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); Xxxxxx "Xxx" Xxxxxxxxx-Xxxxx, Jr., a Florida resident who
for longer than three years served as the sole director, president and the chief
executive officer of Equity Growth Systems (Xx. Xxxxxxxxx-Xxxxx, Jr."); as
Trustee for The Xxxxxxxxx-Xxxxx Trust Dated August 13, 1976 (the "GS Trust"); as
Statutory Trustee for First Xxx Co Properties, Inc., a dissolved Delaware
Corporation ("First Xxx Co"); as a managing partner and U.S. registered agent of
X. Xxxxxx International, LTD., (a/k/a X. Xxxxxx, LTD), a Bahamian Corporation
("KWL"); as a principal and director of Milpitas Investors, Inc., a Delaware
Corporation ("Milpitas"); and as Trustee of the Milpitas Investors, Inc. Trust,
('Milpitas Trust"); Xxxxxx Xxxxxxxxx-Xxxxx, Xx., as Statutory Trustee for Equity
Growth Systems, Inc., a dissolved Maryland Corporation ("EGSM"); Equity Growth
Systems, Xx. Xxxxxxxxx-Xxxxx, Jr., the GS Trust, First Xxx Co., KWL, Milpitas,
Milpitas Trust, EGSM, being hereinafter collectively referred to as the
"Parties" and each being sometimes hereinafter generically referred to as a
"Party").
Preamble:
WHEREAS, Xx. Xxxxxxxxx-Xxxxx, Jr. has heretofore resigned and retired from
his official roles as an officer and director of Equity Growth Systems and in
order to induce new individuals to assume successor roles, offered to settle all
claims he may have had under employment, consulting and creditor relationships
with Equity Growth Systems, as hereinafter described and
WHEREAS, this agreement is conditioned on the Board of Directors of Equity
Growth Systems electing Xxxx Xxxxxxxxx-Xxxxx as a new Board member for the
purposes of replacing Xxxxxx "Xxx" Xxxxxxxxx-Xxxxx, Jr.; and
WHEREAS, Xx. Xxxxxxxxx-Xxxxx, Jr. understands that he is acting for his
owns interest, and the interests of entities affiliated and/or controlled,
other than Equity Growth Systems; and
WHEREAS, Xx. Xxxxxxxxx-Xxxxx, Jr. has represented to the newly elected
directors and management of Equity Growth Systems that he, and/or entities
affiliated and/or controlled by him and/or his designee(s), has provided at
least $147,000 in capital to or for the direct benefit of Equity Growth Systems
under arrangements calling for Equity Growth Systems to assure repayment thereof
(the "TGS Loans"); and
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WHEREAS, Xx. Xxxxxxxxx-Xxxxx, Jr. agrees to discharge through rescission
the series of agreements between Xx. Xxxxxxxxx-Xxxxx, Jr., in a number of
capacities and Equity Growth Systems (as disclosed in Equity Growth Systems
reports on SEC Form 10-KSB for the years ended December 31, 1996 and 1997, the
"Milpitas Agreements"), pursuant to which Equity Growth Systems acquired rights
to a number of real estate assets and/or interests in Limited Partnership Notes
backed by real estate, (the "LP Assets"), as a result of which he and his
designees would assume all ownership rights theretofore are vested in Equity
Growth Systems, inc.; and
WHEREAS, in light of the complexities involved in the LP Assets, which only
Xx. Xxxxxxxxx-Xxxxx, Jr. and/or his designees understand, the newly elected
management is of the opinion that disassociation therefrom in exchange for
cancellation of all obligations to the other Parties, from whatever source,
including, without limitation, employment and consulting agreements, the TGS
loans, promissory notes, loans, etc., is in the long term interest of Equity
Growth Systems:
NOW, THEREFORE, in consideration of the premises, as well as the mutual
covenants hereinafter set forth, the Parties, intending to be legally bound,
hereby agree as follows:
Witnesseth:
First: Terms of Settlement
The Parties hereby agree to settle all of their outstanding claims against
each other and their members, partners, officers, directors, agents and
affiliates, on the following terms:
A. In full payment of all obligations to all other Parties and their affiliates
owed by Equity Growth Systems, and its affiliates, from the beginning of time
until the date of this Agreement, as well as in consideration for the
extinguishment of all agreements between them:
1. The Milpitas Agreements are hereby rescinded and all rights arising
thereunder are hereby vested in Xx. Xxxxxxxxx-Xxxxx, Jr., or such entities or
entity as he may designate in his sole and absolute discretion.
