-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N2qcuhAqTkLK8VzbdfF4pqdz1jAdYNLFM7T6AktnexLE5VTkD9yq3jJIRdHq6lVu tiFmdQDWcLFaG0fEzJArWA== 0000050471-99-000011.txt : 19991103 0000050471-99-000011.hdr.sgml : 19991103 ACCESSION NUMBER: 0000050471-99-000011 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 20 CONFORMED PERIOD OF REPORT: 19990712 ITEM INFORMATION: FILED AS OF DATE: 19990712 DATE AS OF CHANGE: 19991102 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUITY GROWTH SYSTEMS INC /DE/ CENTRAL INDEX KEY: 0000050471 STANDARD INDUSTRIAL CLASSIFICATION: 6500 IRS NUMBER: 112050317 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-03718 FILM NUMBER: 99663161 BUSINESS ADDRESS: STREET 1: 8001 DESOTO WOODS DRIVE CITY: SARASOTA STATE: FL ZIP: 34243 BUSINESS PHONE: 9412559582 MAIL ADDRESS: STREET 1: 8001 DESOTO WOODS DRIVE CITY: SARASOTA STATE: FL ZIP: 34243 FORMER COMPANY: FORMER CONFORMED NAME: EQUITY GROWTH SYSTEMS INC /DE/ DATE OF NAME CHANGE: 19951214 FORMER COMPANY: FORMER CONFORMED NAME: INFOTEC INC DATE OF NAME CHANGE: 19930506 8-K 1 FORM 8-KSB United States 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): July 12, 1999 (Exact name of Registrant as specified in its charter): Equity Growth Systems, inc. (State or other jurisdiction of incorporation): Delaware (Commission file number): 0-3718 (IRS employer identification number): 11-2050317 (Address of Registrant's principal executive offices, including zip code): 440 East Sample Road, Suite 204; Pompano Beach, Florida 33060 (Registrant's telephone number, including area code): (561) 998-3435 (Former name or former address, if changed since last report): 8001 DeSoto Woods Drive; Sarasota, Florida 34243 Table of Contents Item Page Caption 3 Disclosure of materials incorporated by reference 3. Safe harbor statement regarding forward looking information Item 1. 4 Changes in control of Registrant 4 Election of new directors 5 Additional management & significant employees as a result of acquisition 5 Biographies 6 Family relationships 6 [Non] involvement in certain legal proceedings 7 Compensation 10 Certain American Internet transactions 11 Principal shareholders of American Internet 12 Revised stockholder data (due to acquisition of American Internet) Item 2. 18 Acquisition of Disposition of Assets (acquisition of American Internet) 18 Date and manner of acquisition 21 Description of the American Internet subsidiaries 30 [American Internet's] plan of operation; discussion and analysis of financial condition and results of operations 35 Summary and pro forma financial data 38 Risk factors Item 3. * Bankruptcy or Receivership Item 4. 42 Changes in Registrant's Certifying Accountant Item 5. 44 Other Events: (Debenture offering, spokesperson's employment agreement and charter amendments) Item 6 * Resignation's of Registrant's Directors Item 7. 51 Financial Statements & Exhibits Item 8. 54 Change in Fiscal Year Item 9 * Sales of Equity Securities Pursuant to Regulation S 54 Signatures 55 Exhibits and Additional Information 2 Sources of Materials Incorporated by Reference This report includes materials incorporated by reference from the following previously filed reports or registration statements, as permitted by Exchange Act Rule 12b-23: report on Form 10-KSB for the year ended December 31, 1998. Safe Harbor Regarding Forward Looking Statements As provided for in the Private Litigation Reform Act of 1995 (the "Reform Act"), this report contains certain "forward-looking statements" relating to the Registrant and its subsidiaries which represent their current expectations or beliefs, including, but not limited to, statements concerning their operations, performance, financial condition and growth. For purpose of the protection afforded under the Reform Act, any statements contained in this report that are not statements of historical fact are forward-looking statements. Without limiting the generality of the foregoing, words such as "may", "will", "expect", "believe", "anticipate", "intend", "could", "estimate", or "continue", or the negative or other variation thereof or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, such as credit losses, lack of capital, industry changes, technological advances, personnel fluctuations, variability of periodic economic factors, competition, and other factors beyond the Registrant's control which could materially impair the ability of the Registrant or its subsidiaries to continue their growth strategies. Should one or more of these risks or uncertainties materialize or should the Registrant's underlying assumptions prove incorrect, actual outcomes and results could differ materially from those indicated in the forward looking statements. With respect to such forward-looking statements, the Registrant seeks the protections afforded by the Reform Act. These risks include, without limitation, (1) that the Registrant or its subsidiaries will not retain or grow its subscriber base, (2) that the Registrant or its subsidiaries will fail to be competitive with existing or new competitors, (3) that the Registrant or its subsidiaries will not be able to sustain current growth, (4) that the Registrant or its subsidiaries will not adequately respond to technological developments impacting the Internet, and (5) that required financing will not be available if and as needed. This list is intended to identify certain of the principal factors that could cause actual results to differ materially from those described in the forward-looking statements included elsewhere herein. These factors are not intended to represent all of the risks and uncertainties inherent in the Registrant or its subsidiaries' businesses and should be read in conjunction with the more detailed cautionary statements included in this report and in the Registrant's other publicly filed reports and documents. ITEM 1. 3 Changes in Control of Registrant ELECTION OF DIRECTORS Role of Registrant's & American Internet's Boards of Directors The Registrant's board of directors sets corporate policies which are implemented by the Registrant's management and the management of the Registrant's subsidiaries. In the event that the Registrant's board of directors determines that a member faces a conflict of interest for any reason it is expected that the subject director will abstain from voting on the matter which raised the issue. Similar policies will be implemented for the American Internet Subsidiary discussed in Items 1 and 2, below. For further information on the Registrant's Management and Directors, see the Registrant's report on Form 10-KSB for the year ended December 31, 1998, "Item 10: Directors, Executive Officers, Promoters and Control Persons." Mark Granville-Smith In accordance with the terms of a settlement agreement between the Registrant and Edward Granville-Smith, Jr. (who served as the Registrants principal officer and sole director from 1995 until November of 1998), the Registrant elected his son, Mark Granville-Smith as a member of the Registrant's board of directors, effective July 1, 1999. Details of the settlement agreement were disclosed in the Registrant's report on Form 10-KSB for the year ended December 31, 1998 and such agreement was filed as an exhibit thereto. Mark Granville-Smith, 41 years of age, was elected to the Registrant's board of director's effective July 1, 1999, to serve until the next annual meeting of the Registrant's stockholders or until December 31, 1999, whichever event occurs first. Mr. Granville-Smith graduated from Georgetown University, Washington, D.C. in 1980 with a bachelor of science degree in business administration. From 1976 until 1980 he was a commercial pilot for United Bounty Corporation of Silver Spring, Maryland. In 1980, he went to work in the commercial real estate syndication industry with his father Edward Granville-Smith, Jr., the recently retired president, chairman and chief executive officer of the Registrant. Mr. Mark Granville-Smith served as the president of corporate general partners in a number of privately placed real estate syndications during such period, as well as of Milpitas Investors, Inc. ("Milpitas"), the corporate general partner of a public real estate limited partnership capitalized with $6,000,000, and of a number of privately placed real estate syndications. In 1986 he also became president of Gran-Mark Properties, Inc., located in McLean, Virginia, the general partner of Gran-Mark Income Properties Limited Partnership. In 1987 he left Milpitas and formed his own real estate syndication company which sponsored private placement syndications of commercial real estate for two years. Starting in 1989, Mr. Mark Granville-Smith managed an international underwater diving expedition for Maryland Marine Recovery Headquarters in Towson, Maryland, to salvage the cargo of an 1850's sailing ship that sank in the Irish Sea. In 1991, he became chairman of the board and chief executive officer of Classic Concept Builders, Inc. ("Classic"), a start-up residential new home construction company. In 1998, he became involved with the Registrant as a result of his father's decline in health and during September of 1998, was appointed attorney-in-fact for purposes of handling certain personal and business affairs for his father (then the Registrant's sole director and chief executive officer). Since December of 1998 he has participated in the Registrant's board of director's meetings in a non-voting capacity. 4 J. Bruce Gleason In conjunction with the acquisition of American Internet Technical Center, Inc., a Florida corporation ("American Internet"), as described in response to Item Two of this report, Mr. J. Bruce Gleason, the president, founder and a member of the board of directors of American Internet, was elected as a member of the Registrant's board of directors for a term commencing on July 1, 1999 and expiring on the earlier of December 31, 1999, or the conclusion of the next annual meeting of the Registrant's directors. However, the Registrant and its principal stockholders have agreed to use their best efforts to elect a designee of American Internet to the Registrant's board of directors for a period of five years (see the Lock-Up & Voting Agreement filed as an exhibit to this report). Mr. Gleason's biography is set forth below along with those of American Internet's other officers and directors. ADDITIONAL MANAGEMENT & SIGNIFICANT EMPLOYEES AS A RESULT OF ACQUISITION In addition to Mr. Gleason, the following persons, all of whom are employed by American Internet as directors or executive officers, are now deemed by management of the Registrant to constitute significant employees (as that concept is reflected in Securities and Exchange Commission Regulation S-B). Name Age Position J. Bruce Gleason 56 Chief Executive Officer, Chief Financial Officer & President Michael D. Umile 49 Senior Vice President, Secretary BIOGRAPHIES: J. Bruce Gleason Mr. Gleason, age 56, was elected to the Registrant's board of directors, effective as of July 1, 1999, concurrently with the acquisition of American Internet on June 25, 1999. He co-founded American Internet with Michael D. Umile in 1998 and serves on the board of directors of American Internet and as its president, chief executive officer and chief financial officer. He has a diverse business background with over 30 years experience in sales, marketing and finance. In 1972 Mr. Gleason received a certified general accounting designation from the Certified General Accountants Association located in Ontario Canada. From 1972 until 1974 he was employed by Crawford, Smith & Swallo, a public accounting firm located in Toronto, Canada. In 1973 he founded Photo Shack, Inc., an Ontario corporation which owned and operated a chain of seventy, 24 hour film processing kiosks in Canada which he sold in 1976. In 1982, he founded Gourmet Galley, Inc., and served as president of frozen food distribution in Pompano Beach, Florida, until 1990, when he sold Gourmet Galley, Inc. to a partner. In 1990, he co-founded Southern Telco, Inc., a telecommunications company headquartered in Lighthouse Point, Florida, in which he served as president. Southern Telco, Inc., was sold to Public Teleco, Inc. in 1993.From 1994 until 1996, he served as president of Showcase Group, Inc., a construction company headquartered in Deerfield Beach, Florida which built 27 town houses, after which he conveyed his interest to a third party in 1996. During 1996, he received a legal expense insurance license from the State of Florida Department of Insurance and served as an independent associate for Prepaid Legal Services, Inc. headquartered in Lighthouse Point, Florida, until 1998. 5 Michael D. Umile Mr. Umile, age 49, serves on the board of directors of American Internet and as its senior vice president, chief operating officer and secretary. He has been involved in sales and marketing for over 30 years. From 1972 until 1975, he owned an operated Star Towing, Inc., a used car dealership and towing company located in Farmingdale, New York and doing business in New York, New Jersey and New England. From 1977 until 1984, he was a partner in Fantastic Games, Inc., and Vulcom Amusements, a video game dealership located in Hicksville, New York. From 1985 until 1988 he was a co-owner of Phonomatic, Inc., a pay telephone route in New York with over 180 phones owned outright and 220 additional phones owned by Mr. Umile and a non-corporate partner. He served as vice president and general manager of Southern Telco, Inc. a telecommunications company headquartered in Lighthouse Point, Florida, from 1991 until it was sold in 1994. From1994 until 1995, he served as Vice-President of Smoking Joe's, Inc., a restaurant and lounge in Lighthouse Point, Florida. From 1994 until 1996, he served as vice president of Showcase Group, Inc., a construction company headquartered in Deerfield Beach, Florida which built 27 town houses. From 1996 until 1997 he was employed by Universal Group of South Florida, a general merchandise marketing company, located in Lighthouse Point, Florida. FAMILY RELATIONSHIPS. There are no family relationships among the new directors, the officers and directors of American Internet, or between them and any current officers or directors of the Registrant. However, Mark Granville-Smith is the son of former officer and director, Edward Granville-Smith, Jr. and was elected in compliance with obligations of the Registrant under a settlement agreement with Edward Granville-Smith, Jr. INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS. Based on information provided in response to questionnaires filed as exhibits to this report (see "Item 7[c], Exhibit Index"), during the past five years none of the recently elected directors of the Registrant (nor any other current directors of the Registrant, person nominated to become a director, executive officer, promoter or control person of the Registrant or of American Internet) has been a party to or the subject of: (1) Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; 6 (2) Any conviction in a criminal proceeding or has been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) Any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or (4) Been found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. COMPENSATION Arrangements with Registrant's Directors No changes have been effected in the arrangements with members of the Registrant's board of directors, or lack thereof, as disclosed in the Registrant's report on Form 10-KSB for the year ended December 31, 1998. Arrangements with American Internet Subsidiaries' Directors or Executive Officers Each of the directors and executive officers of American Internet has understandings with American Internet regarding duties to be performed and compensation to be received as an employee thereof. Because all of American Internet's current directors are also executive officers, all relevant disclosure concerning their compensation arrangements is discussed below. American Internet has no outside directors; however, it is anticipated that at least one member will be added to its board of directors by the Registrant. Pursuant to the terms of the Reorganization Agreement between the Registrant and the former stockholders of American Internet (the "Subscribers), the Subscribers have the right to elect 2/3 of the members of American Internet's board of directors for a period of five years. Messrs. Gleason and Umile, currently and historically the only members of American Internet's board of directors, do not receive specific compensation for services in such roles, rather, they are compensated for services generally under the terms of employment agreements summarized below. Copies of such agreements are filed as exhibits to this report (see "Item 7[c], Exhibit Index"). In the future, especially if American Internet is successful in making material acquisitions, it is anticipated that additional members will be elected to its board of directors, and, in some cases, special compensation may be called for. Such decisions will be made at the time that expansion of membership on American Internet's board of directors is deemed appropriate and will probably be based on negotiated arrangements. 7 Other than as indicated below with reference to employment of Messrs. Gleason and Umile, there are no arrangements or understandings regarding compensation for services provided as a director of American Internet, including any additional amounts payable for committee participation or special assignments. Manner of Determining Executive Compensation American Internet's board of directors will set compensation for the management of American Internet (other than Messrs. Gleason and Umile) based on guidelines developed with the Registrant's management. Messrs. Gleason and Umile are parties to long term employment agreements with American Internet, as described below. Except for Messrs. Gleason and Umile, no employee, officer or director of American Internet has been paid in excess of $75,000 per year by American Internet. American Internet currently has no pensions or profit sharing arrangements for its officers, directors or employees. Whenever reasonably feasible, American Internet expects that it will use compensation formulas in its future employment agreements with executive officers on a basis that rewards them for success of the areas under their responsibility through stock and cash bonuses. However, recruitment of qualified personnel, in most instances, requires that they be provided with a guaranteed base salary. Employment Contracts, Termination of Employment & Change-in-control Arrangements. The Registrant does not have any compensatory plan or arrangement, including payments to be received from the Registrant, with respect to a named executive officer that results or will result from the resignation, retirement or any other termination of such executive officer's employment with the Registrant and its subsidiaries or from a change-in-control of the Registrant or a change in the named executive officer's responsibilities following a change-in-control, which, including all periodic payments or installments, exceeds $100,000. However, both Mr. Gleason and Mr. Umile are parties to long term employment agreements with American Internet, which, except for titles and responsibilities, reflect virtually identical terms. The following summary of such agreements is qualified in its entirety by reference to the agreements themselves, which are filed as exhibits to this report (see "Item 7[c], Exhibit Index") Term: Each agreement is for an initial term of five years, staring on July 1, 1999, subject to earlier termination as described below and to ongoing annual renewals unless the party desiring not to renew provides the other with at least 30 days prior written notice of intent not to renew. Compensation: $75,000 per annum, payable bi-monthly, with increases to $5,000 per year during the 4th and 5th years. Benefits: Three weeks paid vacation during the first three years and four weeks paid vacation thereafter; reimbursement for travel and other properly documented business expenses; participation in health and life insurance plan and in all other benefits generally available to any other employees (e.g., retirement plans, profit sharing plans); 8 Indemnification: Prepayment of all costs, expenses and judgments related to or provided at the request of American Internet, provided that representation is by legal counsel selected by the Registrant and that applicable conflicts of interest are waived. Early termination: American Internet can terminate the employment agreements severally, as to the terminating entity only, for cause (e.g., the inability through sickness or other incapacity to discharge duties for ninety or more consecutive days or for a total of one hundred eighty or more days in a period of twelve consecutive months; refusal to follow directions of the board of directors; dishonesty; theft; or conviction of a crime; material default in the performance of obligations, services or duties required under the employment agreement (other than for illness or incapacity) or materially breach of any provision of the employment agreement, which continues for twenty days after written notice if it resulted in material damage); discontinuance of business; and death. In the event of a dispute concerning termination due to breach or default, compensation will be continued until resolution of such dispute by a tribunal of competent jurisdiction, subject to repayment upon final determination that such compensation was not called for. The employment agreements contain broad confidentiality and non-competition covenants subject to judicial restructuring if found to be legally unenforceable which provide for both injunctive relief and liquidated damages. The benefits are subject to renegotiation if the Registrant effects other acquisitions and employees of such acquired entities have benefits on more favorable terms. Compensation Under Plans None of American Internet's executive officers have received or become entitled to any cash or non-cash compensation under any company plans (as the term "plan" is defined in Instruction 3 to Item 402 of Regulation SB, promulgated by the Securities and Exchange Commission) during the last calendar year, nor have they been awarded any stock options or other forms of indirect compensation by the Registrant. Neither the Registrant nor any subsidiary thereof has any long term incentive plans; however, the Registrant has agreed to make shares of its common stock available to American Internet at a 15% discount from the applicable market price thereof for use to effect acquisitions or to recruit or retain personnel. Consequently it is likely that an LTIP award or other securities based compensation plan will be developed for American Internet in the future. 9 1998 Summary Compensation Table Annual Long Term Compensation Name Compensation and Awards LTIP* All Principal Rewards Pay- Other Position Salary Bonus Other Stock Options outs Compensation J. Bruce Gleason (1) $75,000 * * * * * (1) Michael D. Umile(2) $75,000 * * * * * (2) -------- (1) Mr. Gleason has served as chief executive officer, chief financial officer and president of American Internet since its inception. In addition to his salary, during 1998, Mr. Gleason received insurance benefits valued at $3,000 for compensation purposes. (2) Mr. Umile has served as chief operating officer, vice president and secretary of American Internet since its inception. In addition to his salary, during 1998, Mr. Umile received insurance benefits valued at $3,000 for compensation purposes. CERTAIN AMERICAN INTERNET TRANSACTIONS Director, Executive Officer, Nominee for Election as a Director or Principal Security Holder Messrs. Gleason and Umile have informed the Registrant's general counsel that since American Internet's inception, no nominee for election as a director; principal security holder or any member of their immediate family (including spouse, parents, children, siblings, and in-laws) had or is to have a direct or indirect material interest in any material transactions with American Internet. Parents of American Internet The following table discloses all persons who are parents of American Internet (as such term is defined in Securities and Exchange Commission Regulation C), showing the basis of control and as to each parent, the percentage of voting securities owned or other basis of control by its immediate parent if any. Percentage Other of Voting Basis Basis for Securities For Name Control Owned Control The Registrant Stock ownership 100% (1) Bruce J. Gleason Membership on board of directors 0% (2) Michael D. Umile Membership on board of directors 0% (3) 10 - - -------- (1) As a result of its stock ownership, the Registrant has the ability to elect all of American Internet's directors. However, pursuant to the terms of the Reorganization Agreement and the related Lock-Up & Voting Agreement (copies of which are filed as exhibits to this report, see "Item 7[c], Exhibit Index"), the Registrant, its officers, directors and Principal Stockholders have agreed to elect designees of the former American Internet stockholders who were parties to the Reorganization Agreement to 2/3 of the seats on American Internet's board of directors for a period of at least five years. (2) Mr. Gleason formerly owned 50.30578% of the common stock in American Internet and is now the largest current stockholder in the Registrant (however, see discussion of Yankees options below). The former stockholders of American Internet (Messrs. Gleason and Umile, and possibly the Potential Participants) in the aggregate, now hold approximately 26.3% of the Registrant's outstanding common stock. Mr. Gleason also serves on the Registrant's board of directors. Pursuant to the terms of the Reorganization Agreement and the related Lock-Up & Voting Agreement (copies of which are filed as exhibits to this report, see "Item 7[c], Exhibit Index"), the Registrant, its officers, directors and Principal Stockholders have agreed to elect designees of the former American Internet stockholders who were parties to the Reorganization Agreement to 2/3 of the seats on the American Internet board of directors for a period of at least five years. Mr. Gleason, because of his prior majority ownership of the common stock in American Internet, will be able to unilaterally determine who a majority of its directors will be, and therefore, to control American Internet, subject to compliance with his fiduciary obligations to the Registrant and its stockholders. (3) Mr. Umile formerly owned 49.93194% of the common stock in American Internet and is now the second largest current stockholder in the Registrant (but see discussion of Yankees options below). Former stockholders of American Internet (Messrs. Gleason and Umile, and possibly the Potential Participants), now hold approximately 26.3% of the Registrant's outstanding common stock. As a result of his close association with Mr. Gleason, it is probable that Mr. Umile will share in Mr. Gleason's ability to control American Internet. Transactions with Promoters, if Organized Within the Past Five Years Messrs. Gleason and Umile are the persons who should be deemed the promoters of American Internet. Additional, more specific information is contained above. PRINCIPAL SHAREHOLDERS OF AMERICAN INTERNET Reorganization with the Registrant The following table sets forth the ownership of shares of American Internet common stock immediately prior to the closing on the reorganization agreement with the Registrant and the number of shares of the Registrant's common stock that American Internet's stockholders received pursuant to the reorganization agreement. 11 Before closing After closing (American Internet) (The Registrant) Number Number Name of Owner of Shares Percent of Shares Percent J. Bruce Gleason 5,100,000 50.3% 1,127,431 13.284% Michael D. Umile 5,000,000 49.3% 1,105,325 13.024% Theodore & Susan Gill * 20,000 00.0893% 4,422 ** 00.00052% Lyn Poppiti. * 16,000 00.0714% 3,538 ** 00.00042% All Officers As a Group 10,100,000 99.64% 2,232,756 26.3076% - - ------ * Assumes that they do not elect to retain their shares of common stock in Ascot and elect to exercise all of their warrants to purchase American Internet common stock. ** Assumes that they do not elect to retain their shares of common stock in Ascot, elect to exercise all of their warrants to purchase American Internet common stock and elect to participate in the exchange of American Internet capital stock for the Registrant's common stock If they did not participate, then both the number and percentage would be 0. If they elected to participate but did not exercise their warrants, then they would have half as much stock. All shares have been rounded up to the next full share. Additional information concerning the material changes caused to the Registrant's principal stockholders and their relative ownership of the Registrant's common stock are disclosed in "Revised Stockholder Data" below. REVISED STOCKHOLDER DATA As a result of the acquisition of American Internet, the stockholder information contained in Item 11 of the Registrant's report on Form 10-KSB for the calendar year ended December 31, 1998, has been materially changed, as described below. Principal Stockholders The following tables disclose information concerning ownership of the Registrant's common stock by officers, directors and principal stockholders (holders of 5% or more of the Registrant's common stock). All footnotes follow the second table. The Registrant's currently outstanding shares of common stock, for purposes of these calculations, are deemed to be 8,487,124 because they do not include the 7,960 shares issuable to the Potential Participants. 12 Table 1. Principal Stockholders: As of the date of this report, the following persons (including any "group") are, based on information available to the Registrant, beneficial owners of more than five percent of the Registrant's common stock (its only class of voting securities): Name and Amount and Address of Nature of Percent Beneficial Beneficial of Owner Ownership Class J. Bruce Gleason 46 Havenwood Drive; Pompano Beach, Florida 33064 1,127,431(1) 13.28% Michael D. Umile 210 Oregon Lane; Boca Raton, Florida 33487 1,105,325 (2) 13.02% Mark and Edward Granville-Smith, Jr. 1,082,000 (3) 12.75% 3821-B Tamiami Trail, Suite 201; Port Charlotte, Florida, 33952 Jerry C. Spellman 897,691 (4) 10.58% 2510 Virginia Avenue, NW; Washington, D.C. 20037 Charles J. Scimeca 650,000 (5) 07.59% 23698 US Highway 19 North; Clearwater, 34265 (3) The Tucker Family 847,500 (6)(7) 09.99% 7359 Ballantree Court; Boca Raton, Florida 33487 The Calvo Family 570,500 (7)(8) 06.72% 1941 Southeast 51st Terrace; Ocala, Florida 34471 The Yankee Companies, Inc. 620,000 (6)(7)(8) 07.30% 902 Clint Moore Road, Suite 136; Boca Raton, Florida 33487 Table 2. Security Ownership of Management: As of the date of this report, the following table discloses, as to the Registrant's common stock, $0.01 par value per share, the Registrant's only outstanding class of equity securities or any of its subsidiaries held by any current officer or director of the Registrant or its subsidiaries, beneficially owned by all directors and nominees, the names of each executive officer, as defined in Item 402(a)(2) of Securities and Exchange Commission Regulation S-B, and directors and executive officers of the Registrant as a group, the total number of shares beneficially owned and the percent of class so owned. Of the number of shares shown, the associated footnotes indicate the amount of shares with respect to which such persons have the right to acquire beneficial ownership as specified in Securities and Exchange Commission Rule 13(d)(1). 13 Name and Amount Address of of Nature of Percent Beneficial Common Beneficial of Owner Stock Owned Ownership Class J. Bruce Gleason 1,127,431 Record (1) 13.28% Michael D. Umile 1,105,325 Record (2) 13.02% Mark Granville-Smith 1,082,000 (3) 12.75% Charles J. Scimeca 650,000 (5) 07.66% Penny Adams Field 62,500 (9) 00.74% Anthony Q. Joffe 62,500 (9) 00.74% G. Richard Chamberlin 175,000 (10) 02.06% All officers and directors as a group 4,264,756 (11) 50.25% Footnotes: (1) Record & Beneficial. Mr. Gleason obtained his shares in exchange for shares in American Internet. Messrs. Gleason and Umile now hold the largest individual blocks of the Registrant's common stock (but see Yankees options). In the event that all 4,500,000 of the shares of common stock reserved for the American Internet deferred, contingent exchange shares are earned, at least 2,264,207 would be allocated to Mr. Gleason, giving him a total of 3,391,638 shares of the Registrant's common stock. (2) Record & Beneficial. Mr. Umile obtained his shares in exchange for shares in American Internet. Messrs. Gleason and Umile now hold the largest individual blocks of the Registrant's common stock (but see Yankees options). In the event that all 4,500,000 of the shares of common stock reserved for the American Internet deferred, contingent exchange shares are earned, at least 2,219,810 would be allocated to Mr. Umile, giving him a total of 3,325,135 shares of the Registrant's common stock. (3) Only 20,000 shares are held directly, the balance being attributed to Mark Granville-Smith as a result of their ownership by his father, Edward Granville-Smith, Jr., subject to a general power of attorney in favor of Mark Granville-Smith. Of the shares attributed to but not owned by Mark Granville-Smith, beneficial ownership is vested in his father, record ownership being held by K. Walker, Ltd., a Bahamian corporation except for 110,000 shares of stock in the record name of Warren McFadden. If only the 20,000 shares were considered, he would hold only 0.005% of the Registrant's common stock. (4) Beneficial ownership, record ownership is held by Bolina Trading Company, S.A., a Panamanian corporation, except with reference to 2,701 shares,(2400 shares of record held by Mr. Spellman personally and 301 shares held of record by First Investment Planning Company). Mr. Spellman is the Managing Director of Bolina Trading Co., S.A., a Panamanian corporation, which owns the subject shares. Such shares comprise the fourth largest block of the Registrant's common stock held by any single person. 14 (5) 200,000 of the 650,000 shares represent shares underlying currently exercisable options, The balance represent 450,000 shares in the record name of Palmair, Inc., a foreign corporation. The transactions concerning the transfer of 450,000 shares to Palmair, Inc., and the December, 1998, warrant agreement with Mr. Scimeca are discussed in Item 12(a) Certain Relationships and Related Transactions, in the Registrant's report on Form 10-KSB for the year ended December 31, 1998. Should Mr. Scimeca be deemed not to control the 450,000 shares transferred to Palmair, Inc., then Mr. Scimeca's percentage of common stock would be 2.35651% and Palmair, Inc, would be 5.30214%. Mr. Scimeca currently serves as a director and as the Registrant's acting president. (6) The Tucker family is comprised of the wife Michelle Tucker, her husband Leonard Miles Tucker and Shayna and Montana, their minor daughters. Mrs. Tucker holds 108,750 shares in trust for each of her minor daughters and, in addition, 630,000 shares are held by Blue Lake Capital Corp., a Florida corporation owned by Mrs. Tucker. Mr. Tucker serves as the president of Yankees and he or his family own 50% of its equity securities, consequently, 50% of the Registrant's securities held or attributed to Yankees should be attributed to The Tucker family. See Note (7). (7) The Yankee Companies, Inc., a Florida corporation, is owned in equal shares by members of the Calvo and Tucker families. Consequently, half of its securities could be attributed beneficially to the Calvo family and half to the Tucker family. See Notes (6) and (8) for additional shares attributable to the Tucker and Calvo Families. In addition to the shares currently held, Yankees is entitles to an additional 225,000 shares for having arranged the acquisition of American Internet, and in addition, is entitled to purchase shares equal to 10% of the Registrant's outstanding common stock and shares of common stock reserved for issuance under conditions clearly definable (e.g., warrants, options, incentive shares, etc.), at the time of exercise for an aggregate of $60,000. If currently exercised, the Yankees options would be exercisable for approximately 1,343,712 shares of the Registrant's common stock (assuming that all 4,500,000 of the shares of common stock reserved for the American Internet deferred, contingent exchange shares are earned). That would give Yankees a total of 2,228,712 shares of the Registrant's common stock, making it the largest Registrant's single stockholder, and, when combined with the common stock held by the Tucker and Calvo families, would give them an aggregate of 3,646,712 shares of the Registrant's common stock. (8) The Calvo Family is comprised of Cyndi N. Calvo, William A. Calvo, III, her husband, and their three minor children, William, Alexander and Edward. Each member of the family holds 40,000 shares (the children's shares are held by their parents, in trust) and Mr. and Mrs. Calvo hold 100,000 shares as tenants by the entireties. In addition, 270,000 shares are held by the Calvo Family Spendthrift Trust, a Florida trust for the benefit of the Calvo family, for which Mrs. Calvo serves as trustee. Mr. Calvo serves as the vice president of Yankees and he or his family own 50% of its equity securities, consequently, 50% of the Registrant's securities held or attributed to Yankees should be attributed to The Calvo Family. See Note (7). (9) Beneficial and record. Ms. Field and Mr. Joffe serve as directors. 15 (10) Beneficial and record. Mr. Chamberlin serves as a director and as the Registrant's secretary and general counsel. (11) Does not include shares issued to Messrs. Weiss, Moffett and Homan as to which the Registrant has advised its transfer agent to decline to honor any transactions based on failure of consideration. See Items 3 and 10 of the Registrant's report on Form 10-KSB for the year ended December 31, 1998. Agreements Pertaining to Voting and Transaction's in the Registrant's Securities. In conjunction with the Registrant's acquisition of American Internet, the Registrant's current officers and directors and its principal stockholders listed below have entered into an agreement restricting their sales of the Registrant's common stock for a period of nine months and agreeing to vote as follows: "First: Voting Agreements ... during the five year period following the Closing (as defined in the reorganization agreement, ... they will, in their roles as members of the ... board of directors and as stockholders ... at all meetings of the ... stockholders or of board of directors, vote in such a manner as to secure approval of the following covenants made ... to the Subscribers in Section 4.6 of the reorganization agreement, to wit: During the five years following the Closing, the [Registrant] ... shall use its best efforts to assure that: 'At least one designee of the Subscribers is nominated for membership on the [Registrant's] ... board of directors at each meeting of the [Registrant's] ... stockholders or directors at which the membership of its board of directors is up for election, and to use their best efforts consistent with applicable law to secure such nominee's election, so that the membership of the [Registrant's] ... board of directors includes at least one designee of the Subscribers; Designees of the Subscribers are elected to at least two thirds of the seats on the [American Internet Subsidiary's] ... board of directors; and On one occasion only, [the Registrant] ... provide "piggy back" registration rights covering up to an aggregate of 35,000 shares of the [the Registrant's] ... stock obtained pursuant to this Agreement to Messrs. Bruce Drezner and Gary Walk; Theodore Gill and Susan Gill, his wife, as tenants by the entireties; and, Lyn Poppiti. 16 Second: Stock Lock-Up & Voting Agreements During the following periods, [the Registrant's] ... Principals will refrain from any sales of [the Registrant's] ... securities, except as specified below: b. During the 90 day period following closing on this Agreement, [the Registrant's] ... Principals will not engage in any sales of [the Registrant's] ... common stock; and c. (1) From the 91st through the 270th day following closing on this Agreement, [the Registrant's] ... Principals will not engage in any sales of [the Registrant's] ... common stock in excess of 10,000 shares per month; (2) For purposes of this Section 2-b only, the persons or entities included within each separately numbered subsection shall be deemed to be acting in concert as part of a related group for purposes of determining such 10,000 shares per month limitation: (A) Charles J. Scimeca, on his own behalf and on behalf of his affiliates. (B) Anthony Q. Joffe, on his own behalf and on behalf of his affiliates. (C) Penny Adams Field, on her own behalf and on behalf of her affiliates. (D) G. Richard Chamberlin Esquire, on his own behalf and on behalf of his affiliates. (E) Jerry C. Spellman, on his own behalf and on behalf of his affiliates. (F) The Yankee Companies, Inc., on its own behalf and on behalf of its affiliates. (G) The Granville-Smith Group: Mark Granville-Smith, on his own behalf and on behalf of his affiliates; and, Edward Granville-Smith, Jr., on his own behalf and on behalf of his affiliates. (H) The Calvo Group: Cyndi N. Calvo, on her own behalf, on behalf of her affiliates and as a trustee for the Calvo Family Spendthrift Trust; and, William A. Calvo, III, on his own behalf, on behalf of his affiliates and as a trustee for his children, William, Alexander & Edward. 17 (I) The Tucker Group: Leonard Miles Tucker, on his own behalf, on behalf of his affiliates and on behalf of Carrington Capital Corp. (exclusive of the 50,000 shares as to which Equitrade Securities Corporation has purchase rights under two covered option/leap agreements, each dated December 18, 1998); and, Michelle Tucker, on her own behalf, on behalf of her affiliates, on behalf of Blue Lake Capital Corp., and as a trustee for her children Shayna and Montana. (J) The Radcliffe Group: Joseph D. Radcliffe, on his own behalf and on behalf of his affiliates; Dennis V. Radcliffe, on his own behalf and on behalf of his affiliates; Michael J. Radcliffe, on his own behalf and on behalf of his affiliates; and, Vanessa Radcliffe, on her own behalf and on behalf of her affiliates. c. Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall be interpreted as an agreement by [the Registrant's] ... Principals to engage in any concerted or group activities involving [the Registrant's] ... common stock, as determined for purposes of Commission Rule 144, or Sections 13, 14 or 16 of the Exchange Act." A copy of the Lock-Up & Voting Agreement is filed as an exhibit to this report (see "Item 7[c], Exhibit Index"). ITEM 2. Acquisition of Assets DATE AND MANNER OF ACQUISITION American Internet was incorporated in Florida on April 15, 1998, as American Internet Technical Center, Inc., to provide various Internet services. American Internet's principal executive offices are located at 440 East Sample Road, Suite 204; Pompano Beach, Florida 33060; Telephone (954) 943-4748. On April 26, 1999, American Internet was acquired by Ascot Industries, Inc., a Nevada corporation ("Ascot") in a stock exchange pursuant to which the stockholders of American Internet acquired 90% of the outstanding capital stock of Ascot in exchange for all of the capital stock of American Internet. During June of 1999, after months of negotiations with a number of existing public companies, Messrs. Gleason and Umile elected to become associated with the Registrant and on June 25, 1999, a reorganization agreement was executed between the Registrant, Ascot (then operating as American Internet Technical Centers, Inc., a Nevada corporation), the former stockholders of American Internet, and American Internet. 18 On July 9, 1999, at the request of the Registrant, the parties to the Reorganization Agreement and the former management and controlling stockholders of Ascot entered into an agreement rescinding its acquisition of American Internet as a result of which, control of Ascot was reacquired by its original stockholders, its name is being changed back to Ascot, and Ascot was carved out of the Reorganization Agreement. As consideration for the rescission, American Internet agreed to pay slightly less than $3,000 in legal fees to Ascot's legal counsel. A copy of the rescission agreement is filed as an exhibit to this report (see Item 7, Exhibit Index"). As an accommodation to three stockholders of Ascot who invested $20,000 (with the option of investing an additional $9,000) because of the American Internet transaction (the "Potential Participants"), they have been given the option until August 1, 1999, of: Remaining stockholders of Ascot; Becoming stockholders in American Internet (holding shares and the right to acquire shares of common stock totaling 36,000 shares of common stock, of 10,136,000 which would be outstanding); or Becoming stockholders in the Registrant, on the same share exchange basis as Messrs. Gleason and Umile. In the event that they have not made an election and complied with documentation requirements by August 1, 1999, the option will expire and they will remain as stockholders and warrant holders in Ascot. On June 25, 1999, Messrs. J. Bruce Gleason, Michael D. Umile exchanged all of their common stock in American Internet for 2,232,756 shares of the Registrant's common stock, with the right to increase the 2,232,756 shares to 6,732,756 shares if net, pre-tax profit projections over the next five years were met. As a result, American Internet became a wholly owned subsidiary of the Registrant. The transaction was structured to meet the tax free exchange provisions of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended, and for accounting purposes, is expected to be treated as a purchase not resulting in a pooling of interests. The securities were issued in reliance on the exemptive provisions of Commission Rule 505 of Regulation D, and comparable state law provisions, based on representations by the parties reflected in the reorganization agreement. For auditing purposes, American Internet is expected to be treated as the predecessor entity, since virtually all of the Registrant's prior operations were transferred to Messrs. Granville-Smith and Spellman, as disclosed in the Registrant's report on Form 10-KSB for the year ended December 31, 1998. A copy of the reorganization agreement pursuant to which the Registrant acquired American Internet, including all exhibits thereto, is filed as an exhibit to this report (see "Item 7[c], Exhibit Index"). Consolidated financial data and pro forma financial information reflecting the acquisition of American Internet required by Item 7(a) will, as permitted by regulations, be provided by amendment to this report within 60 days after its initial filing. Pursuant to the terms of the Reorganization Agreement, Messrs. Gleason and Umile exchanged the 10,100,000 shares in American Internet they would have had based on an approved plan of recapitalization, with the Registrant for an aggregate of 2,232,756 shares of the Registrant's common stock. An additional 7,960 shares of the Registrant's common stock has been reserved for issuance to the Potential Participants should they elect to relinquish all rights to American Internet and Ascot securities. In addition to the initial shares of the Registrant's common stock exchanged for the American Internet capital stock, the exchanging stockholders can receive up to an additional 4,500,000 shares of the Registrant's common stock over the next five years if American Internet meets required net profit before taxes criteria determined as of December 31 in each year set forth below in accordance with generally accepted accounting principals, consistently applied ("GAAP"), as follows: 19 A. Net Pre-tax Profit Goal Time Frame Additional Common Stock to be Issued $200,000 1999 500,000 Shares $500,000 2000 800,000 Shares $1,000,000 2001 800,000 Shares $1,500,000 2002 800,000 Shares $2,000,000 2003 800,000 Shares $2,500,000 2004 800,000 Shares B. In the event that the thresholds were not attained and the Registrant provided American Internet with the anticipated $350,000 in funding for its operations within 90 days following closing on the American Internet acquisition then: 1. If the net, pre tax earnings were less than 33% of the required threshold during the subject 12 month period, the additional stock issuable for such period would be forfeited; 2. If the net, pre tax earnings were between 33% and 80% of the required threshold during the subject 12 month period, the additional stock issuable for such period and the required threshold would be carried over to the next year, increasing both the aggregate threshold and the aggregate bonus attainable for such year; and 3. If the net, pre tax earnings were between 80% and 100% of the required threshold during the subject 12 month period, the additional stock issuable for such period would be prorated. C. In the event that the thresholds were not attained but the Registrant had not provided American Internet with the total $350,000 in funding for its operations within 90 days following closing on the acquisition, then, the additional stock issuable for such period would be prorated. As a result of the reorganization with the Registrant, American Internet became a wholly owned subsidiary of the Registrant, subject to minimal dilution in the event the Potential Participants elect to become stockholders in the Registrant, in which case the Registrant would hold 10,100,000 of 10,138,000 shares of American Internet common stock (99.62517%) outstanding. 20 DESCRIPTION OF AMERICAN INTERNET Business American Internet is a Florida based Internet company that offers Internet services such as e-commerce accounts, hosting services, web site design and Internet consultation. It also serves as a distributor for Education to Go, a California enterprise that provides on-line educational and instructional courses through the Internet. A copy of the agreement with Education to Go is filed as an exhibit to this report (see "Item 7, Exhibit Index") American Internet's corporate operations include a web site production and design division, an Internet presence provider ("IPP"); an on-line education division; various sales related services, customer relations, administrative, accounting and management functions. American Internet employs a computerized management information system to record and manage the various operations of the business. American Internet began by offering free web sites primarily for new, small and medium business. Web sites are designed with the assistance of senior webmaster students in American Internet's on-line educational and instructional programs supervised by experienced web designers, who provide such assistance as part of their graduation requirements. In return, customers are required to use American Internet's hosting services for their web sites. In its first nine months of operations American Internet generated 1,175 clients (it is currently averaging 132 new clients per month); trained students as web masters and established an in house production department. Since inception, American Internet has experienced an average of 11.23% growth per month and is in the process of marketing additional Internet services including e-commerce and marketing programs to its current clients. No customer of American Internet accounts for more than 5% of its business. Principal Products or Services and Their Markets American Internet's primary market is new business throughout the United States and Canada. American Internet designs web sites, hosts web sites, and provides e-commerce programs, marketing and other Internet services. American Internet differs from most competitors in that it is not restricted by geographical boundaries, solicits smaller accounts and utilizes its students to perform many routine tasks. American Internet also serves as a distributor for Education to Go, a California enterprise which offers on line instructional programs in computer technology, web design, management and other fields. All courses are conducted on the Web where students can acquire new skills from the comfort of their own home. American Internet offers free web sites for small and medium sized businesses designed with the assistance of its senior webmaster students (supervised by experienced web designers), as part of their graduation requirements to clients who agree to use American Internet's hosting services for their web sites. New customers are given a choice of either a 6 or 12-month free web site program, subject to payment for the associated hosting services, including search engine registration. Currently, the hosting services are provided at a price of $578 for the six-month contracts and $932 for the annual contract. Clients who sign up for longer periods receive a free month and one free site upgrade. The percentage of one-year contracts has gradually increased to 50% of all current hosting contracts and is expected to maintain that ratio. The 6-month contracts expire during the first year and the clients are invited to re-subscribe to the hosting services at reduced (e.g., from $59 per month to $25 per month). American Internet's management estimates that it will experience a 75% renewal rate. 21 In addition to purchase of hosting services, American Internet's clients are encouraged to purchase a search engine registration option for a charge of $149. Search engines act in a manner similar to telephone yellow page directories in conjunction with the Internet and are an important part of the system. Less than 1% of clients decline the offer. The current version of the American Internet service agreement provides clients with the following options: Domain Name Registration, no charge; Two (2) e-mail addresses, no charge; Six Month Contract ($75 set-up fee plus $59 monthly) $429; One Year Contract ($75 set-up fee plus $59 monthly)$783; Search Engine Registration (over 550 search engines & directories)$149; 4 Page Web Site, no charge with one of the other plans listed. In addition to services and products offered to clients at flat fee rates many clients are encouraged to purchase additional features or upgrades, either in conjunction with the initial sale or during the production stage. The additional features were not a significant source of income during the initial three months of operation; however, as additional sample web sites featuring the additional features and upgrades have been displayed on American Internet's preview pages, demand has been increasing. American Internet's management estimates that income from additional features and upgrades should average at least $100 per client. The more commonly requested additional features and upgrades available for web sites from American Internet, together with their current prices, are as follows: Extra Pages $ 65 per page; Extra Scans (Picture graphics) $ 10 (reduced for 5 or more pages to $7 each); Insert Standard Animations $100 (4 animations); Custom Created Animations $ 50 per hour; Additional e-mail addresses $ 10 per month for each 4 addressees; Auto-responders $ 50 set-up fee plus $10 per month for each 2; Additional Domain Registration $150 (exclusive of Internic fee of $35 per year); Java Scrolling Text $125; Glow Buttons/Mouse Over $ 50 (includes all pages); Framed Web Site $150; Insert Audio Clip $150; Secured Server (for credit cards) $150; Shopping Cart/ e-commerce Prices vary. American Internet became a distributor for on-line educational courses on August 19, 1998. The initial educational program (still being offered) was titled "Professional Web Design" and includes the following courses: Introduction to the Internet; Creating web pages; Advanced web pages; Creating web graphics; Java programming for the web; Microsoft front page and CGI programming for the web. Sixty-two different courses are currently offered, all of which feature web-based delivery and administration. Students can take courses from their own home or business. Requirements for most courses are a computer, Internet access, e-mail and Netscape or Internet Explorer browser. Lessons for each course/ syllabus are usually delivered twice weekly either by e-mail or on the web itself. An instructor is assigned to each course chat room and students interact with the assigned instructors and other students twice per week in special chat room environments. 