as Exhibit "F". Furthermore, the Company's
General Counsel is instructed to commence litigation seeking
a Declaratory Judgment and Accounting from Jerry Spellman and
entities associated with Mr. Spellman, for the purposes of
determining the indebtedness of the company to such persons,
if any; Mr. Scimeca has until Monday, March 8, 1999 at 5:00
P.M. to finalize negotiations with Mr. Spellman. If finalize
negotiations with Mr. Spellman are not completed by the time
set the General Counsel will commence litigation after giving
board members five days advance written notice of his efforts
to begin service of same on Mr. Spellman and the various
entities he is associated.
Please Initial:
Mr. Scimeca: ___ Mr. Joffe: ___ Ms. Field: ___, Mr. Granville-Smith:
___, Mr. Chamberlin: __.
4. RESOLVED, the Board hereby authorizes the filing of a form 8-K
immediately for the purposes of disclosing the above actions, a copy of
which is attached as Exhibit "G", and the Company's status in order to
avoid any possibility that persons with which the Company is negotiating
are engaging in insider trading.
Please Initial:
Mr. Scimeca: ___ Mr. Joffe: ___ Ms. Field: ___, Mr. Granville-Smith:
___, Mr. Chamberlin: __.
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5. RESOLVED, Mr Chamberlin is authorized to begin negotiations with Atlanta
Lending Services, Inc., doing business as Global Acceptance Corporation
for the purposes of a possible reorganization with the Company.
Please Initial:
Mr. Scimeca: ___ Mr. Joffe: ___ Ms. Field: ___, Mr. Granville-Smith:
___, Mr. Chamberlin: __.
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 3rd day of March, 1999.
/s/ G. Richard Chamberlin /s/
------------
G. Richard Chamberlin
Chairman and Secretary of the Meeting
Director
/s/ Charles J. Scimeca /s/
--------------
Charles J. Scimeca
Director
------------
Anthony Q. Joffe
Director
/s/ Penny Field /s/
-------------
Penny Field
Director
/s/ Mark Granville-Smith/s/
------------
Mark Granville-Smith, as attorney in fact for Ted
Granville-Smith, Jr.
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