2. (a) Equity Growth Systems will, within 72 hours after receipt of a
fully executed, notarized copy of this Agreement and a General Release
from Xxxxxxxx, individually and on behalf of Xxxxxxxx and all related
and affiliated entities, instruct its transfer agent to issue 47,000
shares of its common stock to any entities designated by Xx
Xxxxxxxxx-Xxxxx, Jr., and in such portions as Xx. Xxxxxxxxx-Xxxxx,
Jr., so designates: it being understood that 30,000 of these shares
will be immediately transferred to third parties, as consideration in
their release of Equity Growth Systems, referred to herein.
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(b) Furthermore with 72 hours of presentment of the fully executed
documents described in this paragraph, Equity Growth Systems shall pay
to Xx. Xxxxxxxxx-Xxxxx, Jr. or to any entities designated by Xx
Xxxxxxxxx-Xxxxx, Jr., the sum of $5,000.00.
(c) Equity Growth Systems will cooperate in replacing lost, destroyed
or mutilated stock certificates previously, properly and legitimately
issued and that were disclosed in previous filings with the Security
and Exchange Commission
3. (a) As a condition of closing this agreement, Xx. Xxxxxxxxx-Xxxxx,
Jr., by and through his attorney in fact, Xxxx Xxxxxxxxx-Xxxxx, shall
provide Equity Growth Systems an original signed, (by Xxxxx X.
Xxxxxxxx, individually and on behalf of all related and affiliated
entities), General Release.
(b) The General Release shall be duly and properly witnessed and
notarized. Each page will be initialed by Xx. Xxxxx X. Xxxxxxxx. The
release shall be signed in the same form as found and attached and
marked as Exhibit "A" to this Agreement.
B. The Parties other than Equity Growth Systems hereby rescind and relinquish
all rights under any agreements between them or their affiliates and Equity
Growth Systems and its affiliates, 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.
C. Xx. Xxxxxxxxx-Xxxxx, Jr. will, subject to physical capabilities and
limitations based on his health:
1. Cooperate with successor management to terminate all agreements with
former officers, directors and consultants not specifically ratified
by new management and in recovery of securities issued pursuant
thereto, including, without limitation, Messrs. Xxxxx, Xxxxxxx and
Xxxxxx;
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2. Assist new management to prepare all reports to governmental and
regulatory authorities required under applicable laws, regulations and
rules, including, without limitation, tax returns and filings to the
Securities and Exchange Commission.
3. (a) Confirm to G. Xxxxxxx Xxxxxxxxxx, Esq., within 48 hours of signing
this agreement, that no Equity Growth Systems Board of Directors
Resolution(s) were signed by Xxxxxx "Xxx" Xxxxxxxxx-Xxxxx, Jr., as
Sole Director other than as previously represented to G. Xxxxxxx
Xxxxxxxxxx in preparation for filing the 1997 10-KSB.
(b) Xxxxxx "Xxx" Xxxxxxxxx-Xxxxx, Jr., also agrees to confirm the
foregoing as to Board resolution(s) executed between January 1, 1998
and December 31, 1998, and any Board resolution for 1995, 1996, 1997,
that does not appear as an exhibit to the 10-KSB's for 1995, 1996, or
1997.
D. Xx. Xxxxxxxxx-Xxxxx, Jr. hereby represents and warrants that, to the
best of his knowledge under his current physical and mental circumstances,
Equity Growth Systems has no liabilities not reflected in the financial
statements heretofore filed by it with the Securities and Exchange Commission,
while Xx. Xxxxxxxxx-Xxxxx, Jr., was acting as Sole Director and/or CEO of Equity
Growth Systems.
Second: Mutual Releases
(a)In consideration for the exchange of covenants reflected above but
excepting only the obligations created by this Agreement, the Parties hereby
each release, discharge and forgive the other, and each of the others' members,
officers, directors, partners, agents and employees from any and all
liabilities, whether current or inchoate, from the beginning of time until the
date of this Agreement.
(b)It is expressly understood and agreed that the terms of settlement are
an accord and satisfaction and are in compromise of all claims in connection
with or relating to anything involving Equity, including, but not limited to,
any loans, bills of sale, corrected bills of sale, contracts or agreements,
thereby relinquishing any claims by Xx. Xxx Xxxxxxxxx-Xxxxx, Xx., and/or
Milpitas, Milpitas Trust, KWL, First Xxx Co, GS Trust, or other companies,
trusts or entities which Xx. Xxx Xxxxxxxxx-Xxxxx, Xx., or any related entities,
may claim now or in the future.