22 Each course typically runs for six weeks, with 2 lessons per week, for a total of 12 lessons. Assignments are given each week with a final exam provided to those seeking course certificates. Currently, the courses involve the following subjects: Computer: 14 different courses of study. Average course is 12 lessons, 6 weeks of study. Course prices $79.00. Internet: Internet navigation, creation of web pages and web programming. A total of 8 courses, 12 lessons per course. Each course price $95.00. Business: Planning, starting, financing and marketing small to medium sized businesses. A total of 11 courses, varying numbers of lessons per course. Average course price $135.00. Management: Fundamentals of supervision, communication, motivation, conflict resolution, and inventory and project management. A total of 23 different courses, varying numbers of lessons per course. Average course price $195.00. Miscellaneous: Preparation for tests, enhancement of medical skills, charting new career paths. A total of six different courses, varying numbers of lessons per course. Average course price $275.00. Demographic Data The growth in demand for Internet related products and services in the United States and in most other countries outstrips the population growth. Demand for the services is being fueled by factors such as more awareness of the general availability of the service, increased advertising and competition by service providers, more businesses in the target group, the robust economy, the advancements in the technology sector and public acceptance of these changes. Based upon available market data, American Internet's management believes that the market for Internet services such as those provided by American Internet will remain strong. Network Solutions, which has the government contract to register domain names in the United States, reports that new registrations are increasing at a significant rate. Each day, Internic registers an average of more than 67,000 new commercial domain names. During January of 1998 there were 30 million computers on the Internet and approximately 70 million users. Internet co-designer, Vinton Cert, estimates that by the Year 2000 there will be 200 million computers on the Internet and over 400 million users. During 1998, estimates for sales on the Internet by the year 2000 exceeded $4 billion. AOL recently announced that its sales for the ten-day Christmas period of 1998 exceeded $1 billion dollars. 23 While the growth in the domestic market for the service is expected to continue, overseas markets are showing much more promise. The demographic information such as rising income levels, higher education levels and more familiarity with technology are suggesting that overseas markets are ripe for dramatically higher growth rates. Although the sales in overseas markets are currently dwarfed by domestic sales, the firms who do sell overseas are experiencing very fast growth rates and there is every reason to believe that these fast growth rates will continue for years to come and that eventually the overseas markets may even be larger than then domestic market. Distribution Methods of the Products or Services Over 100,000 new businesses are formed in the United States each month. Many of these businesses commence operations on a limited budget but are increasingly aware of the benefits of maintaining a web site. American Internet concentrates on small and new businesses as its market niche and the area where it focuses its marketing efforts in order to achieve its strategic goals. American Internet markets its web sites and other services through various media throughout the United States and Canada. American Internet's marketing strategy has been focused around advertising in local newspapers, direct mail, including postcards and card decks, telemarketing and the Internet. American Internet maintains its own informative web site and encourages prospective clients to visit the site where they can obtain information about American Internet and its services, and to preview approximately ten actual sites of American Internet's clients. Gross sales for the first nine months of operations were approximately $850,000.00 to 1,175 clients. American Internet's short term marketing objective is to increase sales to $4,200,000 and increase the number of clients to 5,000 by the fiscal year ending March 31, 2000. American Internet will experiment with cable television advertising on business networks, such as MSNBC and other networks, press releases, and outbound telemarketing campaign to new businesses, opt-in e-mailing and other advertising techniques and methods. Advertising and marketing costs constitute one of American Internet's largest expenses. Although American Internet has been successful in handling marketing and advertising matters internally, it has decided to engage the services of an advertising agency to handle future marketing responsibilities. American Internet intends to utilize direct response marketing during calendar 1999, specifically through 60-second television commercials on Internet services directed to small and medium sized business owners. Management believes that the television commercials, along with media and print advertising will materially increase sales of the American Internet products and services. Business conducted on the Web is not restricted by geographical boundaries and language barriers are being materially reduced through constantly improving translation programs. American Internet receives over 100 inquires per month from foreign countries, even though it concentrates its marketing efforts in the United States. At the present time, American Internet conducts business in the United States and Canada, however, American Internet is prepared to intensify marketing strategies and communication links in order to actively participate in foreign markets deemed promising. American Internet recently conducted a test-marketing program in Brazil, one of the larger countries in the world, and the initial findings were favorable. 24 Marketing Personnel & Resources Selling efforts are currently undertaken through an internal staff of trained web designers whose duties include responding to inquiries generated through American Internet's marketing and advertising programs. A sales representative assigned to respond to an inquiry explains the American Internet program to the prospect and then faxes, e-mails or mails a six page informational package, including a contract ready for execution. Closing a prospect normally occurs within one to five days after the initial contact. American Internet intends to increase and improve its sales force in conjunction with increased marketing activities in order to maximize the return on marketing expenses. Currently contemplated improvements include providing each sales representative with advanced computerized sales equipment permitting them to service clients quickly and efficiently by providing prompt, accurate answers to questions; permitting timely tracking of customer progress and rapid responses to call backs. Integration of the data generated by sales representatives with a centralized marketing data base is expected to upgrade sales, increase renewals and expand sales of other services. In addition, improved equipment will allow sales personnel to increase foreign marketing efforts at reduced costs through use of Internet telephony to make overseas calls at lower rates than generally available, and to communicate with foreign prospects in their own languages using either multi-lingual sales staffers or available translation program features. Estimate of the Amount Spent During Each of the Last Two Fiscal Years on Research and Development Activities, and if Applicable the Extent to Which the Cost of Such Activities are Borne Directly by Customers American Internet is constantly developing and improving its software products and services because high technological obsolescence is a fundamental characteristic of the Internet industry, presenting constant challenges but also constant opportunities. Management believes that the key to American Internet's success is a focused effort in its niche market; a superior product line that is constantly upgraded; hands on sales and support by the American Internet's top executives so they are never far from the marketplace; a positive return on investment by its clients; and, financial stability to develop new products and strategies to meet market challenges. Since inception, management believes that American Internet has spent approximately $40,000 on research and development activities, none of which has been borne directly by its customers, although all of it will be amortized as a portion of the goods and services sold as a result of developments derived from such research. Status of any Publicly Announced New Product or Service American Internet's management is considering the addition of advanced equipment to create multi-lingual web sites for use in international commerce or in conjunction with foreign clients; equipment that will create "in house" leads of its prospect base from county courthouses, public documents and other records; equipment and programs to generate leads "hits" for its customers using search engines and other marketing techniques; and, equipment that will ensure the fastest and most reliable access to the Internet. It is anticipated that such equipment purchases will be made using funds provided by the Registrant under its commitment to provide $350,000 in capital within 90 days after American Internet's audited financial statements are completed. 25 Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts, Including Duration American Internet holds no patents, trademarks, licenses, franchises or concessions and is not a party to any royalty agreements or labor contracts. Competitive Business Conditions, Competitive Position in the Industry and Methods of Competition Although American Internet's business is currently concentrated in the Southeast United States, it intends to offer its products and services throughout the United States and Canada by the year 2000 and to start world wide international marketing efforts, on a test basis, by the last quarter of 1999. The Internet and its many related commercial opportunities comprise a dynamic industry subject to frequent and rapid changes in consumer tastes as well as technological advances. The nature of the rapid change in the Internet industry means that participants that do not keep pace with advancing technology or consumer tastes will lose favor with the public and be replaced with other Internet more technologically advanced and consumer savvy competitors. American Internet designs its web sites with state of the art software and well trained web designers who are kept up with current innovative trends in designs and graphics. American Internet also has an efficient production department and a knowledgeable sales force that receives on-going technical as well as marketing training. However, there are no assurances that American Internet can correctly anticipate consumer tastes or that it can or will continue to keep pace with changes in technology and consumer demand. American Internet competes in a variety of market segments in the Internet services industry and is aware of many other consumer Internet service companies competing in its selected markets; however, because the market is so large, dynamic and diverse, American Internet seldom finds itself actively opposing its competitors. Many of American Internet's clients are new to the Internet, lack computer literacy or are on limited budgets. American Internet has endeavored to develop a niche in that market segment and in the manner in which it services that market segment. American Internet is aware that it is a part of a very dynamic and competitive industry. American Internet's management believes that it has an advantage over many of its competitors because of its non-restrictive boundaries and of its ability to offer its products and services to new businesses, on a limited budget at low prices. However, there are other companies that are offering services, similar to those offered by American Internet, including, Cyber Graphics Institute, Inc.; WorldWide Web Institute, Inc.; and Web Results Institute, Inc. While no verifiable sales or operational data is available for any of the three; it appears that they are all operating successfully. 26 During the first nine months of American Internet's operations, it seldom encountered direct competition from any source and was required to conduct research to find out who its principal competitors were for purposes of securities law disclosure rather than in reaction to competitive pressures. American Internet's management attributes such experience to the size of its selected market which appears currently to be large enough to accommodate a large number of successful competitive businesses. However, American Internet's management is also cognizant of the fact that as its operational market becomes more saturated, competition will intensify and it will have to remain focused on both new challenges and new opportunities in order to take advantage of and profit from the anticipated changes and become one of the survivors, as the industry consolidates. As a greater number of companies enter the Internet market, American Internet will experience increased competition in the marketing of its services. American Internet believes its competitive position will benefit from its reputation and credibility; its ability to tailor and market new products and services to meet the ever changing demands in the technology sector; its ability to profit from low budget and discount services and the geographic expansion its services world wide. However, the consumer Internet service industry includes some of the largest and best financed companies in the world. Many potential competitors have far greater technical, financial, and marketing resources than American Internet, and such competition may have a material adverse effect on American Internet's operations and profits. Sources and Availability of Raw Materials and the Names of Principal Suppliers American Internet's services are not reliant on the availability of raw materials but rather, involve development of software computer applications, advice on selection of computer hardware and operation of interactive data networks. Sources for all materials required in conjunction with the foregoing are readily available from a large number of suppliers, none of which would be difficult to replace. Government Regulation American Internet is subject to all regulations normally incident to business operations. In addition, its activities are subject to regulation under the United States Telephone Consumer Protection Act, by the Federal Communications Commission, by the Federal Trade Commission and by other foreign, federal, state and local regulatory bodies with jurisdiction over communications and advertising related activities. In the past, Internet related enterprises have been targeted by law enforcement agencies for actions taken by their clients over the Internet, and efforts to regulate the Internet continue at all levels. Because of the dynamic nature of the Internet and the novel, multi-jurisdictional nature of its operations, it is not possible to accurately predict what types of additional regulatory oversight will be imposed in the future, especially in light of current efforts by many groups to censor activities on the Internet. Currently, American Internet is regulated in the State of Florida through the Florida Department of Agriculture and Consumer Affairs, with which it has filed an Affidavit of Exemption under the Florida Telemarketing Act. In addition, American Internet is subject to numerous provisions of state laws designed to protect consumers from unfair advertising and unsolicited communications. Prior to its acquisition by the Registrant, American Internet was required to register under the Florida Telemarketing Act. Although general advertising (e.g., through newspapers and television) is exempt therefrom; direct advertising or advertising to specific individuals falls under the Telemarketing Act guidelines. In the course of its advertising programs American Internet uses various media such as newspapers, television, direct mail and e-mail Internet advertising. In all cases the advertising is designed to invite a call to American Internet for further information and if the call proceeds favorably a sale may be concluded during a subsequent telephone call. It appears, however, that subsidiaries of companies with a class of securities registered under Section 12 of the Exchange Act may be subject to certain exemptions from such regulation. 27 Need for Any Government Approval of Principal Products or Services To the best of the Registrant's knowledge, except as previously discussed there are no special requirements for government approval of its principal products or services not generally applicable to normal business operations. Effect of Existing or Probable Governmental Regulations on the Business There have been and continue to be numerous efforts at every level of government to regulate Internet activities, most of which, in the United States, have been limited by first amendment guarantees. That is not true in other countries. In addition, the regulation of commercial communication activities, especially relating to privacy rights, receipt of unsolicited communications and Internet fraud is likely to expand significantly. Immediately prior to American Internet's incorporation, its principals, in their initial Internet venture, conducted a marketing campaign through a third party that resulted in a number of consumer complaints, one law suit, and contacts and comments from various states' regulatory authorities. American Internet, upon its incorporation, immediately established policies designed to avoid such problems in the future; however, no assurances can be provided that, in the future, inadvertent activities by American Internet personnel or by American Internet clients will not subject American Internet to regulatory actions or civil liabilities, or that prior activities by American Internet's founders will not be imputed to American Internet (see "Legal Proceedings" above). Costs and Effects of Compliance with Federal, State and Local Environmental Laws American Internet is a service businesses and is not aware of any expenses directly attributable to compliance with federal, state or local environmental laws or regulations. Description of Real Estate American Internet's offices, production and operating facilities are located at 440 East Sample Road, Suite 204; Pompano Beach, Florida 33064. American Internet's telephone number is (954) 943-4748 and its fax number is (954) 943-4406. American Internet also maintains an Internet web site at www.aitc.net. American Internet's current facilities are comprised of approximately 2,500 square feet, 1,000 of which are used for sales, 1,000 are used for administration and 500 are used for technical operations. The facilities are leased on a month to month basis, at $2,200 per month and $132 per month in lease related taxes. 28 Management is of the opinion that its current facilities are adequate for its immediate needs. As the Registrant's business increases, however, additional facilities will be required and meaningful expansion of the business of American Internet's business cannot be effected without substantial additional space, especially if American Internet are successful in acquisition related activities. The Registrant has committed to investing at least $350,000 in American Internet, $100,000 of which was provided shortly after its acquisition. The balance is expected to be provided from a private placement of the Registrant's securities to be effected during calendar 1999. No assurances can, however, be provided that such private placement will be successfully concluded. Assuming that adequate funds become available, American Internet's management believes that adequate facilities are readily available at competitive prices in the South Florida area. Description of Furniture, Fixtures & Equipment The assets of American Internet, as valued for accounting purposes, have a depreciated book value of $22,266, and a non-depreciated book value of $26,196. The assets are principally comprised of five categories, fixtures, furniture, office equipment, communications equipment and computers. Fixtures and furniture consist of exterior signs, desks, chairs, file cabinets work stations and room dividers (12); office equipment consists of a Xerox laser printer, a Xerox copier, a Xerox work center fax unit and 4 regular fax machines; communications equipment consists of a 16 unit telephone system and computer equipment consists of 9 computer stations, including monitors and printers and 3 hosting servers and related software. As indicated previously, American Internet must regularly upgrade its communications and computer equipment in order to adequately compete in its industry, and intends to invest in other equipment to upgrade the capabilities of its sales and marketing staff. Number of Total Employees and Number of Full Time Employees As of December 31, 1998, American Internet employed 19 individuals on a full-time basis, plus 15 people on a part-time basis, including web designers, independent contractors and 2 consultants, none of whom are employed pursuant to a collective bargaining or union agreement. American Internet makes extensive use of services provided by its students as part of their curricula and as a result of its educational activities has the opportunity to easily recruit required personnel from a pool of competently trained students and graduates. From time to time, American Internet also uses the services of independent contractors in order to avoid premature expansion of its labor force and the risks associated with premature expansion of ongoing liabilities. American Internet considers that its relationship with its employees is good. Legal & Regulatory Matters American Internet's management has advised the Registrant that it is not a named defendant in any material legal or regulatory proceedings. It has from time to time been involved in minor lawsuits and consumer complaints arising in the ordinary course of business most of which involved an early advertising campaign conducted using facsimile transmission of offers to potential clients. A number of recipients complained that the unsolicited facsimile transmissions violated the Federal Telephone Consumers Protection Act and similar statutes in the States of Florida, Idaho, Maryland, and Wisconsin. No regulatory actions were initiated as a result of such complaints and, despite its belief that it was not legally culpable for any violations by the third party contractor involved, in order to maintain good public relations, American Internet contacted all complainants to apologize and believes that it resolved all such issues with either token payments (less than $200 per instance) or one month's complimentary service. 29 In conjunction with such campaign, American Internet was included as a member of a class of defendants in a civil law suit by Lawrence S. Benjamin, Esquire, an attorney-plaintiff residing in the State of Ohio (the "Benjamin Case"). The Benjamin Case was filed on behalf of an unidentifiable class of plaintiffs against an unidentifiable class of defendants. American Internet, at the suggestion of the Registrant, agreed to settle the Benjamin Case by paying Mr. Benjamin the sum of $7,500, while denying any liability. Such decision was based on the nuisance value of the suit when compared to the potential legal fees of a successful defense, and on the Registrant's desire that American Internet be litigation free at the time of its acquisition. In the future, such matters will probably be litigated using the Registrant's general counsel. A copy of the Settlement Agreement is filed as an exhibit to this report (see "Item 7, Exhibit Index"). All marketing activities that gave rise to the consumer complaints and litigation described above were promptly discontinued and American Internet has initiated procedures to prevent its recurrence in the future. While the outcome of the foregoing matters cannot be predicted with absolute certainty, neither the Registrant nor American Internet expect them to have a materially adverse effect on American Internet's financial condition, liquidity or results of operations. MANAGEMENT'S PLAN OF OPERATION; DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The information required by this item will be provided, together with the financial statements and pro forma financial information pertaining to the transaction which is the subject of this report, by an amendment hereto to be filed by the Registrant with the Securities and Exchange Commission on or before the sixtieth day following the date of this report. The financial data included in the following information is based on unaudited data that may not comply with generally accepted accounting principals, consistently applied and will be superseded in the subsequent amendment Accordingly, the information may not prove accurate and should not be relied on other than as a good faith effort by American Internet's management to provide useful information on an interim basis. Plan of Operation: During the next twelve months, American Internet intends to materially expand its business operations using the funding that the Registrant has agreed to provide (up to $350,000) and securities of the Registrant that will be made available for purposes of acquisitions and personnel recruitment, at a 15% discount from market price, for internal inter-company accounting purposes, including determination of net profit before taxes targets pertaining to the ultimate number of shares of the Registrant's common stock to be issued in exchange for American Internet's acquisition. Using such resources, as well as internally generated capital, American Internet intends to purchase additional electronic equipment and software programs, increase its advertising and marketing budgets in order to attract more clients to its e-commerce, hosting and educational programs; and, to hire additional staff in order to properly service the additional activities generated. 30 American Internet can meet all anticipated operating expenses during the next 12 months from internally generated operational income; however, its proposed expansion is dependent on receipt of $350,000 in proceeds from Registrant and use of the Registrant's securities for acquisition and personnel recruitment purposes, as described above. Substantial additional capital may be required to take optimal advantage of opportunities presented in conjunction with acquisitions, but such requirement cannot be presently quantified, nor can the likelihood that required capital will be available. During the next twelve months, American Internet intends to continue research and development activities designed to develop and maintain state of the art capabilities in Internet and Internet related businesses, as well as to improve its ability to increase and properly serve its client base. Research and development activities are expected to involve programs designed to capitalize on the e-commerce aspects of the Internet. American Internet recently began test marketing "Webstore," a proprietary easy to use web based Internet store program designed to facilitate sales of goods or services over the World Wide Web. Twelve stores purchased the program during the two week test period, a result deemed favorable by American Internet's management. American Internet's management believes that a material portion of its future revenue will be derived from Internet marketing activities and in order to participate in that growing market for web sites (management believes that an average of more than 67,000 are registered daily) recently hired a full time Internet marketing manager who is assisted by a full time employee responsible for preparing search engine submissions. American Internet anticipates that it will continue to upgrade its computer and communications equipment during the next twelve months and expects to spend approximately $50,000 on hosting servers computers and other related equipment. American Internet also intends to increase and improve its sales force in conjunction with increased marketing activities in order to maximize the return on marketing expenses. Currently contemplated improvements include providing each sales representative with advanced computerized sales equipment permitting them to service clients quickly and efficiently by providing prompt, accurate answers to questions; permitting timely tracking of customer progress and rapid responses to call backs. Integration of the data generated by sales representatives with a centralized marketing data base is expected to upgrade sales, increase renewals and expand sales of other services. In addition, improved equipment will allow sales personnel to increase foreign marketing efforts at reduced costs through use of Internet telephony to make overseas calls at lower rates than generally available, and to communicate with foreign prospects in their own languages using either multi-lingual sales staffers or available translation program features. As its client base increases, American Internet will expand its technical, marketing and support staff and, during the next twelve months, it expects to hire up to four additional full time employees in its marketing division, four in its sales division, three administrative employees and two part time employees, supplemented by up to three independent contractors and consultants. 31 It is anticipated that the additional personnel will cost approximately $400,000 during the next 12 months, allocated as follows: Marketing personnel, $125,000; sales personnel, $125,000, administrative personnel, $75,000 and independent contractors $75,000. Based on the foregoing plans, American Internet believes that it can increase its gross earnings substantially while remaining profitable. Discussion and Analysis of Financial Condition and Results of Operations Since its inception, American Internet has generated adequate funds from operations to pay all of its expenses, although it obtained approximately $20,000 in 1999 from the sale of 18,000 shares of its common stock and 18,000 common stock purchase warrants to three investors, the proceeds of which were used for marketing activities. As of December 31, 1998, American Internet had total liquid assets of $89,328 and total liabilities of $60,030. Results of Operation Revenues for the first 9 months, ended December 31, 1998, were $797,502. Approximately 95% of the revenues were derived from the sale of web sites and hosting. American Internet anticipates that its revenues will increase over the next five years and that the percentage of sales from its educational programs, marketing, hosting and other sources will account for a larger share of revenues for the foreseeable future. Cost of revenues consist primarily of web site design and production costs and hosting expenses. Costs of revenues were $151,502 for the nine months ended December 31, 1998. American Internet expects its costs of revenues to increase in dollar amount while declining as a percentage of revenue as American Internet expands its customer bases and types of services. Operating costs include selling, general and administrative costs. These are made up primarily of sales commissions, advertising, administrative salaries and other general expenses. Operating costs were $458,779 for the nine months ended December 31,1998. American Internet expects that it will incur additional selling, administrative, marketing and other general expenses in absolute dollars as American Internet continues to hire personnel and incur expenses related to the further growth of the business and its operation as a public company. For the nine months ended December 31, 1998, American Internet's net profit was $187,221 before Mangements's salaries and $69,206 after Management salaries of $118,015. Internal and External Sources of Liquidity Since its inception, American Internet has financed its operations through the sales it generated. As of December 31, 1998, American Internet had $3,694 in cash. American Internet's capital requirements depend on numerous factors, including market acceptance of American Internet's products and services, the amount of resources American Internet devotes to investments in its services, the resources American Internet devotes to marketing and selling its services and other factors. American Internet has experienced a substantial increase in its capital expenditures since its inception consistent with the growth in its operations and staffing, and anticipates that the net proceeds from to be provided by the Registrant and available funds from operations will be sufficient to meet its anticipated needs for working capital and capital expenditures until at least December 31, 1999. 32 Accounting Policies and Procedures Revenue Recognition: Generally, revenues from sales of products are recognized when products are shipped unless American Internet has obligations remaining under a sales or license agreement, in which case revenue is either deferred until all obligations are satisfied or recognized ratably over the term of the contract. Statements of Cash Flows: American Internet considers all highly liquid financial instruments with a maturity of three months or less when purchased to be cash equivalents. Principles of Consolidation: The accompanying consolidated financial statements include the accounts of the Registrant and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. Mergers and Acquisitions: On June 25, 1999, the Registrant acquired all of the outstanding common stock of American Internet in exchange for 2,236,736 shares of its common stock issued to two of the stockholders of its parent corporation at the time. The acquisition was accounted for using the purchase method of accounting and $1,583,220 in goodwill was recorded which is being amortized over 15 years using the straight-line method. The results of operations of American Internet will be included in the Registrant's consolidated statement beginning June 25, 1999, the date of acquisition. Income/Loss Per Share: The computation of loss per share of common stock is based on the weighted average number of shares outstanding during the periods presented. Statement Re Computation of Earnings Per Share: American Internet has a simple capital structure as defined by APB Opinion Number 15. Accordingly, earnings per share is calculated by dividing net income by the weighted average shares outstanding. Provision for Income Taxes: American Internet was, prior to its acquisition by the Registrant, taxed as an S Corporation under the Internal Revenue Code and applicable state statutes. Under an S corporation election, the income of the corporation flows through to the stockholders to be taxed at the individual level rather than the corporate level. Accordingly, American Internet will have no tax liability for the periods that the S Corporation election was in effect. 33 Year 2000 Compliance The Problem: The year 2000 issue is the result of computer programs using two digits rather than four to define the applicable year. Date-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in system failures or miscalculations, causing disruptions of operations, including, among others, a temporary inability to process transactions, send invoices or engage in similar normal business activities. State of Readiness: In order to address Year 2000 issues, American Internet is evaluating its information and other systems technology to identify and eliminate Year 2000 issues in order to achieve Year 2000 readiness. American Internet has performed a review of its more critical Third Party Systems and has surveyed the publicly available statements issued by vendors of such systems. Most of American Internet's critical third-party providers have made representations to the effect that they are, or will be, Year 2000 compliant. American Internet, however, has not undertaken an in-depth evaluation of its critical or other third-party providers in relation to the Year 2000 issue, and furthermore American Internet has no control over whether its third-party providers are, or will be, Year 2000 compliant. Costs There are no significant historical costs associated with American Internet's Year 2000 readiness efforts and the magnitude of any future costs will depend upon the nature and extent of any problems that are identified. These costs are not expected to exceed $10,000. Risks The failure by American Internet to correct a material Year 2000 problem could result in a complete failure or degradation of the performance of American Internet's network or other systems, including the disruption of operations, a temporary inability to process transactions, send invoices or engage in similar normal business activities. Presently, however, American Internet believes that its most reasonably likely worst case scenario related to the Year 2000 is associated with potential concerns with third-party services or products. Specifically, American Internet is heavily dependent on a significant number of third-party vendors to provide both network services or equipment. A significant Year 2000-related disruption of the network services or equipment provided to American Internet by third-party vendors could cause customers to consider seeking alternate providers or cause an unmanageable burden on customer service and technical support, which in turn could materially and adversely affect American Internet's results of operations, liquidity and financial condition. American Internet is not presently aware of any vendor-related Year 2000 issue that is likely to result in such a disruption. Although there is inherent uncertainty in the Year 2000 issue, American Internet expects that as it progresses with its Year 2000 Plan, the level of uncertainty about the impact of the Year 2000 issue on American Internet will be reduced and American Internet should be better positioned to identify the nature and extent of material risk to American Internet as a result of any Year 2000 disruptions. 34 Contingency Plans Due to the current stage of American Internet's Year 2000 Plan, American Internet is currently unable to fully assess its risks and determine what contingency plans, if any, need to be implemented. As American Internet progresses with its Year 2000 Plan and identifies specific risk areas, American Internet intends to timely implement appropriate remedial actions and contingency plans. The estimates and conclusions herein contain forward-looking statements and are based on management's best estimates of future events. American Internet's expectations about risks, future costs, and the timely completion of its Year 2000 efforts are subject to uncertainties that could cause actual results to differ materially from what has been discussed above. Factors that could influence risks, amount of future costs and the effective timing of remediation efforts include American Internet's success in identifying and correcting potential Year 2000 issues and the ability of third parties to appropriately address their Year 2000 issues. The inability of business processes to continue to function correctly after the beginning of the Year 2000 could have serious adverse effects on companies and entities throughout the world. American Internet, as an Internet based business highly reliant on computer and communications equipment would be extremely vulnerable to such problem directly, in conjunction with its equipment and programs, and as a result of its reliance on world wide communications systems, including telephone companies, utilities and the Internet, over which it exercises no control. Its clients are also extremely vulnerable to year 2000 based computer problems in conjunction with their relationship to American Internet since its is entirely based on the use of computer systems through third party communication services. SUMMARY & PRO FORMA FINANCIAL DATA The following information attempts to demonstrate in summary and pro forma fashion, what American Internet and the Registrant's operations reflected for the year ended December 31, 1998, and what they would have reflected, had the Registrant owned American Internet since its inception in 1998 but not owned the operations subsequently divested. The data is based on Registrant's audited financial statements for the year ended December 31, 1998, and unaudited financial statements for American Internet for the corresponding period (which may change materially when its audited statements are prepared in accordance with generally accepted accounting principals, consistently applied. Such financial statements must be filed as an amendment to this report within sixty days following its original filing date, at which time this section will also be amended, to reflect required corrections. 35 American Pro Forma Registrant Internet Total Adjustment Combined Current Assets: Cash 13,182 3,694 16,876 0 16,876 Accounts receivable 0 85,614 85,614 0 85,614 Prepaid expenses 0 4,461 4,461 0 4,461 Total current assets 13,182 93,769 106,951 0 106,951 Property and equipment Fixed Assets 0 26,196 26,196 0 26,196 Accumulated Depreciation 0 ( 3,930) (3,930) 0 (3,930) Total property and equipment 0 22,266 22,266 0 22,266 Other Assets: Goodwill 0 0 0 1,583,220(1) 1,583,220 Accumulated amortized goodwill 0 0 0 (105,548)(3) (105,548) Deposits 0 13,000 13,000 0 13,000 Total other assets 0 13,000 13,000 1,477,672 1,490,672 Total assets 13,182 129,035 142,217 1,477,672 1,619,889 Current liabilities: Accounts payable 4,661 38,174 42,835 0 42,835 Accrued expenses 0 21,856 21,856 0 21,856 Total current liabilities 4,661 60,030 64,691 0 64,691 Stockholders' equity: Common stock 59,911 200 60,111 22,127(1) 82,238 Additional paid in capital 2,914,395 0 2,914,395 1,629,898(1) 4,544,293 Distributions to stockholders 0 (118,416) (118,416) (118,416)(2) 0 Accumulated deficit (2,566,370) 0 (2,566,370) (68,805)(1) (2,635,175) Current year income (loss) (399,415) 187,221 (212,194) (223,964) (436,158) Total stockholders' equity 8,521 69,005 77,526 1,477,672 1,555,198 Total liabilities and stockholders' equity 13,182 129,035 142,217 1,477,672 1,619,889 36 American Pro Forma Registrant Internet Total Adjustment Combined Fees 0 797,502 757,502 0 757,502 Total revenue 0 797,502 757,502 0 757,502 Cost of sales 0 151,502 151,502 0 151,502 Gross profit 0 646,000 646,000 0 646,000 Operating expenses: Selling 0 323,762 323,762 0 323,762 General & administrative 0 135,017 135,017 118,416(2) 358,981 Amortized good will 0 0 0 105,548(3) 105,548 Total operating expense 0 458,779 458,779 223,964 682,743 Income (loss) from operations 0 187,221 187,221 (223,964) (36,743) Loss from discontinued operations (399,415) 0 (399,415) 0 (399,415) Net loss (399,415) 187,221 (212,194) (223,964) (436,158) Basic income (loss) per share (4) (0.096) 0.084 0 0 (0.068) Weighted average shares 4,174,778 2,236,736 6,411,514 0 6,411,514 Fully diluted income (loss) per share (0.095) 0.084 (0.068) 0 (0.068) Fully diluted average shares 4,222,199 2,236,736 6,458,935 6,458,935
- - ------- (1) Record Acquisition if American Internet by the Registrant. (2) $118,416 is treated as management compensation (3) Amortize goodwill over 15 years = 1998 amortization expense = $105,548 (4) Per share data is based on the following assumptions: That the Registrant's weighted average number of the shares outstanding for the period was 6,097,191; and That 2,500,000 shares had been issued at the inception of American Internet's financial data period (starting April 1, 1998) and that consequently, the weighted average number of the Registrant's shares outstanding for the period, in the pro forma calculations, had been increased by 1,875,000 (2,500,000 x 3/4) to 6,097,191. 37 RISK FACTORS Regulatory Problems & Potential Legislation There have been and continue to be numerous efforts at every level of government to regulate Internet activities, most of which, in the United States, have been limited by first amendment guarantees. That is not true in other countries. In addition, the regulation of commercial communication activities, especially relating to privacy rights, receipt of unsolicited communications and Internet fraud is likely to expand significantly. Immediately prior to American Internet's incorporation, its principals, in their initial Internet venture, conducted a marketing campaign through a third party that resulted in a number of consumer complaints, one law suit, and contacts and comments from various states' regulatory authorities. American Internet, upon its incorporation, immediately established policies designed to avoid such problems in the future; however, no assurances can be provided that, in the future, inadvertent activities by American Internet personnel or by American Internet clients will not subject American Internet to regulatory actions or civil liabilities, or that prior activities by American Internet's founders will not be imputed to American Internet (see "Legal Proceedings" above). In conjunction with the acquisition of American Internet, the Registrant has concluded that the following factors involve risks that may materially affect the acquired operations and consequently, may have a material impact on the Registrant's business and on the value and liquidity of its securities. Risks Associated with the Registrant Dependence on Future Financing American Internet anticipates that it will receive an aggregate of at least $350,000 in funding from the Registrant within 90 days after American Internet's audited financial statements are completed, $100,000 of which was provided immediately following closing on the Reorganization Agreement using most of the proceeds of a limited offering of subordinated, convertible debentures (the "Debentures"). Copies of the Debentures and the related offering documents are filed as exhibits to this report (see "Item 7[c], Exhibit Index"). American Internet's management advised the Registrant's management that American Internet requires at least $350,000 in order to negotiate and conclude certain acquisitions expected to accelerate American Internet's growth and to increase its profitability. If the Registrant is unable to provide the entire $350,000 anticipated by American Internet, it will be required to reconsider its strategic plans and its advertising and marketing strategies, all of which could reduce anticipated growth and profits. The failure by the Registrant to make such funding available would also affect the basis on which calculations for the additional common stock issuable to the former American Internet stockholders will be made (see "Description of American Internet, Background Information" above). 38 Competing Capital Requirements The Registrant's anticipates that it will raise all or a substantial portion of the financing required for American Internet and other unrelated acquisitions through a private placement which the Registrant expects to undertake during 1999. The major portion of the proceeds expected to be derived from the subsequent private placement will not be allocated to American Internet directly, but rather, for use in conjunction with capitalizing future acquisitions of compatible, Internet related businesses. However, there are no assurances that the Registrant will succeed in effecting such private placement on favorable terms, if at all, or that the Registrant will be able to raise sufficient capital from such undertaking. Even if the Registrant successfully concludes the proposed private placement, there are no assurances that the Registrant will be able to use those proceeds to generate new favorable acquisitions or to materially improve the business and business prospects of any businesses acquired, including American Internet. Lack of Liquidity in Proposed Private Placement There will be no public market for the Units being contemplated for the proposed private placement nor will one develop because they will not be registered with the Commission or the securities regulatory authorities of any state; rather, they will be issued in reliance on the exemption from registration under the Securities Act provided by Section 4(6) thereof pertaining to sales solely to "accredited investors," as that term is defined in Commission Rule 501 of regulation D, in reliance on Commission Rule 505 of Regulation D or in reliance on Section 4(2) of the Securities Act. Consequently, it may be difficult or impossible for the holders of the subject securities to pledge, hypothecate or sell them should they desire to do so. In addition, there will be substantial restrictions on the sale or transfer of the subject securities imposed by federal and state securities laws. As a result of such lack of liquidity, it is possible that the Registrant will not be successful in raising the rest of the capital expected by American Internet's management (which would very materially affect the prospects of American Internet) or capital for additional acquisitions contemplated by the Registrant. Unpredictable Response from Possible Funders The Registrant anticipates that the proposed private placement will be offered first to stockholders of the Registrant, then to affiliates of the Registrant including its officers, directors and consultants, with the balance offered principally to accredited investors. In addition, the Registrant's management may endeavor to secure funds through loans and lines of credit, either directly or through its subsidiaries, including American Internet. No assurances can be provided that any of the foregoing will participate in the proposed capital raising, borrowing or credit proposals. Unexpected Additional Capital Requirements Even if American Internet obtains all $350,000 in funding which it expects from the Registrant on a timely basis, American Internet's management believes that it may require additional financing to properly develop the businesses of acquired companies, to properly follow up on its direct response marketing campaigns and for additional working capital related to such factors. If the Registrant is not able to provide required future financing, American Internet would be required to obtain required financing on its own and if it were not successful, it could be required to reduce overall operations, cut back its direct response marketing campaigns and curtail acquisition activities deemed materially important to American Internet's growth and potential profitability. 39 Risks Associated with American Internet Development Stage Company American Internet has completed its first year of business with an operating profit, however, its future business prospects are subject to all risks inherent in the establishment of new business enterprises, including the possibility of operating losses. The likelihood of American Internet's success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the commencement and growth of new business operations, the implementation of American Internet's business plan, and the competitive and regulatory environment in which American Internet operates. Advertising & Marketing Expenses American Internet currently has limited advertising and marketing capabilities based almost entirely on internal personnel and resources. Its proposed expansion is expected to rely materially on the use of traditional advertising and marketing professionals to supplement in-house capabilities, which will require material expenditures without guaranteed results. The inability to complete a marketing program due to inadequate capital could result in lowered market perception of American Internet's capabilities and reputation, rather than in increased sales. In addition, results from marketing campaigns conducted by outside marketing professionals that prove less positive than anticipated may result in increased sales but diminished profits or even losses, due to the costs incurred. Like the use of leverage, the risk of capital on marketing activities can accelerate both positive growth or the risk of unaffordable losses. Technological Obsolescence The Internet industry involves two of the most obsolescence sensitive areas of modern business, computers and communications. Changes, especially in computer systems involving both hardware and software seem to appear weekly and require a balance between not permitting equipment and software to become stale and non-competitive, resulting in lost business, and, making premature expenditures on unproven systems. Failure to make the correct decision, at the right time, could materially impair American Internet's business prospects and profitability. Foreign Currency Fluctuations To the extent that American Internet succeeds in entering the international Internet market and generates foreign clients, it may be required to accept payments in foreign currencies that are, in some instances, subject to material fluctuations in value, usually negative in nature. In the past, that has been true of business in Brazil, a country currently targeted for expansion. In order to protect against currency fluctuations, American Internet will have to develop currency hedging expertise and implement currency hedging strategies on an ongoing basis. Currency hedging strategies are not always successful and if not properly executed, can add to losses due to currency devaluation or regional inflation. 40 Dependence on Management American Internet believes that its success will largely be dependent upon management's implementation of American Internet's business plan. Although management has extensive experience in other business ventures, the principals did not have material previous business experience in the Internet industry when they founded American Internet. Although, American Internet's business has been relatively successful to date that does not assure future success. Projections American Internet's proposed expansion is largely based on confidential internal projections predicated primarily on management's expectations to the future performance of American Internet. The projections are based upon certain assumptions concerning the economy and potential growth of the Internet and related industries, which management cannot control, and on anticipated courses of action that American Internet plans to undertake. One of the material assumptions is that American Internet's Internet services will be received favorably in the market, which is based in part upon generation of interest from qualified buyers. While management studies and discussions with potential clients have led to optimistic expectations, there are usually differences between expectations and actual results caused by events and circumstances that do not occur as expected. There can be no assurance that past or current indications of interest from potential clients will result in actual sales or that even if sales are materially increased, they will culminate in increased profits. Industry Risks Reliance upon Product Acceptance Management believes that the demand for American Internet's Internet services will be materially affected by consumers increasing acceptance of the Internet as a transaction option for services such as advertising, marketing, distribution of products, and the dissemination of information. However, there are no assurances that American Internet's services will find acceptance with consumers even if such trends continue. While the conclusions of American Internet's market research have been favorable, there are no assurances that actual operating results will reach the levels indicated by such research. Competition The industry in which American Internet operates is highly competitive. Many other companies that provide similar services have substantially greater technical, financial and marketing resources than American Internet. In some cases, its competitors appear to have been successful in using questionable tactics to win and maintain market share by, among other things, denying competitors access to technology and important segments of the computer, communications and Internet market. Consequently, there can be no assurances that American Internet's services will be competitive with service providers using technology developed by American Internet's competitors or that American Internet will be able to penetrate targeted segments of the Internet market, even if its services and technology are competitive with those of alternative providers (see the more detailed discussion of competition at "Description of American Internet, Competitive Business Conditions, Competitive Position in the Industry and Methods of Competition" above). 41 The Industry American Internet competes in the Internet services industry where new technologies and markets are constantly being introduced. In many instances, existing services and products are being replaced. Such innovation can prove either positive or negative for American Internet, based on its ability to predict and participate in such changes, rather than to be replaced by them. Consumer's tastes and desires fluctuate and are difficult to predict. There are no assurances that American Internet will be able to accurately predict industry trends or to keep pace with industry changes. General Economic Conditions The financial success of American Internet may be detrimentally affected by a number of factors wholly outside of its control, such as general or special economic conditions, whether or not such changes are generally perceived as negative (e.g., recession, inflation, unemployment and interest rates). Changes can affect the costs of supplies, insurance, transportation, labor and other expenses and will affect American Internet's business either directly or because they affect the business of American Internet's clients. Changes can provide new or improved opportunities but they can also negatively change the financial environment in which American Internet and its clients operate. To the extent that changes increase American Internet's net operating expenses, or those of its clients, without permitting at least corresponding increases in prices charged, such changes could reduce demands in the marketplace for American Internet's services creating losses of business or could result in payment delays creating a liquidity crisis with which American Internet could not successfully deal. While the Registrant's and American Internet's management try to keep informed concerning economic trends and developments and to develop plans for dealing with them, no assurances can be provided that such efforts will succeed in predicting or dealing with uncontrollable economic forces. ITEM 4. Changes in Registrant's Certifying Accountant In conjunction with the acquisition described in response to Item Two, the Registrant's management elected to replace its certified public accountants with the certified public accountants employed by American Internet, since, for accounting purposes, the bulk of the Registrant's auditing work will involve the operations of American Internet and their auditors are closer geographically and have substantially greater familiarity with the bulk of the books, records, procedures and historical data required for future audits. There were no disputes of any kind with the Registrant's prior auditors of which current management is aware, after diligent inquiry, except for a dispute concerning the language of footnotes to the financial statements for the year ended December 31, 1998, as disclosed in the Registrant's report on Form 10-KSB for such period. Such disclosure (Item 8) is hereby incorporated by reference hereto and a copy of the report on Form 10-KSB is filed as an exhibit to this report (see "Item 7[c], Exhibit Index"). In conjunction therewith, while the Registrant disclosed its differences in Item 8, the footnotes retained the language selected by the auditor, Bowman & Bowman, P.A. 42 In amplification of the foregoing, current management, except as disclosed in the preceding paragraph, has no reason to believe that: (i) The Registrant's former auditors resigned, declined to stand for re-election or were dismissed; (ii) The principal accountant's report on the financial statements for either of the past two years contained an adverse opinion or disclaimer of opinion, or was modified as to uncertainty, audit scope, or accounting principles (iii) (A) There were any disagreements with the former accountant, whether or not resolved, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the former accountant's satisfaction, would have caused it to make reference to the subject matter of the disagreement(s) in connection with its report; or (B) The former accountant advised the Registrant that: (i) internal controls necessary to develop reliable financial statements did not exist; or (ii) information has come to the attention of the former accountant which made the accountant unwilling to rely on management's representations, or unwilling to be associated with the financial statements prepared by management; or (iii) the scope of the audit should be expanded significantly, or information had come to the accountant's attention that the accountant had concluded would, or if further investigated might, materially impact the fairness or reliability of a previously issued audit report or the underlying financial statements, or the financial statements issued or to be issued covering the fiscal period(s)subsequent to the date of the most recent audited financial statements (including information that might preclude the issuance of an unqualified audit report), and the issue was not resolved to the accountant's satisfaction prior to its resignation or dismissal. The decision to change accountants was approved by the Registrant's board of directors on July 1, 1999. The Registrant's new auditors are expected to be Daszkal, Bolton & Manela, P.A., certified public accountants with offices at 240 West Palmetto Park Road, Suite 300; Boca Raton, Florida 33432, who currently serve as American Internet's auditors. Their telephone number is (561) 367-1040; their fax number is (561) 750-3236; and, their Internet web site is located at www.dbmsys.usa.com. The proposed auditor's engagement agreement is filed as an exhibit to this report (see "Item 7[c], Exhibit Index"). The chairperson of the Registrant's audit committee has attempted to reach Bowman & Bowman, P.A., the Registrant's former auditor to discuss this matter and to obtain a letter from it pertaining to whether or not it agrees with the foregoing disclosure; however, the auditor has not returned telephone calls or replied to fax requests for contact. Copies of the foregoing disclosure have been provided to Bowman & Bowman, P.A., by fax, e-mail and letter and the Registrant anticipates that it will reply to such contacts as soon as it is available. The Registrant has no basis for believing that Bowman & Bowman, P.A., will not agree with the foregoing disclosure or that Bowman & Bowman, P.A., will not provide the required letter, which will be filed as an exhibit to this report immediately after it is received. 43 ITEM 5. Other Events Recent Offering of Unregistered Securities On or about June 25, 1999, in contemplation of the closing on the acquisition of American Internet, the Registrant authorized a private placement of $200,000 in a newly authorized class and series of subordinated convertible debentures. The private placement was structured to comply with the exemption from registration provided by Section 4(6) of the Securities Act, as an offering solely to accredited investors. As of the date of this report, $100,000 in principal amount of the Debentures have been paid for by four subscribers, one of which was Yankees, which paid $10,000. Because of certain rights in its consulting agreement with the Registrant, Yankees conversion rights are materially better than those available to other Debenture Holder in that Yankees conversion price is half of that otherwise applicable. The Debentures issued to date are currently the Registrant's only outstanding debt securities. The Debentures are designated as Class A, Series A, Convertible, Subordinated Debentures, are for a term of one year, with simple interest at the annual rate of 8% payable with principal at maturity in one lump sum. The Debentures are convertible into the Registrant's common stock at the holders' option at the rate of $0.50 per share (but see Yankees special rights above). There are no prepayment penalties. The Debentures are subordinate to all debt designated by the Registrant as senior indebtedness. Neither a trustee nor an indenture was used in connection with the Debentures based on exemptions from the Trust Indenture Act of 1939, as amended, provided under Sections 304(a)(8) and 304(b) thereof. The proceeds of the Debenture placement proceeds received to date were used to provide the funds to American Internet required at closing on the reorganization agreement ($100,000, see Item 2). The balance of the proceeds received, if any, will be used for working capital by the Registrant. No commissions were paid nor did the Registrant incur material expenses in conjunction with the private placement. Copies of the subscription agreement for the Debenture private placement and the form of Debenture used are filed as exhibits to this report (see "Item 7[c], Exhibit Index"). Carmen Piccolo Agreement In light of an anticipated increase in public inquiries concerning the Registrant, its board of directors determined that one person should be given responsibilities for coordinating all required information, securing required approvals for its release, and acting as the Registrant's spokesperson to its stockholders and the investment community. Consequently, the Registrant has entered into an employment agreement with Ms. Carmen Piccolo to act as its spokesperson. Ms. Piccolo is required to devote substantially all of her business time, energies and abilities to the proper and efficient management and execution of her job with the Registrant but will have no authority to act as an agent of the Registrant or to bind it or its subsidiaries as a principal or agent. She will serve as the principal point of contact between the Registrant and the media (print, electronic, voice and picture), the investment community and its security holders and will be responsible for the collection and maintenance of all information concerning the Registrant and for verification of the accuracy and completeness thereof; she will assist in the preparation and distribution of regular reports of the activities of the Registrant to the investment community, the press, its securities holders and the general public; assist in development and implementation of all public relations programs required by the Registrant. Ms. Piccolo will be responsible for securing prior 44 written approval for the release of any information concerning the Registrant from any regulatory authorities (e.g., the Securities and Exchange Commission [the "Commission") or self regulatory organizations (e.g., the National Association of Securities Dealers, Inc. [the "NASD"]) having jurisdiction over dissemination of such information; the Registrant's board of directors and chief executive officer, and from its general counsel. She will also be responsible for maintaining orderly and easy to find records of all corporate information released by her and for performing such other duties as are assigned to her by the Registrant's president and board of directors, subject to compliance with all applicable laws and fiduciary obligations. Ms. Piccolo informed the Registrant that she is not subject to legal, self regulatory organization (e.g., National Association of Securities Dealers, Inc.) or regulatory impediments to the provision of the services called for by her agreement or to receipt of the compensation called for. Acknowledging that important 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., in-house "due diligence" or "compliance" departments of licensed securities firms, etc., Ms. Piccolo has agreed that she will not release any financial or other material information or data about the Registrant without the prior written consent and approval of its general counsel; conduct any meetings with financial analysts without informing the Registrant's general counsel and board of directors in advance of the proposed meeting and the format or agenda of such meeting; or release any information or data about the Registrant to any selected or limited person(s), entity, or group if she is aware that such information or data has not been generally released or promulgated. In addition, Ms. Piccolo agreed that: (1) If she describes the Registrant's securities to any third parties, she will disclose to such person all compensation received from the Registrant to the extent required under any applicable laws, including, without limitation, Section 17(b) of the Securities Act of 1933, as amended; (2) She will not disclose to any third party any confidential non-public information furnished by the Registrant or otherwise obtained by her with respect to the Registrant; (3) She will restrict or cease all efforts on the Registrant's behalf, including all dissemination of information, immediately upon receipt of instructions (in writing by fax or letter) to that effect. (4) If she learns of any pending public securities offering to be made or expected to be by made the Registrant, she will immediately cease any public relations activities on behalf of the Registrant until receipt of written instructions from its general counsel as to how to proceed, and thereafter shall proceed only in accordance with such written instructions. 45 (5) She will not take any action which would in any way adversely affect the reputation, standing or prospects of the Registrant or which would cause the Registrant to be in violation of applicable laws. As consideration for Ms. Piccolo's services to the Registrant she will receive a gross monthly salary of $2,000 payable in bi-monthly installments of $1,000 less related taxes and withholding obligations (the "Base Salary"). In addition to the Base Salary, Ms. Piccolo was granted a series of 12 month options to purchase up to an aggregate of 48,000 shares of the Registrant's common stock at an exercise price of $1.00 per share (the price on the date the agreement was signed), vesting at the rate of 4,000 shares per month, provided that she is in the employ of the Registrant at the time of exercise. The option was issued in reliance on the exemption from registration under Section 5 of the Securities Act and the Florida Securities and Investor Protection Act pursuant to Section 4(2) of the Securities Act and Section 517.061(11) of the Florida Act. However, in the event that Equity Growth files a registration or notification statement with the Commission or any state securities regulatory authorities registering or qualifying any of its securities for sale or resale to the public as free trading securities, it is required to notify Ms. Piccolo of such intent at least 15 business days prior to such filing and if requested by her, include any shares theretofore issued upon exercise of the options in such registration or notification statement, provided that she cooperates in a timely manner with any requirements therefor. Ms. Piccolo is also entitled to any benefits generally made available to all other employees of the Registrant and is entitled to indemnification for liabilities, suits, judgments, fines, penalties or disabilities, including expenses associated directly, therewith (e.g. legal fees, court costs, investigative costs, witness fees, etc.) resulting from any reasonable actions taken by her in good faith on behalf of the Registrant, its affiliates provided that she permits the Registrant to select and supervise all personnel involved in such defense and that she waives any conflicts of interest that such personnel may have as a result of also representing the Registrant, its stockholders or other personnel and agrees to hold them harmless from any matters involving such representation, except such as involve fraud or bad faith. A copy of Ms. Piccolo's employment agreement is filed as an exhibit hereto (see "Item 7, Exhibit Index"). Amendments to Certificate of Incorporation In conjunction with the implementation of the Registrant's acquisition program, the Registrant's board of directors determined that it should materially modify its certificate of incorporation, in order to provide a name more in line with its current activities and to make it more secure for worthwhile companies and individuals to become associated with it by providing them assurances of continuity and protection from meritless litigation. With the cooperation of stockholders holding approximately 6,246,947 shares of the Registrant's common stock who acted by written consent in lieu of special meeting (as permitted pursuant to Sections 222 and 242 of the Delaware General Corporation Law, the Registrant approved an amendment to its certificate of incorporation on July 9, 1999, as follows: First, articles 1, 2, 3, 5 and 10 were repealed and replaced by the following new articles: 46 FIRST: Name: (A) The name of the Corporation is "AmeriNet Group.com, Inc." (B) The Corporation's Board of Directors is hereby authorized, without stockholder approval, to amend this Certificate from time to time, in order to change the name of the Corporation." SECOND: Registered Agent (A) The street address of the registered office of this Corporation in the state of Delaware is 25 Greystone Manor, Lewes Delaware 19958, situate in Sussex County, and the name of the initial registered agent of this Corporation at such address is Harvard Business Services, Inc. (8) The registered agent's telephone number is 1-800-345-2677 and its E-Mail address is rick1@ix.netcom.com. THIRD: Purposes: This Corporation is organized for the purpose of transacting any and all lawful business; provided, however, that it shall not: (A) Engage in any activities that would subject it to regulation as an investment company under the Federal Investment Company Act of 1940 (the "Investment Company Act"), as amended, unless it shall have first qualified and elected to be regulated as a small business development company pursuant to Sections 54 et. seq., thereof, and limits its investment company activities to those permitted thereby; or (B) Engage in any activities which would subject the Corporation to regulation as a broker dealer in securities subject to regulation under the Securities Exchange Act of 1934, as amended (the "Exchange Act") or as an investment advisor subject to regulation under the Investment Advisors Act of 1940, as amended (the "Investment Advisor's Act"); or (C) Engage in any other activities requiring the Corporation to comply with governmental registration and supervision, unless it has completed such registration and conducts itself in full compliance with such supervisory requirements. FIFTH: Amendments of Certificate by Board of Directors: The Corporation's Board of Directors is hereby authorized, without stockholder approval, to amend this Certificate from time to time, in order to: (1) Effect splits or reverse splits of the Corporation's common or preferred stock; (2) Increase the Corporation's authorized capital; and 47 (3) Decrease the Corporation's authorized capital; provided that such decrease may not affect any issued and outstanding shares. TENTH: Quorum: Unless otherwise provided for in the Corporation's Bylaws, a majority of the shares entitled to vote, represented in person or by proxy, shall be required to constitute a quorum at a meeting of stockholders. Except for providing the board of directors to amend the Registrant's certificate of incorporation without stockholder consent in order to change its name and to modify its capital structure, and to restrict it from engaging in certain regulated activities, the foregoing amendments did not involve any material matters. The amendment pertaining to change in capital was based on concerns over certain aspects of Delaware's corporate franchise taxes that penalize corporations for authorized but unissued securities and will permit the Registrant to increase its authorized capital as required to effect acquisitions, without maintaining a large quantity of authorized but unissued securities, or to expend funds on legal, auditing printing mailing and facilities required to conduct numerous stockholders meetings at which the only topics for action would be increases in authorized capital and possibly name changes. In addition, the Registrant adopted the following new articles: ELEVENTH: Indemnification (4) The Corporation shall indemnify its Officers, Directors and authorized agents for all liabilities incurred directly, indirectly or incidentally to services performed for the Corporation, to the fullest extent permitted under Delaware law existing now or hereinafter enacted. (5) Funds required to pay expenses reasonably necessary to defend allegations that would raise the foregoing right of indemnifications shall be advanced by this Corporation at any time that the person claiming such expenses appears reasonably likely to become entitled to indemnification and enters into a binding agreement with this Corporation to repay advances for such expenditures in the event that he, she or it is eventually found not to be entitled to indemnification. TWELFTH: Limitation on Stockholder Actions (3) Stockholders shall not have a cause of action against the Corporation's Officers, Directors or agents as a result of any action taken, or as a result of their failure to take any action, unless deprivation of such right is deemed a nullity because, in the specific case, deprivation of a right of action would be impermissibly in conflict with the public policy of the State of Delaware. (4) No stockholder may assert a derivative cause of action on behalf of the Corporation, rather, any claims that would give rise to 48 derivative causes of action shall be submitted in writing, specifying the nature of the cause of action and providing all evidence associated with such claim, to a special committee of the Board of Directors comprised of members who do not also serve as officers of the Corporation and are not reasonably involved with the subject cause of action, or if no such directors are serving, to legal counsel designated by the Corporation in which no attorney holds shares of the Corporation's securities, holds any office or position with the Corporation or is related by marriage or through siblings, parents or children to any officer or director of the Corporation, and the decision to litigate, or not to litigate by such special committee or special counsel shall be binding on the Corporation and the submitting stockholder or stockholders; unless the foregoing procedure has not been followed within 90 days after completion of the submission by the subject stockholder. (5) The fact that this Article shall be inapplicable in certain circumstances shall not render it inapplicable in any other circumstances and the Courts of the State of Delaware are hereby granted the specific authority to restructure this Article, on a case by case basis or generally, as required to most fully give legal effect to its intent. THIRTEENTH: Take Over Defenses: (A) The Board of Directors of this orporation shall have the broadest possible authority and discretion in adopting and maintaining resistance to, and defenses against, takeover bids that it deems not to be in the best interests of the Corporation including (without limitation) adopting and maintaining any form of shareholder rights plan or "poison pill" comprised of such terms and features as the Board of Directors deems to be in the best interests of the Corporation. (B) Without limitation on the foregoing, the Board of Directors shall have the authority and discretion to adopt and maintain a shareholder rights plan or other defensive mechanism that may be deactivated or redeemed only: (1) By vote of continuing directors (i.e., the directors who put such shareholder rights plan or other defensive mechanism in place or the designated successors of such directors) to the exclusion of newly elected directors nominated or supported by a takeover bidder or bidders; (2) After a prescribed delay period following election of directors making up a majority of the Board of Directors if such new directors are nominated or supported by a takeover bidder or bidders; or (3) Before election of directors making up a majority of the Board of Directors if such new directors are nominated or supported by a takeover bidder or bidders. 49 (C) No bylaw shall limit in any way the authority of the Board of Directors of this Corporation to adopt or maintain any shareholder rights plan or otherwise to resist or defend against any takeover bid that the Board of Directors finds not to be in the best interests of the Corporation." FOURTEENTH: Affiliated Transactions: This Corporation shall not be subject to the restrictions or requirements for affiliated transactions imposed by Section 203 of the Delaware General Corporation Law, as permitted by the waiver provisions of Section (b)(1) thereof. FIFTEENTH: Compromise & Arrangement (A) Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and /or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. (B) If a majority in number representing three fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to compromise or arrangement and to any reorganization of this Corporation as consequence of such the said compromise or arrangement and the said reorganization compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. As a result of the foregoing amendments, the Registrant's board of directors and officers, as well as officers and directors of its subsidiaries, employees, agents and advisors, have material protection from suits by stockholders, have significant rights to indemnification and legal defense, including the right to receive advances for related expenses. Such protection could make them less careful and less considerate of the rights of stockholders, and could result in a drain of corporate resources. However, in light of concerns in the high technology sector over what is perceived to be destructive and abusive litigation, the Registrant's board of directors and a majority of its existing stockholders (even excluding its current officers and directors) believed that such risks were outweighed by the need to assure potential acquisition candidates and employees that to the extent legally possible, they would be shielded from such risks, should they elect to become associated with the Registrant. 50 In addition, the fourteenth and fifteenth articles makes it potentially very difficult for a third party to take over the Registrant without the consent of its board of directors. Such provision, if employed by directors who did not have the best interests of the Registrant's stockholders at heart, or by directors who, while in good faith, were wrong about the best interests of the Registrant's stockholders, could deprive its stockholders of favorable business opportunities, while permitting the subject directors and the Registrant's management to remain entrenched in office. Again, the Registrant's board of directors believed that such risks were justified because such provision provides material assurances to companies acquired and personnel hired by the Registrant or its subsidiaries that they will be able to rely on the commitments made to them and to effectuate long term plans, without undue concerns for about disruptive short term speculators. None of the provisions in the second series of articles adopted were based on concerns over currently likely take over attempts or over anticipated acquisitions involving affiliated parties. Indeed, the affiliation related restrictions waived in article fifteen are frequently viewed as methods to discourage hostile takeovers. Although the Registrant's officers and directors owe its stockholders strong fiduciary obligations, no assurances can be provided that in the future, unscrupulous or incompetent people will not abuse or misuse such powers, to the stockholders detriment. The Registrant expects that the certificate of amendment described above will be filed with the Secretary of State of Delaware on or about July 14, 1999, and that it will become effective on such date. A copy of the certificate amending the Corporation's certificate of incorporation is filed as an exhibit hereto (see "Item 7, Exhibit Index"). ITEM 7. Financial Statements & Exhibits (A) Financial statements of business acquired.*** Unaudited financial statements for American Internet as of December 31, 1998, are filed as exhibits to the reorganization agreement. However, such financial statements do not comply with the requirements of Regulation SB. The financial statements required for American Internet in response to this item will, as permitted by applicable Securities and Exchange Commission rules, be filed by amendment to this report on or before the 60th day following the date hereof. (B) Pro forma financial information. *** Unaudited financial statements for American Internet as of December 31, 1998, are filed as exhibits to the reorganization agreement. However, such financial statements do not comply with the requirements of Regulation SB. The pro forma financial information required for American Internet in response to this item will, as permitted by applicable Securities and Exchange Commission rules, be filed by amendment to this report on or before the 60th day following the date hereof. 51 (C) Exhibit Index: Regulation SB Exhibit Sequential Table Page Number Number or Source * Exhibit Description 2 PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR SUCCESSION: .6 55 Stock exchange agreement dated February 28, 1999, between the Ascot, Industries, Inc. and American Internet Technical Center, Inc. .7 74 Rescission Agreement between American Internet and Ascot dated July 9, 1999. .8 89 Reorganization agreement dated June 25, 1999, between the Registrant and American Internet Technical Centers, Inc. 3 (I) ARTICLES OF INCORPORATION .30 172 Amendments to Registrant's Certificate of Incorporation Dated July 7, 1999. .31 178 Articles of incorporation of American Internet, as amended (ii) Bylaws .41 186 Bylaws of American Internet, as amended 4 INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES. .11 223 Form of Class A, Series A, Convertible, Subordinated Debenture .12 240 Form of Subscription agreement for Debenture private placement to accredited investors. 52 Regulation SB Exhibit Sequential Table Page Number Number or Source * Exhibit Description 10 MATERIAL CONTRACTS: (4) .33 252 Lock-up & voting agreement. .34 263 Registrant's engagement agreement with Daszkal, Bolton & Manela, P.A., certified public accountants, dated July 9, 1999. .35 266 American Internet employment agreement with J. Bruce Gleason. .35 277 American Internet employment agreement with Michael D. Umile. .36 289 Registrant's employment agreement with Carmen Piccolo. .37 305 Distributor agreement between American Internet and Education to Go, dated August 4, 1998. 11 (2) STATEMENT RE COMPUTATION OF EARNINGS PER SHARE. 13 PERIODIC OR CURRENT EXCHANGE ACT REPORTS: .1 **** Form 10-KSB for the year ended December 31, 1998. 16 *** LETTER RE CHANGE IN CERTIFYING ACCOUNTANT. 21 (3) SUBSIDIARIES OF THE REGISTRANT. 22 308 CONSENT OF EXPERTS AND COUNSEL: CONSENT OF DASZKAL, BOLTON & MANELA, P.A., CERTIFIED PUBLIC ACCOUNTANTS. 99 ADDITIONAL EXHIBITS: .34 309 Officers & directors questionnaires (J. Bruce Gleason). .35 314 Officers & directors questionnaires (Michael D. Umile). .36 319 Officers & directors questionnaires (Mark Granville-Smith). .37 325 Lawerence S, Benjamin Settlement Agreement. .38 329 Notice of Election of Rights pursuant to Section 4.9 of American Internet Reorganization Agreement. 53 - - ------- * Page numbers refer to sequentially numbered pages, starting with the report cover. ** Not applicable. *** To be filed by subsequent amendment. **** Not required for reports on 8-KSB. (1) Incorporated by reference from the Registrant's report on Form 10-KSB for the year ended December 31, 1998. (2) Incorporated from page 33 of this report. (3) Incorporated from page 18 of this report. (4) Additional American Internet agreements are to be provided to the Registrant's legal counsel and if deemed material will be filed as amendments to this report. ITEM 8. Change in Fiscal Year The Registrant has, subject to compliance with any Internal Revenue Service or Securities and Exchange Commission Requirements, elected to change its fiscal year to June 30, in order to avoid the difficulties in competing for auditing services with the severe demands placed on the auditing profession during the first quarter of every calendar year as a result of the federal tax filing deadline on April 15, and the Commission's heaviest filing date of the year for reports on Form 10-KSB on March 30. The Registrant believes that such change will permit it to negotiate better auditing fees and to receive more timely and less distracted attention from its auditors. SIGNATURES Pursuant to the requirements of the Securities Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Equity Growth Systems, inc. July 12, 1999 By: /s/ Charlkes J. Scimeca /s/ ____________________________ Charles J. Scimeca President 54 EX-2.6 2 STOCK EXHCHANGE AGREEMENT EXHIBIT 2.6 STOCK EXCHANGE AGREEMENT THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE " 1933 ACT"), NOR REGISTERED UNDER ANY STATE SECURITIES LAW, AND ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN RULE 144 UNDER THE 1933 ACT. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY. AGREEMENT FOR THE EXCHANGE OF COMMON STOCK AGREEMENT made this 28th day of February 1999, by and between Ascot Industries, Inc., a Nevada corporation, (the "ISSUER") and American Internet Technical Centers, Inc. and the individuals listed in Exhibit A attached hereto, (the "SHAREHOLDERS"), which SHAREHOLDERS own all of the issued and outstanding shares of American Internet Technical Centers, Inc., a Florida corporation. ("AIT") In consideration of the mutual promises, covenants, and representations contained herein, and other good and valuable consideration, THE PARTIES HERETO AGREE AS FOLLOWS: 1. EXCHANGE OF SECURITIES. Subject to the terms and conditions of this Agreement, the ISSUER agrees to issue to SHAREHOLDERS, 10,000,000 shares of the common stock of ISSUER, $.001 par value (the "Shares"), in exchange for 100% of the issued and outstanding shares of the AIT, such that AIT shall become a wholly owned subsidiary of the ISSUER. 2. REPRESENTATIONS AND WARRANTIES. ISSUER represents and warrants to SHAREHOLDERS and AIT the following: i. Organization. ISSUER is a corporation duly organized, validly existing, and in good standing under the laws of Nevada, and has all necessary corporate powers to own properties and carry on a business, and is duly qualified to do business and is in good standing in Nevada. All actions taken by the Incorporators, directors and shareholders of ISSUER have been valid and in accordance with the laws of the State of Nevada. ii. Capital. The authorized capital stock of ISSUER cornetists of 20,000,000 shares of common stock, $.001 par value, of which 11,600,000 are issued and outstanding, and 1,000,000 shares of preferred stock, par value $.001, none of which are issued. All outstanding shares are fully paid and non assessable, free of liens, encumbrances, options, restrictions and legal or equitable rights of others not a party to this Agreement. At closing, there will be no outstanding subscriptions, options, rights, warrants, convertible securities, or other agreements or commitments obligating ISSUER to issue or to transfer from treasury any additional shares of its capital stock. None of 55 the outstanding shares of ISSUER are subject to any stock restriction agreements. All of the shareholders of ISSUER have valid title to such shares and acquired their shares in a lawful transaction and in accordance with the laws of Nevada. iii. Financial Statements. Exhibit B to this Agreement includes the balance sheet of ISSUER as of February 28, 1999, and the related statements of income and retained earnings for the period then ended. The financial statements have been prepared in accordance with generally accepted accounting principles consistently followed by ISSUER throughout the periods indicated, and fairly present the financial position of ISSUER as of the date of the balance sheet in the financial statements, and the results of its operations for the periods indicated. iv. Absence of Changes. Since the date of the financial statements, there has not been any change in the financial condition or operations of ISSUER, except changes in the ordinary course of business, which changes have not in the aggregate been materially adverse. v. Liabilities. ISSUER does not have any debt, liability, or obligation of any nature, whether accrued, absolute, contingent, or otherwise, and whether due or to become due, that is not reflected on the ISSUERS' financial statement. ISSUER is not aware of any pending, threatened or asserted claims, lawsuits or contingencies involving ISSUER or its common stock. There is no dispute of any kind between ISSUER and any third party, and no such dispute will exist at the closing of this Agreement. At closing, ISSUER will be free from any and all liabilities, liens, claims and/or commitments. vi. Ability to Carry Out Obligations. ISSUER has the right, power, and authority to enter into and perform its obligations under this Agreement. The execution and delivery of this Agreement by ISSUER and the performance by ISSUER of its obligations hereunder will not cause, constitute, or conflict with or result in (a) any breach or violation or any of the provisions of or constitute a default under any license, indenture, mortgage, charter, instrument, articles of incorporation, bylaw, or other agreement or instrument to which ISSUER or its shareholders are a party, or by which they may be bound, nor will any consents or authorizations of any party other than those hereto be required, (b) an event that would cause ISSUER to be liable to any party, or (c) an event that would result in the creation or imposition or any lien, charge or encumbrance on any asset of ISSUER or upon the securities of ISSUER to be acquired by SHAREHOLDERS. vii. Full Disclosure. None of representations and warranties made by the ISSUER, or in any certificate or memorandum furnished or to be furnished by the ISSUER, contains or will contain any untrue statement of a material fact, or omit any material tact the omission of which would be misleading. viii. Contract and Leases. ISSUER is not currently carrying on any business and is not a party to any contract, agreement or lease. No person holds a power of attorney from ISSUER. ix. Compliance with Laws. ISSUER has complied with, and is not in violation of any federal, state, or local statute, law, and/or regulation pertaining to ISSUER . ISSUER has complied with all federal and state securities laws in connection with the issuance, sale and distribution of its securities. x. Litigation. ISSUER is not (and has not been) a party to any suit, action, arbitration, or legal, administrative, or other proceeding, or pending governmental investigation. To the best knowledge of the ISSUER, there is no basis for any such action or proceeding and no such action or proceeding is threatened 56 against ISSUER and ISSUER is not subject to or in default with respect to any order, writ, injunction, or decree of any federal, state, local, or foreign court, department, agency, or instrumentality. xi. Conduct of Business. Prior to the closing, ISSUER shall conduct its business in the normal course, and shall not (1) sell, pledge, or assign any assets (2) amend its Articles of Incorporation or Bylaws, (3) declare dividends, redeem or sell stock or other securities, (4) incur any liabilities, (5) acquire or dispose of any assets, enter into any contract, guarantee obligations of any third party, or (6) enter into any other transaction. xii. Corporate Documents. Copies of each of the following documents, which are true complete and correct in all material respects, will be attached to and made a part of this Agreement: (1) Articles of Incorporation; (2) Bylaws; (3) Minutes of Shareholders Meetings; (4) Minutes of Directors Meetings; (5) List of Officers and Directors; (6) Balance Sheet as of February 28, 1999 together with other financial statements described in Section 2(iii); (7) Stock register and stock records of ISSUER and a current, accurate list of ISSUER's shareholders. xiii. Documents. All minutes, consents or other documents pertaining to ISSUER to be delivered at closing shall be valid and in accordance with the laws of Nevada. xiv. Title. The Shares to be issued to SHAREHOLDERS will be, at closing, free and clear of all liens, security interests, pledges, charges, claims, encumbrances and restrictions of any kind. None of such Shares are or will be subject to any voting trust or agreement. No person holds or has the right to receive any proxy or similar instrument with respect to such shares, except as provided in this Agreement, the ISSUER is not a party to any agreement which offers or grants to any person the right to purchase or acquire any of the securities to be issued to SHAREHOLDERS I here is no applicable local, state or federal law, rule, regulation, or decree which would, as a result of the issuance of the Shares to SHAREHOLDERS, impair, restrict or delay SHAREHOLDERS' voting rights with respect to the Shares. 3. SHAREHOLDERS and AIT represent and warrant to ISSUER the following: i. Organization. AIT is a corporation duly organized, validly existing, and in good standing under the laws of Florida, has all necessary corporate powers to own properties and carry on a business, and is duly qualified to do business and is in good standing in Florida. All actions taken by the Incorporators, directors and shareholders of AIT have been valid and in accordance with the laws of Florida. ii. Shareholders and Issued Stock. Exhibit A annexed hereto sets forth the names and share holdings of 100% of AIT's shareholders. iii. Listing Stock for Trading. Upon closing, SHAREHOLDERS and AIT shall take all steps reasonably necessary to get the ISSUER's common stock listed for trading in NASD Automated Bulletin Board and to, as soon as practicably possible, have the company listed with Standard and Poors or Moodys in their Accelerated Corporate Report. 57 iv. Counsel. SHAREHOLDERS and AIT represent and warrant that prior to Closing, that they are represented by independent counsel or have had the opportunity to retain independent counsel to represent them in this transaction and that prior to Closing, the law offices of Donald F. Mintmire & Associates has acted as exclusive counsel to the ISSUER and has not represented either the SHAREHOLDERS or AIT in any manner whatsoever. 4. INVESTMENT INTENT. SHAREHOLDERS agrees that the Shares being issued pursuant to this Agreement may be sold, pledged, assigned, hypothecate or otherwise transferred, with or without consideration ( a "Transfer"), only pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act, the availability of which is to be established to the satisfaction of ISSUER. SHAREHOLDERS agrees, prior to any Transfer, to give written notice to ISSUER expressing his desire to effect the transfer and describing the proposed transfer. 5. CLOSING. The closing of this transaction shall take place at the law offices of Donald F. Mintmire, 265 Sunrise Ave., Suite 204, Palm Beach, Florida. Unless the closing of this transaction takes place on or before February 28, 1999, then either party may terminate this Agreement. 6. DOCUMENTS TO BE DELIVERED AT CLOSING. i. By the ISSUER (1) Board of Directors Minutes authorizing the issuance of a certificate or certificates for 10,000,000 Shares, registered in the names of the SHAREHOLDERS equal to their pro-rata holdings in AIT. (2) The resignation of all officers of ISSUER. (3) A Board of Directors resolution appointing such person as SHAREHOLDERS designate as a director(s) of ISSUER. (4) The resignation of all the directors of ISSUER, except that of SHAREHOLDER'S designee, dated subsequent to the resolution described in 3, above. (5) Unaudited financial statements of ISSUER, which shall include a balance sheet dated as of February 28, 1999 and statements of operations, stockholders equity and cash flows for the twelve month period then ended. (6) All of the business and corporate records of ISSUER, including but not limited to correspondence files, bank statements, checkbooks, savings account books, minutes of shareholder and directors meetings, financial statements, shareholder listings, stock transfer records, agreements and contracts. (7) Such other minutes of ISSUER's shareholders or directors as may reasonably be required by SHAREHOLDERS. (8) Within 30 days of closing, a private placement memorandum pursuant to Rule 504 of Regulation D as promulgated under the Securities Act of 1993. 58 (9) An Opinion Letter from ISSUER's Attorney attesting to the validity and condition of the ISSUER. ii. By SHAREHOLDERS AND AIT: (1) Delivery to the ISSUER, or to its Transfer Agent, the certificates of this Agreement representing 100% of the issued and outstanding stock of AIT. (2) Consents signed by all the shareholders of AIT consenting to the terms 7. REMEDIES. i. Arbitration. Any controversy or claim arising out of, or relating to, this Agreement, or the making, performance, or interpretation thereof, shall be settled by arbitration in Palm Beach County, Florida in accordance with the Commercial Rules of the American Arbitration Association then existing. The arbitrator assigned shall have authority and power to decide all arbitratible issues. Judgment on the arbitration award may be entered in any court having jurisdiction over the subject matter of the controversy. The prevailing party in such claim or controversy shall be entitled to recover all costs and expenses of such claim or controversy, including attorneys fees from the non-prevailing party. 8. MISCELLANEOUS. i. Captions and Headings. The Article and paragraph headings throughout this Agreement are for convenience and reference only, and shall in no way be deemed to define, limit, or add to the meaning of any provision of this Agreement. ii. No oral Change. This Agreement and any provision hereof, may not be waived, changed, modified, or discharged orally, but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, or discharge is sought. iii. Non Waiver. Except as otherwise expressly provided herein, no waiver of any covenant, condition, or provision of this Agreement shall be deemed to have been made unless expressly in writing and signed by the party against whom such waiver is charged; and (I) the failure of any party to insist in any one or more cases upon the performance of any of the provisions, covenants, or conditions of this Agreement or to exercise any option herein contained shall not be construed as a waiver or relinquishment for the future of any such provisions, covenants, or conditions, (ii) the acceptance of performance of anything required by this Agreement to be performed with knowledge of the breach or failure of a covenant, condition, or provision hereof shall not be deemed a waiver of such breach or failure, and (iii) no waiver by any party of one breach by another party shall be construed as a waiver with respect to any other or subsequent breach iv. Time of Essence. Time is of the essence of this Agreement and of each and every provision hereof. v. Entire Agreement. This Agreement contains the entire Agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings. 59 vi. Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. vii. Notices. All notices, requests, demands, and other communications under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given, or on the third day after mailing if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, and properly addressed, and by fax, as follows: ISSUER: Dale B. Finfrock P.O. Box 669 Palm Beach, FL 33480 Copy to: Donald F. Mintmire, Esquire 265 Sunrise Ave., Suite 204, Palm Beach, Florida 33480 AIT: J. Bruce Gleason 1500 E. Atlantic Blvd. Pompano Beach, FL 33060 IN WITNESS WHEREOF, the undersigned has executed this Agreement this 28th day of February, 1999. ASCOT INDUSTRIES, INC. By Dale B. Finfrock, President AMERICAN INTERNET TECHNICAL CENTERS, INC. By: J. Bruce Gleason, President Exhibits to the Stock Exchange Agreement ASCOT INDUSTRIES, INC Formed in Nevada Federal Employer Identification Number (Tax ID): 65-08 1 5743 Corporate Creations (305) 672-0686 60 CORPORATE CHARTER I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do hereby certify that ASCOT INDUSTRIES, INC. did on February 24, 1998, file in this office the original Articles of Incorporation; that said Articles are now on file and of record in the office of the Secretary of State of the State of Nevada, and further, that said Articles contain all the provisions required by the law of said State of Nevada. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Great Seal of State, at my office, in Carson City, Nevada, on February 25,1998. /s/ Secretary of State /s/ Certification Clerk Articles of Incorporation (PURSUANT TO NRS 78) State of Nevada 1. NAME OF CORPORATION: Ascot Industries, Inc. 2. RESIDENT AGENT: Name of Resident Agent: National Registered Agents, Inc. of Nevada . Street Address: 400 West King Street Carson City, NV 89703 Mailing Address (if different): 3. AUTHORIZED SHARES. (number of shares the Corporation is authorized to issue) Number of shares with per value 20,000,000 Par value:$.001 Number of shares without par value: 4. GOVERNING BOARD: shall be styled as (check one): X Directors __ Trustees The FIRST BOARD OF DIRECTORS shall consist of one members and the names and addresses are as follows: Dale B. Finfrock, Jr. P.O. Box 669 Palm Beach FL 33480 5. PURPOSE: The purpose of the corporation is to conduct or promote any lawful business or purposes. 6. NRS 78.037: States that the articles of Incorporation may also contain a provision eliminating or limiting the personal liability of a directors or officer of the corporation or its stockholders for damages for breach of fiduciary duty as a director or officer except acts or omissions which include misconduct 61 or fraud. Do you want this provision to be part of your articles? Please check one of the following: YES 7. OTHER MATTERS: This form includes the minimal statutory requirements to incorporate under NRS 78. You may attach additional information noted on separate pages. But, if any of the additional information is contradictory to this form it cannot be filed and will be returned to you for correction. NUMBER OF PASTES ATTACHED 1 8. SIGNATURES OF INCORPORATORS: The names and address of each of the incorporators signing the articles: Corporate Creations International Inc. 941 Fourth Street #200 Miami Bach, Fl 33139 CORPORATE CREATIONS INTERNATIONAL, INC. Greg K. Kuroda, Vice President 9 CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT National Registered Agents, Inc.of Nevada hereby accepts appointment as Resident Agent for the above named corporation. NATIONAL REGISTERED AGENTS, INC. OF NEVADA DATE: 2/23/98 Articles of Incorporation (PURSUANT TO NRS 78) State of Nevada STATE OF NEVADA Secretary of State In Edition to the shares specified in Section 3, the Corporation shall have the authority to issue 1,000,000 shares of preferred stock, par value $.001 per share, which may be divided into series and with the preferences, limitations and relative rights determined by the Board of Directors. The Corporation elects not to be governed by the provisions of AIRS 78.378 to 78.3793 governing the acquisition of a controlling interest in the Corporation. 62 Written Consent of Directors to Organize ASCOT INDUSTRIES, INC. The Board of Directors hereby takes the following actions by unanimous written consent to organize this Nevada corporation: 1. Articles of Incorporation. The articles of incorporation of the Corporation are approved. 2. Officers. The following persons are appointed to the offices set forth opposite their names to serve until their successors are appointed: President Dale B. Finfrock, Jr. Secretary Dale B. Finfrock, Jr. Treasurer Dale B. Finfrock, Jr. 3. Bylaws. The bylaws that are in the Corporate Records binder adopted and approved as the bylaws of the Corporation. 4. Stock Certificates. The common stock certificates that are in the Corporate Records binder are approved as the form to be used in issuing shares of common stock of the Corporation. 5. Bank Account. The officers are directed to open an account with a bank or other financial institution and to deposit in that account all funds of the Corporation. All resolutions required to open an account in accordance with this paragraph are adopted as the action of the Board of Directors. 6. Organizational and Start-up Expenditures. The officers of the Corporation are authorized to elect to amortize organizational and qualified start-up expenditures in accordance with Sections 248 and 195 of the Internal Revenue Code, as amended. 7. Approval of Prior Actions. All lawful actions by the incorporator and its representatives which were taken on behalf of the Corporation prior to the effective date of this written consent are approved. 