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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. If any conflict arises between the provisions of this
Agreement and any amendments hereto, the latest provisions shall in the absence
of manifest error prevail.
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 fifth business day
after mailing by United States registered or unaudited mail, return receipt
requested, postage prepaid, addressed as follows:
To Equity Growth Systems:
000 Xxxxx Xxxxx Xxxx, Xxxxx 000; Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Acting President.
To Xx. Xxxxxxxxx-Xxxxx, Jr.:
Xxxxxx Xxxxxxxxx-Xxxxx, Xx., c/o Xxxx Xxxxxxxxx-Xxxxx
00000 Xxxxxxxx Xxxx, Xxxxx 000; Xxxxxxxx, Xxxxxxxx 00000
To the trustee for The Xxxxxxxxx-Xxxxx Trust dated August 13, 1976:
Xxxxxx Xxxxxxxxx- Xxxxx c/o Xxxx Xxxxxxxxx-Xxxxx
00000 Xxxxxxxx Xxxx, Xxxxx 000; Xxxxxxxx, Xxxxxxxx 00000
To X. Xxxxxx, L.T.D. a/k/a X. Xxxxxx International, LTD:
Xxxxxx Xxxxxxxxx-Xxxxx, Xx. c/o Xxxx Xxxxxxxxx-Xxxxx
00000 Xxxxxxxx Xxxx, Xxxxx 000; Xxxxxxxx, Xxxxxxxx 00000
with a copy to:
X. Xxxxxx, L.T.D. a/k/a X. Xxxxxx International, Ltd.
00 Xxxxxxxxx Xxxxxx; Nassau, N.P., Bahamas, X.X. Xxx XX 00000
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To The Trustee of the Milpitas Investors, Inc. Trust:
Xxxxxx Xxxxxxxxx-Xxxxx, Xx., c/o Xxxx Xxxxxxxxx-Xxxxx
00000 Xxxxxxxx Xxxx, Xxxxx 000; Xxxxxxxx, Xxxxxxxx 00000
To Milpitas Investors, Inc.:
Xxxxxx Xxxxxxxxx-Xxxxx, Xx., c/o Xxxx Xxxxxxxxx-Xxxxx
00000 Xxxxxxxx Xxxx, Xxxxx 000; Xxxxxxxx, Xxxxxxxx 00000
with a copy to:
Xxx 000, Xxxxxxx Xxxx, Xxxx Xxxxxxxx 00000
with a copy to:
US Corp Company
0000 Xxxxxx Xxxx; Xxxxxxxxxx, Xxxxxxxx 00000, Registered Agent
To Xxxxxx X Xxxxx, Trustee:
Indenture of Trust with Milpitas Investors Inc., dated October 31, 1992
Seventh Floor, 0000 Xxxxx Xxxxxxxxx; Xxxxxx, Xxxxxxxx 00000-0000
To Statutory Trustee for Equity Growth Systems, inc:
Xxxxxx Xxxxxxxxx-Xxxxx, Xx., c/o Xxxx Xxxxxxxxx-Xxxxx
00000 Xxxxxxxx Xxxx, Xxxxx 000; Xxxxxxxx, Xxxxxxxx 00000
To Statutory Trustee for First Xxx Co Properties, Inc.:
Xxxxxx Xxxxxxxxx-Xxxxx, Xx., c/o Xxxx Xxxxxxxxx-Xxxxx
00000 Xxxxxxxx Xxxx, Xxxxx 000; Xxxxxxxx, Xxxxxxxx 00000
with a copy to:
The Corporation Trust Company; Corporation Trust Center
0000 Xxxxxx Xx.; Xxxxxxxxxx, Xxxxxxxx 00000, Registered Agent
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. All notices and
communications shall be deemed to have been received by the party to whom it was
addressed at the time of transmission in the case of a fax or other means of
written telecommunication ( and if the time of transmission is not during the
hours of 0900 to 1700 (9:00 A.M. to 5:00 P.M.) At the place of receipt, then at
0900 hours (9:00 A.M.) At the place of receipt the next day when business is
usually conducted at the place of receipt). Any party may require at any time
one (1) copy of all notices, communications or legal process be sent to such
address (not exceeding two (2) in number) as such party may specify in writing.