8. Subscription For Shares of the Corporation. For the consideration determined by the Board of Directors to be adequate, the Corporation will issue a stock certificate for shares of the Corporation's common stock to each person named below: Shares Shareholder Dale B. Finfrock, Jr. The undersigned, constituting the Corporation's entire Board of Directors executed this written consent effective as of the 27 day of February, 1998 . /s/ Dale B. Finfrock /s/ 63 Bylaws of ASCOT INDUSTRIES, INC. ARTICLE I. DIRECTORS Section 1. Function. All corporate powers shall be exercised by or under the authority of the Board of Directors. The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. Directors must be natural persons who are at least 18 years of age but need not be shareholders of the Corporation. Residents of any state may be directors. Section 2. Compensation. The shareholders shall have authority to fix the compensation of directors. Unless specifically authorized by a resolution of the shareholders, the directors shall serve in such capacity without compensation. Section 3. Presumption of Assent. A director who is present at a meeting of the Board of Directors or a committee of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless he objects at the beginning of the meeting (or promptly upon arriving) to the holding of the meeting or transacting the specified business at the meeting, or if the director votes against the action taken or abstains from voting because of an asserted conflict of interest. Section 4. Number. The Corporation shall have at least the minimum number of directors required by law. The number of directors may be increased or decreased from time to time by the Board of Directors. Section 5. Election and Term. At each annual meeting of shareholders, the shareholders shall elect directors to hold office until the next annual meeting or until their earlier resignation, removal from office or death. Directors shall be elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. Section 6. Vacancies. Any vacancy occurring in the Board of Directors, including a vacancy created by an increase in the number of directors, may be filled by the shareholders or by the affirmative vote of a majority of the remaining directors though less than a quorum of the Board of Directors A director elected to fill a vacancy shall hold office only until the next election of directors by the shareholders. If there are no remaining directors, the vacancy shall be filled by the shareholders. Section 7. Removal of Directors. At a meeting of shareholders, any director or the entire Board of Directors may be removed, with or without cause, provided the notice of the meeting states that one of the purposes of the meeting is the removal of the director. A director may be removed only if the number of votes cast to remove him exceeds the number of votes cast against removal. Section 8. Quorum and Voting. A majority of the number of directors fixed by these Bylaws shall constitute a quorum for the transaction of business. The act of a majority of directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Section 9. Executive and Other Committees. The Board of Directors, by resolution adopted by a majority of the full Board of Directors, may designate from among its members one or more committees each of which must have at least two members. Each committee shall have the authority set forth in the resolution designating the committee. 64 Section 10. Place of Meeting. Regular and special meetings of the Board of Directors shall be held at the principal place of business of the Corporation or at another place designated by the person or persons giving notice or otherwise calling the meeting Section 11. Time, Notice and Call of Meetings. Regular meetings of the Board of Directors shall be held without notice at the time and on the date designated by resolution of the Board of Directors Written notice of the time, date and place of special meetings of the Board of Directors shall be given to each director by mail delivery at least two days before the meeting. Notice of a meeting of the Board of Directors need not be given to a director who signs a waiver of notice either before or after the meeting. Attendance of a director at a meeting constitutes a waiver of notice of that meeting and waiver of all objections to the place of the meeting, the time of the meeting, and the manner in which it has been called or convened, unless a director objects to the transaction of business (promptly upon arrival at the meeting) because the meeting is not lawfully called or convened Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors must be specified in the notice or waiver of notice of the meeting A majority of the directors present, whether or not a quorum exists, may adjourn any meeting of the Board of Directors to another time and place Notice of an adjourned meeting shall be given to the directors who were not present at the time of the adjournment and, unless the time and place of the adjourned meeting are announced at the time of the adjournment, to the other directors Meetings of the Board of Directors may be called by the President or the Chairman of the Board of Directors. Members of the Board of Directors and any committee of the Board may participate in a meeting by telephone conference or similar Directors and participate in a meeting by telephone communications equipment if all persons participating in the meeting can hear each other at the same time. Participation by these means constitutes presence in person at a meeting. Section 12. Action by Written Consent. Any action required or permitted to be taken at a meeting of directors may be taken without a meeting if a consent in writing setting forth the action to be taken and signed by all of the directors is filed in the minutes of the proceedings of the Board. The action taken shall be deemed effective when the last director signs the consent, unless the consent specifies otherwise. ARTICLE II. MEETINGS OF SHAREHOLDERS Section 1. Annual Meeting. The annual meeting of the shareholders of the corporation for the election of officers and for such other business as may properly come before the meeting shall be held at such time and place as designated by the Board of Directors. Section 2. Special Meeting. Special meetings of the shareholders shall be held when directed by the President or when requested in writing by shareholders holding at least 10% of the Corporation's stock having the right and entitled to vote at such meeting. A meeting requested by shareholders shall be called by the President for a date not less than 10 nor more than 60 days after the request is made. Only business within the purposes described in the meeting notice may be conducted at a special shareholders' meeting. Section 3. Place. Meetings of the shareholders will be held at the principal place of business of the Corporation or at such other place as is designated by the Board of Directors. 65 Section 4. Notice. A written notice of each meeting of shareholders shall be mailed to each shareholder having the right and entitled to vote at the meeting at the address as it appears on the records of the Corporation. The meeting notice shall be mailed not less than 10 nor more than 60 days before the date set for the meeting. The record date for determining shareholders entitled to vote at the meeting will be the close of business on the day before the notice is sent. The notice shall state the time and place the meeting is to be held. A notice of a special meeting shall also state the purposes of the meeting. A notice of meeting shall be sufficient for that meeting and any adjournment of it. If a shareholder transfers any shares after the notice is sent, it shall not be necessary to notify the transferee. All shareholders may waive notice of a meeting at any time. Section 5. Shareholder Quorum. A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. Any number of shareholders, even if less than a quorum, may adjourn the meeting without further notice until a quorum is obtained. Section 6. Shareholder Voting. If a quorum is present, the affirmative vote of a majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders. Each outstanding share shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders. An alphabetical list of all shareholders who are entitled to notice of a shareholders' meeting along with their addresses and the number of shares held by each shall be produced at a shareholders' meeting upon the request of any shareholder. Section 7. Proxies. A shareholder entitled to vote at any meeting of shareholders or any adjournment thereof may vote in person or by proxy executed in writing and signed by the shareholder or his attorney-in-fact. The appointment of proxy will be effective when received by the Corporation's officer or agent authorized to tabulate votes. No proxy shall be valid more than 11 months after the date of its execution unless a longer term is expressly stated in the proxy. Section 8. Validation. If shareholders who hold a majority of the voting stock entitled to vote at a meeting are present at the meeting, and sign a written consent to the meeting on the record, the acts of the meeting shall be valid, even if the meeting was not legally called and noticed. Section 9. Conduct of Business By Written Consent. Any action of the shareholders may be taken without a meeting if written consents, setting forth the action taken, are signed by at least a majority of shares entitled to vote and are delivered to the officer or agent of the Corporation having custody of the Corporation's records within 60 days after the date that the earliest written consent was delivered. Within 10 days after obtaining an authorization of an action by written consent, notice shall be given to those shareholders who have not consented in writing or who are not entitled to vote on the action. The notice shall fairly summarize the material features of the authorized action. If the action creates dissenters' rights, the notice shall contain a clear statement of the right of dissenting shareholders to be paid the fair value of their shares upon compliance with and as provided for by the state law governing corporations. ARTICLE III. OFFICERS Section 1. Officers: Election 1; Resignation; Vacancies. The Corporation shall have the orders and assistant officers that the Board of Directors appoint from time to time Except as otherwise provided in an employment agreement which the Corporation has with an officer, each officer shall serve until a successor is chosen by the directors at a regular or special meeting of the directors or until removed. Officers and agents shall be chosen, serve for the terms, and have the duties determined by the directors. A person may hold two or more Offices. 66 Any officer may resign at any time upon written notice to the Corporation The resignation shall be effective upon receipt, unless the notice specifies a later date If the assignation is effective at a later date and the Corporation accepts the future effective date, the Board of Directors may fill the pending vacancy before the effective date provided the successor officer does not take office until the future effective date. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled for the unexpired portion of the term by the Board of Directors at any regular or special meeting. Section 2. Powers and Duties of Officers. The officers of the Corporation shall have such powers and duties in the management of the Corporation as may be prescribed by the Board of Directors and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board of Directors. Section 3. Removal of Officers. An officer or agent or member of a committee elected or appointed by the Board of Directors may be removed by the Board with or without cause whenever in its judgment the best interests of the Corporation will be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer, agent or member of a committee shall not of itself create contract rights. Any officer, if appointed by another officer, may be removed by that officer. Section 4. Salaries. The Board of Directors may cause the Corporation to enter into employment agreements with any officer of the Corporation. Unless provided for in an employment agreement between the Corporation and an officer, all officers of the Corporation serve in their capacities without compensation. Section 5. sank Accounts. The Corporation shall have accounts with financial institutions as determined by the Board of Directors. ARTICLE IV. DISTRIBUTIONS The Board of Directors may, from time to time, declare distributions to its shareholders in cash, property, or its own shares, unless the distribution would cause (i) the Corporation to be unable to pay its debts as they become due in the usual course of business, or (ii) the Corporation's assets to be less than its liabilities plus the amount necessary, if the Corporation were dissolved at the time of the distribution, to satisfy the preferential rights of shareholders whose rights are superior to those receiving the distribution. The shareholders and the Corporation may enter into an agreement requiring the distribution of corporate profits, subject to the provisions of law. 67 ARTICLE V. CORPORATE RECORDS Section 1 Corporate Records. The corporation shall maintain its records in written form or in another form capable of conversion into written form within a reasonable time. The Corporation shall keep as permanent records minutes of all meetings of its shareholders and Board of Directors, a record of all actions taken by the shareholders or Board of Directors without a meeting, and a record of all actions taken by a committee of the Board of Directors on behalf of the Corporation. The Corporation shall maintain accurate accounting records and a record of its shareholders in a form that permits preparation of a list of the names and addresses of all shareholders in alphabetical order by class of shares showing the number and series of shares held by each. The Corporation shall keep a copy of its articles or restated articles of incorporation and all amendments to them currently in effect; these Bylaws or restated Bylaws and all amendments currently in effect; resolutions adopted by the Board of Directors creating one or more classes or series of shares and fixing their relative rights, preferences, and limitations, if shares issued pursuant to those resolutions are outstanding; the minutes of all shareholders' meetings and records of all actions taken by shareholders without a meeting for the past three years; written communications to all shareholders generally or all shareholders of a class of series within the past three years, including the financial statements furnished for the last three years; a list of names and business street addresses of its current directors and officers; and its most recent annual report delivered to the Department of State. Section 2. Shareholders' Inspection Rights. A shareholder is entitled to inspect and copy, during regular business hours at a reasonable location specified by the Corporation, any books and records of the Corporation. The shareholder must give the Corporation written notice of this demand at least five business days before the date on which he wishes to inspect and copy the record(s). The demand must be made in good faith and for a proper purpose. The shareholder must describe with reasonable particularity the purpose and the records he desires to inspect, and the records must be directly connected with this purpose. This Section does not affect the right of a shareholder to inspect and copy the shareholders' list described in this Article if the shareholder is in litigation with the Corporation. In such a case, the shareholder shall have the same rights as any other litigant to compel the production of corporate records for examination. The Corporation may deny any demand for inspection if the demand was made for an improper purpose, or if the demanding shareholder has within the two years preceding his demand, sold or offered for sale any list of shareholders of the Corporation or of any other corporation, has aided or abetted any person in procuring any list of shareholders for that purpose, or has improperly used any information secured through any prior examination of the records of this Corporation o. any other corporation. Section 3. Financial Statements for Shareholders Unless modified by resolution of the shareholders within 120 days after the close of each fiscal year, the Corporation shall furnish its shareholders with annual financial statements which may be consolidated or combined statements of the Corporation and one or more of its subsidiaries, as appropriate, that include a balance sheet as of the end of the fiscal year, an income statement for that year, and a statement of cash flows for that year. If financial statements are prepared for the Corporation on the basis of generally accepted accounting principles, the annual financial statements must also be prepared on that basis. If the annual financial statements are reported upon by a public accountant, his report must accompany them. If not, the statements must be accompanied by a statement of the President or the person responsible for the Corporation's accounting records stating his reasonable belief whether the statements were prepared on the basis of generally accepted accounting principles and, if not, describing the basis of preparation and 68 describing any respects in which the statements were not prepared on a basis of accounting consistent with the statements prepared for the preceding year. The Corporation shall mail the annual financial statements to each shareholder within 120 days after the close of each fiscal year or within such additional time thereafter as is reasonably necessary to enable the Corporation to prepare its financial statements. Thereafter, on written request from a shareholder who was not mailed the statements, the Corporation shall mail him the latest annual financial statements. Section 4. Other Reports to Shareholders. If the Corporation indemnifies or advances expenses to any director, officer, employee or agent otherwise than by court order or action by the shareholders or by an insurance carrier pursuant to insurance maintained by the Corporation, the Corporation shall report the indemnification or advance in writing to the shareholders with or before the notice of the next annual shareholders meeting, or prior to the meeting if the indemnification or advance occurs after the giving of the notice but prior to the time the annual meeting is held. This report shall include a statement specifying the persons paid, the amounts paid, and the nature and status at the time of such payment of the litigation or threatened litigation. If the Corporation issues or authorizes the issuance of shares for promises to render services in the future, the Corporation shall report in writing to the shareholders the number of shares authorized or issued, and the consideration received by the corporation, with or before the notice of the next shareholders' meeting ARTICLE V: STOCK CERTIFICATES Section 1 Issuance The Board of Directors may authorize the issuance of some or all of the shares of any or all of its classes or series without certificates. Each certificate issued shall be signed by the President and the Secretary (or the Treasurer) The rights and obligations of shareholders are identical whether or not their shares are represented by certificates. Section 2. Registered Shareholders. No certificate shall be issued for any share until the share is fully paid. The Corporation shall be entitled to treat the holder of record of shares as the holder in fact and, except as otherwise provided by law, shall not be bound to recognize any equitable or other claim to or interest in the shares. Section 3. Transfer of Shares. Shares of the Corporation shall be transferred on its books only after the surrender to the Corporation of the share certificates duly endorsed by the holder of record or attorney-in-fact. If the surrendered certificates are canceled, new certificates shall be issued to the person entitled to them, and the transaction recorded on the books of the Corporation. Section 4. Lost, Stolen or Destroyed Certificates. If a shareholder claims to have lost or destroyed a certificate of shares issued by the Corporation, a new certificate shall be issued upon the delivery to the Corporation of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed, and, at the discretion of the Board of Directors, upon the deposit of a bond or other indemnity as the Board reasonably requires. 69 ARTICLE VI I . INDEMNIFICATION Section 1 Right to Indemnification. The Corporation hereby indemnifies each person (including the heirs, executors, administrators, or estate of such person) who is or was a director or officer of the Corporation to the fullest extent permitted or authorized by current or future legislation or judicial or administrative decision against all fines, liabilities, costs and expenses, including attorneys' fees, arising out of his or her status as a director, officer, agent, employee or representative. The foregoing right of indemnification shall not be exclusive of other rights to which those seeking an indemnification may be entitled. The Corporation may maintain insurance, at its expense, to protect itself and all officers and directors against fines, liabilities, costs and expenses, whether or not the Corporation would have the legal power to indemnify them directly against such liability. Section 2. Advances. Costs, charges and expenses (including attorneys fees) incurred by a person referred to in Section 1 of this Article in defending a civil or criminal proceeding shall be paid by the Corporation in advance of the final disposition thereof upon receipt of an undertaking to repay all amounts advanced if it is ultimately determined that the person is not entitled to be indemnified by the Corporation as authorized by this Article, and upon satisfaction of other conditions required by current or future legislation. Section 3 Savings Clause If this Article or any portion of 1 is invalidated on any ground by a court of competent jurisdiction, the Corporation nevertheless indemnifies each person described in Section 1 of this Article to the fullest extent permitted by all portions of this Article that have not been invalidated and to the fullest extent permitted by law. ARTICLE VIII. AMENDMENT These Bylaws may be altered, amended or repealed, and new Bylaws adopted, by a majority vote of the directors or by a vote of the shareholders holding a majority of the shares. I certify that these are the Bylaws adopted by the Board of Directors of the Corporation Dale B. Finfrock Jr. --------------------- Secretary Date: 2/27/98 70 CERTIFICATE OF CHANGE OF RESIDENT AGENT AND LOCATION OF REGISTERED OFFICE (Corporations Only) Ascot Industries, Inc. The change below is effective upon the filing of this document with the Secretary of State. Reason for change is change of resident agent. Resident Agent Name: CSC Services of Nevada, INC. Street & Suite: 502 East John Street City, State, Zip: Carson City, NV 89706 The resident agent and location of the registered office is changed to: Resident agent name: CHQ Incorporated Street Address: 1555 E. Flamingo Rd. Suite 155, Las Vegas, Nevada 89119 Mailing Address: P.O. BOX 19118, Las Vegas, Nevada 89132 NOTE: For a corporation to file this certificate, the signature of one officer is required. This certificate does not need to be notarized. /s/ Dale B. Finfrock, President /s/ Certificate of Acceptance of Appointment by Resident Agent: I, CHQ Incorporated, a Nevada corporation hereby accept the appointment as Resident Agent for the above-named corporation. ______________________________ Date ____________ CONSENT OF THE SOLE DIRECTOR OF AMERICAN INTERNET TECHNICAL CENTERS, INC. The undersigned, being the sole director of American Internet Technical Centers, Inc., a Nevada corporation (hereinafter the Company") does hereby unanimously consent to the following actions taken and done at 10:00 A.M. on March 15, 1999. RESOLVED: To enter into an Agreement for the Exchange of Common Stock (the Agreement) with the shareholders of American Internet Technical Centers, Inc., a Florida corporation, pursuant to which in exchange for 100% of the issued and outstanding stock of American Internet Technical Centers, Inc., the Company will issue 10,160,000 shares of the Company's common stock to the shareholders of American Internet Technical Centers, Inc. as follows. Name Number of Shares See attached list 10,160,000 RESOLVED: That Dale B. Finfrock, Jr. as president of the Company Is authorized to execute the Agreement, and to execute any and all documents in connection therewith, including to effectuate the issuance of the shares of common stock of the Company as called for in the Agreement to effectuate said exchange. RESOLVED: To elect the following persons as additional directors of the Company, to serve in such capacities until their successors are elected: 71 J. Bruce Gleason Chairman RESOLVED: To elect those persons to those offices set forth after their respective names, to serve in such capacities until their successors are elected: J. Bruce Gleason President RESOLVED: To retire and cancel the 10,000,000 shares of the Company's common stock which were previously issued. RESOLVED: At the close of this meeting, to accept the resignation of Dale B. Finfrock, Jr. as an officer and director of the Company. There being no further business before this Board at this time, the Meeting was adjourned. /s/ Dale B. Finfrock, Jr. Sole Director /s/ ANNUAL LIST OF OFFICERS, DIRECTORS AND AGENTS OF: ASCOT INDUSTRIES, INC. FOR THE PERIOD FEB 1999 TO 2000. DUE BY FEB 28, 1999. RA# 61182 The Corporation's duly appointed resident agent in the State of Nevada upon whom process can be served is: NATIONAL REGISTERED AGENTS OF NV 202 S MINNESOTA CARSON CITY NV 89703 If the above information is incorrect, please check this box and a change of resident agent/address form will be sent. PLEASE READ INSTRUCTIONS BEFORE COMPLETING AND RETURNING THIS FORM. 1. Include the name and address, either residence or business, for all officers and directors. A President, Secretary, Treasurer and all Directors must be named. There must be at least one director. Last year information may have been preprinted. If you need to make changes, cross out the incorrect information and insert the new information above it. An officer must sign the form. Form will be returned if unsigned. 2. If there are additional directors, attach a list of them to this form. 3. Return the completed form with the $85.00 filing fee. A $15 penalty must be added for failure to file this form by the deadline. An annual list received more than 60 days before its due date shall be deemed and amended list for the previous year . 72 (4) Make your check payable to the Secretary of State. Your canceled check will constitute a certificate to transact business per NRS 78.155. If you need the below attachment stamped, enclose a self addressed stamped envelope. To receive a certified copy of this completed form, an additional $10.00 and appropriate instructions. (5) Return the completed form to : Secretary of State , 101 North Carson Street, Suite #3, Carson City, NV 89701-4786. (702) 687-5203 FILING FEE $85.00 PENALTY $15.00 PRESIDENT: Dale B. Finfrock, Jr.; PO Box 669; Palm Beach, FL 33480 SECRETARY: Dale B. Finfrock, Jr.; PO Box 669; Palm Beach, FL 33480 TREASURER: Dale B. Finfrock, Jr.; PO Box 669; Palm Beach, FL 33480 I hereby certify this annual list. /s/ Dale B. Finfrock, Jr. President Date: 2/24/99 ASCOT INDUSTRIES, INC. BALANCE SHEET FEBRUARY 28, 1999 ASSETS Current Assets: Cash 0 Total Current Assets 0 Organizational Costs $16,000.00 Total Assets $16,000.00 SHAREHOLDERS' EQUITY Shareholder's Equity: Common Stock, par value $.001 per share; 20,000,000 shares authorized, 11,600,000 shares issued and outstanding 11,600.00 Additional paid-in capital 4,400.00 Total Shareholders' Equity $16,000.00 EXHIBIT A SHAREHOLDERS OF AMERICAN INTERNET TECHNICAL CENTERS, INC. NAME SHARES PRINCIPAL SHAREHOLDERS The following table sets forth the ownership of Shares of Common Stock as of the date of this Memorandum by Company's officers and directors. All of the officers and directors as a group and each person who is known by the Company to beneficially own more that 5% of the outstanding Shares of Common Stock. The table indicates the number of shares beneficially owned and the percentage of ownership, respectively, assuming that the Offering is fully subscribed and all shares of Preferred Stock are converted into shares of Common Stock. Percentage Percentage Prior to After Name of Owner Number of Shares Offering Offering J. Bruce Gleason 5,100,000 50.19 46.5% Michael Umile 5,000,000 49.2% 45.6% Gary Walk 30,000 .3% .27% Bruce Drezner 30,000 .3% .27% All Officers As a Group 10,160,000 100% 92.64% 73 EX-2.7 3 RECISSION AGREEMENT EXHIBIT 2.7 RESCISSION AGREEMENT Rescission Agreement This Rescission Agreement (the "Agreement") is made and entered into by and among American Internet Technical Centers, Inc., a Nevada corporation originally organized as Ascot Industries, Inc. ("American Internet Nevada"); American Internet Technical Center, Inc., a Florida corporation (American Internet Florida"); Dale B. Finfrock, Jr., a Florida resident also sometimes known as "Dale B. Finfrock" ("Mr. Finfrock"); Donald F. Mintmire, Esquire, an attorney residing in the State of Florida ("Mr. Mintmire"); Mintmire & Associates, an entity engaged in the practice of law in the State of Florida controlled by Mr. Mintmire ("Mintmire & Associates"); J. Bruce Gleason, a Florida resident ("Mr. Gleason"); and, Michael D. Umile, a Florida resident ("Mr. Umile;" Mr. Umile and Mr. Gleason being collectively hereinafter referred to as the "Original American Internet Florida Stockholders"; Mr. Finfrock, Mr. Mintmire and Mintmire & Associates (being hereinafter collectively referred to as the "Original Ascot Group"), the Original Ascot Group, American Internet Nevada, American Internet Florida and the Original American Internet Florida Stockholders being sometimes hereinafter collectively referred to as the "Parties" and each being sometimes hereinafter generically referred to as a "Party"). Preamble: WHEREAS, American Internet Nevada, American Internet Florida and the Original American Internet Florida Stockholders have entered into and closed upon a reorganization agreement (the "Reorganization Agreement") with Equity Growth Systems, inc., a publicly held Delaware corporation with a class of securities registered under Section 12(g) of the Securities Exchange Act of 1934, as amended ("Equity Growth" and the "Exchange Act," respectively), a copy of which (without exhibits) is annexed hereto and made a part hereof as exhibit 0.1, as a result of which Equity Growth has acquired 90% of the capital stock of American Internet Nevada, with the unilateral right under Section 4.9 of the Reorganization Agreement to change the transaction to an acquisition of 100% of the capital stock of American Internet Florida and all the assets of American Internet Nevada; and WHEREAS, Equity Growth has elected its rights under Section 4.9 of the Reorganization Agreement, and requires that the Original American Internet Florida Stockholders, American Internet Nevada and American Internet Florida facilitate such election by entry into this Agreement; and 74 WHEREAS, the Original American Internet Florida Stockholders, the Original Ascot Group, American Internet Florida and American Internet Florida desire rescind the agreement between Ascot Industries, Inc. ("Ascot," the former name of American Internet Nevada) and the Original American Internet Florida Stockholders, a copy of which is annexed hereto and made a part hereof as exhibit 0.2 (the "Stock Exchange Agreement"), subject only to payment of $2,581.86 by American Internet Florida to Mintmire & Associates for legal services related to the Stock Exchange Agreement: 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: Article One Rescission Provisions 1.1 Recitation of Applicable facts and Conclusions (D) Annexed hereto and made a part hereof as exhibit 1.1(a) is the statement of fees due from American Internet Nevada to Mintmire & Associates, which American Internet Florida hereby agrees to assume and pay immediately following execution of this Agreement. (E) The Parties hereby acknowledge that there were material misunderstandings concerning the Exchange Agreement which have led them to elect to rescind it, but that this Agreement does not constitute an admission by any Party concerning the conclusions of any other Party or Parties as to the reasons for such misunderstandings. 1.2 No Admission of Liability Without limiting the generality of the foregoing, no Party to this Agreement admits any of the claims, allegations or conclusions of any other Party in conjunction with the Exchange Agreement or any transactions by any other Party involving Ascot. 75 1.3 Effectuating Actions by Ascot, the Original Ascot Group and American Internet Nevada Ascot, the Original Ascot Group and American Internet Nevada hereby: (A) Irrevocably consent to the rescission of the Stock Exchange Agreement, ab initio. (B) Relinquish all rights to the name American Internet Technical Centers, hereby assign it to American Internet Florida, and agree to immediately change American Internet Nevada's name back to Ascot Industries, Inc., by repealing its recent change of name amendment; (C) Hereby transfer and assign all of its right, title and interest to any and all of Ascot's or American Internet Nevada's assets, wherever located, whether tangible or intangible, current or inchoate, to American Internet Florida; (D) Waive the arbitration rights reflected in the Exchange Agreement; (E) Recognize Mr. Bruce Drezner ("Mr. Drezner") and Mr. Gary D. Walk ("Mr. Walk"), as holders of 30,000 shares of American Internet Nevada's common stock each (60,000 shares in the aggregate), received as compensation for their introduction of the Original American Internet Florida Stockholders to the Original Ascot Group; (F) If they so elect, recognize Mr. Theodore Gill and Mrs. Susan Gill, his wife , both residents of the State of New Jersey ("Mr. & Mrs. Gill"), as holders of 10,000 shares of American Internet Nevada's common stock and warrants to purchase an additional 10,000 shares of American Internet Nevada's common stock at $0.50 per share, in consideration of their payment of $10,000 therefor; (G) If she so elects, recognize Ms. Lyn Poppiti, a resident of the State of Florida, as the holder of 8,000 shares of American Internet Nevada's common stock and warrants to purchase an additional 10,000 shares of American Internet Nevada's common stock at $0.50 per share, in consideration of her payment of $8,000 therefor; (H) Agree to immediately notify all Ascot and American Internet Nevada stockholders other than the Original American Internet Florida Stockholders of the foregoing. (I) Agree to return to American Internet Florida all American Internet Florida documents, agreements, stock certificates, (including but not limited to original stock certificates in the names of Mr. Gleason or Mr. Umile,) stock powers, stock ledgers, including but not limited to all such items in the possession of Mintmire & Associates. 1.4 Effectuating Actions by the Original American Internet Florida Stockholders & American Internet Florida The Original American Internet Florida Stockholders and American Internet Florida hereby: (A) Irrevocably consent to the rescission of the Stock Exchange Agreement, ab initio. 76 (B) Relinquish all rights to the name Ascot Industries, Inc., and hereby assign it to the Original Ascot Group, and agree to immediately change American Internet Nevada's name back to Ascot Industries, Inc., by repealing its recent change of name amendment; (C) Waive the arbitration rights reflected in the Exchange Agreement; (D) Agree, immediately after receipt of a completely executed copy of this Agreement, tender to Mintmire & Associates an American Internet Florida check in the amount of $2,852.86. 1.5 Special Covenants of the Parties Each of the Parties, as a material inducement to entry into this Agreement by all of the other Parties, hereby covenants and agrees, as follows: (A) Each of the Parties, on its own behalf and on behalf of his, her or its family and affiliates, hereby relinquish all rights, whether accrued or inchoate, under any instruments, indentures, charters, agreements, understandings, commitments, promises or any other basis between him, her, her or its family or his, her or its affiliates and all the other Parties and their affiliates, other than those created by this Agreement. (B) Each of the Parties hereby irrevocably covenants and agrees that he, she or its will maintain all information heretofore shared with him, her or its by any other Party, or any other Party's members, officers, directors, stockholders, employees, agent or affiliates, whether related to the business of any of the Parties or to other business or financial matters or to personal matters, totally confidential and shall not disclose any such information to any other person or entity, for any reason whatsoever, unless compelled to do so under process of law. (C) Each of the Parties hereby irrevocably covenants and agrees that he, she or it will refrain from making any disparaging remarks, directly or indirectly, specifically, through innuendo or by inference, whether or not true, about any other Party, or any other Party's members, officers, directors, stockholders, employees, agent or affiliates, whether related to the business of the Parties, to other business or financial matters or to personal matters. (D) 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 each other Party, and his, her or its affiliates, 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. (E) 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. (F) 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. 77 Article Two Reorganization Agreement Ratification (A) Except as modified by Equity Growth Systems, inc., a publicly held Delaware corporation with a class of securities registered under Section 12(g) of the Securities Exchange Act of 1934, as amended ("Equity Growth" and the "Exchange Act," respectively) through exercise of its rights under Section 4.9 of the reorganization agreement entered into by Equity Growth, American Internet Florida, American Internet Nevada and the Original American Internet Florida Stockholders on or about June 25, 1999 (the "Reorganization Agreement"), and as a result of the rescission of the Exchange Agreement, nothing in this Agreement shall be interpreted as detrimentally affecting the rights of Equity Growth, American Internet Florida or Messrs. Gleason or Umile under the Reorganization Agreement, including the rights to receipt of deferred contingent shares of Equity Growth's common stock, and to Equity Growth's full ownership of all of the capital stock of American Internet Florida and American Internet Florida's ownership of all assets formerly belonging to American Internet Nevada. (B) American Internet Florida hereby agrees that if they so elect, to treat Mr. Theodore Gill and his wife Susan Gill, both residents of the State of New Jersey ("Mr. & Mrs. Gill"), and Ms. Lyn Poppiti, a resident of the State of Florida (Ms. Poppiti"), as stockholders of American Internet Florida entitled to receive common stock in Equity Growth, at their option, in lieu of common stock in American Internet Florida or American Internet Nevada, as if they were parties to the Reorganization Agreement who held 10/10,178ths (Mr. & Mrs. Gill) and 8/10,178ths (Ms. Poppiti), of the common stock in American Internet Florida prior to the closing on the Reorganization Agreement. (C) Equity Growth shall be deemed a third party beneficiary of this Agreement for all purposes and shall be copied in all notices to Parties or other required by this Agreement, as if it were directly a Party hereto; however, no Party herein shall be deemed in privity of contract with Equity Growth for purposes of enforcing any rights against it not otherwise enforceable solely pursuant to the provisions of the Reorganization Agreement. Article Three American Internet Nevada Messrs. Gleason and Umile, currently the only executive officers and the only members of the Board of Directors of American Internet Nevada (the "Directors") and the holders of 10,100,000 shares of the common stock of American Internet Nevada, being in excess of 80% of its outstanding common stock; and, Mr. Finfrock, formerly the sole executive officer and the only member of the Board of Directors of Ascot and then American Internet Nevada, and with Mr. Mintmire, the holders, on their own behalf and as the trustee or agent for a number of other persons of a majority of the common stock of American Internet Nevada and Ascot, prior to the Exchange Agreement, in their respective roles as 78 directors and stockholders, by execution of this Agreement hereby convene a special meeting of the Board of Directors and of the stockholders of American Internet Nevada, waiving notice thereof, and hereby adopt the following resolution: RESOLVED, that pursuant to authority granted under Sections 78.315 and 78.320 of the Nevada general Corporation Law and as permitted by its constituent documents, this Corporation hereby adopts ratifies and confirms the rescission agreement between American Internet Technical Centers, Inc., a Nevada corporation originally organized as Ascot Industries, Inc. ("American Internet Nevada"); American Internet Technical Center, Inc., a Florida corporation (American Internet Florida"); Dale B. Finfrock, Jr., a Florida resident also sometimes known as "Dale B. Finfrock" ("Mr. Finfrock"); Donald F. Mintmire, Esquire, an attorney residing in the State of Florida ("Mr. Mintmire"); Mintmire & Associates, an entity engaged in the practice of law in the State of Florida controlled by Mr. Mintmire ("Mintmire & Associates"); J. Bruce Gleason, a Florida resident ("Mr. Gleason"); and, Michael D. Umile, a Florida resident ("Mr. Umile;" Mr. Umile and Mr. Gleason being collectively hereinafter referred to as the "Original American Internet Florida Stockholders"; Mr. Finfrock, Mr. Mintmire and Mintmire & Associates (being hereinafter collectively referred to as the "Original Ascot Group"), the Original Ascot Group, American Internet Nevada, American Internet Florida and the Original American Internet Florida Stockholders being sometimes hereinafter collectively referred to as the "Parties" and each being sometimes hereinafter generically referred to as a "Party"); concurrently with the promulgations of this resolution by written consent in lieu of special meeting of the Corporation's Board of Directors and in lieu of special meeting of the Corporation's stockholders (the "Rescission Agreement" and this "Instrument," respectively); and be it FURTHER RESOLVED, that Mr. Finfrock be, and he is hereby, elected to this Corporation's Board of Directors, effective immediately ; and be it FURTHER RESOLVED, that pursuant to its obligations under the Rescission Agreement, this Corporation hereby repeals the amendment to its certificate of incorporation changing its name from "Ascot Industries, Inc." to "American Internet technical Centers, Inc." originally adopted and implemented on or about February 28, 1999, as a result of which its name shall again be "Ascot Industries, Inc." and that Mr. Gleason is hereby appointed as the president of this Corporation and Mr. Umile is hereby appointed the secretary of this Corporation for the purpose of executing all documents, certificates, resolutions or other instruments required to effect the foregoing on behalf of this Corporation; and be it FURTHER RESOLVED, that pursuant to its obligations under the Rescission Agreement, this Corporation hereby assigns to American Internet Technical Center, Inc., a Florida corporation, all right title and interest in and to the name American Internet Technical Centers and to all of its assets, wherever located, whether tangible or intangible, current or inchoate; and be it FURTHER RESOLVED, that pursuant to its obligations under the Rescission Agreement, this Corporation hereby waives the arbitration rights reflected in the Exchange Agreement and agrees to indemnify and hold the Original American Internet Florida Stockholders, American Internet Florida and its affiliates, officers, directors, stockholders, employees, agents and advisors, harmless from any and all liabilities pertaining, directly or indirectly, to any actions or failures to act by this Corporation, the Original Ascot Group or as a result of the Parties' entry into this Agreement; and be it FURTHER RESOLVED, that Mr. Finfrock be, and he is hereby, directed to immediately notify all Ascot and American Internet Nevada stockholders other than the Original American Internet Florida Stockholders of the foregoing. 79 Article Five American Internet Florida Messrs. Gleason and Umile, currently the only executive officers and the only members of the Board of Directors of American Internet Florida (the "Directors") and the holders of a proxy pursuant to the terms of the Reorganization Agreement, from Equity Growth, the holder of at least 10,100,000 shares of the common stock of American Internet Florida, being in excess of 80% of its outstanding common stock to vote such securities in the manner set forth below (the "Equity Growth Proxy"), in their respective roles as directors and proxies for the stockholders of this Corporation, by execution of this Agreement hereby convene a special meeting of the Board of Directors and of the stockholders of American Internet Florida, waiving notice thereof, and hereby adopt the following resolution: RESOLVED, that pursuant to authority granted under Sections 607.0704 and .0821 of the Florida Business Corporation Act and as permitted by its constituent documents, this Corporation hereby adopts ratifies and confirms the rescission agreement between American Internet Technical Centers, Inc., a Nevada corporation originally organized as Ascot Industries, Inc. ("American Internet Nevada"); American Internet Technical Center, Inc., a Florida corporation (American Internet Florida"); Dale B. Finfrock, Jr., a Florida resident also sometimes known as "Dale B. Finfrock" ("Mr. Finfrock"); Donald F. Mintmire, Esquire, an attorney residing in the State of Florida ("Mr. Mintmire"); Mintmire & Associates, an entity engaged in the practice of law in the State of Florida controlled by Mr. Mintmire ("Mintmire & Associates"); J. Bruce Gleason, a Florida resident ("Mr. Gleason"); and, Michael D. Umile, a Florida resident ("Mr. Umile;" Mr. Umile and Mr. Gleason being collectively hereinafter referred to as the "Original American Internet Florida Stockholders"; Mr. Finfrock, Mr. Mintmire and Mintmire & Associates (being hereinafter collectively referred to as the "Original Ascot Group"), the Original Ascot Group, American Internet Nevada, American Internet Florida and the Original American Internet Florida Stockholders being sometimes hereinafter collectively referred to as the "Parties" and each being sometimes hereinafter generically referred to as a "Party"); concurrently with the promulgations of this resolution by written consent in lieu of special meeting of the Corporation's Board of Directors and in lieu of special meeting of the Corporation's stockholders (the "Rescission Agreement" and this "Instrument," respectively); and be it FURTHER RESOLVED, that pursuant to its obligations under the Rescission Agreement, this Corporation hereby assigns to American Internet Technical Centers, Inc., a Nevada corporation, all right title and interest in and to the name Ascot Industries; and be it FURTHER RESOLVED, that pursuant to its obligations under the Rescission Agreement, this Corporation hereby waives the arbitration rights reflected in the Exchange Agreement and agrees to indemnify and hold the Original Ascot Group and American Internet Nevada and its affiliates, officers, directors, stockholders, employees, agents and advisors, harmless from any and all liabilities pertaining, directly or indirectly, to any actions or failures to act by this Corporation or the Original American Internet Florida or as a result of the Parties' entry into this Agreement. 80 Article Four Miscellaneous 4.1 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. 4.2 Notice. (a) 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: Equity Growth Systems, inc. 8001 DeSoto Woods Drive; Sarasota, Florida 34243; Telephone (941) 358-8182; Fax (941) 358-8423 Attention: Charles J. Scimeca, President; with a copy to The Yankee Companies, Inc. 902 Clint Moore Road, Suite 136; Boca Raton, Florida 33487 Attention: Leonard Miles Tucker, President Telephone (561) 998-2025, Fax (561) 998-3425; and, e-mail carrington@flinet.com; and to G. Richard Chamberlin, Esquire; General Counsel Equity Growth Systems, inc. 14950 South Highway 441; Summerfield, Florida 34491 Telephone (352) 694-6714, Fax (352) 694-9178; and, e-mail, GrichardCh@aol.com. To the Former American Internet Florida Stockholders: J. Bruce Gleason and Michael D. Umile 440 East Sample Road; Pompano Beach, Florida 33056 Telephone (954) 943-4748; Fax (954) 943-4046; e-mail aitc2@bellsouth.net; and to To American Internet Nevada: American Internet Technical Centers, Inc. 440 East Sample Road; Pompano Beach, Florida 33056 Attention: J. Bruce Gleason, President. Telephone (954) 943-4748; Fax (954) 943-4046; e-mail aitc2@bellsouth.net; and to In care of Mintmire & Associates 265 Sunrise Avenue, Suite 204; Palm Beach, Florida 33480; Telephone (561) 832-5696, Fax (561) 832-5371 81 Attention Donald F. Mintmire, Esquire, Agent To American Internet Florida: American Internet Technical Center, Inc. 440 East Sample Road; Pompano Beach, Florida 33056 Attention: J. Bruce Gleason, President. Telephone (954) 943-4748; Fax (954) 943-4046; e-mail aitc2@bellsouth.net; To Ascot or the Original Ascot Group: In care of Mintmire & Associates 265 Sunrise Avenue, Suite 204; Palm Beach, Florida 33480 Attention Donald F. Mintmire, Esquire, Agent Telephone (561) 832-5696, Fax (561) 832-5371 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. (b) (1) The Parties acknowledge that Yankees serves as a strategic consultant to Equity Growth and, together with general counsel to Equity Growth (who also serves as general counsel to Yankees) has acted as scrivener for the Parties in this transaction but that Yankees is neither a law firm nor an agency subject to any professional regulation or oversight. (2) Because of the inherent conflict of interests involved, Yankees has advised all of the Parties to retain independent legal counsel to review this Agreement and its exhibits and incorporated materials on their behalf. (C) The decision by any Party not to use the services of legal counsel in conjunction with this transaction shall be solely at their own risk, each Party acknowledging that applicable rules of the Florida Bar prevent Equity Growth's general counsel, who has reviewed, approved and caused modifications to this Agreement on behalf of Equity Growth, from representing anyone other than Equity Growth in this transaction. 4.3 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. 4.4 Survival. The several representations, warranties and covenants of the Parties contained herein shall survive the execution hereof and the Closing hereon and shall be effective regardless of any investigation that may have been made or may be made by or on behalf of any Party. 82 4.5 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. 4.6 Governing Law. This Agreement shall be construed in accordance with the substantive and procedural laws of the State of Delaware (other than those regulating taxation and choice of law) but any proceedings pertaining directly or indirectly to the rights or obligations of the Parties hereunder shall, to the extent legally permitted, be held in Broward County, Florida. 4.7 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. 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. 4.8 Litigation. (a) Except as provided below in conjunction with reduction of this Agreement to a judgment: (1) 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. (B) 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: (C) (A) First, the issue shall be submitted to mediation before a mediation service in Broward County, Florida to be selected by lot from six alternatives to be provided, one by Mr. Finfrock, one by Mr. Mintmire, one by Ascot, one by Yankees as agent for the current Directors and stockholders of Equity Growth, one by American Internet Florida and one by the Original American Internet Florida Stockholders acting by majority vote (based on their relative stock ownership in Equity Growth). 83 (B) The mediation efforts shall be concluded within ten business days after their in itiation unless the Parties unanimously agree to an extended mediation period; (4) 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 Broward County, Florida to be selected by lot, from six alternatives to be provided, one by Mr. Finfrock, one by Mr. Mintmire, one by Ascot, one by Yankees as agent for the current Directors and stockholders of Equity Growth, one by American Internet Florida and one by the Original American Internet Florida Stockholders acting by majority vote (based on their relative stock ownership in Equity Growth). (5) (A) Expenses of mediation shall be borne by the parties to the mediation equally, if successful. (B) Expenses of mediation, if unsuccessful and of arbitration shall be borne by the Party or Parties against whom the arbitration decision is rendered. (C) If the terms of the arbitral award do not establish a prevailing Party, then the expenses of unsuccessful mediation and arbitration shall be borne equally by the Parties involved. 4.9 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. 4.10 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. 4.11 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. 4.12 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. 84 4.13 Status. Nothing in this Agreement shall be construed or shall constitute a partnership, joint venture, employer-employee relationship or lessor-lessee relationship. 4.14 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 Commission. 4.15 License. (a) This Agreement is the property of Yankees and the use hereof by the Parties is authorized hereby solely for purposes of this transaction. (b) The use of this form of agreement or of any derivation thereof without Yankees' prior written permission is prohibited. (c) This Agreement shall not be construed more strictly against any Party as a result of its authorship. 4.16 Exhibit Index. Exhibit Description 0.1 The Reorganization Agreement 0.2 The Exchange Agreement 1.1(a) The Mintmire & Associates Statement In Witness Whereof, the Parties have caused this Agreement to be executed effective as of the date last set forth below. Signed, sealed and delivered In Our Presence: American Internet Technical Centers, Inc. (A Nevada corporation) - - --------------------------------- _________________________________ By: _______________________________ J. Bruce Gleason, President (Corporate Seal) Attest: __________________________ Michael D. Umile, Secretary Dated: July 8, 1999 85 ------------------------------ Dale B. Finfrock, Jr., Director American Internet Technical Center, Inc. (A Florida corporation) ________________________________ ________________________________ By: _______________________________ J. Bruce Gleason, President (Corporate Seal) Attest: ______________________________ Michael D. Umile, Secretary Dated: July 8, 1999 Original American Internet Florida Stockholders - - --------------------------------- - - --------------------------------- ------------------------------ J. Bruce Gleason - - --------------------------------- - - --------------------------------- ------------------------------ Michael D. Umile Dated: July 8, 1999 86 Original Ascot Group - - --------------------------------- - - --------------------------------- ------------------------------ Dale B. Finfrock, Jr. - - --------------------------------- - - -------------------------------- ----------------------------- Donald F. Mintmire, Esquire, on his own behalf and as the authorized agent for Mintmire & Associates Dated: July 8, 1999 Exhibit 0.1for the Rescission Agreement The Reorganization Agreement (See Exhibit 2.8 of the 8-KSB) Exhibit 0.2 for the Rescission Agreement The Exchange Agreement (See Exhibit 2.6 of the 8-KSB) Exhibit 1.1(a) for the Recission Agreement The Mintmire & Associates Statement Mintmire & Associates 265 Sunrise Avenue, Suite 204 Palm Beach, FL 33480 American Internet Technical Center, Inc. 1500 East Atlantic Blvd. Pompano Beach, FL 33060 7/2/1999 Date DESCRIPTION Hours AMOUNT of Service 2/3/1999 Conference- clients 0.5 100.00 2/23/1999 General Corporate 504 Private Placement 1.6 320.00 Memorandum 2/23/1999 Draft of Document- 504PPM 1.5 300.00 2/23/1999 Telephone Conference with client 0.1 20.00 3/1/1999 Telephone conference- client 0.2 40.00 3/8/1999 Telephone conference- Mike Umile 0.1 20.00 3/15/1999 Telephone conference- Dale Finfrock 0.1 20.00 3/17/1999 Draft document- 504 Private Placement 1.25 250.00 87 Memorandum 3/18/1999 Draft document- 504 Private Placement 1 200.00 Memorandum 3/19/1999 Draft document- Private Placement Memorandum 2.1 420.00 3/22/1999 Telephone Conference- Mike Umile 0.1 20.00 3/22/1999 Telephone conference- Mike Umile 0.1 20.00 3/24/1999 General corporate- 504 Private Placement 1.2 240 00 Memorandum 3/25/1999 General corporate 0.4 80.00 3/30/1999 General corporate 0.4 80 00 3/31/1999 Telephone conference- David Gunning 0.2 40.00 4/2/1999 Review document-fax from David Gunning 0.1 20.00 4/4/1999 Renew document- Complaint 0.25 50.00 4/9/1999 Telephone conference- Dale Finfrock 0.2 40.00 Page 1 Mintmire & Associates 265 Sunrise Avenue, Suite 204 Palm Beach, FL 33480 American Internet Technical Center, Inc. 1500 East Atlantic Blvd. Pompano Beach, FL 33060 7/2/1999 Date DESCRIPTION Hours AMOUNT of Service 4/13/1999 Telephone conference- clients 0.8 160.00 4/15/1999 General corporate 0.2 40.00 4/29/1999 Draft document- opinion 0.5 100.00 5/6/1999 Conference-Interoffice 0.1 20.00 6/29/1999 Document review letter 0.1 20.00 7/1/1999 Telephone conference-Richard Chamberlain 0.2 40.00 7/1/1999 Conference-Interoffice 0.1 20.00 7/1/1999 Document review-file 0.1 20.00 Total attorneys fees 2,700.00 Costs Advanced (photocopies, long distance calls, postage, epic.) 135.00 Expenses 6/3/1999 Federal Express charges, 16.86 $2,851.86 Page 2 88 EX-2.8 4 REORGANIZATION AGREEMENT EXHIBIT 2.8 REORGANIZATION AGREEMENT Reorganization Agreement This Reorganization Agreement (the "Agreement") is made and entered into by and among Equity Growth Systems, inc., a Delaware corporation with a class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the "Holding Company" and the "Exchange Act," respectively); American Internet Technical Centers, Inc., a Nevada corporation originally organized as Ascot Industries, Inc. (the "Target Company"); American Internet Technical Center, Inc., a Florida corporation wholly owned by the Target Company (the "Subsidiary") and, J. Bruce Gleason, a Florida resident ("Mr. Gleason"), on his own behalf and as attorney-in-fact for the individuals and entities which are listed in exhibit 0.1 annexed hereto and made a part hereof, each of whom has executed a power of attorney so designating Mr. Gleason (collectively hereinafter referred to together with Mr. Gleason as the "Subscribers"; the Holding Company, the Target Company, the Subsidiary and the Subscribers being sometimes hereinafter collectively referred to as the "Parties" and each being sometimes hereinafter generically referred to as a "Party"). This Agreement is also executed by The Yankee Companies, Inc., a Florida corporation ("Yankees"), for the limited purposes specifically set forth in this Agreement directly involving Yankees. Preamble: WHEREAS, the Subscribers own 90% of the authorized issued and outstanding shares of common stock, $0.001 par value (there being no other securities) of the Target Company; the "Target Company Stock"); and WHEREAS, the Target Company, through the Subsidiary, is engaged in the business more particularly described in the private placement memorandum dated January 15, 1999 heretofore filed by the Holding Company with the United States Securities and Exchange Commission (the "Commission") as an exhibit to its report on Form 10-KSB for the year ended December 31, 1998 (the "Memorandum"); and WHEREAS, the Subscribers desire to acquire 2,250,000 shares of the Holding Company's common stock, par value $0.01 per share, in exchange for their conveyance of all of their shares of the Target Company Stock and the Target Company is agreeable to issuing such additional shares of its common stock as may be required to equal when aggregated with the shares to be conveyed by the Subscribers, 90%of the Target Company's reserved, issued and outstanding securities, in a transaction intended to meet the requirements of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the "Code"): 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: 89 Witnesseth: Article One Exchange Provisions 1.1 Exchange Subject to the hereinafter described conditions: AGE> (a) The Holding Company hereby agrees to exchange 2,250,000 shares of its Common Stock, $0.01 par value (the "Holding Company Stock"), with the Subscribers for all of the capital stock in the Target Company held by them; (1) The Subscribers hereby agree to exchange all of the shares of the Target Company's capital stock held by them with the Holding Company for the Holding Company Stock; and (2) The Target Company hereby agrees to issue to the Holding Company such additional shares of its capital stock as may be required, when aggregated with the shares of capital stock being exchanged by the Subscribers, to equal 90% of the Target Company's capital stock (all of the Target Company's capital stock to be conveyed by Subscribers to the Holding Company and issued to the Holding Company by the Target Company being hereinafter included within the defined term "Target Company Stock"). (b) Concurrently with the closing on this Agreement (as set forth in Article Three of this Agreement, hereinafter referred to as the "Closing") and delivery of the Target Company Stock to the Holding Company, the Holding Company shall instruct its transfer agent, to issue 2,250,000 shares of the Holding Company Stock to the Subscribers, allocated to each Subscriber in proportion to their ownership of the Target Company Stock, inter se. (c) In addition to the 2,250,000 shares of Stock to be issued to the Subscribers at the Closing, the Holding Company shall immediately instruct its transfer agent to reserve an additional 4,500,000 shares of its common stock, $0.01 par value, for possible issuance to the Subscribers as a contingent part of the exchange being effected through this Agreement, based on the Target Company's attainment of the hereinafter defined "Performance Criteria." (d) Notwithstanding the foregoing, in the event that during the initial 60 days following the Closing the Holding Company's publicly traded common stock, $0.01 par value per share, does not retain an average price per share of at least $0.50 based on the average daily closing offering price therefor reported by members of the National Association of Securities Dealers, Inc., a Delaware corporation registered as a self regulatory organization by the Commission (the "NASD") on the over the counter electronic bulletin board (the "OTC Bulletin Board") and such failure is not due to unusual market conditions or improprieties or irregularities in the trading of the Holding Company's securities, then, the Holding Company and the Subscribers (acting by majority of Holding Company shares of common stock held by them) will either: (1) Agree to an adjustment in the amount of Stock exchanged, or, (2) Permit the Subscribers to rescind this Agreement, provided that any decision to rescind 90 must be made in writing, signed by Subscribers holding a majority of the shares of the Holding Company's common stock, inter se, and delivered to the Holding Company in the manner hereinafter provided for delivery of notices generally, not later than the 90th day following the Closing and must be accompanied by concurrent payment to the Holding Company, in United States legal tender, of all sums theretofore advanced or invested in the Target Company, the Subsidiary, or any affiliates of either of them (excluding the Holding Company), by or on behalf of the Target Company. AGE> 1.2 Exemption From Registration & Representations as to Title (a) The Subscribers each severally hereby represent, warrant, covenant and acknowledge, after consultation with their advisors, that: (1) The Holding Company Stock is being issued without registration under the provisions of Section 5 of the Securities Act of 1933, as amended (the "Act"), the Delaware Securities Act, or the securities acts of the Subscribers' states of domicile (the "Subscribers' State Blue Sky Laws") pursuant to exemptions provided by Section 4(2) of the Act and comparable sections of the Subscribers' State Blue Sky Laws pertaining to private placements; (2) All of the Holding Company Stock will bear legends restricting its transfer, sale, conveyance or hypothecation unless such Stock is either registered under the provisions of Section 5 of the Act and the Subscribers' State Blue Sky Laws, or an opinion of legal counsel, in form and substance satisfactory to legal counsel to the Holding Company is provided by the Subscribers to the effect that such registration is not required as a result of applicable exemptions therefrom; (3) The Holding Company's transfer agent shall be instructed not to transfer any of the Holding Company Stock unless the Holding Company advises it that such transfer is in compliance with all applicable laws; (4) The Subscribers are each acquiring the Holding Company Stock for their own account, for investment purposes only, and not with a view to further sale or distribution; (5) The Subscribers or their advisors have examined the Holding Company's securities acts filings as posted on the Commission's EDGAR Internet web site and prior to the Closing will have become fully familiar with the Holding Company and its operations as a result of their pre-Closing due diligence investigations during which they will have been provided with access to all of the Holding Company's books and records and have been provided with the opportunity to question the Holding Company's officers and directors as to such matters involving the Holding Company as the Subscribers' deemed appropriate; and (6) The Subscribers will, on the date of the Closing, own the Target Company Stock, registered in their names and subject to no liens, pledges or encumbrances, and will convey good title thereto to the Holding Company, there being no outstanding subscriptions, options, warrants or other agreements or commitments obligating the Subscribers to sell any of their shares of the Target Company's Stock or any options or rights with respect thereto. 91 (b) The Holding Company hereby represents, warrants, covenants and acknowledges that: (1) The Target Company Stock is being transferred or issued without registration under the provisions of Section 5 of the Act or under the Delaware Securities Act or the Subscribers' State Blue Sky Laws pursuant to exemptions provided by Section 4(2) of the Act and comparable provisions of the Delaware Securities Act and the Subscribers' State Blue Sky Laws; (2) All of the Target Company Stock will bear legends restricting its transfer, sale, conveyance or hypothecation unless such Target Company Stock is either registered under the provisions of Section 5 of the Act and under applicable state securities laws, or an opinion of legal counsel is provided by the Holding Company certifying that such registration is not required as a result of applicable exemptions therefrom; (3) The Holding Company shall not transfer any of the Target Company Stock except in compliance with all applicable laws; and (4) The Holding Company is acquiring the Target Company Stock for its own account, for investment purposes only and not with a view to further sale or distribution. (c) In the event that the restructuring provisions of Section 4.9 become applicable, then the representations in Section 1.2(b) shall be deemed to refer to the Subsidiary's common stock rather than the Target Company's common stock. 1.3 Liabilities. (a) Any liabilities in any manner encumbering or affecting the Target Company, the Subsidiary (the Target Company and the Subsidiary being hereinafter collectively or generically referred to as the "Target Companies") or their assets are disclosed on exhibit 1.3 annexed hereto and made a part hereof (the "Disclosed Liabilities"). (b) The Target Companies and the Subscribers hereby covenant and agree to indemnify and hold the Holding Company harmless from any liabilities of the Target Companies or affecting the Target Companies' assets other than the Disclosed Liabilities ("Undisclosed Liabilities") and the Holding Company may, in addition to all other legal or equitable remedies that may be available, offset from any funds, securities or other things of value due to the Target Companies, the Subscribers or the Subscribers' affiliates (as that term is most liberally defined for federal securities law purposes), such sums as may be required to make the Holding Company whole as a result of the assertion of any Undisclosed Liability against the Target Companies or their assets. Article Two Representations And Warranties 2.1 The Holding Company. The Holding Company hereby represents and warrants to the Subscribers, the Target Company and the Subsidiary, as a material inducement to their entry into this Agreement, that, except as disclosed in exhibit 2.1 (the "Holding Company's Warranty Exceptions") or in the Holding Company's Exchange Act Reports provided filed with the Commission prior to the date of this Agreement (the "Exchange Act Reports"), that, to the best of current management's knowledge and except for matters that are not material: 92 (a) All of the Holding Company's assets are described in the Exchange Act Reports. (b) The Holding Company has 20,000,000 shares of Common Stock $0.01 par value authorized, not more than 6,238,448 shares of which are expected to be outstanding as of the Closing, there being no other outstanding securities of any class or of any kind or character of the Holding Company, there being no outstanding subscriptions, options, warrants or other agreements or commitments obligating the Holding Company to issue or sell any additional shares of the Holding Company's Stock or any options or rights with respect thereto, or any securities convertible into any shares of Stock of any class, except as follows: (1) 200,000 shares of common stock are reserved for issuance pursuant to currently existing obligations disclosed in the Exchange Act Reports, to the Holding Company's president; (2) An undetermined additional number of shares of common stock are reserved for issuance to Yankees, as described in the Exchange Act Reports or disclosed in this Agreement; and (3) The Holding Company has 5,000,000 shares of preferred stock of undefined characteristics authorized, $0.01 par value per share, none of which has been issued or reserved. (c) Except as described in the preceding paragraph, the Holding Company is not a party to any written or oral agreement which grants an option or right of first refusal or other arrangement to acquire any of its securities or to any agreement that affects the voting rights of any of its securities, nor has the Holding Company made any commitment of any kind relating to the issuance of shares of any of the Holding Company's securities, whether by subscription, right of conversion, option or otherwise; (d) The Holding Company is not a party to any agreement or understanding for the sale or exchange of inventory or services for consideration other than cash or at a discount in excess of normal discount for quantity or cash payment, except in the ordinary course of business; (e) There are presently no contingent liabilities, factual circumstances, threatened or pending litigation, contractually assumed obligations or unasserted possible claims which might result in a material adverse change in the future financial condition or operations of the Holding Company; (f) (1) The execution, delivery and performance of this Agreement and the transactions con templated hereby do not require the consent, authority or approval of any other person or entity except such as have been obtained; (2) Notwithstanding the generality of the foregoing, the entering into of this Agreement and the performance thereof has been duly and validly authorized by all required corporate action; (g) No transactions have been entered into either by or on behalf of the Holding Company, other than 93 in the ordinary course of business nor have any acts been performed (including within the definition of the term performed the failure to perform any required acts) which would adversely affect the goodwill of the Holding Company; (h) (1) The audited, consolidated financial statements of the Holding Company including statements of operations, stockholders investment and cash flows and balance sheets since inception, and unaudited financial statements for the period from the last audited financial statement until the end of the Holding Company's fiscal quarter closest to the date of this Agreement, all prepared in accordance with generally accepted accounting principles, consistently applied, are included in the Holding Company's Exchange Act Reports (the "Holding Company's Financial Statements"). (2) To the best of the Holding Company's knowledge, the Holding Company's Financial Statements, as contained in its Exchange Act Reports, fairly present the Holding Company's financial condition as of their respective dates and its results of operations for their respective periods in accordance with generally accepted accounting principles, consistently applied; (i) Except as and to the extent reflected or reserved against in the unaudited interim balance sheet of the Holding Company (the "Holding Interim Company's Balance Sheet), the Holding Company had no liabilities or legal obligations of a nature required to be reflected on a corporate balance sheet prepared in accordance with generally accepted accounting principles or disclosed in the notes thereto, whether absolute, accrued, contingent, or otherwise and whether due or to become due; (j) To the best of the Holding Company's knowledge, there is no material reasonable basis for the assertion against the Holding Company or any of its subsidiaries of any liability or obligation which is not fully reflected or reserved against in the Holding Company's Interim Balance Sheet or disclosed in the notes thereto, except liabilities or obligations incurred since the date thereof in the ordinary course of the Holding Company's business; (k) Since the date of the Holding Company's Financial Statements no events have occurred nor have any facts been discovered which materially alter in a detrimental manner the financial status or prospects of the Holding Company; (l) The Holding Company does not have any liabilities which constitute a lien or charge on their securities or assets; (m) The Holding Company has good, valid and marketable title to all of its assets, subject to no mortgage, pledge, lien, encumbrance, security interest or charge, except as disclosed in the Holding Company's Financial Statements, and can and will retain free and clear title thereto after the Closing, free and clear of any claims whatsoever; 94 (n) There are no claims, actions, suits, proceedings or investigations pending or threatened against the Holding Company and the Holding Company does not know of any basis for any such claim, action, suit, proceeding or investigation; (o) The Holding Company has filed with the appropriate governmental agencies all tax returns and tax reports required to be filed; all federal, state and local income, profits, franchise, sales, use, occupation, property or other taxes due have been fully paid, and, the Holding Company is not a party to any action or proceeding by any governmental authority for assessment or collection of taxes, nor has any claim for assessments been asserted against the Holding Company or its assets; (p) The Holding Company is, as of the date of this Agreement, a validly existing corporation, organized pursuant to the laws of the State of Delaware with all legal and corporate authority and power to conduct its business and to own its properties and possesses all necessary permits and licenses required in connection with the conduct of its business; (q) The conduct of the Holding Company's business is in full compliance with all applicable federal, state and local governmental statutes, rules, regulations, ordinances and decrees; (r) The execution and delivery of this Agreement, the consummation of the transactions herein contemplated and compliance with the terms of this Agreement will not conflict with or result in a breach in any of the terms or provisions of, or constitute a default under, the certificate of incorporation or bylaws of the Holding Company; any indenture, other agreement or instrument to which the Holding Company or its assets are bound; or, any applicable regulation, judgment, order or decree of any governmental instrumentality or court, domestic or foreign, having jurisdiction over the Holding Company, its securities or its properties; (s) This Agreement constitutes a binding obligation of the Holding Company, enforceable against it in accordance with the terms hereof; (t) (1) None of the employees of the Holding Company are represented by labor unions, nor does the Holding Company have any reason to believe that any of its employees desire to be represented by labor unions; and (2) The Holding Company has no reason to believe that any of its employees have any potential claims against the Holding Company based on violations of equal employment laws, occupational health and safety standards, restrictions against sexual harassment or any other legally protected rights; (u) (1) The Holding Company has no reason to believe that it has generated any hazardous wastes or engaged in activities which could be interpreted as potential violations of laws, statutes, regulations ordinances or judicial decrees in any manner regulating the generation or disposal of hazardous waste. (2) There are no on-site or off-site locations where the Holding Company has stored, disposed or arranged for the disposal of chemicals, pollutants, contaminants, wastes, toxic substances, petroleum or petroleum products; there are no underground storage tanks lo cated on property owned or leased by the Holding Company; and, no polychlorinated hiphenyle are used or stored at any property owned or leased by the Holding Company; (v) There are no impediments to obtaining hazard and liability insurance covering all of the Holding Company's assets and operations, at commercially reasonable insurance rates, nor does the Holding Company have any basis for believing that such insurance, at such rates, will not be obtainable by the Holding Company in the future; 95 (w) All of the information reflected in the foregoing representations and warranties is complete and accurate, and does not omit any information required to make the information provided non-misleading, accurate and meaningful, in light of the nature of this transaction. 2.2 The Subscribers, the Subsidiary and The Target Company. The Subscribers, the Subsidiary and the Target Company hereby represents and warrants to the Holding Company, as a material inducement to the Holding Company's entry into this Agreement, that, except as specified on exhibit 2.2 annexed hereto and made a part hereof (the "Target Companies' Warranty exceptions"), to the best of current management's knowledge and except for matters that are not material: (a) Exhibit 2.2(a) contains a complete and accurate list of all real, personal and intellectual property owned by the Target Companies, whether tangible or intangible, current or inchoate, and the principal terms of thereof, including, without limitation, all patents, copyrights, trademarks, service marks, all leases pursuant to which the Target Companies lease property (including identification of the property, the annual rentals payable thereunder, the expiration dates, and other terms of any extensions or renewals permitted thereunder); (b) (1) The Target Company has 20,000,000 shares of Common Stock, $0.001 par value, authorized, 11,600,000 of which are currently issued and outstanding, there being no other authorized or outstanding securities of any class or of any kind or character of the Target Company; and (2) The Subsidiary has 7,500 shares of Common Stock, $1.00 par value, authorized, all of which are currently issued and outstanding solely to the Target Company, there being no other authorized or outstanding securities of any class or of any kind or character of the Subsidiary; (3) There are no outstanding subscriptions, options, warrants or other agreements or commitments obligating the Target Companies or the Subscribers to issue or sell any additional shares of Target Companies' capital stock or any options or rights with respect thereto, or any securities convertible into any shares of Target Companies' capital stock of any class; (c) (1) Upon conveyance of the Target Company Stock by the Subscribers, the Holding Company will become the owner of 90% of the Target Company's authorized, issued and outstand ing equity securities; (3) On and after the Closing, the Target Company will continue to own all of the Subsidiary's capital stock and securities, and the Subsidiary will continue to own all of the assets and to engage in all of the operations described or projected in the memorandum, subject solely to dispositions in the ordinary course of business and dispositions, if any, approved in writing by the Holding Company; and (4) In the event that the restructuring provisions of Section 4.9 become applicable: (A) The Holding Company will be the direct owner of all of the Subsidiary's securities and neither the Target Company nor any affiliate, stockholder or person claiming thereunder shall have any interests orrights therein, thereto or thereunder; 96 (B) All of the assets of the Target Companies will be irrevocably vested in the Subsidiary and the Target Company will have no interests or rights therein, thereto or thereunder; (d) As of the Closing, the Target Companies will not be a party to any written or oral agreement which grants any option or right of first refusal or other arrangement to acquire any of their securities or to any agreement that will affect the voting rights of any of their securities, nor have the Subscribers or the Target Companies made any commitment of any kind relating to the issuance of shares of any of the Target Companies' securities, whether by subscription, right of conversion, option or otherwise; (e) The Target Companies are not a party to any agreement or understanding for the sale or exchange of inventory or services for consideration other than cash or at a discount in excess of normal discounts for quantity or cash payment; (f) There are presently no contingent liabilities, factual circumstances, threatened or pending litigation, contractually assumed obligations or unasserted possible claims which might result in a material adverse change in the future financial condition or operations of the Target Companies, other than, as to the Target Company, the hereinafter defined Ascot 504 offering, and as to that, the restructure provisions of Section 4.9 of this Agreement provide the Holding Company with full protection therefrom; (g) (1) The execution, delivery and performance of this Agreement and the transactions con templated hereby do not require the consent, authority or approval of any other person or entity, except such as have been obtained; (2) Without limiting the generality of the foregoing, the entering into of this Agreement and the performance required hereunder has been duly and validly authorized by all required corporate action; (h) No transactions have been entered into either by or on behalf of the Target Companies, other than in the ordinary course of business nor have any acts been performed (including within the definition of the term performed the failure to perform any required acts) which would materially adversely affect the goodwill of the Target Companies; (i) (1) Annexed hereto and made a part hereof as composite exhibit 2.2(i) are: (a) an unaudited balance sheet of the Subsidiary as of December 31, 1998, with the related unaudited statement of operations and accumulated deficit and unaudited statements of cash flows since inception, and unaudited quarterly updates thereto for each calendar quarter ending since such time, other than the current calendar quarter, all of which have been prepared in accordance with generally accepted accounting purposes, consistently applied (such balance sheets, statements of operations, statements of cash flow, statements of stockholders equity and other statements required by generally accepted accounting principals are referred to herein as the "Subsidiary's Financial Statements"); 97 (2) The addition of all required financial data concerning the Target Company necessary for preparation of audited financial statements and pro forma financial information required by Commission Regulation SB in conjunction with the acquisition of the Target Companies by the Holding Company (the "Required SEC Statements") will not materially differ from the Subsidiary's Financial Statements because the Target Company does not have and has not historically had any material assets or operations independent of the Subsidiary's, and the addition of information concerning the Target Company will not render preparation of the Required SEC Statements materially more difficult or expensive; (3) The Subsidiary's Financial Statements fairly present the financial condition of the Target Companies as of the dates thereof, and the results of operations of the Target Companies for the periods indicated, in each case in accordance with generally accepted accounting principles applied on a consistent basis; (4) Except as disclosed in the Subsidiary's Financial Statements, the Target Companies have no liabilities or legal obligations of a nature required to be reflected on a corporate balance sheet prepared in accordance with generally accepted accounting principles or disclosed in the notes thereto, whether absolute, accrued, contingent, or otherwise and whether due or to become due (including, without limitation, liabilities for taxes and interest, penalties, and other charges payable with respect thereto (a) in respect of or measured by the income of the Target Companies through such date, or (b) arising out of any transaction entered into prior thereto). (5) There is no basis for the assertion against the Target Companies of any liability or obligation which is not fully reflected or reserved against in the Subsidiary's Financial Statements, except liabilities or obligations incurred since the date of the Acquired Company's Financial Statements in the ordinary course of the Target Companies' business consistent with its past practices, other than, as to the Target Company, the hereinafter defined Ascot 504 offering, and as to that, the restructure provisions of Section 4.9 of this Agreement provide the Holding Company with full protection therefrom; (6) There are no impediments to the certification and auditing of the Target Companies' financial statements, since the earlier of inception (including the inception of any predecessors under applicable securities laws and generally accepted accounting procedures ["GAAP"]) for the last two fiscal or calendar years, and the Target Companies have heretofore retained the firm of Daszkal, Bolton & Manela, certified public accountants who are members of the AICPA's Securities Practice Section and have successfully completed a peer review of their auditing procedures, to commence a certified audit of at least the last two fiscal or calendar years of their operations, as required for filings under Section 12(g) of the Exchange Act and Regulations SB of the Exchange Act, and will not replace such accountants except with accountants meeting similar competency requirements. (j) Except as reflected in the Subsidiary's Financial Statements, since the date of the Subsidiary's Financial Statements the Target Companies have not suffered any material adverse change in their financial condition, assets, liabilities or business; or suffered any material casualty loss (whether or not insured); 98 (k) On the date of the Closing, the Target Companies' aggregate liabilities, whether accrued or inchoate, shall not exceed its current cash assets by more than $15,000 and such liabilities shall not require any payments, other than as specifically disclosed in exhibit 1.3; (l) None of the properties or assets used in the business of the Target Companies are subject to any mortgage, pledge, lien, security interest, conditional sale agreement, encumbrance, or charge of any kind, except as disclosed in exhibit 1.3; (m) Except as set forth in Exhibit 2.2 annexed hereto and made a part hereof: (1) (a) There are no claims, actions, suits, proceedings or investigations pending or threatened by or against the Target Companies; and (b) The Target Companies do not know of any basis for any such claim, action, suit, proceeding, or investigation, other than, as to the Target Company, the hereinafter defined Ascot 504 offering effected by prior management prior to Ascot's acquisition of the Subsidiary, could in the future result in an investigation or regulatory proceedings if not resolved, and as to that, the restructure provisions of Section 4.9 of this Agreement provide the Holding Company with full protection therefrom; (2) The Target Companies are not subject to any liabilities or potential liabilities that will subject the Holding Company, or its affiliates, stockholders, officers, directors, agents or advisors to any claims or liabilities predicated or emanating from torts or violations of law attributable to the Target Companies or for which the Target Companies assumed responsibility or which can in any manner be imputed to the Target Companies or their assets; except that, prior to its acquisition of the Subsidiary, conducted an offering of it securities in reliance on Commission Rule 504 of Regulation D which the Registrant's legal counsel has determined may not have met the requirements of such rule and consequently, the Parties have agreed that if such deficiency is not corrected to their mutual satisfaction within 30 days following the Closing, this Agreement may be restructured by eliminating the Target Company therefrom, in the manner set forth in Section 4.9; (n) The Target Companies have no liabilities involving expenses attributable directly, indirectly or incidentally to any litigation; (o) (1) Except as otherwise disclosed in the Subsidiary's Financial Statements and exhibit 1.3, the Target Companies have good, valid, and marketable title to all their properties and assets, real, personal and mixed, tangible and intangible; (2) Prior to the Closing, the Target Companies shall have acquired and fully paid for all of the securities, assets and operations of all affiliated businesses, if any; (p) Since their respective inceptions the Target Companies have not disposed of any assets or contractual rights which disposition has had or will in the future have a materially adverse effect on the business of the Target Companies and no such disposition will be made by the Target Companies outside the ordinary course of business during the interim between execution of this Agreement and the Closing, unless this Agreement shall have been terminated, without the prior written consent of the Holding Company; 99 (q) The Target Companies have filed or will, prior to the Closing, arrange to file with the appropriate governmental agencies all tax returns and tax reports required to be filed; all federal, state and local income, profits, franchise, sales, use, occupation, property or other taxes due have been fully paid, except as listed on exhibit 1.3; and, the Target Companies are not a party to any action or proceeding by any governmental authority for assessment or collection of taxes, nor has any claim for assessments been asserted against the Target Companies or their assets; (r) The Target Companies are, as of the date of this Agreement, validly existing corporations, organized pursuant to the laws of the States of Nevada (the Target Company) and Florida (the "Subsidiary"), with all legal and corporate authority and power to conduct their businesses and to own their properties and possess all necessary permits and licenses required in connection with the conduct of their business; (s) The conduct of the Target Companies' business is in full compliance with all applicable federal, state and local governmental statutes, rules, regulations, ordinances and decrees, other than, as to the Target Company, the hereinafter defined Ascot 504 offering effected by prior management prior to Ascot's acquisition of the Subsidiary, could in the future result in an investigation or regulatory proceedings if not resolved, and as to that, the restructure provisions of Section 4.9 of this Agreement provide the Holding Company with full protection therefrom; (t) The execution and delivery of this Agreement, the consummation of the transactions herein contemplated and compliance with the terms of this Agreement will not conflict with or result in a breach in any of the terms or provisions of, or constitute a default under, the Articles of Incorporation or By-Laws of the Target Companies; any indenture, other agreement or instrument to which the Target Companies or their stockholders are a party or by which the Target Companies or their assets are bound; or, any applicable regulation, judgment, order or decree of any governmental instrumentality or court, domestic or foreign, having jurisdiction over the Target Companies, their securities or properties; (u) This Agreement constitutes the valid and binding agreement of the Target Company and is enforceable in accordance with its terms, except as enforcibility may be limited by applicable bankruptcy, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law, no such proceeding being anticipated or under consideration); (v) (1) The Target Companies have not experienced any material difficulties with the management or recruiting of employees for their businesses, nor do the Target Companies have any reason to believe that any such difficulties will arise in the future. (2) None of the employees of the Target Companies are represented by labor unions, nor do the Target Companies have any reason to believe that any of their employees desire to be represented by labor unions; and (3) The Target Companies have no reason to believe that any of their employees have any potential claims against the Target Companies or their successors in interest based on 100 violations of equal employment laws, occupational health and safety standards, restrictions against sexual harassment or any other legally protected rights; (w) (1) The Target Companies have no reason to believe that they have generated any hazardous wastes or engaged in activities which violate or could be interpreted as violating any laws, statutes, regulations ordinances or judicial decrees in any manner regulating the generation or disposal of hazardous waste. (2) There are no on-site or off-site locations where the Target Companies have stored, disposed or arranged for the disposal of chemicals, pollutants, contaminants, wastes, toxic substances, petroleum or petroleum products; there are no underground storage tanks located on property owned or leased by the Target Companies; and, no polychlorinated hiphenyle are used or stored at any property owned or leased by the Target Companies; (x) (1) There are no impediments to obtaining hazard and liability insurance covering all of the Target Companies' assets and operations, at commercially reasonable insurance rates, nor do the Target Companies have any basis for believing that such insurance, at such rates, will not be obtainable by the Target Companies in the future. (2) Annexed hereto and made a part hereof as composite exhibit 2.2(x) are current copies of all policies of insurance or binders therefor covering the Target Companies and their as sets, all of which will remain in full force and effect after the Closing. (y) All of the information reflected in the foregoing representations and warranties is complete and accurate, and does not omit any information required to make the information provided non-misleading, accurate and meaningful, in light of the nature of this transaction. Article Three Conditions & Closing 3.1 Conditions Precedent (a) The obligations of the Holding Company under this Agreement are subject to the Target Companies' (the term "Target Companies" in the context of this Article being deemed to include all subsidiaries of the Target Company and sibling business entities of the Target Company, the assets and operations of which are to be included among the subjects of this Agreement) and Subscribers' satisfaction, or the written waiver by the Holding Company, of the following conditions prior to the Closing (the "Conditions Precedent"). That: (1) All covenants, agreements, actions, proceedings, instruments and documents required to be carried out or delivered by a Subscriber or the Target Companies pursuant to this Agreement shall have been performed, complied with or delivered to the Holding Company in accordance with the terms thereof. (2) The warranties and representations made by the Subscribers and the Target Companies in this Agreement shall be true and correct in all material respects on and as of the date of the Closing and shall be deemed to be made on and as of such date. 101 (3) There are no material violations nor are the Subscribers or the Target Companies aware of any potential material violations of any laws, statutes, ordinances, orders, regulations or requirements of any governmental authority affecting the Target Companies or their assets, other than, as to the Target Company, the hereinafter defined Ascot 504 offering effected by prior management prior to Ascot's acquisition of the Subsidiary, and as to that, the restructure provisions of Section 4.9 of this Agreement provide the Holding Company with full protection therefrom. (4) There is no action, suit or proceeding pending or threatened against or affecting the Target Companies or their assets in any court or before or by any federal, provincial, state, county or municipal department, commission, board, bureau, agency or other governmental instrumentality which would affect a Subscriber's or the Target Companies' ability to perform hereunder or which could affect the business of the Target Companies in a materially adverse manner, other than, as to the Target Company, the hereinafter defined Ascot 504 offering effected by prior management prior to Ascot's acquisition of the Subsidiary, and as to that, the restructure provisions of Section 4.9 of this Agreement provide the Holding Company with full protection therefrom. (5) The Target Companies are in material compliance with all applicable federal, provincial, state or local statutes, regulations, rules or ordinances applicable to the it, its securities or assets and that the transactions contemplated hereby will not result in any violations thereof, other than, as to the Target Company, the hereinafter defined Ascot 504 offering effected by prior management prior to Ascot's acquisition of the Subsidiary, and as to that, the restructure provisions of Section 4.9 of this Agreement provide the Holding Company with full protection therefrom. (6) The issuance of the Holding Company Stock and the transfer of the Target Company Stock complies with the requirements for exemption from registration under the statutes, regula tions and rules applicable thereto and of comparable provisions of the laws of the Holding Company's and the Subscribers' states or provinces of domicile. (7) All licenses, patents and intellectual property rights heretofore used, held or owned by the Target Companies continue to be in good standing and not subject to legal or other challenges, and that after the Closing, they will continue to remain in full force, effect and validity. (8) The operations of the several affiliated entities which comprise the total business of which the Target Companies have been a part have been consolidated as to ownership and control under the Target Company, in a manner resulting in the control and ownership thereof by the Target Company, and, that as a consequence of the transactions contemplated by this Agreement, all such assets and operations shall become the indirect property (through ownership of the Target Company's capital stock) of the Holding Company. (9) (A) The draft current report on Commission Form 8-KSB prepared by the Registrant's legal counsel with information provided by the management of the Target Companies, as it pertains to the Target Companies and their related personnel, completely and truthfully addresses each item of information called for by the 102 Commission's Regulation SB, and the Holding Company may use all such information in conjunction with preparation and filing of the current report on Commission Form 8-KSB to be filed with the Commission within 15 days after the Closing (hereinafter referred to as the Target Companies Disclosure Responses"). (B) The Target Companies Disclosure Responses have been completed and answered in an accurate and complete fashion, and do not fail to disclose any information necessary to render the information provided, not misleading. (b) The obligations of the Subscribers under this Agreement are subject to the Holding Company's satisfaction, or the written waiver thereof by the Subscribers (acting by majority of Target Company shares of common stock held by them immediately prior to the Closing), of the following conditions prior to the Closing (the "Subscribers' Conditions Precedent"): (1) That all covenants, agreements, actions, proceedings, instruments and documents required to be carried out or delivered by the Holding Company pursuant to this Agreement shall have been performed, complied with or delivered to the Subscriber in accordance with the terms thereof. (2) That the warranties and representations made by the Holding Company in this Agreement shall be true and correct in all material respects on and as of the date of the Closing and shall be deemed to be made on and as of such date. (3) That the issuance of the Holding Company Stock and the transfer of the Target Company Stock complies with the requirements for exemption from registration under the statutes, regulations and rules applicable thereto, including, without limitation, the provisions of Sections 4(1), 4(2) or 4(6) of the Securities Act of 1933, as amended, of Regulation D promulgated thereunder, and of comparable provisions of the laws of the Holding Company's and the Subscriber's states or provinces of domicile. 3.2 Conditions Subsequent (a) The obligations of the Parties are subject to the condition subsequent that the Subsidiary's Financial Statements and all financial data concerning the Target Company (assuming that the restructure provisions of Section 4.9 doe not become applicable) complies or can within the 75 day period following the Closing be made to comply with the requirements of Regulation S-B promulgated under the Exchange Act; provided that: (1) In the event that the Commission advises the Holding Company that the Target Companies' financial statements (excluding pro forma financial statements) filed with the Form 8-KSB of the Holding Company relating to the acquisition of the Target Company, os an amendment thereto fail to comply in a material respect with generally accepted accounting principals or the requirements of Regulation S-B and the Commission is unwilling to waive such deficiencies, the Holding Company, the Subscribers and the Target Companies will use their best efforts to correct the subject financial statements in such manner as will satisfy the Commission's objections thereto or cause the Commission to withdraw its objections; 103 (2) If such corrections are not affected or such objections withdrawn within three months after any deficiencies are raised by the Commission, the Holding Company may elect to rescind this Agreement, ab initio, unless the Parties can, at such time, agree on a restructuring of this transaction in a manner meeting the applicable reporting requirements imposed by applicable federal and state securities law requirements; (3) If prior to the expiration of the three month correction period set forth in the preceding paragraph, the Commission advises the Holding Company that it intends to take enforcement action or to disrupt trading in the Holding Company's securities as a result of deficiencies in the Target Companies' financial statements, then, at the Holding Company's option, it may elect to rescind this Agreement, ab initio, unless the Parties and the Commission can, at such time, agree on a restructuring of this transaction in a manner meeting the reporting requirements imposed by applicable federal and state securities law requirements, as a result of which the Commission will refrain from taking the actions threatened. (4) In the event that this condition subsequent becomes applicable and this Agreement is rescinded, ab initio, then all sums advanced to or invested in the Target Companies by the Holding Company shall be converted into secured promissory notes of the Target Companies, as co-makers, with a term calling for balloon installments of principal and interest at the annual rate of 10%, due and payable on the 30th day prior to the date for payment of the Holding Company's Class A, Series A, Convertible, Subordinated Debentures (the "American Internet Notes"), the American Internet Notes to be secured by a first lien on all of the Target Companies' assets (tangible, intangible, current or inchoate), subject only to such prior liens as currently exist as of the date of this Agreement. (b) This Agreement is subject to the condition subsequent that the offering effected by the Target Company in reliance on Commission Rule 504 prior to its acquisition of the Subsidiary under prior management fully complied with all requirements of applicable state and federal securities laws, provided that, if the Parties are not mutually satisfied that this condition has been met within 30 days following the Closing, then this Agreement shall be restructured as called for under Section 4.9 of this Agreement, such restructuring to be deemed effective ab initio. 3.3 Closing. The Closing on this transaction shall take place as follows: (a) The Closing on this transaction will take place on the business day following the date on which each of the Parties have advised the others that all conditions precedent have been complied with, but not later that June 30, 1999, with all required Closing documents to be pre-cleared and exchanged by overnight post by legal counsel to the Parties within one business day prior to any scheduled Closing, it being currently contemplated that such closing will take place on Thursday, June 24, 1999, at the offices of Yankees in Boca Raton, Florida. (b) The Closing may be adjourned and reconvened at another physical location, if required, at the request of any Party, provided that it is completed prior to July 15, 1999. 104 (c) In the event that the Closing has not taken place by July 15, 1999, then any Party may terminate this Agreement by provision of notice of such election to all other Parties, in the manner hereinafter set forth for provision of notice generally, in which case, all rights and obligations under this Agreement shall be terminated, no Party having any rights against another Party, or incurring any liabilities to another Party, as a result of this Agreement. 3.4 Items to be Delivered at the Closing by the Target Company, the Subsidiary and the Subscribers. At the Closing, Mr. Gleason, on behalf of the Target Company, the Subsidiary and the Subscribers, will deliver the following items to the Holding: (a) (1) Certificates for the shares of the Target Company Stock, duly endorsed or with stock power attached with appropriate signature guarantees (except for any original issue shares by the Target Company required to adjust the total Target Company shares delivered to equal the 90% requirement heretofore set forth), in form and substance adequate to permit immediate transfer thereof to the Holding Company; (2) For purposes of facilitating the restructuring called for by Section 4.9, should it become applicable, certificates for all of the shares of the Subsidiary's capital stock, duly endorsed or with stock power attached with appropriate signature guarantees in form and substance adequate to permit immediate transfer thereof to the Holding Company or in the name of the Holding Company; (b) Certification from an officer of the Target Company to the effect that the management of the Target Companies have been urged to consult with legal counsel in conjunction with all aspects of the transactions reflected in this Agreement and that either after consulting with counsel or having determined to proceed without counsel, he or they reasonably believe that: (1) The issuance of the Holding Company Stock to the Subscribers will not require any actions in the Subscriber's states or provinces of domicile, other than such actions as have been taken no later than the day prior to the Closing, in order to comply with such states' or provinces' laws, regulations and rules governing private placements, and that such issuance will not violate any such laws, regulations or rules; and (2) The transfer of the Target Company Stock as contemplated by this Agreement meets the requirements of the exemption from registration requirements provided by Sections 4(1), 4(2) or 4(6) of the Securities Act of 1933, as amended. (c) Certification from the Target Company's chief financial officer indicating that, after a review of the Target Companies' books and records from the date of the Subsidiary's latest financial statements annexed hereto until the fifth day prior to the Closing, such review did not give such officer cause to believe that any materially detrimental matters have occurred, or that there have been any materially detrimental changes in the financial condition of the Target Companies, other than as disclosed in this Agreement. (d) An investment letter executed by each Subscriber in the form annexed hereto as exhibit 3.4(d). (e) Certified officers' certificates of resolutions of the boards of directors of the Target Companies irrevocably and unqualifiedly approving this Agreement and all instruments and agreements called for hereby, and authorizing, empowering and directing the officers of the Target Companies to enter into this Agreement and to take all actions required to comply with the terms hereof. 