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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. Unless a party demonstrates by a preponderance of
the evidence that the invalid or unenforceable provision is an essential term of
the Agreement.
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 Xxxxxx 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.
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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.
(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, rather, the relationships
established hereby are those of settling debtor and creditor.
(b) Each party hereto represents and warrants that to the best of his, her
or it's knowledge that the execution and performance of this Agreement will not
constitute a breach of any agreement or restriction, if any, to which, he, she,
or it, is a party or by which she, he or it, is bound.
(c) Any individual signing this Agreement for or on behalf of, partnership
or corporation or trustee, or as statutory trustee or as managing director,
warrants that he or she has been duly authorized to execute this Agreement on
behalf of that entity, partnership, corporation or as that trustee or managing
director.
3.14 Counterparts.
(a) This Agreement may be executed in any number of counterparts.
(b) All executed counterparts shall constitute one Agreement
notwithstanding that all signatories are not signatories to the original or the
same counterpart.
(c) Execution by exchange of facsimile transmission shall be deemed legally
sufficient to bind the signatory; however, the Parties shall, for aesthetic
purposes, prepare a fully executed original version of this Agreement, which
shall be the document filed with the Securities and Exchange Commission.
3.15 License.
(a) This Agreement is the property of the Yankee Companies, Inc., a Florida
corporation ("Yankees").
(b) The use hereof by the Parties is authorized hereby solely for purposes
of this transaction and, the use of this form of agreement or of any derivation
thereof without Yankees' prior written permission is prohibited.
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(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.
3.16 Waiver
No failure to exercise, nor any delay in exercising, on the part of any
Party hereto of any right or remedy hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right or remedy prevent any
further, or other exercise thereof, or the exercise of any right or remedy; or
be construed as a waiver of any continuing or succeeding breach of any provision
of this Agreement; or a waiver of the provision itself. The failure or delay of
any party hereto to require performance by any other party hereto of any
provision of this Agreement, shall not affect the right of such failing or
delaying party to require the performance of such provision unless and until
such performance has been waived by all of the Parties hereto in writing.
EXECUTION PAGES
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
effective as of the date set forth below and Signed, sealed and delivered, In
Our Presence:
Equity Growth Systems,inc.
By: /s/ Xxxxxxx X. Xxxxxxx /s/
------------------------------
Witness #1 Xxxxxxx X. Xxxxxxx, Acting President
---------------------------------
Witness #2
-----------------------------------
Dated: March 22, 1999
Corporate Seal
State of }
County of} ss.:
Before me, an individual duly authorized to administer oaths, did
personally appear Xxxxxxx X. Xxxxxxx, 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)
/s/ Xxxxxxxx X. Xxxxxxxx /s/
--------------------------
Notary Public
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Witness #1
----------------------------
Witness #2
----------------------------
Mr. Xxxxxx "Xxx" Xxxxxxxxx-Xxxxx, Jr.:
/s/ Xxxx Xxxxxxxxx-Xxxxx as attorney-in-fact /s/
Xxxxxx Xxxxxxxxx-Xxxxx, Xx.,
individually and as Trustee
for The Xxxxxxxxx Xxxxx Trust
Dated August 13, 1976, and as
managing partner and Registered
Agent for X. Xxxxxx International,
LTD., (a/k/a X. Xxxxxx, LTD, a
Bahamian Corporation, and as
Principal and Director of Milpitas
Investors, Inc., as Trustee
of the Milpitas Investors, Inc.
Trust, and, as Statutory Trustee
for Equity Growth Systems, Inc.,
a dissolved Maryland Corporation
and as Statutory Trustee for First
Xxx Co Properties, Inc., a dissolved
Delaware Corporation: by Xxxx
Xxxxxxxxx-Xxxxx, his son and
attorney-in-fact acting by virtue of
his power of attorney, a copy of which is
annexed hereto and made a part hereof,
immediately following this signature page.
Dated: March 22, 1999
State of }
County of} ss.:
Before me, an individual duly authorized to administer oaths, did
personally appear Xxxx Xxxxxxxxx-Xxxxx as attorney in fact for Xxxxxx "Xxx"
Xxxxxxxxx-Xxxxx, Jr, individually and for entities listed above, 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)
/s/ Xxxxxxx Xxxx Viscaiella /s/
--------------------------
Notary Public
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