105 3.5 Items to be Delivered at the Closing by the Holding Company. At the Closing, the Holding Company will deliver the following to Mr. Gleason, receiving them on behalf of the Subscribers: (a) Certified Board of Directors resolutions and signed, irrevocable instructions to the Holding Company's transfer agent instructing it to immediately issue certificates in the aggregate amount of 2,250,000 shares in the names of the Subscribers, allocated in proportion to their ownership of the Target Company Stock on the date of the Closing, and to reserve 4,500,000 shares of the Holding Company's common stock for potential future issuance, as provided for in this Agreement. (b) An opinion from the Holding Company's legal counsel that the issuance of the Holding Company Stock as contemplated by this Agreement will meet the requirements of the exemption from registration requirements provided by Section 4(2) of the Securities Act of 1933, as amended. (c) A certification from the Holding Company's chief financial officer indicating that, after a review of the Holding Company's books and records from the date of the Holding Company's latest financial statements annexed hereto until the fifth day prior to the Closing, such review did not give such officer cause to believe that any materially detrimental matters have occurred, or that there have been any materially detrimental changes in the financial condition of the Holding Company, other than as disclosed in this Agreement. (d) Certified officers' certificates of resolutions of the Holding Company's board of directors irrevocably and unqualifiedly approving this Agreement and all instruments and agreements called for hereby, and authorizing, empowering and directing the officers of the Holding Company to enter into this Agreement and to take all actions required to comply with the terms hereof. 3.6 Closing Costs. Except as expressly provided in this Agreement, each Party shall pay their own Closing costs. 3.7 Brokers. (a) This transaction has been brought about with the assistance of Yankees which is entitled to compensation from the Holding Company in accordance with the terms of its consulting agreement with the Holding Company, heretofore filed as an exhibit to the Holding Company's Exchange Act Reports (the "Yankees Agreement"). (b) Except as set forth in this Agreement: (1) The Subscribers, the Target Company and the Subsidiary hereby represent and warrant to the Holding Company that it will not be subject to and will indemnify and hold it harmless against any claims of brokers for commissions or other compensation in connection with this Agreement and the consummation of the transactions contemplated hereby. 106 (2) The Holding Company hereby represents and warrants to the Subscribers, the Target Company and the Subsidiary that, except as disclosed in this Agreement, it has dealt with no brokers in conjunction with its contemplated acquisition of the Target Companies. Article Four Covenants 4.1 Post Closing Performance Criteria. (a) Whether or not the restructuring provisions of Section 4.9 become operative, the Holding Company will issue additional shares of its common stock to the Subscribers as additional shares exchanged for the Target Company Stock or if applicable pursuant to Section 4.9, all of the Subsidiary's capital stock (the "Additional Exchange Shares"), predicated on the Target Companies' attaining the following annual net, pre-tax profit thresholds determined as of December 31 of each year in accordance with generally accepted accounting principals, consistently applied ("GAAP"), as follows: Goal Time Frame Additional Exchange Shares $200,000 1999 500,000 Shares $500,000 2000 800,000 Shares $1,000,000 2001 800,000 Shares $1,5000,000 2002 800,000 Shares $2,000,000 2003 800,000 Shares $2,500,000 2004 800,000 Shares (b) In the event that the thresholds are not attained and the Holding Company has provided the Target Companies with at least $250,000 in funding for their operations, then: (1) If the net, pre tax earnings are less than 33% of the required threshold during the subject 12 month period, the Additional Exchange Shares for such period will be forfeited; (2) If the net, pre tax earnings are between 33% and 80% of the required threshold during the subject 12 month period, the Additional Exchange Shares for such period and the required threshold will be carried over to the next year, increasing both the aggregate threshold and the aggregate bonus attainable for such year; and (3) If the net, pre tax earnings are between 80% and 100% of the required threshold during the subject 12 month period, the Additional Exchange Shares for such period shall be prorated. (c) In the event that the thresholds are not attained but the Holding Company has not provided the Target Companies with at least $250,000 in funding for its operations, then, the Additional Exchange Shares for such period shall be prorated. 107 4.2 Employment of Certain Subscribers. (a) The Holding Company hereby acknowledges that two of the Subscribers, Mr. Gleason and Michael D. Umile ("Mr. Umile") are parties to long term employment agreements with the Target Companies which call for an aggregate of annual compensation in the amount of $75,000 each, copies of each employment agreement being annexed hereto and made a part hereof as composite exhibit 4.2 (the "Subscribers' Employment Agreements"). (b) The Holding Company hereby covenants and agrees that it will not take any actions compelling the Target Companies to terminate the Subscribers' Employment Agreements, except in the event of material cause, as defined therein, or as may otherwise be required by law. 4.3 Maintenance of Target Companies. Except as approved by the Holding Company's Board of Directors, on a case by case basis during the interim between execution of this Agreement and either the Closing or termination thereof: (a) The Target Companies shall not sell or transfer any of their material assets, real, personal, tangible or intangible, other than in the ordinary course of business, without the Holding Company's explicit prior written consent. (b) The Target Companies will keep all of their material assets in good standing, order and repair and shall cause any and all necessary remedies and repairs thereto to be made on or before the Closing. (c) The Target Companies will use all reasonable efforts to assure that all of their material employees remain in their employ following the Closing; (d) The Target Companies will use all reasonable efforts to assure that all of their material contracts and business relationships remain in good standing and in full force and effect following the Closing. 4.4 Cooperation. (a) The Parties and their agents shall have reasonable access to the premises and assets of the others for the purpose of familiarizing themselves with the operations of each others businesses. (b) The Parties agree to cooperate with each other and to render a reasonable amount of assistance in the orderly integration of the business of the Target Companies into the Holding Company's operations and the familiarization of the Parties therewith. 4.5 Post Closing Legal Activities. (a) The Holding Company's general counsel shall prepare and file all required reports of the transactions contemplated by this Agreement with the Commission, such reports to include a detailed report of special event on Commission Form 8-KSB, Commission Forms 3, 4 and 5 and Commission Schedules 13D or 13G for the Subscribers and any current control persons of the target Companies, and such other materials, and such other matters as, in the opinion of the Holding Company's management, may be required. 108 (b) The Parties hereby covenant and agree to fully cooperate with the Holding Company's general counsel in the timely preparation and filing of all such materials and reports, all of which are due on or before the fifteenth day following the Closing. 4.6 Covenants of the Holding Company (b) During the five years following the Closing, the Holding Company shall use its best efforts to assure that: (1) At least one designee of the Subscribers is nominated for membership on the Holding Company's Board of Directors at each meeting of the Holding Company's stockholders or directors at which the membership of its Board of Directors is up for election, and to use their best efforts consistent with applicable law to secure such nominee's election, so that the membership of the Holding Company's Board of Directors includes at least one designee of the Subscribers; (2) Designees of the Subscribers are elected to at least two thirds of the seats on the Target Companies' boards of directors; and (3) On one occasion only, provide "piggy back" registration rights covering up to an aggregate of 35,000 shares of the Holding Company's Stock obtained pursuant to this Agreement to Messrs. Bruce Drezner and Gary Walk; Theodore Gill and Susan Gill, his wife, as tenants by the entireties; and, Ms. Lyn Poppiti. (c) The Holding Company will use its best efforts to fully enforce the stock lock up and voting agreement in the form annexed hereto and made a part hereof as exhibit 4.6(b) (the "Lock-Up & Voting Agreement, entered into by the Holding Company's current officers, directors and principal stockholders (the "Holding Company's Principals"). 4.7 Additional Covenants of the Holding Company (a) Within five business days following the Closing, the Holding Company will make a direct equity investment in the Target Company of $100,000 and will use its best efforts to increase its direct equity investments in the Target Company to $250,000 within 90 days after the Target Companies provide the Holding Company with the Target Companies' financial statements required for filing with the Commission, as described in Articles Two and Three. (b) The Subscribers and the Target Companies hereby covenant and agree to use their best efforts to assist the Holding Company in developing and effecting its capital raising activities by, among other things, providing and disseminating all information required in conjunction therewith on a timely basis and participating in meetings, telephone conferences and other events with potential funding sources, as arranged by or for the Holding Company. (c) The Holding Company may from time to time, at the request of the Target Companies, make available shares or units of the Holding Company's securities for purposes of acquisitions by the Target Companies or for use as compensation to the Target Companies' employees, provided that 109 in each such instance, the Target Companies shall be charged a price equal to 85% of the price of such securities determined on the basis of the last transaction price reported therefor by any NASD member firm on the OTC Bulletin Board, or such superior market or exchange on which the Holding Company's securities are then traded, or, if no such market exists due to the non-trading nature of the securities involved, then at the last price therefor recorded by the Holding Company, adjusted based on the change in the value in the Holding Company's stockholders' equity per share, since such date, such price to be charged as an expense against the Target Companies' earnings for purposes of determining eligibility for the additional exchange shares compensation issuable to the Subscribers and any other purposes required by GAAP. 4.8 Additional Covenants of the Subscribers and the Target Companies. (a) Being aware of the continuing information disclosure obligations applicable to publicly held companies, the Subscribers and the Target Companies hereby covenant and agree that they will develop, implement and maintain record development and retention systems and compliance procedures compatible with any procedures developed, implemented or maintained by the Holding Company, for purposes of assuring timely compliance with reporting requirements under federal and state securities laws, federal, state and local tax laws and any other laws, regulations, rules, ordinances or orders which may be applicable to the business operations of the Holding Company and its subsidiaries. (b) The Subscribers and the Target Companies hereby covenant and agree that they will assist the Holding Company to develop and implement an acquisition program designed to assist the Holding Company to develop into a diversified Internet and related activity holding company with the goal of becoming a material participant in the emerging Internet based global communications and commerce industry; and, to assist the Holding Company to develop, implement and engage in periodic fund raising efforts required to properly capitalize such acquisition activities. 4.9 Restructuring Covenant. Notwithstanding anything in this Agreement to the contrary: (a) In the event that within 30 days after the Closing the Parties are not satisfied as to the legality of the offering of the Target Company's securities by prior management of the Target Company in reliance on Commission Rule 504 effected during the period staring on or about March 2, 1998 and ending on or about August 20, 1998, as reflected in the Form D, subscription execution records and transfer agency records annexed hereto and made a part hereof as composite exhibit 4.9(a) (the "Ascot Rule 504 offering" and the "504 Documents," respectively), then this Agreement shall, without any further required action by any Party other than delivery of a notice to the Parties by the Registrant's legal counsel (after the fact), be restructured by the withdrawal of the Target Company as a party hereto other than for the limited purpose of consenting to the assignment and transfer of all of the Subsidiary's common stock directly to the Holding Company and the releases, acknowledgments and covenants and set forth in this Section 4.9, in consideration for the release by the Holding Company of the Target Company from any liability to the Holding Company arising from expenses associated with negotiating this Agreement, preparing the instruments and documents required hereby and effecting the transactions called for hereby, it being the clear agreement and understanding of the Parties that as a result of such restructuring: 110 (1) All rights of the Target Company granted and obligations assumed hereby will devolve on the Subsidiary; (2) The Subsidiary shall become a direct wholly owned subsidiary of the Holding Company; (3) The Target Company will have no rights to any compensation or of any other kind under this Agreement or from the Subscribers, the Subsidiary or the Holding Company, from any cause or reason whatsoever; (4) The restructuring will be irrevocably considered as full, complete and adequate consideration for a general release from any and all liabilities, whether current or inchoate, of the Subscribers, the Subsidiary or the Holding Company to the Target Company; (5) All liabilities of the Target Company to the Subscribers or the Subsidiary as a result of any misrepresentation, breach of covenants or breach of conditions under the exchange agreement between some of the Subscribers, the Subsidiary and the Target Company dated February 28, 1999, a copy of which is annexed hereto and made a part hereof as composite exhibit 4.9(a)(5) (the "Exchange Agreement"), including any arising as a result of legal deficiencies in the Ascot Rule 504 offering, will be preserved for subsequent disposition in conjunction with ultimate disposition of the Target Company, as described below; (6) All assets of the Target Company used directly or indirectly by the Subsidiary in the operation of its business or which the Subsidiary or the Holding Company believe to be reasonably necessary for the operations or management of the Subsidiary shall be deemed unconditionally conveyed to the Subsidiary by the Target Company, as of the Closing; (7) The Target Company will become a shell temporarily controlled by the Subscribers until they, with the assistance of the Registrant, Yankees and their legal counsel, can make arrangements to either dissolve the Target Company or rescind all transactions pursuant to which the Target Company originally acquired the Subsidiary, returning control thereof to the former management and subscribers to the Ascot Rule 504 offering. (b) Such restructuring will have no effect on the rights of the Subscribers hereunder, all of which shall remain intact. (c) The Target Company hereby grants to the Holding Company, with full power of delegation and substitution, an irrevocable power of attorney coupled with an interest, in the Form annexed hereto and made a part hereof as exhibit 4.9(c) (the "Target Company's Power of Attorney"), to take any acts or execute any documents, instruments, certificates, forms of releases, confessions of judgment or other documents or instruments on behalf of the Target Company, reasonably designed to effect the provisions of this Section 4.9, such power of attorney to survive the Closing and the restructuring described in this Section 4.9. (d) No Party shall be required to initiate any proceedings or actions of any kind as a condition to exercise any of the rights granted in this Section 4.9. (e) The Holding Company shall, in the event of any disagreement concerning the applicability or interpretation of this Section 4.9, be irrevocably deemed the final authority on such decision, to be made in its sole and exclusive discretion. 111 Article Five Miscellaneous 5.1 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. 5.2 Notice. (a) 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 the Holding Company: Equity Growth Systems, inc. 8001 DeSoto Woods Drive; Sarasota, Florida 34243; Telephone (941) 358-8182; Fax (941) 358-8423 Attention: Charles J. Scimeca, President; with a copy to G. Richard Chamberlin, Esquire; General Counsel Equity Growth Systems, inc. 14950 South Highway 441; Summerfield, Florida 34491 Telephone (352) 694-6714, Fax (352) 694-9178; and, e-mail, GrichardCh@aol.com. To the Subscribers: At such addresses as they provide the Holding Company's transfer agent for such purpose. To the Target Company: American Internet Technical Centers, Inc. 440 East Sample Road; Pompano Beach, Florida 33056 Attention: J. Bruce Gleason, President. Telephone (954) 943-4748; Fax (954) 943-4046; e-mail aitc2@bellsouth.net To the Subsidiary: American Internet Technical Center, Inc. 440 East Sample Road; Pompano Beach, Florida 33056 Attention: J. Bruce Gleason, President. Telephone (954) 943-4748; Fax (954) 943-4046; e-mail aitc2@bellsouth.net 112 To Yankees: The Yankee Companies, Inc. 902 Clint Moore Road, Suite 136; Boca Raton, Florida 33487 Attention: Leonard Miles Tucker, President Telephone (561)998-2025, Fax (561) 998-3425; and, e-mail carrington@flinet.com; 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. (b) (1) The Parties acknowledge that Yankees serves as a strategic consultant to the Holding Company and has acted as scrivener for the Parties in this transaction but that Yankees is neither a law firm nor an agency subject to any professional regulation or oversight. (2) Because of the inherent conflict of interests involved, Yankees has advised all of the Parties to retain independent legal and accounting counsel to review this Agreement and its exhibits and incorporated materials on their behalf. (3) The decision by any Party not to use the services of legal counsel in conjunction with this transaction shall be solely at their own risk, each Part acknowledging that applicable rules of the Florida Bar prevent the Holding Company's general counsel, who has reviewed, approved and caused modifications on behalf of the Holding Company, from representing anyone other than the Holding Company in this transaction. 5.3 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. 5.4 Survival. The several representations, warranties and covenants of the Parties contained herein shall survive the execution hereof and the Closing hereon 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 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. 113 5.6 Governing Law. This Agreement shall be construed in accordance with the substantive and procedural laws of the State of Delaware (other than those regulating taxation and choice of law) but any proceedings pertaining directly or indirectly to the rights or obligations of the Parties hereunder shall, to the extent legally permitted, be held in Broward County, Florida. 5.7 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. 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. 5.8 Litigation. (a) 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. (b) 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 ex clusively resolved through the following procedures: (1) (A) First, the issue shall be submitted to mediation before a mediation service in Broward County, Florida to be selected by lot from six alternatives to be provided, three by Yankees as agent for the current Directors and stockholders of the Holding Company and three by the Subscribers acting by majority vote (based on their relative stock ownership in the Holding Company). (B) The mediation efforts shall be concluded within ten business days after their in itiation 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 Broward County, Florida to be selected by lot, from six alternatives to be provided, three by Yankees as agent for the current Directors and stockholders of the Holding Company and three by the Subscribers acting by majority vote (based on their relative stock ownership in the Holding Company). (3) (A) Expenses of mediation shall be borne by the Subsidiary if successful. 114 (B) Expenses of mediation, if unsuccessful and of arbitration shall be borne by the Party or Parties against whom the arbitration decision is rendered. (C) If the terms of the arbitral award do not establish a prevailing Party, then the expenses of unsuccessful mediation and arbitration shall be borne equally by the Parties involved. 5.9 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. 5.10 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. 5.11 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. 5.12 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. 5.13 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 exchanging stockholders in a transaction meeting the requirements of Section 368)(a)(1)(B) of the Code, and parties incidental thereto. 5.14 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 Commission. 115 5.15 License. (a) This Agreement is the property of Yankees and the use hereof by the Parties is authorized hereby solely for purposes of this transaction. (b) The use of this form of agreement or of any derivation thereof without Yankees' prior written permission is prohibited. (c) This Agreement shall not be construed more strictly against any Party as a result of its authorship. 5.16 Exhibit Index. Exhibit Description 0.1 Subscribers' Data & Powers of Attorney 1.3 Target Company's Disclosed Liabilities 2.1 Holding Company's Warranty Exceptions 2.2 Target Companies' Warranty Exceptions 2.2(a) List of Real and Personal Property Owned or Leased by Target Company 2.2(i) Target Companies' Unaudited Consolidated Financial Statements 2.2(x) Target Company's Insurance Policies or Binders 3.4(d) Form of Investment Letters 4.2 Subscribers' Employment Agreements 4.6(b) The Lock-Up & Voting Agreement 4.9(a) The 504 Documents 4.9(a)(5) The [Target Companies] Exchange Agreement 4.9(c) Target Company's Power of Attorney Signatures Subscribers' Powers of Attorney In Witness Whereof, the Parties have caused this Agreement to be executed effective as of the date last set forth below. Signed, sealed and delivered In Our Presence: Equity Growth Systems, inc. - - --------------------------------- _________________________________ By: ________________________________ Charles J. Scimeca, President (Corporate Seal) Attest: ______________________________ G. Richard Chamberlin, Secretary Dated: June 25, 1999 116 American Internet Technical Centers, Inc. (A Nevada corporation) _________________________________ _________________________________ By: _______________________________ J. Bruce Gleason, President (Corporate Seal) Attest: ______________________________ Michael D. Umile, Secretary Dated: June 24, 1999 American Internet Technical Center, Inc. (A Florida corporation) _________________________________ _________________________________ By: _______________________________ J. Bruce Gleason, President (Corporate Seal) Attest: ______________________________ Michael D. Umile, Secretary Dated: June 25, 1999 Subscribers - - --------------------------------- _________________________________ By: ______________________________ . Bruce Gleason, their duly designated and serving attorney-in-fact, pursuant to the powers of attorney annexed hereto and made a part hereof. Dated: June 25, 1999 The Yankee Companies, Inc. for the limited purposes specifically set forth in this Agreement - - --------------------------------- _________________________________ By: _______________________________ Leonard Miles Tucker, President (Corporate Seal) Attest: ____________________________ William A. Calvo, III, Secretary Dated: June 25, 1999 117 EXHIBIT 0.1 of the Reorganization Agreement Limited Power of Attorney State of Florida } County of Palm Beach } Ss.: I, Michael D. Umile, hereby appoint J. Bruce Gleason, an individual residing at 44 Havenwood Drive; Pompano Beach, Florida 33064 as my attorney-in-fact to negotiate and execute all documents, agreements, instruments and corrective instruments on my behalf and in my name, as if I myself had undertaken such functions personally, with full recourse against me, in conjunction with all matters concerning the Reorganization Agreement with Equity Growth Systems, inc. and all instruments and agreements called for in the agreement, and I hereby authorize, direct and empower Mr. Gleason to enter into the Reorganization Agreement on my behalf and for him to take all actions required to comply with the terms, thereof, and I hereby further authorize, empower and direct Mr. Gleason to handle all related stock issuance, cancellations, reservations and expenditures related to my American Internet Technical Centers, Inc. stock. IN WITNESS WHEREOF, I have executed this Indenture, on this ____ day of ________, 1999. Signed, Sealed & Delivered In Our Presence - - ---------------------- - - ---------------------- ---------------------- Michael D. Umile SWORN TO BEFORE ME, an official duly authorized by the State of Florida to administer oaths, on the date first above written by the above referenced grantor, who provided me with personal identification, as follows:. My Commission expires: [SEAL] ---------------------- Notary Public Limited Power of Attorney State of Florida } County of } Ss.: I, Lynn Poppiti, hereby appoint J. Bruce Gleason, an individual residing at 44 Havenwood Drive; Pompano Beach, Florida 33064 as my attorney-in-fact to negotiate and execute all documents, agreements, instruments and corrective instruments on my behalf and in my name, as if I myself had undertaken such functions personally, with full recourse against me, in conjunction with all matters concerning the Reorganization Agreement with Equity Growth Systems, inc. and all instruments and agreements called for in the agreement, and I hereby authorize, direct and empower Mr. Gleason to enter into the Reorganization Agreement on my behalf and for him to take all actions required to comply with the terms, thereof, and I hereby further authorize, empower and direct Mr. Gleason to handle all related stock issuance, cancellations, reservations and expenditures related to my American Internet Technical Centers, Inc. stock. 118 IN WITNESS WHEREOF, I have executed this Indenture, on this ____ day of ________, 1999. Signed, Sealed & Delivered In Our Presence - - ---------------------- - - ---------------------- ---------------------- Lyn Poppiti SWORN TO BEFORE ME, an official duly authorized by the State of Florida to administer oaths, on the date first above written by the above referenced grantor, who provided me with personal identification, as follows:. My Commission expires: [SEAL] ---------------------- Notary Public EXHIBIT 1.3 of the Reorganization Agreement OFFICER'S CERTIFICATION for AMERICAN INTERNET TECHNICAL CENTER, INC., a Florida corporation Exhibit 1.3: Disclosed Liabilities We, J. Bruce Gleason, President, and Michael D. Umile, Secretary, both duly elected and currently serving officers of American Internet Technical Center, Inc., a Florida corporation,(hereinafter referred to as the "Corporation"), hereby certify, they reasonably believe that the following is a true and correct listing of all long term Liabilities, other than with Equity Growth Systems, inc. or other than with each other, as of June 24, 1999 for the Corporation: 2. Arbour Building: Lease is month to month, disclosed on contracts certification of even date. 3. Marketing Agreement dated June 15, 1999, with Amazia's MarketPlace disclosed on contracts certification of even date. 4. Life Insurance Premiums disclosed on Insurance binders and contract certification of even date. 5. Workman's Comp. and Employment Liability on Insurance binders and contract certification of even date. 6. Life Insurance premiums disclosed in insurance certification 7. Lawrence S. Benjamin v. American Internet Technical Center, (Ohio, case no. 755845). Settlement Agreement without the admission of liability anticipated. Copy of proposed settlement agreement is attached. $7,500.00 119 8. Buckingham, Doolittle, Burroughs, LLP, attorney's fees. $4,000.00 9. Daszkal, Bolton & Manela, CPA firm, $3,500.00 Total: $15,000.00 IN WITNESS WHEREOF, we have hereunto set our hand and seal, effective as of the 25th day of June , 1999. American Internet Technical Center, Inc. -------------------- ---------------------- J. Bruce Gleason Michael D. Umile President Secretary BEFORE ME, the undersigned authority, on this date personally appeared J. Bruce Gleason and Michael D. Umile, who first being duly sworn, deposes, and says: that they are both duly elected officers of AMERICAN INTERNET TECHNICAL CENTER, INC., a Florida corporation, and that they have read the same, know the contents thereof, and that the same is true and correct to the best of their knowledge and belief. Sworn to and subscribed before me this 25th day of June 1999. My commission expires: ---------------------- Notary Public Personally Known or produced I.D. Type of I.D. Produced: 120 OFFICER'S CERTIFICATION for AMERICAN INTERNET TECHNICAL CENTERS, INC., a Nevada corporation Exhibit 1.3: Disclosed Liabilities We, J. Bruce Gleason, President, and Michael D. Umile, Secretary, both duly elected and currently serving officers of American Internet Technical Centers, Inc., a Nevada, corporation, (hereinafter referred to as the "Corporation"), hereby certify, they reasonably believe that the following is a true and correct listing of all long term Liabilities, other than with Equity Growth Systems, inc. or other than with each other, as of June 24, 1999 for the Corporation: None IN WITNESS WHEREOF, we have hereunto set our hand and seal, effective as of the 25th day of June , 1999. American Internet Technical Centers, Inc. -------------------- ---------------------- J. Bruce Gleason Michael D. Umile President Secretary BEFORE ME, the undersigned authority, on this date personally appeared J. Bruce Gleason and Michael D. Umile, who first being duly sworn, deposes, and says: that they are both duly elected officers of AMERICAN INTERNET TECHNICAL CENTERS, INC., a Nevada, corporation ; and that they have read the same, know the contents thereof, and that the same is true and correct to the best of their knowledge and belief. Sworn to and subscribed before me this 25th day of June 1999. My commission expires: ---------------------- Notary Public Personally Known or produced I.D. Type of I.D. Produced: EXHIBIT 2.1 of the Reorganization Agreement OFFICER'S CERTIFICATION for Equity Growth Systems, inc. A publicly held Delaware corporation Exhibit 2.1: Warranty Exceptions We, Charles J. Scimeca, President, and G. Richard Chamberlin, Secretary, both duly elected and currently serving officers of Equity Growth Systems, inc., a publicly held Delaware corporation, (hereinafter referred to as the "Corporation"), hereby certify, they reasonably believe that the following is a true and correct listing of all Warranty Exceptions as of June 24, 1999 for the Corporation: General: We call your attention to the fact that any information filed with the Securities and Exchange Commission to the extent that it is contrary to the information provided in this Reorganization Agreement, is a warranty exception to the Reorganization Agreement signed and executed between the parties. 121 IN WITNESS WHEREOF, we have hereunto set our hand and seal, effective as of the 25th day of June , 1999. Equity Growth Systems, inc. ---------------------- ----------------------- Charles J. Scimeca, President G. Richard Chamberlin President Secretary BEFORE ME, the undersigned authority, on this date personally appeared Charles J. Scimeca and G. Richard Chamberlin, who first being duly sworn, deposes, and says: that they are both duly elected and currently serving officers of EQUITY GROWTH SYSTEMS, inc., a publicly held Delaware, corporation ; and that they have read the same, know the contents thereof, and that the same is true and correct to the best of their knowledge and belief. Sworn to and subscribed before me this 25th day of June 1999. My commission expires: --------------------------- Notary Public Personally Known or produced I.D. Type of I.D. Produced: EXHIBIT 2.2 of the Reorganization Agreement OFFICER'S CERTIFICATION for AMERICAN INTERNET TECHNICAL CENTER, INC., a Florida corporation Exhibit 2.2: Warranty Exceptions We, J. Bruce Gleason, President, and Michael D. Umile, Secretary, both duly elected and currently serving officers of American Internet Technical Center, Inc., a Florida corporation, (hereinafter referred to as the "Corporation"), hereby certify, they reasonably believe that the following is a true and correct listing of all Warranty Exceptions as of June 24, 1999 for the Corporation: Litigation: Although none of the following lists the Corporation as a Defendant, there is a possibility that the Corporation could be adversely affected by the following: 1. The case of Lawrence S. Benjamin v. American Internet Technical Center, (Ohio, case no. 355845), wherein a non-corporate affiliate of the Company is a named party defendant in a class action law suit alleging certain facsimile transmissions violate state and federal law. Settlement negotiations have been conducted in the range of $3,500.00 (initial offer of the Corporation) to $14,000.00, (initial offer of Plaintiff.) The parties have orally agreed to execute a final settlement agreement for $7,500.00. Copy of proposed settlement agreement is attached. The Corporation admits no wrong doing. 122 2. In addition to the above mentioned case, citizen complaints as to certain unsolicited facsimile advertising have been filed in certain states. There exists a potential liability for each complaint of $500.00 per complaint. Complaints have been filed against a non-corporate affiliate in the following states: State of Idaho: Office of State Attorney General, complaint letter January 7, 1999, (Patricia Rohwer, fax on 8/11/98); State of Florida: Office of the State Attorney, letter dated June 18, 1998; State of Maryland: Office of State Attorney, letter dated June 16, 1998, Suzanne Dale, fax dated June 9, 1998; State of Wisconsin: Dept of Agriculture, letter dated January 25, 1999, Peter Chappori, fax on June 22, 1998; Pear, Sperling, Eggan: Michigan attorney's letter dated May 6, 1998, with demand for $500.00, (Domino's Pizza and the Law firm). IN WITNESS WHEREOF, we have hereunto set our hand and seal, effective as of the 25th day of June , 1999. American Internet Technical Center, Inc. -------------------- ---------------------- J. Bruce Gleason Michael D. Umile President Secretary BEFORE ME, the undersigned authority, on this date personally appeared J. Bruce Gleason and Michael D. Umile, who first being duly sworn, deposes, and says: that they are both duly elected officers of AMERICAN INTERNET TECHNICAL CENTER, INC., a Florida corporation, and that they have read the same, know the contents thereof, and that the same is true and correct to the best of their knowledge and belief. Sworn to and subscribed before me this 25th day of June 1999. My commission expires: ---------------------- Notary Public Personally Known or produced I.D. Type of I.D. Produced: 123 OFFICER'S CERTIFICATION for AMERICAN INTERNET TECHNICAL CENTERS, INC., a Nevada corporation EXHIBIT 2.2: Warranty Exceptions We, J. Bruce Gleason, President, and Michael D. Umile, Secretary, both duly elected and currently serving officers of American Internet Technical Centers, Inc., a Nevada, corporation, (hereinafter referred to as the "Corporation"), hereby certify, they reasonably believe that the following is a true and correct listing of all Warranty Exceptions as of June 24, 1999 for the Corporation: Litigation: Although none of the following lists American Internet Technical Center, Inc., a Florida Corporation (hereinafter referred to as "American Internet [Florida]") as a Defendant, there is a possibility that the Corporation could be adversely affected by the following: 1. The case of Lawrence S. Benjamin v. American Internet [Florida], (Ohio, case no. 355845), wherein a non-corporate affiliate of American Internet [Florida] is a named party defendant in a class action law suit alleging certain facsimile transmissions violate state and federal law. Settlement negotiations have been conducted in the range of $3,500.00 (initial offer of American Internet [Florida]) to $14,000.00, (initial offer of Plaintiff.) The parties have orally agreed to execute a final settlement agreement for $7,500.00. Copy of proposed settlement agreement is attached. American Internet [Florida] admits no wrong doing. 2. In addition to the above mentioned case, citizen complaints as to certain unsolicited facsimile advertising have been filed in certain states. There exists a potential liability for each complaint of $500.00 per complaint. Complaints have been filed against a non-corporate affiliate in the following states: State of Idaho: Office of State Attorney General, complaint letter January 7, 1999, (Patricia Rohwer, fax on 8/11/98); State of Florida: Office of the State Attorney, letter dated June 18, 1998; State of Maryland: Office of State Attorney, letter dated June 16, 1998, Suzanne Dale, fax dated June 9, 1998; State of Wisconsin: Dept of Agriculture, letter dated January 25, 1999, Peter Chappori, fax on June 22, 1998; Pear, Sperling, Eggan: Michigan attorney's letter dated May 6, 1998, with demand for $500.00, (Domino's Pizza and the Law firm). IN WITNESS WHEREOF, we have hereunto set our hand and seal, effective as of the 25th day of June , 1999. American Internet Technical Centers, Inc. -------------------- ---------------------- J. Bruce Gleason Michael D. Umile President Secretary BEFORE ME, the undersigned authority, on this date personally appeared J. Bruce Gleason and Michael D. Umile, who first being duly sworn, deposes, and says: that they are both duly elected officers of AMERICAN INTERNET TECHNICAL CENTERS, INC., a Nevada, corporation ; and that they have read the same, know the contents thereof, and that the same is true and correct to the best of their knowledge and belief. Sworn to and subscribed before me this 25th day of June 1999. My commission expires: ---------------------- Notary Public Personally Known or produced I.D. Type of I.D. Produced: 124 EXHIBIT 2.2(a) of the Reorganization Agreement OFFICER'S CERTIFICATION for AMERICAN INTERNET TECHNICAL CENTER, INC., a Florida corporation Exhibit 2.2(a): Real and Personal Property List We, J. Bruce Gleason, President, and Michael D. Umile, Secretary, both duly elected officers of American Internet Technical Center, Inc., a Florida corporation, (hereinafter referred to as the "Corporation"), hereby certify, they reasonably believe that the following is a true and correct listing of the real and personal property as of June 24, 1999 for he Corporation: Real property: None Lease: Month to Month Personal property: Computer Stations including monitors and printers 9 $10.800.00 Hosting servers and software 3 $ 7,400.00 Xerox laser printer 1 $ 640.00 Xerox photocopier 1. $ 810.00 Xerox work center fax unit 1 $ 385.00 Regular fax machines 4 $ 615.00 Telephone and phone system 16 $ 750.00 Work stations/room dividers 12 stations $ 2,100.00 Miscellaneous, Desks, Chairs, File Cabinets $ 1,946.00 Exterior Signs 1 $ 750.00 Total: $26,196.00 125 IN WITNESS WHEREOF, we have hereunto set our hand and seal, effective as of the 25th day of June , 1999. American Internet Technical Center, Inc. -------------------- ---------------------- J. Bruce Gleason Michael D. Umile President Secretary BEFORE ME, the undersigned authority, on this date personally appeared J. Bruce Gleason and Michael D. Umile, who first being duly sworn, deposes, and says: that they are both duly elected officers of AMERICAN INTERNET TECHNICAL CENTER, INC., a Florida corporation, and that they have read the same, know the contents thereof, and that the same is true and correct to the best of their knowledge and belief. Sworn to and subscribed before me this 25th day of June 1999. My commission expires: ---------------------- Notary Public Personally Known or produced I.D. Type of I.D. Produced: OFFICER'S CERTIFICATION for AMERICAN INTERNET TECHNICAL CENTERS, INC., a Nevada corporation Exhibit 2.2(a): Real and Personal Property List We, J. Bruce Gleason, President, and Michael D. Umile, Secretary, both duly elected officers of American Internet Technical Centers, Inc., a Nevada, corporation, (hereinafter referred to as the "Corporation"), hereby certify, they reasonably believe that the following is a true and correct listing of the real and personal property as of June 24, 1999 for the Corporation: Real property: None Lease: None Personal property: None IN WITNESS WHEREOF, we have hereunto set our hand and seal, effective as of the 25th day of June , 1999. American Internet Technical Centers, Inc. -------------------- ---------------------- J. Bruce Gleason Michael D. Umile President Secretary BEFORE ME, the undersigned authority, on this date personally appeared J. Bruce Gleason and Michael D. Umile, who first being duly sworn, deposes, and says: that they are both duly elected officers of AMERICAN INTERNET TECHNICAL CENTERS, INC., a Nevada, corporation ; and that they have read the same, know the contents thereof, and that the same is true and correct to the best of their knowledge and belief. Sworn to and subscribed before me this 25th day of June 1999. My commission expires: ---------------------- Notary Public Personally Known or produced I.D. Type of I.D. Produced: 126 EXHIBIT 2.2(i) of the Reorganization Agreement UNAUDITED FINANCIALS AMERICAN INTERNET TECHNICAL CENTER, INC. BALANCE SHEET DECEMBER 31, 1998 ASSETS Current assets: Cash $ 3,694 Accounts receivable - net of allowance for doubtful accounts $24,914 85,614 Prepaid expenses 4,461 Total current ass 93,769 Property and equipment: 26,196 Less: accumulated depreciation (3,930) Total property and equipment 22,266 Other assets: Deposits 13,000 Total assets $ 129,035 LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Accounts payable $ 38,174 Accrued expenses 21,856 Total current liabilities 60,030 Stockholder's equity: Common stock, $1.00 par value, 200 shares authorized, issued and outstanding 200 Retained earnings 68,805 Total stockholder's equity 69,005 Total liabilities and stockholder's equity $ 129,035 ========== Unaudited-For Management Purposes Only Page 1 127 AMERICAN INTERNET TECHNICAL CENTER, INC. STATEMENT OF INCOME AND RETAINED EARNINGS YEAR ENDED DECEMBER 31, 1998 Revenues earned $ 797,502 Costs of revenues earned 151,502 Gross profit 646,000 Operating expenses: Selling 323,762 General Administrative expenses 135,017 Total Operating Expenses 458,779 Net income $ 187,221 ============ Unaudited-For Management Purposes Only Page 2 128 AMERICAN INTERNET TECHNICAL CENTER, INC. STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY YEAR ENDED DECEMBER 31, 1998 Number of Additional Shares Common Paid-in Retained Stock Capital Earnings Total Balance (deficit), April 15, 1998 200 $ 200 $ - $ - $ 200 Distributions to stockholders - - - (118,416) (118,416) Net income - 1998 - - - 187,221 187,221 Balance (deficit), December 31, 1998 200 $ 200 $ - $ 68,805 $ 69,005
Unaudited-For Management Purposes Only Page 3 AMERICAN INTERNET TECHNICAL CENTER, INC. STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1998 Cash flows from operating activities: Net income $ 187,221 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 3,930 (Increase) decrease in: Accounts receivables (85,614) Prepaid expenses (4,461) Deposits (13,000) Increase (decrease) in: Accounts payable 38,174 Accrued expenses 21,856 Net cash provided by operating activities 148,106 Cash flow from investing activities: Purchases of property and equipment (26,196) Cash flows from financing activities: Issuance of common stock 200 Distributions to stockholders (118,416) Net cash used by financing activitie (118,216) Net increase in cash 3,694 Cash at beginning of period - Cash at end of period $ 3,694 ============= Additional cash payment information: Interest paid $ - ================ Income taxes $ - ================ Unaudited-For Management Purposes Only Page 4 129 EXHIBIT 2.2(x) of the Reorganization Agreement OFFICER'S CERTIFICATION for AMERICAN INTERNET TECHNICAL CENTER, INC., a Florida corporation Exhibit 2.2(x): Insurance Binders and Contracts We, J. Bruce Gleason, President, and Michael D. Umile, Secretary, both duly elected officers of American Internet Technical Center, Inc., a Florida corporation, (hereinafter referred to as the "Corporation"), hereby certify, they reasonably believe that the following is a true and correct listing of all insurance binders or contracts of any kind as of June 25, 1999 for the corporation: Life Insurance: Bruce J. Gleason Banner Life, policy number 17B022746, $300,000 (death benefit), $1,784.00 (Annual premium) Michael Umile Banner Life, policy number 17B022745, $300,000 (death benefit), $1,521.00 (Annual premium) Workman's Comp. and Employment Liability Binder dated 06-12-99: Reliance Insurance Company Code: 0851587 Each accident, 100,000 Disease; each employee: 100,000 Disease policy limit 500,000 Estimated annual premium $1,720.00 IN WITNESS WHEREOF, we have hereunto set our hand and seal, effective as of the 25th day of June , 1999. American Internet Technical Center, Inc. ---------------------- ----------------------- J. Bruce Gleason Michael D. Umile President Secretary BEFORE ME, the undersigned authority, on this date personally appeared J. Bruce Gleason and Michael D. Umile, who first being duly sworn, deposes, and says: that they are both duly elected officers of AMERICAN INTERNET TECHNICAL CENTER, INC., a Florida corporation, and that they have read the same, know the contents thereof, and that the same is true and correct to the best of their knowledge and belief. Sworn to and subscribed before me this 25th day of June 1999. My commission expires: - - ---------------------------------- Notary Public Personally Known or produced I.D. Type of I.D. Produced: 130 OFFICER'S CERTIFICATION for AMERICAN INTERNET TECHNICAL CENTERS, INC., a Nevada corporation Exhibit 2.2(x): Insurance Binders and Contracts We, J. Bruce Gleason, President, and Michael D. Umile, Secretary, both duly elected officers of American Internet Technical Centers, Inc., a Nevada, corporation, (hereinafter referred to as the "Corporation"), hereby certify, they reasonably believe that the following is a true and correct listing of all insurance binders or contracts of any kind as of June 25, 1999 for the corporation: NONE IN WITNESS WHEREOF, we have hereunto set our hand and seal, effective as of the 25th day of June , 1999. American Internet Technical Centers, Inc. ------------------------ ---------------------- J. Bruce Gleason Michael D. Umile President Secretary BEFORE ME, the undersigned authority, on this date personally appeared J. Bruce Gleason and Michael D. Umile, who first being duly sworn, deposes, and says: that they are both duly elected officers of AMERICAN INTERNET TECHNICAL CENTERS, INC., a Nevada, corporation ; and that they have read the same, know the contents thereof, and that the same is true and correct to the best of their knowledge and belief. Sworn to and subscribed before me this 25th day of June 1999. My commission expires: ------------------------- Notary Public Personally Known or produced I.D. Type of I.D. Produced: 131 EXHIBIT 3.4(d) of the Reorganization Agreement FORM OF INVESTMENT LETTER Charles J. Scimeca President Equity Growth Systems, inc. 8001 DeSoto Woods Drive Sarasota, Florida 34243 Dear Sir: I hereby certify and warrant that I am acquiring 1,127,431 shares of Equity Growth Systems, inc.'s (the "Company") unregistered common stock (the "Stock"). I hereby certify under penalty of perjury that upon receipt of the Stock, I will be accepting it for my own account for investment purposes without any intention of selling or distributing all or any part thereof. I represent and warrant that I qualify as an accredited investor (as that term is defined in rule 501 of Regulation D promulgated under authority of the Securities Act of 1933, as amended) or have been specifically excused from such requirement, in writing by the Company's management, or, in the alternative, that I am sophisticated in financial affairs, or have relied on the advice of someone sophisticated in financial affairs, and I able to bear the economic risks of this investment and I do not have any reason to anticipate any change in my circumstances, financial or otherwise, nor any other particular occasion or event which should cause me to sell or distribute, or necessitate or require my sale or distribution of the Stock. No one other than me has any beneficial interest in the Stock. I further certify that I have consulted with my own legal counsel who, after having been apprized by me of all the material facts surrounding this transaction, opined to me, for the benefit of 132 the Company, that this transaction was being effected in full compliance with the applicable securities laws of my state of domicile. I agree that I will in no event sell or distribute any of the Stock unless in the opinion of your counsel (based on an opinion of my legal counsel) the Stock may be legally sold without registration under the Securities Act of 1933, as amended, and/or registration and/or other qualification under then-applicable State and/or Federal statutes, or the Stock shall have been so registered and/or qualified and an appropriate prospectus, shall then be in effect. I am fully aware that the Stock is being offered and sold by the corporation to me in reliance on the exemption provided by Sections 3(b), 4(2) or 4(6) or the Securities Act of 1933, as amended, which exempts the sale of securities by an issuer where no public offering is involved, and on my certifications and warranties. In connection with the foregoing, I consent to your legending my certificates representing the Stock to indicate my investment intent and the restriction on transfer contemplated hereby and to your placing a "stop transfer" order against the Stock in the Company's stock transfer books until the conditions set forth herein shall have been met. I acknowledge by my execution hereof that I have had access to your books, records and properties, and have inspected the same to my full and complete satisfaction prior to my acquisition of the Stock. I represent and warrant that because of my experience in business and investments, I am competent to make an informed investment decision with respect thereto on the basis of my inspection of your records and my questioning of your officers. I further certify that my domicile is located at the address listed in this letter. Very truly yours, /s/ J. Bruce Gleason /s/ ------------------- J. Bruce Gleason 44 Havenwood Drive Pompano Beach, Florida 33064 Accepted: This 25 day of June, 1999. /s/ Charles J. Scimeca /s/ - - ---------------- Charles J. Scimeca, President Equity Growth Systems, inc. 133 FORM OF INVESTMENT LETTER Charles J. Scimeca President Equity Growth Systems, inc. 8001 DeSoto Woods Drive Sarasota, Florida 34243 Dear Sir: I hereby certify and warrant that I am acquiring 1,105,325 shares of Equity Growth Systems, inc.'s (the "Company") unregistered common stock (the "Stock"). I hereby certify under penalty of perjury that upon receipt of the Stock, I will be accepting it for my own account for investment purposes without any intention of selling or distributing all or any part thereof. I represent and warrant that I qualify as an accredited investor (as that term is defined in rule 501 of Regulation D promulgated under authority of the Securities Act of 1933, as amended) or have been specifically excused from such requirement, in writing by the Company's management, or, in the alternative, that I am sophisticated in financial affairs, or have relied on the advice of someone sophisticated in financial affairs, and I able to bear the economic risks of this investment and I do not have any reason to anticipate any change in my circumstances, financial or otherwise, nor any other particular occasion or event which should cause me to sell or distribute, or necessitate or require my sale or distribution of the Stock. No one other than me has any beneficial interest in the Stock. I further certify that I have consulted with my own legal counsel who, after having been apprized by me of all the material facts surrounding this transaction, opined to me, for the benefit of the Company, that this transaction was being effected in full compliance with the applicable securities laws of my state of domicile. I agree that I will in no event sell or distribute any of the Stock unless in the opinion of your counsel (based on an opinion of my legal counsel) the Stock may be legally sold without registration under the Securities Act of 1933, as amended, and/or registration and/or other qualification under then-applicable State and/or Federal statutes, or the Stock shall have been so registered and/or qualified and an appropriate prospectus, shall then be in effect. I am fully aware that the Stock is being offered and sold by the corporation to me in reliance on the exemption provided by Sections 3(b), 4(2) or 4(6) or the Securities Act of 1933, as amended, which exempts the sale of securities by an issuer where no public offering is involved, and on my certifications and warranties. In connection with the foregoing, I consent to your legending my certificates representing the Stock to indicate my investment intent and the restriction on transfer contemplated hereby and to your placing a "stop transfer" order against the Stock in the Company's stock transfer books until the conditions set forth herein shall have been met. I acknowledge by my execution hereof that I have had access to your books, records and properties, and have inspected the same to my full and complete satisfaction prior to my acquisition of the Stock. I represent and warrant that because of my experience in business and investments, I am 134 competent to make an informed investment decision with respect thereto on the basis of my inspection of your records and my questioning of your officers. I further certify that my domicile is located at the address listed in this letter. Very truly yours, /s/ Michael D. Umile /s/ ------------------- Michael D. Umile 210 Oregon Lane Boca Raton, Florida 33487 Accepted: This 25th day of June, 1999. /s/ Charles J. Scimeca /s/ - - ---------------- Charles J. Scimeca, President Equity Growth Systems, inc. FORM OF INVESTMENT LETTER Charles J. Scimeca President Equity Growth Systems, inc. 8001 DeSoto Woods Drive Sarasota, Florida 34243 Dear Sir: I hereby certify and warrant that I am acquiring ________ shares of Equity Growth Systems, inc.'s (the "Company") unregistered common stock (the "Stock"). I hereby certify under penalty of perjury that upon receipt of the Stock, I will be accepting it for my own account for investment purposes without any intention of selling or distributing all or any part thereof. I represent and warrant that I qualify as an accredited investor (as that term is defined in rule 501 of Regulation D promulgated under authority of the Securities Act of 1933, as amended) or have been specifically excused from such requirement, in writing by the Company's management, or, in the alternative, that I am sophisticated in financial affairs, or have relied on the advice of someone sophisticated in financial affairs, and I able to bear the economic risks of this investment and I do not have any reason to anticipate any change in my circumstances, financial or otherwise, nor any other particular occasion or event which should cause me to sell or distribute, or necessitate or require my sale or distribution of the Stock. No one other than me has any beneficial interest in the Stock. I further certify that I have consulted with my own legal counsel who, after having been 135 apprized by me of all the material facts surrounding this transaction, opined to me, for the benefit of the Company, that this transaction was being effected in full compliance with the applicable securities laws of my state of domicile. I agree that I will in no event sell or distribute any of the Stock unless in the opinion of your counsel (based on an opinion of my legal counsel) the Stock may be legally sold without registration under the Securities Act of 1933, as amended, and/or registration and/or other qualification under then-applicable State and/or Federal statutes, or the Stock shall have been so registered and/or qualified and an appropriate prospectus, shall then be in effect. I am fully aware that the Stock is being offered and sold by the corporation to me in reliance on the exemption provided by Sections 3(b), 4(2) or 4(6) or the Securities Act of 1933, as amended, which exempts the sale of securities by an issuer where no public offering is involved, and on my certifications and warranties. In connection with the foregoing, I consent to your legending my certificates representing the Stock to indicate my investment intent and the restriction on transfer contemplated hereby and to your placing a "stop transfer" order against the Stock in the Company's stock transfer books until the conditions set forth herein shall have been met. I acknowledge by my execution hereof that I have had access to your books, records and properties, and have inspected the same to my full and complete satisfaction prior to my acquisition of the Stock. I represent and warrant that because of my experience in business and investments, I am competent to make an informed investment decision with respect thereto on the basis of my inspection of your records and my questioning of your officers. I further certify that my domicile is located at the address listed in this letter. Very truly yours, /s/ Lynn Poppiti /s/ ------------------- Lynn Poppiti 487 Ocean Drive Ocean Beach, Florida Accepted: This 25 day of June, 1999. /s/ Charles J. Scimeca /s/ - - ---------------- Charles J. Scimeca, President Equity Growth Systems, inc. 136 EXHIBIT 4.2 of the Reorganization Agreement Subscribers Employment Agreements (See Exhibit 2.8 of the 8-KSB) EXHIBIT 4.6(b) of the Reorganization Agreement Lock-Up & Voting Agreement (See Exhibit 10.33 of the 8-KSB) EXHIBIT 4.9(a) of the Reorganization Agreement The 504 Documents 137 Offering Memorandum Dated March 2, 1998 Confidential Ascot Industries, Inc. (A Nevada Corporation) 1,600,000 Shares At a Price of S.01 Per Share Ascot Industries Inc., a Nevada corporation (the "Company"), is a company which is in the Internet, advertising and communications business. The Company's principal office is located at 222 Lakeview Avenue, Suite 160-124, West Palm Beach, FL 33401. AN INVESTMENT IN THE COMPANY IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK. INVESTMENT IN THE SECURITIES OFFERED HEREBY IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL FINANCIAL MEANS WHO CAN AFFORD A TOTAL LOSS OF THEIR INVESTMENT AND WILL BE SOLD ONLY TO ACCREDITED OR OTHERWISE QUALIFIED INVESTORS. FOR A DISCUSSION OF THE MATERIAL RISKS IN CONNECTION WITH THE PURCHASE OF THE SHARES, SEE "INVESTMENT RISK CONSIDERATIONS". THE SECURITIES ARE BEING OFFERED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 AS AMENDED (THE"ACT'), IN RELIANCE UPON THE EXEMPTION FROM REGISTRATION AFFORDED BY SECTIONS 4(2) AND 3(B) OF THE SECURITIES ACT AND REGULATION D PROMULGATED THEREUNDER. THIS MEMORANDUM HAS NOT BEEN REVIEWED OR APPROVED OR DISAPPROVED, NOR HAS THE ACCURACY OR ADEQUACY OF THE INFORMATION SET FORTH HEREIN BEEN PASSED UPON BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES ADMINISTRATOR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS OFFERING IS BEING MADE PURSUANT TO THE EXEMPTIONS AFFORDED BY SECTIONS 4(2! OR 3(B) OF THE SECURITIES ACT OF 1933 AN RULE 504 PROMULGATED THEREUNDER AND STATE SMALL CORPORATE OFFERING REGISTRATION PROVISIONS. PURSUANT TO RULE 504 THE SHARES SOLD HEREBY WILL NOT BE SUBJECT TO ANY LIMITATIONS ON RESALE THEREOF UNDER FEDERAL LAW. THE SHARES MAY HOWEVER, BE SUBJECT TO LIMITATIONS ON THE OFFER AND SALE AND THE RESALE OF THE SHARES IMPOSED BY THE BLUE SKY LAWS OF INDIVIDUAL STATES IN ADDITION THE COMPANY INTENDS TO FILE THE REQUIRED DOCUMENTS IN CERTAIN OTHER STATES IDENTIFIED BY MANAGEMENT AS HAVING POSSIBLE INVESTOR INTEREST AND USE ITS BEST EFFORTS TO QUALIFY THE SHARES FOR SECONDARY TRADING IN SUCH STATES, THOUGH NO ASSURANCE CAN BE GIVEN THAT IT WILL BE ABLE TO QUALIFY THE SHARES FOR SECONDARY TRADING IN ANY SUCH STATES IN WHICH IT SUBMITS SUCH APPLICATIONS AND DOCUMENTS. AN INABILITY TO QUALIFY THE SHARES FOR SECONDARY TRADING WILL CREATE SUBSTANTIAL RESTRICTION ON THE TRANSFERABILITY OF SUCH SHARES 138 WHICH MAY NEGATE THE BENEFIT OF THE EXEMPTION PROVIDED BY RULE 504 OF REGULATION D. SEE "RISK FACTORS." THE COMPANY WILL USE ITS BEST EFFORTS TO CAUSE THE SHARES TO BE LISTED ON THE ELECTRONIC BULLETIN BOARD OPERATED BY THE NATIONAL ASSOCIATION OF SECURITIES DEALERS INC AS A MARKET IN WHICH THEY MAY BE TRADED. THERE IS NO ASSURANCE THAT SUCH LISTING WILL BE OBTAINED OR THAT IF A LISTING IS OBTAINED THAT ANY MARKET FOR THE SHARES WILL DEVELOP, OR IF DEVELOPED, THAT IT WILL BE SUSTAINED. Subscription Proceeds to the Price Commissions(1 ) Company Per Share $0.01 $ -0- $ 16,000 ( 1 ) The Shares are being sold by the Company's sole Officer and no commissions will be paid in connection with the Offering. Ascot Industries, Inc. 222 Lakeview Avenue Suite 160-124 West Palm Beach, FL 33401 (561) 833-5092 NOTICES TO PROSPECTIVE INVESTORS THIS OFFERING MEMORANDUM IS SUBMITTED IN CONNECTION WITH THE OFFERING OF THE SHARES AND MAY NOT BE REPRODUCED OR USED FOR ANY OTHER PURPOSE. BY ACCEPTING DELIVERY OF THIS OFFERING MEMORANDUM, EACH RECIPIENT AGREES TO RETURN THIS OFFERING MEMORANDUM AND ALL OTHER DOCUMENTS. IF THE RECIPIENT DOES NOT AGREE TO PURCHASE ANY OF THE SHARES, TO THE COMPANY AT ITS ADDRESS LISTED ON THE COVER OF THE OFFERING MEMORANDUM. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED BY THE SECURITIES ACT OF 1933, AS AMENDED AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD DE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITIES. FURTHERMORE THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 139 THIS OFFERING MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO PURCHASE SHARES TO ANY PERSON IN ANY STATE OR IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS UNLAWFUL. SUBJECT TO THE PRECEDING SENTENCE, THIS OFFERING MEMORANDUM IS INTENDED FOR THE EXCLUSIVE USE OF THE PERSON TO WHOM IT IS DELIVERED OR AN AUTHORIZED AGENT OF THE COMPANY ON BEHALF OF THE COMPANY. PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS CONFIDENTIAL OFFERING MEMORANDUM OR ANY PRIOR ON SUBSEQUENT COMMUNICATIONS AS LEGAL, TAX OR INVESTMENT ADVICE. EACH INVESTOR SHOULD CONSULT HIS OWN COUNSEL, ACCOUNTANT OR BUSINESS ADVISOR AS TO LEGAL, TAX AND RELATED MATTERS COVERING HIS INVESTMENT. THE SHARES ARE OFFERED SUBJECT TO THE ACCEPTANCE BY THE COMPANY OF OFFERS BY PROSPECTIVE INVESTORS, ALLOCATION OF SHARES BY THE COMPANY AND OTHER CONDITIONS SET FORTH HEREIN. THE COMPANY MAY REJECT ANY OFFER IN WHOLE OR IN PART AND NEED NOT ACCEPT OFFERS IN THE ORDER RECEIVED. THIS CONFIDENTIAL OFFERING MEMORANDUM DOES NOT CONTAIN AN UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS MADE IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING. IT CONTAINS A FAIR SUMMARY OF THE MATERIAL TERMS AND DOCUMENTS PURPORTED TO BE SUMMARIZED HEREIN. THE SHARES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED , OR THE SECURITIES LAWS OF CERTAIN STATES AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SHARES UNDERLYING THE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR OTHER REGULATORY AUTHORITIES. NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON ON ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THE SUBSCRIPTION PRICE FOR THE SHARES IS PAYABLE IN FULL UPON SUBSCRIPTION. THE OFFERING PRICE WAS DETERMINED ARBITRARILY BY THE COMPANY AND BEARS NO RELATIONSHIP TO ASSETS, EARNINGS, BOOK VALUE ON ANY OTHER CRITERIA OF VALUE. NO REPRESENTATION IS MADE THAT THE SHARES HAVE A MARKET VALUE OF, ON COULD BE RESOLD AT, THAT PRICE (SEE "RISK FACTORS') THE SHARES WILL BE OFFERED BY THE COMPANY ON A BEST EFFORTS BASIS TO A SELECT GROUP OF INVESTORS WHO MEET CERTAIN SUITABILITY STANDARDS. NO COMMISSIONS AND NO NON-ACCOUNTABLE OR ACCOUNTABLE EXPENSE ALLOWANCE 140 OF ANY KIND WILL BE PAID FROM OR DEDUCTED FROM THE PROCEEDS RAISED HEREBY. THE COMPANY WILL ADSORB ALL MARKETING EXPENSES ASSOCIATED WITH THIS OFFERING (SEE "USE OF PROCEEDS ). THE COMPANY HAS AGREED TO PROVIDE, PRIOR TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREIN, TO EACH POTENTIAL PURCHASER OF SECURITIES (OR HIS REPRESENTATIVES OR BOTH) THE OPPORTUNITY TO ASK QUESTIONS OF, AND RECEIVE ANSWERS FROM, THE COMPANY OR ANY PERSON ACTING ON ITS BEHALF CONCERNING THE TERMS AND CONDITIONS OF THIS OFFERING AND TO OBTAIN ANY ADDITIONAL INFORMATION, TO THE EXTENT THEY POSSESS SUCH INFORMATION OR CAN ACQUIRE IT WITHOUT UNREASONABLE EFFORT ON EXPENSE, NECESSARY TO VERIFY THE ACCURACY OF THE INFORMATION SET FORTH HEREIN. THIS OFFERING MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO ANY PERSON WHO DOES NOT MEET THE SUITABILITY STANDARDS DESCRIBED HEREIN. REPRODUCTION OF THIS OFFERING MEMORANDUM IS STRICTLY PROHIBITED. NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS OFFERING MEMORANDUM EXCEPT AS NOTED ABOVE WITH REGARD TO QUESTIONS ASKED OF THE COMPANY AND OF THOSE AUTHORIZED TO ACT ON ITS BEHALF. NO OFFERING LITERATURE OR ADVERTISING HAS BEEN AUTHORIZED BY THE COMPANY EXCEPT THE INFORMATION CONTAINED HEREIN. ANY INFORMATION ON REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ITS OFFICERS AND DIRECTORS. EXCEPT AS OTHERWISE INDICATED, THIS OFFERING MEMORANDUM SPEAKS AS OF THE DATE ON THE COVER PAGE. NEITHER THE DELIVERY OF THIS OFFERING MEMORANDUM NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES. CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE RESPECTIVE DATES AT WHICH THE INFORMATION IS GIVEN HEREIN OR THE DATE HEREOF. ANY UNSOLD SHARES MAY BE PURCHASED BY THE COMPANY OR ITS AFFILIATES ON THE SAME TERMS AS SHARES PURCHASED BY OTHER INVESTORS. NOTICES TO RESIDENTS OF CERTAIN STATES NOTICE TO ALABAMA RESIDENTS THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER THE ALABAMA SECURITIES ACT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS NOT BEEN FILED WITH THE ALABAMA SECURITIES COMMISSION. THE COMMISSION DOES NOT RECOMMEND OR ENDORSE THE PURCHASE OF ANY SECURITIES, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF THIS OFFERING MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ANYTHING TO THE CONTRARY HEREIN NOTWITHSTANDING THE INVESTMENT OF 141 AN ALABAMA PURCHASER WHO IS NOT AN ACCREDITED INVESTOR MAY NOT EXCEED TWENTY (20%) PER CENT OF SUCH PURCHASER S NET WORTH, EXCLUSIVE OF PRINCIPAL RESIDENCE, FURNISHINGS AND AUTOMOBILES. NOTICE TO ALASKA RESIDENTS THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE ALASKA SECURITIES ACT AND MAY NOT SE SOLD WITHOUT REGISTRATION UNDER THAT ACT OR EXEMPTION THEREFROM. NOTICE TO ARIZONA RESIDENTS THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE ARIZONA SECURITIES ACT AND ARE BEING SOLD IN RELIANCE UPON THE EXEMPTION CONTAINED IN SECTION 44-1844(1) OF SUCH ACT. THESE SECURITIES MAY NOT BE SOLD WITHOUT REGISTRATION UNDER SUCH ACT OR EXEMPTION THEREFROM. ARIZONA RESIDENTS MUST HAVE EITHER (I) A MINIMUM NET WORTH OF AT LEAST SEVENTY FIVE THOUSAND ($75,000) DOLLARS (EXCLUDING HOME, HOME FURNISHINGS AND AUTOMOBILES) AND A MINIMUM ANNUAL GROSS INCOME OF SEVENTY FIVE THOUSAND ($75,000) DOLLARS; ON (II) A NET WORTH OF AT LEAST TWO HUNDRED TWENTY FIVE THOUSAND ($225,000) DOLLARS (AS COMPUTED ABOVE). NOTICE TO ARKANSAS RESIDENTS THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER SECTION 14(L))(14) OF THE ARKANSAS SECURITIES ACT AND SECTION 4(2) OF THE SECURITIES ACT OF 1933. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS NOT BEEN FILED WITH THE ARKANSAS SECURITIES DEPARTMENT OR WITH THE SECURITIES AND EXCHANGE COMMISSION. NEITHER THE DEPARTMENT NOR THE COMMISSION HAS PASSED UPON THE VALUE OF THESE SECURITIES, MADE ANY RECOMMENDATIONS AS TO THEIR PURCHASE, APPROVED OR DISAPPROVED THE OFFERING, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS OFFERING MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, AN INVESTMENT BY A NON ACCREDITED INVESTOR MAY NOT EXCEED TWENTY (20%) PER CENT OF THE INVESTORS NET WORTH AT THE TIME OF PURCHASE, ALONE OR JOINTLY WITH SPOUSE. NOTICE TO CALIFORNIA RESIDENTS IF THE COMPANY ELECTS TO SELL SHARES IN THE STATE OF CALIFORNIA. IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THE SHARES, OR OTHER INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONERS RULES. 142 NOTICE TO CONNECTICUT RESIDENTS THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE CONNECTICUT SECURITIES ACT AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT REGISTRATION OR EXEMPTION THEREFROM. NOTICE TO DELAWARE RESIDENTS THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE DELAWARE SECURITIES ACT AND MAY NOT BE SOLD ON TRANSFERRED WITHOUT REGISTRATION OR EXEMPTION THEREFROM. NOTICE TO FLORIDA RESIDENTS THE SHARES REFERRED TO HEREIN WILL BE SOLD TO, AND ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061 OF THE FLORIDA SECURITIES ACT. THE SHARES HAVE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF FLORIDA. IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OR THE ISSUER, AN ESCROW AGENT OR WITHIN THREE (3) DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICH EVER OCCURS LATER. NOTICE TO GEORGIA RESIDENTS THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE GEORGIA SECURITIES ACT OF 1973 AS AMENDED. IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION SET FORTH IN SECTION 9(M) OF SUCH ACT AND THE SECURITIES CANNOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR IN A TRANSACTION WHICH IS OTHERWISE IN COMPLIANCE WITH SAID ACT. NOTICE TO IDAHO RESIDENTS THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE CONNECTICUT SECURITIES ACT AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT REGISTRATION OR EXEMPTION THEREFROM. ANYTHING TO THE CONTRARY NOTWITHSTANDING, THE INVESTMENT BY A NON- ACCREDITED INVESTOR MAY NOT EXCEED TEN (10%) PER CENT OF THE INVESTOR'S NET WORTH. NOTICE TO INDIANA RESIDENTS EACH INVESTOR PURCHASING SHARES MUST WARRANT THAT HE HAS EITHER (I) 143 A NET WORTH (EXCLUSIVE OF HOME, HOME FURNISHINGS AND AUTOMOBILES) EQUAL TO AT LEAST THREE (3) TIMES THE AMOUNT OF HIS INVESTMENT BUT IN NO EVENT LESS THAN SEVENTY FIVE THOUSAND ($75,000) DOLLARS OR (II) A NET WORTH (EXCLUSIVE OF HOME, HOME FURNISHINGS AND AUTOMOBILES OF TWO (2) TIMES HIS INVESTMENT BUT IN NO EVENT LESS THAN THIRTY THOUSAND ($30,000) DOLLARS AND A GROSS INCOME OF THIRTY THOUSAND ($30.00.0) DOLLARS. NOTICE TO IOWA RESIDENTS IOWA RESIDENTS MUST HAVE EITHER (I) A NET WORTH OF AT LEAST FORTY THOUSAND ($40,000) DOLLARS EXCLUDING HOME, HOME FURNISHINGS AND AUTOMOBILES} AND A MINIMUM ANNUAL GROSS INCOME OF FORTY THOUSAND ($40,000) DOLLARS, OR (II) A NET WORTH OF AT LEAST ONE HUNDRED TWENTY FIVE THOUSAND ($125,000) DOLLARS AS COMPUTED ABOVE. NOTICE TO KANSAS RESIDENTS AN INVESTMENT BY A NON-ACCREDITED INVESTOR SHALL NOT EXCEED TWENTY (20%) PER CENT OF THE INVESTOR'S NET WORTH; EXCLUDING PRINCIPAL RESIDENCE, FURNISHINGS THEREIN AND PERSONAL AUTOMOBILES. NOTICE TO KENTUCKY RESIDENTS THESE SECURITIES REPRESENTED BY THIS CERTIFICATE (OR OTHER DOCUMENT), HAVE BEEN ISSUED PURSUANT TO A CLAIM OF EXEMPTION FROM THE REGISTRATION OR QUALIFICATION PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREIN. ANYTHING TO THE CONTRARY HEREIN NOTWITHSTANDING, THE INVESTMENT BY A NON-ACCREDITED INVESTOR MAY NOT EXCEED TEN (10%) OF THE INVESTOR'S NET WORTH. NOTICE TO MAINE RESIDENTS THESE SECURITIES ARE BEING SOLD PURSUANT TO THE EXEMPTION FROM REGISTRATION WITH THE BANK SUPERINTENDENT OF THE STATE OF MAINE UNDER SECTION 10520(2)(R) OF TITLE 32 OF THE MAINE REVISED STATUTES. THESE SECURITIES MAY BE DEEMED RESTRICTED SECURITIES AND AS SUCH THE HOLDER MAY NOT BE ABLE TO RESELL THE SECURITIES UNLESS PURSUANT TO REGISTRATION UNDER STATE OR FEDERAL SECURITIES LAWS OR UNLESS AN EXEMPTION UNDER SUCH LAWS ENLISTS. NOTICE TO MARYLAND RESIDENTS THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE MARYLAND 144 SECURITIES ACT IN RELIANCE UPON THE EXEMPTION FROM REGISTRATION SET FORTH IN SECTION 11-602(9) OF SUCH ACT. UNLESS THESE SECURITIES ARE REGISTERED, THEY MAY NOT BE REOFFERED FOR SALE OR RESOLD IN THE STATE OF MARYLAND, EXCEPT AS A SECURITY, OR IN A TRANSACTION EXEMPT UNDER SUCH ACT. NOTICE TO MASSACHUSETTS RESIDENTS MASSACHUSETTS RESIDENTS MUST HAVE HAD EITHER (1) A MINIMUM NET WORTH OF AT LEAST FIFTY THOUSAND ($50,000) DOLLARS EXCLUDING HOME, HOME FURNISHINGS AND AUTOMOBILES AND HAD DURING THE LAST YEAR, OR IT IS ESTIMATED THAT THE SUBSCRIBER WILL HAVE DURING THE CURRENT TAX YEAR, TAXABLE INCOME OF FIFTY THOUSAND ($50,000) DOLLARS, OR (2) A NET WORTH OF AT LEAST ONE HUNDRED FIFTY THOUSAND ($150,000) DOLLARS (AS COMPUTED ABOVE). NOTICE TO MICHIGAN RESIDENTS THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE MICHIGAN SECURITIES ACT AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT REGISTRATION UNDER THAT ACT OR EXEMPTION THEREFROM. THE COMPANY SHALL PROVIDE ALL MICHIGAN INVESTORS WITH A DETAILED WRITTEN STATEMENT OF THE APPLICATION OF THE PROCEEDS OF THE OFFERING WITHIN SIX (6) MONTHS AFTER COMMENCEMENT OF THE OFFERING OR UPON COMPLETION, WHICHEVER OCCURS FIRST, AMD WITH ANNUAL CURRENT BALANCE SHEETS AND INCOME STATEMENTS THEREAFTER. NOTICE TO MINNESOTA RESIDENTS THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER CHAPTER 80 OF THE MINNESOTA SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED ON OTHERWISE DISPOSED OF FOR VALUE EXCEPT PURSUANT TO REGISTRATION OR OPERATION OF LAW. NOTICE TO MISSISSIPPI RESIDENTS THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER THE MISSISSIPPI SECURITIES ACT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS NOT BEEN FILED WITH THE MISSISSIPPI SECRETARY OF STATE OR WITH THE SECURITIES AND EXCHANGE COMMISSION. NEITHER THE SECRETARY OF STATE NOR THE COMMISSION HAS PASSED UPON THE VALUE OF THESE SECURITIES, NOR HAS APPROVED OR DISAPPROVED THE OFFERING. THE SECRETARY OF STAT E DOES NOT RECOMMEND THE PURCHASE OF THESE OR ANY OTHER SECURITIES. THERE IS NO ESTABLISHED MARKET FOR THESE SECURITIES AND THERE MAY NOT BE ANY MARKET FOR THESE SECURITIES IN THE FUTURE. THE SUBSCRIPTION PRICE OF THESE SECURITIES HAS BEEN ARBITRARILY DETERMINED BY THE ISSUER AND IS NOT AN INDICATION OF THE ACTUAL VALUE OF THESE SECURITIES. 145 THE PURCHASER OF THESE SECURITIES MUST MEET CERTAIN SUITABILITY STANDARDS AND MUST BE ABLE TO BEAR THE ENTIRE LOSS OR HIS INVESTMENT. ADDITIONALLY. ALL PURCHASERS WHO ARE NOT ACCREDITED INVESTORS MUST HAVE A NET WORTH OF AT LEAST THIRTY THOUSAND ($30,000) DOLLARS AND INCOME OF THIRTY THOUSAND ($30,000) DOLLARS OR A NET WORTH OF SEVENTY FIVE THOUSAND ($75.000) DOLLARS. THESE SECURITIES MAY NOT BE TRANSFERRED FOR A PERIOD OF ONE (1) EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE MISSISSIPPI SECURITIES ACT OR IN A TRANSACTION IN COMPLIANCE WITH THE MISSISSIPPI SECURITIES ACT. NOTICE TO MISSOURI RESIDENTS THESE SECURITIES ARE SOLD TO, AND BEING ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPTED UNDER SECTION 10, SUBSECTION 409.402(B), MISSOURI UNIFORM SECURITIES ACT (RMSO 1969). THE SHARES HAVE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF MISSOURI. UNLESS THE SHARES ARE REGISTERED, THEY MAY NOT BE REOFFERED OR RESOLD IN THE STATE OF MISSOURI, EXCEPT AS A SECURITY, OR IN A TRANSACTION EXEMPT UNDER SAID ACT. ANYTHING TO THE CONTRARY NOTWITHSTANDING, AN INVESTOR MUST HAVE A MINIMUM ANNUAL INCOME OF THIRTY THOUSAND ($30,000) DOLLARS AND A NET WORTH OF AT LEAST THIRTY THOUSAND ($30,000) DOLLARS,(EXCLUSIVE OF HOME, FURNISHINGS AND AUTOMOBILES) OR A NET WORTH OF SEVENTY FIVE THOUSAND ($75,000) DOLLARS EXCLUSIVE OF HOME, FURNISHINGS AND AUTOMOBILES. AN INVESTMENT BY A NON-ACCREDITED INVESTOR SHALL NOT EXCEED TWENTY (20%) PER CENT OF THE INVESTOR'S NET WORTH. NOTICE TO MONTANA RESIDENTS EACH MONTANA RESIDENT WHO SUBSCRIBES FOR THE SECURITIES BEING OFFERED HEREBY AGREES NOT TO SELL THESE SECURITIES FOR A PERIOD OF TWELVE (12) MONTHS AFTER DATE OF PURCHASE. ANYTHING TO THE CONTRARY NOTWITHSTANDING, THE INVESTMENT BY A NON- ACCREDITED INVESTOR MAY NOT EXCEED TWENTY (20) PER CENT OF THE INVESTOR'S NET WORTH. NOTICE TO NEBRASKA RESIDENTS THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE NEBRASKA SECURITIES ACT AND MAY NOT BE SOLD WITHOUT REGISTRATION UNDER THAT ACT OR EXEMPTION THEREFROM. NOTICE TO NEW HAMPSHIRE RESIDENTS 146 EACH NEW HAMPSHIRE INVESTOR PURCHASING SHARES MUST WARRANT THAT HE HAS EITHER (I) A NET WORTH (EXCLUSIVE OF HOME, HOME FURNISHINGS AND AUTOMOBILES) OF TWO HUNDRED FIFTY THOUSAND ($250,000) DOLLARS OR (2) A NET WORTH (EXCLUSIVE OF HOME, HOME FURNISHINGS AND AUTOMOBILES OF ONE HUNDRED TWENTY FIVE THOUSAND ($125,000) DOLLARS AND FIFTY THOUSAND ($50,000) DOLLARS ANNUAL INCOME. NOTICE TO NEW JERSEY RESIDENTS THE ATTORNEY GENERAL OF THE STATE HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. THE FILING OF THE WITHIN OFFERING DOES NOT CONSTITUTE APPROVAL OF THE ISSUE OR THE SALE THEREOF BY THE BUREAU OF SECURITIES OR THE DEPARTMENT OF LAW AND PUBLIC SAFETY OF THE STATE OF NEW JERSEY. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. NOTICE TO NORTH DAKOTA RESIDENTS THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES COMMISSIONER OF THE STATE NORTH DAKOTA NOR HAS THE COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. NOTICE TO NEW YORK RESIDENTS THIS OFFERING MEMORANDUM HAS NOT BEEN REVIEWED BY THE ATTORNEY GENERAL. PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THIS OFFERING MEMORANDUM DOES NOT CONTAIN AN UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS MADE IN OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING. IT CONTAINS A FAIR SUMMARY OF THE MATERIAL TERMS AND DOCUMENTS PURPORTED TO BE SUMMARIZED HEREIN. NOTICE TO NORTH CAROLINA RESIDENTS THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER THE NORTH CAROLINA SECURITIES ACT. THE NORTH CAROLINA SECURITIES ADMINISTRATOR NEITHER RECOMMENDS NOR ENDORSES THE PURCHASE OF ANY SECURITY, NOR HAS THE ADMINISTRATOR PASSED ON THE ACCURACY OR ADEQUACY OF THE INFORMATION PROVIDED HEREIN. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. NOTICE TO OKLAHOMA RESIDENTS 147 THE SECURITIES RENDERED BY THIS CERTIFICATE NAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE OKLAHOMA SECURITIES ACT. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED FOR VALUE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OF THEM UNDER THE SECURITIES ACT OF 1933 AND/OR THE OKLAHOMA SECURITIES ACT OF AN OPINION OF COUNSEL TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR ACTS. ANYTHING TO THE CONTRARY NOTWITHSTANDING, AN INVESTMENT BY A NON- ACCREDITED INVESTOR SHALL NOT EXCEED TEN (10) PER CENT OF THE INVESTOR'S NET WORTH. NOTICE TO OREGON RESIDENTS THE SECURITIES OFFERED HAVE BEEN REGISTERED WITH THE DIRECTOR OF THE STATE OF OREGON UNDER THE PROVISIONS OF OAR 441-65-240, THE INVESTOR IS ADVISED THAT THE DIRECTOR HAS MADE ONLY A CURSORY REVIEW OF THE REGISTRATION STATEMENT AND HAS NOT REVIEWED THIS DOCUMENT SINCE THIS DOCUMENT IS NOT REQUIRED TO BE FILED WITH THE DIRECTOR. THE INVESTOR MUST RELY ON THE INVESTOR'S OWN EXAMINATION OF THE COMPANY CREATING THE SECURITIES, AND THE TERMS OF THE OFFERING INCLUDING THE MERITS AND RISKS INVOLVED IN MAKING AN INVESTMENT DECISION ON THESE SECURITIES. NOTICE TO PENNSYLVANIA RESIDENTS ANY PERSON WHO ACCEPTS AN OFFER TO PURCHASE THE SECURITIES IN THE COMMONWEALTH OF PENNSYLVANIA IS ADVISED, THAT PURSUANT TO SECTION 207(1N) OF THEE PENNSYLVANIA SECURITIES ACT, HE SHALL HAVE THE RIGHT TO WITHDRAW HIS ACCEPTANCE, AND RECEIVE A FULL REFUND OF ANY CONSIDERATION PAID, WITHOUT INCURRING ANY LIABILITY, WITHIN TWO (2) BUSINESS DAYS FROM 'THE TIME THAT HE RECEIVES NOTICE OF THIS WITHDRAWAL RIGHT AND RECEIVES THE PLACEMENT OFFERING MEMORANDUM. ANY PERSON WHO WISHES TO EXERCISE SUCH RIGHTS OF WITHDRAWAL IS ADVISED TO GIVE NOTICE BY LETTER OR TELEGRAM SENT AND POSTMARKED BEFORE THE END OF THE SECOND BUSINESS DAY AFTER EXECUTION. IF THE REQUEST FOR WITHDRAWAL IS TRANSMITTED ORALLY, WRITTEN CONFIRMATION MUST BE GIVEN. ANY PERSON WHO PURCHASES INTERESTS WHO IS A PENNSYLVANIA RESIDENT WILL NOT SELL SUCH INTERESTS FOR A PERIOD OF TWELVE (12) MONTHS BEGINNING WITH THE CLOSING DATE. PENNSYLVANIA RESIDENTS MUST HAVE EITHER (I) A MINIMUM NET WORTH OF THIRTY THOUSAND ($30.000) DOLLARS EXCLUDING HOME, HOME FURNISHINGS AND AUTOMOBILES AND A MINIMUM ANNUAL GROSS INCOME OF THIRTY THOUSAND ($30.000) DOLLARS, OR (II) A NET WORTH OF AT LEAST SEVENTY FIVE THOUSAND ($75,000) DOLLARS (AS COMPUTED ABOVE), AND MAY NOT INVEST MORE THAN TEN (10%) PER CENT OF THEIR NET WORTH (EXCLUSIVE OF THE SUBSCRIBER'S HOME, HOME FURNISHINGS AND AUTOMOBILES. 148 NOTICE TO SOUTH CAROLINA RESIDENTS THESE SECURITIES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER THE SOUTH CAROLINA UNIFORM SECURITIES ACT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS NOT BEEN FILED WITH THE SOUTH CAROLINA SECURITIES COMMISSIONER. THE COMMISSIONER DOES NOT RECOMMEND OR ENDORSE THE PURCHASE OF ANY SECURITIES, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF THIS OFFERING MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. NOTICE TO SOUTH DAKOTA RESIDENTS THE SHARES HAVE NOT BEEN REGISTERED UNDER CHAPTER 47-31 OF THE SOUTH DAKOTA SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED ON OTHERWISE DISPOSED OF FOR VALUE EXCEPT PURSUANT TO REGISTRATION, EXEMPTION THEREFROM OR OPERATION OF LAW. SOUTH DAKOTA RESIDENTS MUST HAVE EITHER (I) A MINIMUM NET WORTH OF AT LEAST SIXTY THOUSAND ($60,000) DOLLARS (EXCLUDING HOME, HOME FURNISHINGS AND AUTOMOBILES) AND A MINIMUM GROSS INCOME OF SIXTY THOUSAND ($60,000) DOLLARS, OR (II) A NET WORTH OF AT LEAST TWO HUNDRED TWENTY FIVE THOUSAND ($225,000) DOLLARS (AS COMPUTED ABOVE). NOTICE TO TENNESSEE RESIDENTS ANYTHING TO THE CONTRARY NOTWITHSTANDING, AN INVESTMENT BY ANY INVESTOR SHALL NOT EXCEED TEN (10%) PER CENT OR THE INVESTOR'S NET WORTH. NOTICE TO TEXAS RESIDENTS THIS OFFERING MEMORANDUM IS FOR THE INVESTOR'S CONFIDENTIAL USE AND MAY NOT BE REPRODUCED. ANY ACTION CONTRARY TO THESE RESTRICTIONS MAY PLACE SUCH INVESTOR AND THE ISSUER IN VIOLATION OR THE TEXAS SECURITIES ACT. ANYTHING TO THE CONTRARY NOTWITHSTANDING, AN INVESTMENT BY ANY INVESTOR SHALL NOT EXCEED TEN (10%) PER CENT OF THE INVESTOR'S NET WORTH. NOTICE TO UTAH RESIDENTS THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UTAH SECURITIES ACT AND MAY NOT BE SOLD WITHOUT REGISTRATION UNDER THAT ACT ON EXEMPTION THEREFROM. NOTICE TO WASHINGTON RESIDENTS THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE WASHINGTON 149 SECURITIES ACT AND THE ADMINISTRATOR OF SECURITIES OF THE STATE OF WASHINGTON AS NOT REVIEWED THE OFFERING OR OFFERING MEMORANDUM. THESE SECURITIES MAY NOT BE SOLD WITHOUT REGISTRATION UNDER THE ACT OR EXEMPTION THEREFROM. IT IS THE RESPONSIBILITY OF ANY INVESTOR PURCHASING SHARES TO SATISFY ITSELF AS TO FULL OBSERVANCE OF THE LAWS OF ANY RELEVANT TERRITORY OUTSIDE THE UNITED STATES IN CONNECTION WITH ANY SUCH PURCHASE, INCLUDING OBTAINING ANY REQUIRED GOVERNMENTAL OR OTHER CONSENTS OR OBSERVING ANY OTHER APPLICABLE REQUIREMENTS. OFFERING MEMORANDUM Ascot Industries, Inc. (A Nevada Corporation) Offering Memorandum Dated March 2, 1998 1,600,000 Shares Ascot Industries, Inc., (the Company corporation, is offering on a "best efforts, no minimum basis. up to a maximum of 1,600,000 shares of common stock (~Common Stock ), $ 001 par value, at $0.01 per Share. Since there is no minimum, no proceeds will be held in escrow account and all funds will be immediately available to the Company. The Company intends to apply for inclusion of the Common Stock on the Over the Counter Electronic Bulletin Board. There can be no assurances that an active trading market will develop, even if the securities are accepted for quotation. Additionally, even if the Company's securities are accented for quotation and active trading develops, the Company is still required to maintain certain minimum criteria established by NASDAQ, of which there can be no assurance that the company will be able to continue to fulfill such criteria. Prior to this offend, there has been no public market for the common stock of the Company. The price of the Shares offered hereby was arbitrarily determined by the Company and does not bear any relationship to the Company's assets, book value, net worth, results of operations or any other recognized criteria of value. For additional information regarding the factors considered in determining the offering price of the Shares, see "Risk Factors - Arbitrary Offering Price",. "Description of Securities". The Company does not presently file reports or other information with the Securities and Exchange Commission ("Commission"). However, following completion of this offering, the Company intends to furnish its security holders with annual reports containing audited financial statements and such interim reports, in each case as it may determine to furnish or as may be required by law. 150 THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OF ANY STATES ECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROS PECTUS.ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE SECURITIES ARE OFFERED BY THE COMPANY SUBJECT TO PRIOR SALE, ACCEPTANCE OR AN OFFER TO PURCHASE, WITHDRAWAL, CANCELLATION OR MODIFICATION OF THE OFFER WITHOUT NOTICE THE COMPANY RESERVES THE RIGHT TO REJECT ANY ORDER, IN WHOLE OR In PART, FOR THE PURCHASE OF ANY OF THE SECURITIES OFFERED HEREBY. This offering involves special risks concerning the Company (see "Risk Factors"). Investors should carefully review the entire Memorandum and should not invest any funds in this Offering unless they can afford to lose their entire investment. In making an investment decision, investors must rely on their own examination of the issuer and the terms of the Offering, including the merit and risks involved. OFFERING SUMMARY The following summary information is qualified in its entirety by the detailed information and financial statements and notes thereto appearing elsewhere in this Memorandum. The Company is in the Internet, advertising and communications business. The Company was incorporated in the State of Nevada and its principal executive office is located at 222 Lakeview Avenue, Suite 160--124, West Palm Beach, FL 33401 and its telephone number is (561 ) 833-5092 RISK FACTORS THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. ONLY THOSE PERSONS ABLE TO LOSE THEIR ENTIRE INVESTMENT SHOULD PURCHASE THESE SECURITIES. PROSPECTIVE INVESTORS,PRIOR TO MAKING AN INVESTMENT DECISION. SHOULD CAREFULLY READ THIS PROSPECTUS AND CONSIDER, ALONG WITH OTHER MATTERS REFERRED TO HEREIN, THE FOLLOWING RISK FACTORS: Risk Factors Relating to the Business of the Company Start-up or Development Stage Company. The Company did not have any operations before its organization and is a "start-up" or "development stage" company No assurances can be Liven that the Company will the able to compete with other companies in its industry The purchase of the securities offered hereby must be regarded as the placing of funds at a high risk in a new or "start-up" venture with all the unforeseen costs. expenses, problems. and difficulties to which such ventures are subject See "Use of Proceeds to Issuer" and "Description of Business " No Assurance of Profitability To date the Company has not generated any revenues from operations. The Company does not anticipate any significant revenues in the near future The Company's 151 ability to successfully implement its business plan is dependent on the completion of this Offering There can be no assurance that the Company will be able to develop Into a successful or profitable business No Assurance of Payment of Dividends. No assurances can be made that the future operations of the Company will result in additional revenues or will be profitable. Should the operations of the Company become profitable it Is that the Company would retain much or all of its earnings in order to finance future growth and expansion Therefore, the Company does not presently intend to pay dividends, and it is not likely that any dividends win be paid in the foreseeable future. See "Dividend Policy". Possible Need for Additional Financing . The Company intends to fund its operations and other capital needs for the next 12 months substantially from the operations and proceeds of this Offering, but there can be no assurance that such funds will be sufficient for these purposes. The Company may require additional amounts of capital for its future expansion, operating costs and working capital. The Company has made no arrangements to obtain future additional financing, and if required there can be no assurance that such financing will be available, or that such financing will be available on acceptable terms. See "Use of Proceeds. Dependence on Management. The Company's success is principally dependent on its current management personnel for the operation of its business. Broad Discretion in Application of Proceeds. The management of the Company has broad discretion to adjust the application and allocation of the net proceeds of this offering, in order to address chanced circumstances and opportunities As a result of the foregoing, the success of the Company will be substantially dependent upon the discretion and judgment of the management of the Company with respect to the application and allocation of the net proceeds hereof. Pending use of such proceeds, the net proceeds of this offering will be invested by the Company in temporary, short-term interest-bearing obligations. See "Use of Proceeds. Arbitrary Offering Price. There has been no prior public market for the Company's securities. The price to the public of the Shares offered hereby has been arbitrarily determined by the Company and bears no relationship to the Company's earnings, book value or any other recognized criteria of value. Immediate and Substantial Dilution. An investor in this offering will experience immediate and substantial dilution. Lack of Poor Market for Securities of the Company. No prior market has existed for the securities being offered hereby and no assurance can be given that a market will develop subsequent to this offering. No Escrow of Investors' Funds. This offering is being made on a "best efforts, no minimum basis As such all the funds from this Offering will be immediately available to the Company. No assurance of acquisition While it is the company's intend to acquire either all of the shares or assets of other industry related companies in addition to expanding its own operations, there is no assurance that the company will be able to achieve this goal. That event would cause a materially adverse effect on the future of the company 152 USE OF PROCEEDS The Company will receive the proceeds from the Offering for working capital. DIVIDEND POLICY Holders of the Company's Common Stock are entitled to dividends when, as and if declared by the Board of Directors out of funds legally available therefor. The Company does not anticipate the declaration or payment of any dividends in the foreseeable future. The Company intends to retain earnings, if any to finance the development and expansion of its business. Future dividend policy will be subject to the discretion of the Board of Directors and will be contingent upon future earnings, if any, the Company's financial condition, capital requirements, general business conditions and other factors Therefore, there can be no assurance that any dividends of any kind will ever be paid. THE COMPANY The Company is in the Internet, advertising and communications business. In addition, the company is negotiating with other companies in the Internet, advertising and communications field with the intent of acquiring all of the shares or assets of one or more of these companies However, if the company is unable to complete the acquisition/acquisitions it will continue to operate its existing business and expand its activities through internal growth. Management Dale B. Finfrock, Jr., is the Company's sole Director, and its President and Secretary EXECUTIVE COMPENSATION Since the Company was recently incorporated, it has no historical information with respect to executive compensation. At the conclusion of the Offering, the Company does not intend to compensate its officers for services to the Company from the proceeds of this Offering and will only do so when and if the Company generates profits. Compensation of Directors Directors are not paid fees for their services nor reimbursed for expenses of attending board meetings. DESCRIPTION OF SECURITIES Shares The Company is offering hereby a "best efforts, no minimum basest' up to 1,600,000 shares of Commo n Stock at $.01 per Share. Common Stock 153 The authorized capital stock of the Company consists of 20,000, 000 shares of Common Stock, $. 001 par value. Holders of the Common Stock do not have preemptive rights to purchase additional shares of Common Stock or other subscription rights. The Common Stock carries no conversion rights and is not subject to redemption or to any sinking fund provisions. All shares of Common Stock are entitled to share equally in dividends from sources legally available therefor when, as and if declared by the Board of Directors and, upon liquidation or dissolution of the Company, whether voluntary or involuntary, to share equally in the assets of the Company available for distribution to stockholders All outstanding shares of Common Stock are validly authorized and issued, fully paid and non-assessable, and all shares to be sold and issued as contemplated hereby, will be validly authorized and issued, fully paid and non-assessable. The Board of Directors is authorized to issue additional shares of Common Stock, not to exceed the amount authorized by the Company's Certificate of Incorporation, on such terms and conditions and for such consideration as the Board may deem appropriate without further stockholder action. The above description concerning the Common Stock of the Company does not purport to be complete. Reference is made to the Company's Certificate of Incorporation and Bylaws which are available for inspection upon proper notice at the Company's offices, as well as to the applicable statutes of the State of Nevada for a more complete description concerning the rights and liabilities of stockholders. Prior to this offering there has been no market for the Common Stock of the Company' and no predictions can be made of the effect, if any, that market sales of shares or the availability of shares for sale will have on the market price prevailing from time to time. Nevertheless, sales of significant amounts of the Common Stock of the Company in the public market may adversely affect prevailing market paces, and may impair the Company's ability to raise capital at that time through the sale of its equity securities. Each holder of Common Stock is entitled to one vote per share on all matters on which such stockholders are entitled to vote. Since the shares of Common Stock do not have cumulative voting rights, the holders of more than 50 percent of the shares voting for the election of directors can elect all the directors if they choose to do so and, in such event, the holders of the remaining shares will not be able to elect any person to the Board of Directors. PLAN OF DISTRIBUTION The Company has no underwriter for this Offering. The Offering is therefore a self-underwriting. The Shares will be offered by the Company at the offering price of $.01 per Share. Price of the Offering. There is no, and never has been, a market for the Shares, and there is no guaranty that a market will ever develop for the Company's shares. Consequently the offering price has been determined by the Company. Among other factors considered in such determination were estimates of business potential for the Company, the Company's financial condition, an assessment of the Company's management and the general condition of the securities market at the time of this Offering. However, such price does not necessarily bear any relationship to the assets, income or net worth of the Company. The offering price should not be considered an indication of the actual value of the Shares. Such price is subject to change as a result of market conditions and other factors, and no assurance can be given that the Shares can be resold at the Offering Price. 154 There can be no assurance that an active trading market will develop upon completion of this Offering, or if such market develops, that it will continue. Consequently, purchasers of the Shares offered hereby may not find a ready market for Shares. ADDITIONAL INFORMATION Each investor warrants and represents to the Company that, prior to making an investment in the Company, that he has had the opportunity to inspect the books and records of the Company and that he has had the opportunity to make inquiries to the officers and directors of the Company and further that he has been provided full access to such information. INVESTOR SUITABILITY STANDARDS AND INVESTMENT RESTRICTIONS Suitability Shares will be offered and sold pursuant an exemption under the Securities Act, and exemptions under applicable state securities and Blue Sky laws. There are different standards under these federal and state exemptions which must be met by prospective investors in the Company. The Company will sell Shares only to those Investors it reasonably believes meet certain suitability requirements described below. Each prospective Investor must complete a Confidential Purchaser questionnaire and each Purchaser Representative, if any, must complete a Purchaser Representative Questionnaire. EACH INVESTOR MUST BE RESPONSIBLE FOR DETERMINING THAT IT IS PERMITTED TO INVEST IN THE COMPANY, THAT ALL APPROPRIATE ACTIONS TO AUTHORIZE SUCH AN INVESTMENT HAVE BEEN TAKEN, AND THAT ANY REQUIREMENTS THAT ITS INVESTMENTS BE DIVERSIFIED OR SUFFICIENTLY LIQUID HAVE BEEN MEET. An Investor will qualify as an Accredited Investor if it falls within any one of the following categories at the time of the sale of the Shares to that Investor. ( 1 ) A bank as defined in Section 3(a)(2) of the Securities Act, or a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; a Small Business Investment Company licensed by the United States Small Business Administration under Section 301(c)or(d)of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of that Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, of the 155 employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan with the investment decisions made solely by persons that are accredited investors; (2) A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1942; (3) An organization described in Section 501(c)(3) of the internal Revenue Code with total assets in excess of $5,000,000; (4) A director or executive officer of the Company. (5) A natural person whose individual net worth, or joint net worth with that person's spouse, at the time of such person's purchase of the Shares exceeds $1,100,000; (6) A natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; (7) A trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as describe in Rule 506(b)(2)(ii) of Regulation D; and (8) An entity in which all of the equity owners are accredited investors (as defined above). As used in this Memorandum the term "net worth" means the excess of total assets over total liabilities. In computing net worth for the purpose of (5) above, the principal residence of the investor must be valued at cost, including cost of improvements, or at recently appraised value by an institutional lender making a secured loan, net of encumbrances. In determining income an Investor should add to the investor's adjusted gross income any amounts attributable to tax exempt income received, losses claimed as a limited partner in any limited partnership, deductions claimed for depletion, contributions to an IRA or KEOGH retirement plan, alimony payments, and any amount by which income form long-term capital gains has been reduced in arriving at adjusted gross income. In order to meet the conditions for exemption from the registration requirements under the securities laws of certain jurisdictions, investors who are residents of such jurisdiction may be required to meet additional suitability requirements. An investor that does not qualify as an accredited investor is a non-accredited investor and may acquire Shares only if: (1) The Investor is knowledgeable and experienced with respect to investments in limited partnerships either alone or with its Purchaser Representative, if any; and (2) The Investor has been provided access to all relevant documents it desires or needs; and 156 (3) The Investor is aware of its limited ability to sell and/or transfer its Shares in the Company; and (4) The investor can bear the economic risk(including loss of the entire investment)without impairing its ability to provide for its financial needs and contingencies in the same manner as it was prior to making such investment. THE COMPANY RESERVES THE RIGHT IN ITS ABSOLUTE DISCRETION TO DETERMINE IF A POTENTIAL INVESTOR MEETS OR FAILS TO MEET THE SUITABILITY STANDARDS SET FORTH IN THIS SECTION. Additional Suitability Requirements for Benefit Plan Investors In addition to the foregoing suitability standards generally applicable to all Investors, the Employee Retirement Income Security Act of 1934, as amended ("ERISA"), and the regulations promulgated thereunder by the Department of Labor impose certain additional suitability standards for Investors that are qualified pension, profit-sharing or stock bonus plans ("Benefit Plan Investor"). In considering the purchase of Shares, a fiduciary with respect to a prospective Benefit Pl an I investor must consider whether an investment in the Shares will satisfy the prudence requirement of section 404(a)(1)(B) of ERISA, since there is not expected to be any market created in which to sell or otherwise dispose of the Shares In addition, the fiduciary must consider whether the investment in Shares will satisfy the diversification requirement of Section 404(a)(1)(C) of ERISA Restrictions on Transfer or Resale of Shares The Availability of federal and state exemptions and the legality of the offers and sales of the Shares are conditioned upon, among other things, the fact that the purchase of Shares by all Investors are for investment purposes only and not with a view lo resale or distribution. Accordingly each prospective Investor will be required to represent in the Subscription Agreement that it is purchasing the Shares for its own account and for the purpose of investment only, not with a view to, or in accordance with, the distribution of sale of the Shares and that it we not sell pledge. assign or transfer or offer to sell, pledge, assign or transfer any of its Shares without an effective registration statement under the Securities Act, or an exemption there from and an opinion of counsel acceptable to the Company that registration under the Securities Act is not required and that the transaction complies with elf other applicable federal and state securities or Blue Sky laws. 157 Ascot Industries, Inc. (A Nevada Corporation) Subscription Documents March 2, 1998 INSTRUCTION FOR COMPLETION: In connection with your subscription for Ascot Industries, Inc. (the Company), enclosed herewith are the following documents which must be properly and fully completed and signed: 1. INVESTMENT AGREEMENT. Fully completed and signed. Please make your check payable to the Company. (Note to partnerships who wish to subscribe: each general partner of the partnership must fully complete and sign the Investment Agreement). NOTES TO SUBSCRIBERS: (a) Please indicate on the Subscription Agreement and the Confidential Purchaser Questionnaire how the Units are to be held (e.g. joint tenants with rights of survivorship, tenants by the entireties, etc). (b) Please return Subscription Documents and checks to the Company at P.O. Box 669, Palm Beach, FL 33480. Checks should be made payable to the Ascot Industries, Inc. (c) Additional copies of the required forms are available from the Company at P.O. Box 669, Palm Beach, FL 33480, or by calling the Company at (561) 833-5092. INVESTMENT SUBSCRIPTION AGREEMENT To: Ascot Industries, Inc. P.O. Box 669 Palm Beach, FL 33480 Gentlemen: You have informed me that the Company is offering shares of the Company's common stock at a price of $0.01 per share. 1. Subscription. Subject to the terms and conditions of this Subscription Agreement (the Agreement.), the undersigned hereby tenders this subscription, together with the payment (in cash or by bank check in lawful funds of the United States) of an amount equal to $0.01 per Share, and the other subscription documents, all in the forms submitted to the undersigned. 2. Acceptance of Subscription: Adoption and Appointment. It is understood and agreed that this Agreement is made subject to the following terms and conditions: (a) The Company shall have the right to accept or reject subscriptions in any order it shall determine, in whole or in part, for any reason (or for no reason). (b) Investments are not binding on the Company until accepted by the Company. The Company will refuse any subscription by giving written notice to the purchaser by personal delivery or first-class mail. In its sole discretion, the Company may establish a limit on the purchase of Units by a particular purchaser. 158 (c) The undersigned hereby intends that his signature hereon shall constitute an irrevocable subscription to the Company of this Agreement. subject to a three day right of rescission for Florida residents pursuant to Section 517 061 of the Florida Securities and Investor Protection Act. Each Florida resident has a right to withdraw his or her subscription for Units, without any liability whatsoever, and receive a full refund of all monies paid, within three days after the execution of this Agreement or payment for the Units has been made, whichever is later. To accomplish this withdrawal, a subscriber need only send a letter or telegram to the Company at the address set forth in this Agreement, indicating his or her intention to withdraw. Such letter or telegram should be sent and postmarked prior to the end of the aforementioned third day. It is prudent to send such letter by certified mail, return receipt requested, to ensure that is received and also to evidence the time when it was mailed. If the request is made orally (in person or by telephone) to the Company a written confirmation that the request has been received should be requested. Upon satisfaction of the all the conditions referred to herein, copies of this Agreement, duly executed by the Company, will be delivered to the undersigned. 3. Representations and Warranties of the Undersigned The undersigned hereby represents and warrants to the Company as follows: (a) The undersigned (I) has adequate means of providing for his current needs and possible personal contingencies, and he has no need for liquidity of his investment in the Company;(ii) is an Accredited Investor, as defined below, or has the net worth sufficient to bear the risk of losing his entire investment, and (iii) has, alone or together with his Purchaser Representative(as herein after defined), such knowledge end experience nonfinancial matters that the undersigned is capable of evaluating the relative risks and merits of this investment "Accredited Investors" include (I) accredited investors as defined in Regulation D under the Securities Act of 1933, as amended ("Reg D") i. e. (a) $1,000,000 in net worth (including spouse) or (b) $200,000 in annual income for the last two years end projected for the current year; and (ii)the Company or affiliates of the Company. "Non-Accredited Investors" are all subscribers who are not"Accredited Investors" All investors must have either a preexisting personal or business relationship with the Company or any of its affiliates, or by reason of their business or financial experience (or the business or financial experience of their unaffiliated professional advisors)would reasonably be assumed to have the capacity to protect their own interests in connection with this investment. Each subscriber must represent that he is purchasing for his own account not with a view to or for resale in connection with any distribution of the Units. (b) The address set forth in his Purchaser Questionnaire is his true and correct residence, and he has no present intention of becoming a resident of any other state or jurisdiction. 159 (c) The undersigned acknowledges that if a Purchaser Representative., as defined in Regulation D, has been utilized by the undersigned, (i) the undersigned has completed and executed the Acknowledgment of Use of Purchaser Representative; (ii) in evaluating his investment as contemplated hereby, the undersigned has been advised by his Purchaser Representative as to the merits and risks of the investment in general and the suitability of the investment for the undersigned in particular; and (ii) the undersigned's Purchaser Representative has completed and executed the Purchaser Representative Questionnaire. (d) The undersigned has received and read or reviewed with his Purchaser Representative, if any, and represents he is familiar with this Agreement, the other Subscription Documents and the Memorandum accompanying these documents. The undersigned confirms that all documents, records and books pertaining to the investment in the Company and requested by the undersigned or his Purchaser Representative have been made available or have been delivered to the undersigned and/or the undersigned's Purchaser Representative. (e) The undersigned and/or his Purchaser Representative have had an opportunity to ask questions of and receive answers from the Company or a person or persons acting on its behalf, concerning the terms and conditions of this investment and the financial condition, operations and prospects of the Company. (f) The undersigned understands that the Units have not been registered under the Securities Act of 1933, as amended (the "Securities Acts) or any state securities laws and are instead being offered and sold in reliance on exemptions from registration; and the undersigned further understands that he is purchasing an interest in a Company without being furnished any offering literature or prospectus other than the material furnished hereby. (g) The Units for which the undersigned hereby subscribed are being acquired solely for his own account, and are not being purchased with a view to or for the resale, distribution, subdivision, or fractionalization hereof. He has no present plans to enter into any such contract, undertaking, agreement or arrangement. In order to induce the Company to sell and issue the Units subscribed for hereby to the undersigned, it is agreed that the Company will have no obligation to recognize the ownership, beneficial or otherwise, of such Units by anyone but the undersigned. (h) The undersigned has received, completed and returned to the Company the Purchaser Questionnaire relating to his general ability to bear the risks of an investment in the Company and his suitability as an investor in a private offering; and the undersigned hereby affirms the correctness of his answers to such Confidential Purchaser Questionnaire and all other written or oral information concerning the undersigned's so it ability provided to the Company by, or on behalf of, the undersigned. (i) The person, if any, executing the Purchaser Representative Questionnaire, a copy of which has been received by the undersigned, is acting and is hereby designated to act as the undersigned's Purchaser Representative in connection with the offer and sale of the Units to the undersigned. This designation of a Purchaser Representative was made with the knowledge of the representations and disclosures made in such Purchaser Representative Questionnaire and other Subscription Documents. 160 (j) The undersigned acknowledges and is aware of the following: (i) That there are substantial restrictions on the transferability of the Units and the Units will not be, and Investors in the Company have no rights to require that, the Units be registered under the Securities act, the undersigned may not be able to avail himself of certain of the provisions of Rule 144 adopted by the Securities and Exchange Commission under the Securities Act with respect to the resale of the Units and, accordingly, the undersigned may be required to hold the Units for a substantial period of time and it may not be possible for the undersigned to liquidate his Investment In the Company. (ii) That no federal or state agency has made any finding or determination as to the fairness of the Offering of Units for investment or any recommendation or endorsement of the Units. (1) The approximate or exact length of time that he will be required to remain as owner of the Units. (2) The poor performance on the part of the Company or any Affiliate (as defined in Rule 405 under the Securities Act), or its associates, agents, or employees or of any other person, will in any way indicate the predictable results of the ownership of the Units or of the overall Company. (3) Subscriptions will be accepted in the order in which they are received. (iii) That the Company shall incur certain costs and expenses and undertake other actions in reliance upon the irrevocability of the subscription (following the three day rescission period described in Paragraph 2 C of this Agreement) for the Units made hereunder. The foregoing representations and warranties are true and accurate as of the date of delivery of the Funds to the Company and shall survive such delivery. If, in any respect, such representations and warranties shall not betrueandaccuratepriortothedeliveryoftheFundspursuanttoParagraph1 hereof, the undersigned shall give written notice of such fact to his Purchaser Representative, if any, specifying which representations and warranties are not true and accurate and the reasons therefor, with a copy to the Company and otherwise to give the same information to the Company directly. 4. Indemnification. The undersigned acknowledges that he understands the meaning and legal consequences of the representations and warranties contained in Paragraph 3 hereof, and he hereby indemnifies and holds harmless the Company, agents, employees and affiliates, from and against any and all losses, claims, damages or liabilities due to or arising out of a breach of any representations(s) or warranty(s) of the undersigned contained in this Agreement. 5. No Waiver. Notwithstanding any of the representations, warranties, acknowledgment or agreements made herein by the undersigned, the undersigned does not thereby or in any other manner waive any rights granted to him under federal or sate securities laws 6. Transferability. The undersigned agrees not to transfer or assign this Agreement, or any of his interest herein. Further, an investor in the Units pursuant to this Agreement and applicable law, wilt not be permitted to transfer or dispose of the Units unless they are registered or unless such transaction is exempt from registration under the Securities Act or other securities laws and in the case of the purportedly exempt sale, such investor provided (at his own expense) an opinion of counsel reasonably satisfactory to the Company that such exemption is, in fact available. 161 7. Revocation. The undersigned acknowledges and agrees that his subscription for the Units made by the execution and delivery of this Agreement by the undersigned is irrevocable and subject to the three day right of rescission in Florida described in Section 2c herein, and that such subscription shall survive the death or disability of the undersigned, except as provided pursuant to the blue sky laws of the states in which the Units may be offered, or any other applicable state statutes or regulations 8. Miscellaneous. (a) All notices or other communications given or made hereunder shall be in writing and shall be delivered or mailed by registered or certified mail, return receipt requested, postage prepaid, to the undersigned at his address set forth below and to (b) Notwithstanding the place where this Agreement may be executed by any of the parties hereto, the parties expressly agree that all the terms and provisions hereof shall be construed in accordance with and shall be govern by the laws of the State of Florida (c) This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof any may be amended only by writing executed by all parties (d) This Agreement shall be binding upon the heirs, estates, legal representatives, successors and assigns of all parties hereto (e) All terms used herein shall be deemed to include the masculine and the feminine and the singular and the plural as the context requires ASCOT INDUSTRIES, INC. SUBSCRIPTION AGREEMENT SIGNATURE PAGE Accredited Non Accredited Number of Shares Subscribed for: Amount tendered at $0.01 per Share: (Signature of Subscriber) (Signature of Spouse, or joint tenant, if any) (Printed Name of Subscriber) (Printed Name of Spouse, or other joint tenant if any) (Address) (Address) (Social Security Number) (Social Security Number) Subscription accepted Ascot Industries, Inc. 162 The following people signed a Subscription Agreement Signature Page: 2. Josephine Finfrock 3. Mark H. Finfrock 4. Dale B. Finfrock, Jr. 5. Kirk D. Finfrock 6. Bryan & Debra French 7. Linda L. Freidman 8. King Trust 9. Advantage Management Reserves, LTD. Charles A. Gaudio, Pres. 9. Gloria Austin, Trustee Trust Dated 5/24/95 10. Rod C. Ball 11. Lauren E. Bennett Trust 12. Madeline J. Bennett Trust 13. Blake J. Bennett Trust No. 1 U/A 7/15/86 14. Blake Bennett T-U-A 7/15/86 15. Brian & Irene Bennett 16. Virginia S. Burke 17. Edwin M. Burke 18. Angela W. Callback 19. Paul J. Chase 20. Carol A. Chihocky Rev Living Trust 21. Timothy A. & Ellen Cornell 22. Country Woods Development Corp. Clyde P. Didier, President 23. Mary Cowden 24. Herbert Gorka, Jr. TTEE UAD 12/22/1992 Colton Charitable Remainder Unitrust FBO Ernest Colton (Recipient) 25. Michael & Mary Lou Dolezel 26. Ellen Epstein, Trustee 27. Euro First Capital Corporation Dale B. Finfrock, President 28. Helen H. Finfrock 29. Peter M. Finfrock 30. Morris M. Garrett, Jr. 31. Charles A. Gaudio 32. Graig T. Gaudio 33. Robert Gingras 34. John T. Hamilton II 163 35. Gloria S. Hamilton 36. Robert K. Havilano 37. Mike J. & Christi Helms 38. D. Victor Knight, Jr. 39. John D. Mashek, Jr. 40. James R. McCarthy 41. Robert W. McMichael 42. Mr. & Mrs. Glen R. Meloni 43. Scott D. Miller 44. Gerald J. Millstein, M.D. 45. Marie-Pascale MOLEMA 46. Howrey Trust 2/5/952 & Thelma N. Howrey, TR 47. One Capital Corporation, Dale B. Finfrock, Jr., President 48. OTC Horizon Group, Dale B. Finfrock, Jr., President 49. Carole S. Parson, Trustee U/A DTD 11/23/92 50. The Doris J. Patzwald Living Trust UTD 6/3/96 51. Charles H. Powell 52. E. Dianne Reed 53. John G. Reimer 54. Elton L. & Shirley A. Reneau 55. Wiley R. Reynolds 56. Stanley M. Rumbough, Jr. 57. Robert J. Schhchter 58. Omer Scrock 59. Scroggie Holdings, Inc., George A. Scroggie, President 60. Pamela W. Sissin 61. James F. Smith 62. Keith Steele 63. James W. & Annette E. Stephens 64. TVI Capital Corporation; Dale E, Finfrock, Jr. President 65. Jerry & Toni Wakefield 66. Mary L. Wallace 67. Morgan Warren 68. Lawrence P. Westfield 69. White Lake Enterprises; Clyde P. Didier, President 70. Marcene & Ann Williscroft 71. J. Lloyd & Mildred Woods 72. Legal Computer Technology Inc., Donald F. Mintmire 73. Donald F. Mintmire 164 FORM D U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 NOTICE OF SALE OF SECURITIES PURSUANT TO REGULATION D, SECTION 4(6), AND/OR UNIFORM LIMITED OFFERING EXEMPTION FILED WITH THE COMMISSION ON MARCH 16, 1998 - - -------------------------------------------------------------------------------- Name of Offering ( check if this is an amendment and name has changed, and indicate change.) Ascot Industries, Inc. - - -------------------------------------------------------------------------------- Filing Under (Check box(es) that apply): (X ) Rule 504 ( ) Rule 505 ( ) Rule 506 ( ) Section 4(6) (X ) ULOE Type of Filing: (X) New Filing Amendment - - -------------------------------------------------------------------------------- A. BASIC IDENTIFICATION DATA - - -------------------------------------------------------------------------------- 1. Enter the information requested about the issuer - - -------------------------------------------------------------------------------- Name of Issuer ( check if this is an amendment and name has changed, and indicate change.) Ascot Industries, Inc. - - -------------------------------------------------------------------------------- Address of Executive Offices (Number and Street, City, State, Zip Code, Telephone Number (Including Area Code) P.O. Box 669, Palm Beach, FL 34480 561-833-5092 - - -------------------------------------------------------------------------------- Address of Principal Business Operations (Number and Street, City, State, Zip Code, Telephone Number (Including Area Code) Same as above (if different from Executive Offices) - - -------------------------------------------------------------------------------- Brief Description of Business - - -------------------------------------------------------------------------------- Type of Business Organization (X) corporation limited partnership, already formed other (please specify): business trust limited partnership, to be formed - - -------------------------------------------------------------------------------- Month Year Actual or Estimated Date of Incorporation or Organization: 2 98 (X) Actual - - -------------------------------------------------------------------------------- Jurisdiction of Incorporation or Organization: (Enter two-letter U.S. Postal Service abbreviation for State: NV - - ------------------------------------------------------------------------------- GENERAL INSTRUCTIONS Federal: Who Must File: All issuers making an offering of securities in reliance on an exemption under Regulation D or Section 4(6), 17 CFR 230.501 et seq. or 15 U.S.C. 77d(6). When to File: A notice must be filed no later than 15 days after the first sale of securities in the offering. A notice is deemed filed with the U.S. Securities and Exchange Commission (SEC) on the earlier of the date it is received by the SEC at the address given 165 below or, if received at that address after the date on which it is due, on the date it was mailed by United States registered or certified mail to that address. Where to File: U.S. Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies Required: Five (5) copies of this notice must be filed with the SEC, one of which must be manually signed. Any copies not manually signed must be photocopies of manually signed copy or bear typed or printed signatures. Information Required: A new filing must contain all information requested. Amendments need only report the name of the issuer and offering, any changes thereto, the information requested in Part C, and any material changes from the information previously supplied in Parts A and B. Part E and the Appendix need not be filed with the SEC. Filing Fee: There is no federal filing fee. State: This notice shall be used to indicate reliance on the Uniform Limited Offering Exemption (ULOE) for sales of securities in those states that have adopted ULOE and that have adopted this form. Issuers relying on ULOE must file a separate notice with the Securities Administrator in each state where sales are to be, or have been made. If a state requires the payment of a fee as a precondition to the claim for the exemption, a fee in the proper amount shall accompany this form. This notice shall be filed in the appropriate states in accordance with state law. The Appendix in the notice constitutes a part of this notice and must be completed. ATTENTION - - -------------------------------------------------------------------------------- Failure to file notice in the appropriate states will not result in a loss of the federal exemption. Conversely, failure to file the appropriate federal notice will not result in a loss of an available state exemption unless such exemption is predicated on the filing of a federal notice. - - -------------------------------------------------------------------------------- A. BASIC IDENTIFICATION DATA - - -------------------------------------------------------------------------------- 2. Enter the information requested for the following: o Each promoter of the issuer, if the issuer has been organized within the past five years; o Each beneficial owner having the power to vote or dispose, or direct the vote or disposition of, 10% or more of a class of equity securities of the issuer; o Each executive officer and director of corporate issuers and of corporate general and managing partners of partnership issuers; and o Each general and managing partner of partnership issuers. - - -------------------------------------------------------------------------------- Check Box(es) that Apply: ( ) Promoter ( ) Beneficial Owner (X ) Executive Officer (X) Director ( ) General and/or Managing Partner - - -------------------------------------------------------------------------------- Full Name (Last name first, if individual) Finfrock, Jr., Dale B. - - -------------------------------------------------------------------------------- Business or Residence Address (Number and Street, City, State, Zip Code) P.O. Box 669, Palm Beach, FL 33480 - - -------------------------------------------------------------------------------- (Use blank sheet, or copy and use additional copies of this sheet, as necessary.) 166 - - -------------------------------------------------------------------------------- B. INFORMATION ABOUT OFFERING - - -------------------------------------------------------------------------------- 1. Has the issuer sold, or does the issuer intend to sell, to Yes No non-accredited investors in this offering? .................... (X ) ( ) Answer also in Appendix, Column 2, if filing under ULOE. 2. What is the minimum investment that will be accepted from any individual? ....................................................... $0 3. Does the offering permit joint ownership of a single unit? .... Yes No (X ) ( ) 4. Enter the information requested for each person who has been or will be paid or given, directly or indirectly, any commission or similar remuneration for solicitation of purchasers in connection with sales of securities in the offering. If a person to be listed is an associated person or agent of a broker or dealer registered with the SEC and/or with a state or states, list the name of the broker or dealer. If more than five (5) persons to be listed are associated persons of such a broker or dealer, you may set forth the information for that broker or dealer only. - - -------------------------------------------------------------------------------- Full Name (Last name first, if individual) - - -------------------------------------------------------------------------------- Business or Residence Address (Number and Street, City, State, Zip Code) - - -------------------------------------------------------------------------------- Name of Associated Broker or Dealer - - -------------------------------------------------------------------------------- States in Which Person Listed Has Solicited or Intends to Solicit Purchasers (Check "All States" or check individual States) ............. ( ) All States [AL] [AK] [AZ] [AR] [CA] [CO] [CT] [DE] [DC] [FL] [GA] [HI] [ID] [IL] [IN] [IA] [KS] [KY] [LA] [ME] [MD] [MA] [MI] [MN] [MS] [MO] [MT] [NE] [NV] [NH] [NJ] [NM] [NY] [NC] [ND] [OH] [OK] [OR] [PA] [RI] [SC] [SD] [TN] [TX] [UT] [VT] [VA] [WA] [WV] [WI] [WY] [PR] - - -------------------------------------------------------------------------------- (Use blank sheet, or copy and use additional copies of this sheet, as necessary.) - - -------------------------------------------------------------------------------- C. OFFERING PRICE, NUMBER OF INVESTORS, EXPENSES AND USE OF PROCEEDS - - -------------------------------------------------------------------------------- 1. Enter the aggregate offering price of securities included in this offering and the total amount already sold. Enter "0" if answer is "none" or "zero". If the transaction is an exchange offering, check this box ( ) and indicate in the columns below the amounts of the securities offered for exchange and already exchanged. 167 Aggregate Amount Already Type of Security Offering Price Sold Debt .............................. $0 $0 Equity ............................ $16,000 $0 (X) Common ( ) Preferred Convertible Securities (including warrants) Convertible debentures $0 $0 Partnership Interests ............. $0 $0 Other (Specify_____________)................ $0 $0 Total ........................... $0 $0 Answer also in Appendix, Column 3, if filing under ULOE. 2. Enter the number of accredited and non-accredited investors who have purchased securities in this offering and the aggregate dollar amounts of their purchases. For offerings under Rule 504, indicate the number of persons who have purchased securities and the aggregate dollar amount of their purchases on the total lines. Enter "0" if answer is "none" or "zero". Aggregate Number Dollar Amount Investors of Purchases Accredited Investors .............. 0 $0 Non-accredited Investors .......... 0 $0 Total (for filings under Rule 504 only) ............................... 0 $0 Answer also in Appendix, Column 4, if filing under ULOE. 3. If this filing is for an offering under Rule 504 or 505, enter the information requested for all securities sold by the issuer, to date, in offerings of the types indicated, the twelve (12) months prior to the first sale of securities in this offering. Classify securities by type listed in Part C-Question 1. Type of Dollar Amount Type of offering Security Sold Rule 505 .......................... Regulation A ...................... Rule 504 .......................... Total ........................... 168 4. a. Furnish a statement of all expenses in connection with the issuance and distribution of the securities in this offering. Exclude amounts relating solely to organization expenses of the issuer. The information may be given as subject to future contingencies. If the amount of an expenditure is not known, furnish an estimate and check the box to the left of the estimate. Transfer Agents Fees ............. [X] $0 Printing and Engraving Costs ...... [X] $0 Legal Fees ........................ [X] $1,500.00 Accounting Fees ................... [X] $0 Engineering Fees .................. [X] $0 Sales Commissions (specify finders fees separately) .................... [X] $0 Other Expenses (identify) Faxes, telephone, paper, office expenses [ ] $ Total ........................... [ ] $ - - -------------------------------------------------------------------------------- C. OFFERING PRICE, NUMBER OF INVESTORS, EXPENSES AND USE OF PROCEEDS - - -------------------------------------------------------------------------------- b. Enter the difference between the aggregate offering price given in response to Part C - Question 1 and total expenses furnished in response to Part C - Question 4.a. This difference is the "adjusted gross proceeds to the issuer" ............ $14,500 5. Indicate below the amount of the adjusted gross proceeds to the issuer used or proposed to be used for each of the purposes shown. If the amount for any purpose is not known, furnish an estimate and check the box to the left of the estimate. The total of the payments listed must equal the adjusted gross proceeds to the issuer set forth in response to Part C -Question 4.b above. Payments to Officers, Directors, & Payments To Affiliates Others Salaries and fees ................ $ 0 $ 0 [ ] Purchase of real estate .......... $ 0 $ 0 [ ] Purchase, rental or leasing and installation of machinery and $ 0 $ 0 [ ] equipment ........................ Construction or leasing of plant $ 0 $ 0 [ ] buildings and facilities ........... 169 Acquisition of other businesses (including the value of securities involved in this offering that may be used in exchange for the assets or securities of another $ 0 $ 0 [ ] issuer pursuant to a merger) ....... Repayment of indebtedness ........ $ 0 $ 0 [ ] Working capital .................. $ 0 $14,500.00 [X] Other (specify): Advertising & promoting Programs including hosting marketing on line $ 0 $ 0 [ ] Column Totals .................... $ $ 0 [ ] Total Payments Listed (column totals added) ............................... $ 14,500.00 [X] - - -------------------------------------------------------------------------------- D. FEDERAL SIGNATURE - - -------------------------------------------------------------------------------- The issuer has duly caused this notice to be signed by the undersigned duly authorized person. If this notice is filed under Rule 505, the following signature constitutes an undertaking by the issuer to furnish to the U.S. Securities and Exchange Commission, upon written request of its staff, the information furnished by the issuer to any non-accredited investor pursuant to paragraph (b)(2) of Rule 502. Ascot Industries, Inc. /s/ Dale B. Finfrock, Jr. March 2, 1998 Issuer (Print or Type) Signature Date Dale B. Finfrock, Jr. President Name of Signer (Print or Type) Title of Signer (Print or Type) - - -------------------------------------------------------------------------------- ATTENTION - - -------------------------------------------------------------------------------- Intentional misstatements or omissions of fact constitute federal criminal violations. (See 18 U.S.C. 1001.) - - -------------------------------------------------------------------------------- EXHIBIT 4.9(a)5 of the Reorganization Agreement The Target Companies Exchange Agreement (See Exhibit 2.6 of the 8-KSB) 170 EXHIBIT 4.9(c) of the Reorganization Agreement Target Company's Limited Power of Attorney Limited Power of Attorney Coupled with an Interest State of Florida } County of Palm Beach } ss.: American Internet Technical Centers, Inc., a Nevada corporation (the "Grantor"), by J. Bruce Gleason, an individual residing at 44 Havenwood Drive; Pompano Beach, Florida 33064, serving as its president, pursuant to a resolution of its Board of Directors dated June 25th, 1999, and in conjunction with its obligations under Section 4.9 of that certain reorganization agreement entered into with Equity Growth Systems, inc., a publicly held Delaware corporation ("Equity Growth"), and certain other parties, including the holders of approximately 90% of the Grantor's capital stock. and, its wholly owned subsidiary (the "Reorganization Agreement"), hereby irrevocably appoints the Board of Directors of Equity Growth, acting by majority vote, with full power of substitution and delegation, as its attorney-in-fact (the person or persons designated to so act being hereinafter generically referred to as the "Grantee"), for all purposes set forth in Section 4.9 of the Reorganization Agreement and all matters incidental thereto, or convenient to accomplish the goals thereof, including, without limiting the generality of the foregoing, to negotiate and execute all indentures, certificates, stock powers, confessions of judgment, documents, agreements, instruments and corrective instruments on its behalf and in its name, as if it, itself had undertaken such functions directly after having received complete and irrevocable directives to so act from the Grantor's Board of Directors at a properly convened and directed meeting thereof, with full recourse against it, in conjunction with all matters concerning the Reorganization Agreement and Equity Growth, and all instruments and agreements called for in the Reorganization Agreement. IN WITNESS WHEREOF, I have executed this Indenture, on this 25th day of June, 1999. Signed, Sealed & Delivered In Our Presence American Internet Technical Centers, Inc. - - ------------------------------- _______________________________ By: _______________________________ J. Bruce Gleason, President SWORN TO BEFORE ME, an official duly authorized by the State of Florida to administer oaths, on the date first above written by the above referenced Grantor, who provided me with personal identification, as follows: and, after being duly sworn, did certify that he is the duly elected and serving president of the Grantor, that his execution of this irrevocable power of attorney coupled with an interest was duly authorized, empowered and directed by the Grantor's Board of Directors at a duly convened meeting thereof, for the purpose of inducing Equity Growth and the other parties to the Reorganization Agreement to Close thereon, and to provide the Grantor with a substantial infusion of capital and other material benefits, and that such act is duly enforceable against the Grantor, in accordance with the terms of the Reorganization Agreement and this Indenture. My Commission expires: [SEAL] ---------------------- Vanessa H. Mitchem Notary Public -118- 171 EX-3.30 5 AMENDMENT TO CERTIFICATE OF INCORPORATION EXHIBIT 3.30 AMENDMENTS TO REGISTRANT's CERTIFICATE OF INCORPORATION Certificate of Amendment to Certificate of Incorporation of Equity Growth Systems, inc. Pursuant to the provisions of Sections 222 and 242 of the General Corporation Law of the State of Delaware, this Delaware profit corporation does hereby adopt the following certificate of amendment to its Certificate of Incorporation: Witnesseth: First: Amendments adopted: (d) Articles First, Second, Third, Fifth and Tenth, are hereby repealed. (e) The following new Article First is hereby adopted, changing the name of this Corporation from "Equity Growth Systems, inc." to "AmeriNet Group.com, Inc." As amended, Article First will henceforth read as follows: FIRST: Name: (A) The name of the Corporation is "AmeriNet Group.com, Inc." (B) The Corporation's Board of Directors is hereby authorized, without stockholder approval, to amend this Certificate from time to time, in order to change the name of the Corporation. (f) The following Articles are hereby adopted, replacing repealed Articles Second, Third, Fifth and Tenth: SECOND: Registered Agent 172 (a) The street address of the registered office of this Corporation in the state of Delaware is 25 Greystone Manor, Lewes Delaware 19958, situate in Sussex County, and the name of the initial registered agent of this Corporation at such address is Harvard Business Services, Inc. (b) The registered agent's telephone number is 1-800-345-2677 and its E-Mail address is rick1@ix.netcom.com. THIRD: Purposes: This Corporation is organized for the purpose of transacting any and all lawful business; provided, however, that it shall not: (A) Engage in any activities that would subject it to regulation as an investment company under the Federal Investment Company Act of 1940 (the "Investment Company Act"), as amended, unless it shall have first qualified and elected to be regulated as a small business development company pursuant to Sections 54 et. seq., thereof, and limits its investment company activities to those permitted thereby; or (B) Engage in any activities which would subject the Corporation to regulation as a broker dealer in securities subject to regulation under the Securities Exchange Act of 1934, as amended (the "Exchange Act") or as an investment advisor subject to regulation under the Investment Advisors Act of 1940, as amended (the "Investment Advisor's Act"); or (C) Engage in any other activities requiring the Corporation to comply with governmental registration and supervision, unless it has completed such registration and conducts itself in full compliance with such supervisory requirements. FIFTH: Amendments of Certificate by Board of Directors: The Corporation's Board of Directors is hereby authorized, without stockholder approval, to amend this Certificate from time to time, in order to: (a) Effect splits or reverse splits of the Corporation's common or preferred stock; (b) Increase the Corporation's authorized capital; and (c) Decrease the Corporation's authorized capital; provided that such decrease may not affect any issued and outstanding shares. 173 TENTH: Quorum: Unless otherwise provided for in the Corporation's Bylaws, a majority of the shares entitled to vote, represented in person or by proxy, shall be required to constitute a quorum at a meeting of stockholders. (c) The following new Articles are hereby adopted: ELEVENTH: Indemnification (a) The Corporation shall indemnify its Officers, Directors and authorized agents for all liabilities incurred directly, indirectly or incidentally to services performed for the Corporation, to the fullest extent permitted under Delaware law existing now or hereinafter enacted. (b) Funds required to pay expenses reasonably necessary to defend allegations that would raise the foregoing right of indemnifications shall be advanced by this Corporation at any time that the person claiming such expenses appears reasonably likely to become entitled to indemnification and enters into a binding agreement with this Corporation to repay advances for such expenditures in the event that he, she or it is eventually found not to be entitled to indemnification. TWELFTH: Limitation on Stockholder Actions (b) Stockholders shall not have a cause of action against the Corporation's Officers, Directors or agents as a result of any action taken, or as a result of their failure to take any action, unless deprivation of such right is deemed a nullity because, in the specific case, deprivation of a right of action would be impermissibly in conflict with the public policy of the State of Delaware. (c) No stockholder may assert a derivative cause of action on behalf of the Corporation, rather, any claims that would give rise to derivative causes of action shall be submitted in writing, specifying the nature of the cause of action and providing all evidence associated with such claim, to a special committee of the Board of Directors comprised of members who do not also serve as officers of the Corporation and are not reasonably involved with the subject cause of action, or if no such directors are serving, to legal counsel designated by the Corporation in which no attorney holds shares of the Corporation's securities, holds any office or position with the Corporation or is related by marriage or through siblings, parents or children to any officer or director of the Corporation, and the decision to litigate, or not to litigate by such special committee or special counsel shall be binding on the Corporation and the submitting stockholder or stockholders; unless the foregoing procedure has not been followed within 90 days after completion of the submission by the subject stockholder. 174 (d) The fact that this Article shall be inapplicable in certain circumstances shall not render it inapplicable in any other circumstances and the Courts of the State of Delaware are hereby granted the specific authority to restructure this Article, on a case by case basis or generally, as required to most fully give legal effect to its intent. THIRTEENTH: Take Over Defenses: (1) The Board of Directors of this Corporation shall have the broadest possible authority and discretion in adopting and maintaining resistance to, and defenses against, takeover bids that it deems not to be in the best interests of the Corporation, including (without limitation) adopting and maintaining any form of shareholder rights plan or "poison pill" comprised of such terms and features as the Board of Directors deems to be in the best interests of the Corporation. (2) Without limitation on the foregoing, the Board of Directors shall have the authority and discretion to adopt and maintain a shareholder rights plan or other defensive mechanism that may be deactivated or redeemed only: (a) By vote of continuing directors (i.e., the directors who put such shareholder rights plan or other defensive mechanism in place or the designated successors of such directors) to the exclusion of newly elected directors nominated or supported by a takeover bidder or bidders; (b) After a prescribed delay period following election of directors making up a majority of the Board of Directors if such new directors are nominated or supported by a takeover bidder or bidders; or (c) Before election of directors making up a majority of the Board of Directors if such new directors are nominated or supported by a takeover bidder or bidders. (3) No bylaw shall limit in any way the authority of the Board of Directors of this Corporation to adopt or maintain any shareholder rights plan or otherwise to resist or defend against any takeover bid that the Board of Directors finds not to be in the best interests of the Corporation. 175 FOURTEENTH: Affiliated Transactions: This Corporation shall not be subject to the restrictions or requirements for affiliated transactions imposed by Section 203 of the Delaware General Corporation Law, as permitted by the waiver provisions of Section (b)(1) thereof. FIFTEENTH: Compromise & Arrangement (A) Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the ap plication in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. (b) If a majority in number representing three fourths in value of the creditors or class of creditors or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to compromise or arrangement and to any reorganization of this Corporation as consequence of such the said compromise or arrangement and the said reorganization compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. Second: The date of each amendment adopted is: July 7, 1999. Third: The capital of the Corporation was not reduced by virtue of the foregoing amendment. Fourth: Adoption of Amendments: The amendments were adopted by the shareholders after recommendation by the Board of Directors. The number of votes cast for the amendments were sufficient for approval, to wit, 6,246,947 in favor, 2,222,177 not voting. 176 In Witness Whereof, we have subscribed our names this 7th day of July, 1999. Signed, Sealed & Delivered In Our Presence Equity Growth Systems, inc. - - ---------------------------- _____________________________ By: ________________________ Charles J. Scimeca, President {SEAL} Attest: ________________________ G. Richard Chamberlin, Esquire Secretary 177 EX-3.31 6 ARTICLES OF INCORPORATION, AS AMENDED EXHIBIT 3.31 ARTICLES OF INCORPORATION, AS AMENDED ARTICLES OF INCORPORATION OF AMERICAN INTERNET TECHNICAL CENTER, INC. The undersigned subscriber to these Articles of Incorporation is a natural person competent to contract and hereby form a Corporation for profit under Chapter 607 of the Florida Statutes. ARTICLE 1 - NAME The name of the Corporation is AMERICAN INTERNET TECHNICAL CENTER, INC., (hereinafter, "Corporation"). ARTICLE 2 - PURPOSE OF CORPORATION The Corporation shall engage in any activity or business permitted under the laws of the United States and of the State of Florida. ARTICLE 3 - PRINCIPAL OFFICE The address of the principal office of this Corporation is 1500 East Atlantic Boulevard, Pompano Beach, Florida 33060 and the mailing address is the same. 178 ARTICLE 4 - INCORPORATOR The name and street address of the incorporator of this Corporation is: Elsie Sanchez 343 Almeria Avenue Coral Gables, Florida 33134 ARTICLE 5 - OFFICERS The officers of the Corporation shall be: President: J. Bruce Gleason Vice-President: Michael D. Umile Secretary: Michael D. Umile Treasurer: J. Bruce Gleason whose addresses shall be the same as the principal office of the Corporation. ARTICLE 6 - DIRECTOR(S) The Director(s) of the Corporation shall be: J. Bruce Gleason Michael D. Umile whose addresses shall be the same as the principal office of the Corporation. ARTICLE 7 - CORPORATE CAPITALIZATION 7.1 The maximum number of shares that this Corporation is authorized to have outstanding at any time is SEVEN THOUSAND FIVE HUNDRED (7,500) shares of common stock, each share having the par value of ONE DOLLAR ($1.00). 7.2 No holder of shares of stock of any class shall have any preemptive right to subscribe to or purchase any additional shares of any class, or any bonds or convertible securities of any nature; provided, however, that the Board of Director(s) may, in authorizing the issuance of shares of stock of any class, 179 confer any preemptive right that the Board of Director(s) may deem advisable in connection with such issuance. 7.3 The Board of Director(s) of the Corporation may authorize the issuance from time to time of shares of its stock of any class, whether now or hereafter authorized, or securities convertible into shares of its stock of any class, whether now or hereafter authorized, for such consideration as the Board of Director(s) may deem advisable, subject to such restrictions or limitations, if any, as may be set forth in the bylaws of the Corporation. 7.4 The Board of Director(s) of the Corporation may, by Restated Articles of Incorporation, classify or reclassify any unissued stock from time to time by setting or changing the preferences, conversions or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or term or conditions of redemption of the stock. ARTICLE 8 - SUB-CHAPTER S CORPORATION The Corporation may elect to be an S Corporation, as provided in Sub-Chapter S of the Internal Revenue Code of 1986, as amended. 8.1 The shareholders of this Corporation may elect and, if elected, shall continue such election to be an S Corporation as provided in Sub-Chapter S of the Internal Revenue Code of 1986, as amended, unless the shareholders of the Corporation unanimously agree otherwise in writing. 8.2 After this Corporation has elected to be an S Corporation, none of the shareholders of this Corporation, without the written consent of all the shareholders of this Corporation shall take any action, or make any transfer or other disposition of the shareholders' shares of stock in the Corporation, which will result in the termination or revocation of such election to be an S Corporation, as provided in Sub chapter S of the Internal Revenue Code of 1986, as amended. 8.3 Once the Corporation has elected to be an S Corporation, each share of stock issued by this Corporation shall contain the following legend: "The shares of stock represented by this certificate cannot be transferred if such transfer would void the election of the Corporation to be taxed under Sub-Chapter S of the Internal Revenue Code of 1 986, as amended. " ARTICLE 9 - SHAREHOLDERS' RESTRICTIVE AGREEMENT All of the shares of stock of this Corporation may be subject to a Shareholders' Restrictive Agreement containing numerous restrictions on the rights of shareholders of the Corporation and transferability of the shares of stock of the Corporation. A copy of the Shareholders' Restrictive Agreement, if any, is on file at the principal office of the Corporation. 180 ARTICLE 10 - POWERS OF CORPORATION The Corporation shall have the same powers as an individual to do all things necessary or convenient to carry out its business and affairs, subject to any limitations or restrictions imposed by applicable law or these Articles of Incorporation. ARTICLE 11 - TERM OF EXISTENCE This Corporation shall have perpetual existence. ARTICLE 12- REGISTERED OWNER(S) The Corporation, to the extent permitted by law, shall be entitled to treat the person in whose name any share or right is registered on the books of the Corporation as the owner thereto, for all purposes, and except as may be agreed in writing by the Corporation, the Corporation shall not be bound to recognize any equitable or other claim to, or interest in, such share or right on the part of any other person, whether or not the Corporation shall have notice thereof. ARTICLE 13 - REGISTERED OFFICE AND REGISTERED AGENT The initial address of registered office of this Corporation is AmeriLawyer, located at 343 Almeria Avenue, Coral Gables, Florida 33134. The name and address of the registered agent of this Corporation is AmeriLawyer, 343 Almeria Avenue, Coral Gables, Florida 33134. ARTICLE 14- BYLAWS The Board of Director(s) of the Corporation shall have power, without the assent or vote of the shareholders, to make, alter, amend or repeal the Bylaws of the Corporation, but the affirmative vote of a number of Directors equal to a majority of the number who would constitute a full Board of Director(s) at the time of such action shall be necessary to take any action for the making, alteration, amendment or repeal of the Bylaws. ARTICLE 15 - EFFECTIVE DATE These Articles of Incorporation shall be effective immediately upon approval of the Secretary of State, State of Florida. ARTICLE 16 - AMENDMENT The Corporation reserves the right to amend, alter, change or repeal any provision contained in these Articles of Incorporation, or in any amendment hereto, or to add any provision to these Articles of Incorporation or to any amendment hereto, in any manner now or hereafter prescribed or permitted by the 181 provisions of any applicable statute of the State of Florida, and all rights conferred upon shareholders in these Articles of Incorporation or any amendment hereto are granted subject to this reservation. IN WITNESS WHEREOF, I have hereunto set my hand and seal, acknowledged and filed the foregoing Articles of Incorporation under the laws of the State of Florida, this APR 14,1998 /s/ Elsie Sanchez, Incorporator /s/ ACCEPTANCE OF REGISTERED AGENT DESIGNATED IN ARTICLES OF INCORPORATION AmeriLawyer, having a business office identical with the registered office of the Corporation name above, and having been designated as the Registered Agent in the above and foregoing Articles of Incorporation, is familiar with and accepts the obligations of the position of Registered Agent under the applicable provisions of the Florida Statutes. AmeriLawyer By: /s/ Natalia Utrera, Vice President /s/ Articles of Amendment to Articles of Incorporation of American Internet Technical Center, Inc. Pursuant to the provisions of Section 607.1006, Florida Statutes, this Florida profit corporation does hereby adopt the following articles of amendment to its Articles of Incorporation: Witnesseth: First: Amendments adopted: (3) Section 7.1 is hereby repealed and replaced by the following new Section 7.1: "7.1 The maximum number of shares that this Corporation is authorized to have outstanding at any time is 20,000,000 shares of common stock, each share having a par value of $0.001." (4) The current provisions of Article 6 will be re-designated as Section 6.1 and the following new Section 6.2 is hereby adopted and added to the Corporation's Articles of Incorporation: 182 "6.2 The Corporation's Board of Directors is hereby authorized, without prior stockholder approval, to amend these Articles of Incorporation, from time to time, in order to: (1) Effect splits or reverse splits of the Corporation's common or preferred stock; increase the amount of authorized capital stock and determine the attributes thereof, provided that such amendment may not detrimentally affect the rights of holders of outstanding capital stock, other than as a result of pro rata dilution; (2) Create a class of preferred stock and designate the attributes of such preferred stock; (3) Change the name of the Corporation; and, (4) Such other matters as may be otherwise permitted under then applicable laws of the State of Florida." (5) Articles 5, 8, 14, are hereby repealed and replaced by the following new Articles 5, 8 and 14, adopted and added to the Corporation's Articles of Incorporation: ARTICLE 5 INDEMNIFICATION The Corporation shall indemnify its Officers, Directors and authorized agents for all liabilities incurred directly, indirectly or incidentally to services performed for or at the request of the Corporation, and shall advance funds required for such purposes to the person indemnified, to the fullest extent permitted under Florida law existing now or hereinafter enacted, subject to such contractual conditions or limitations as the Corporation and the indemnified person may have agreed to in a written and subscribed instrument. ARTICLE 8 LIMITATION ON STOCKHOLDER ACTIONS In the event that this Corporation at any time has more than three stockholders, none of which owns more than 95% of the Corporation's outstanding common stock of all classes and series, then the following provisions shall be applicable as to all stockholders who own less than 50% of the Corporation's outstanding common stock of all classes and series ("Minority Stockholders"): (1) Minority Stockholders shall not have a cause of action against the Corporation's Of ficers, Directors or agents as a result of any action taken, or as a result of their failure 183 to take any action, unless deprivation of such right is deemed a nullity because, in the specific case, deprivation of a right of action would be impermissibly in conflict with the public policy of the State of Florida. (2) No Minority Stockholder may assert a derivative cause of action on behalf of the Corporation, rather, any claims that would give rise to derivative causes of action shall be submitted in writing, specifying the nature of the cause of action and providing all evidence associated with such claim, to a special committee of the Board of Directors comprised of members who do not also serve as officers of the Corporation and are not reasonably involved with the subject cause of action, or if no such directors are serving, to legal counsel designated by the Corporation in which no attorney holds shares of the Corporation's securities, holds any office or position with the Corporation or is related by marriage or through siblings, parents or children to any officer or director of the Corporation, and the decision to litigate, or not to litigate by such special committee or special counsel shall be binding on the Corporation and the submitting Minority Stockholder or Minority Stockholders; unless the foregoing procedure has not been followed within 90 days after completion of the submission by the subject Minority Stockholder. (3) The fact that this Article shall be inapplicable in certain circumstances shall not render it inapplicable in any other circumstances and the Courts of the State of Florida are hereby granted the specific authority to restructure this Article, on a case by case basis or generally, as required to most fully give legal effect to its intent. ARTICLE 14 AFFILIATED TRANSACTIONS This Corporation shall not be subject to the restrictions or requirements for affiliated transactions imposed by Sections 607.0901, Florida Statutes, as permitted by the waiver provisions of Section 607.0901(5)(b) thereof." Second: The date of each amendment adopted is: February 10, 1999. Third: Adoption of Amendments: The amendments were unanimously adopted by the shareholders. The number of votes cast for the amendments were sufficient for approval. 184 IN WITNESS WHEREOF, I have subscribed my name this 8th day of July, 1999. Signed, Sealed & Delivered In Our Presence - - ----------------------------- - - ----------------------------- ----------------------------- J. Bruce Gleason, President 185 EX-3.41 7 BYLAWS OF AMERICAN INTERNET EXHIBIT 3.41 BYLAWS OF AMERICAN INTERNET, AS AMENDED Bylaws of American Internet Technical Center, Inc. ARTICLE I STOCKHOLDERS SECTION 1. Annual Meetings (a) (1) The annual meeting of the stockholders of the Corporation, shall be held at the principal office of the Corporation in the State of Florida or at such other place within or without the State of Florida as may be determined by the Board of Directors and as may be designated in the notice of such meeting. (2) The meeting shall be held on the 15th day of October of each year or on such other day as the Board of Directors may specify. (3) If said day is a legal holiday, the meeting shall be held on the next succeeding business day not a legal holiday. (b) Business to be transacted at such meeting shall be the election of Directors to succeed those whose terms are expiring and such other business as may be properly brought before the meeting. (c) In the event that the annual meeting, by mistake or otherwise, shall not be called and held as herein provided, a special meeting may be called as provided for in Section 2 of this Article I in lieu of and for the purposes of and with the same effect as the annual meeting. 186 SECTION 2. Special Meetings (a) A special meeting of the stockholders of the Corporation may be called for any purpose or pur poses at any time by the Chairman or President of the Corporation, by the Board of Directors or by the holders of not less than 10% of the outstanding capital stock of the Corporation entitled to vote at such meeting. (b) At any time, upon the written direction of any person or persons entitled to call a special meet ing of the stockholders, it shall be the duty of the Secretary to send notice of such meeting pursuant to Section 4 of this Article I. It shall be the responsibility of the person or persons directing the Secretary to send notice of any special meeting of stockholders to deliver such direction and a proposed form of notice to the Secretary not less than 15 days prior to the proposed date of said meeting. (c) Special meetings of the stockholders of the Corporation shall be held at such place, within or without the State of Florida, on such dates, and at such time as shall be specified in the notice of such special meeting. SECTION 3. Adjournment (a) When the annual meeting is convened, or when any special meeting is convened, the presiding officer may adjourn it for such period of time as may be reasonably necessary to reconvene the meeting at another place and time. (b) The presiding officer shall have the power to adjourn any meeting of the stockholders for any proper purpose, including, but not limited to, lack of a quorum, securing a more adequate meeting place, electing officials to count and tabulate votes, reviewing any stockholder proposals or passing upon any challenge which may properly come before the meetings. (c) When a meeting is adjourned to another time or place, it shall not be necessary to give any notice of the adjourned meeting if the time and place to which the meeting is adjourned are announced at the meeting at which the adjournment is taken, and any business may be transacted at the adjourned meeting that might have been transacted on the original date of the meeting. If, however, after the adjournment the Board fixes a new record date for the adjourned meeting, a notice of the adjourned meeting shall be given in compliance with Section 4(a) of this Article I to each stockholder of record on the new record date entitled to vote at such meeting. SECTION 4. Notice of Meetings; Purpose of Meeting; Waiver (a) (1) Each stockholder of record entitled to vote at any meeting shall be given in person, or by first class mail, postage prepaid, written notice of such meeting which, in the case of 187 a special meeting, shall set forth the purpose(s) for which the meeting is called, not less than 10 or more than 60 days before the date of such meeting. (2) If mailed, such notice is to be sent to the stockholder's address as it appears on the stock transfer records of the Corporation, unless the stockholder shall be requested of the Secretary in writing at least 15 days prior to the distribution of any required notice that any notice intended for him or her be sent to some other address, in which case the notice may be sent to the address so designated. (3) Notwithstanding any such request by a stockholder, notice sent to a stockholder's address as it appears on the stock transfer records of this Corporation as of the record date shall be deemed properly given. (4) Any notice of a meeting sent by United States mail shall be deemed delivered when deposited with proper postage thereon with the United States Postal Service or in any mail receptacle under its control. (b) (1) A stockholder waives notice of any meeting by attendance, either in person or by proxy, at such meeting or by waiving notice in writing either before, during or after such meeting. (2) Attendance at a meeting for the express purpose of objecting that the meeting was not lawfully called or convened, however, will not constitute a waiver of notice by a stockholder who states at the beginning of the meeting, his or her objection that the meeting is not lawfully called or convened. (c) A waiver of notice signed by all stockholders entitled to vote at a meeting of stockholders may also be used for any other proper purpose including, but not limited to, designating any place within or without the State of Florida as the place for holding such a meeting. (d) Neither the business to be transacted at, nor the purpose of, any regular or special meeting of stockholders need be specified in any written waiver of notice. SECTION 5. Closing of Transfer Records; Record Date; Stockholders' List (a) In order to determine the holders of record of the capital stock of the Corporation who are en titled to notice of meetings, to vote a meeting or adjournment thereof, or to receive payment of any dividend, or for any other purpose, the Board of Directors may fix a date not more than 60 days prior to the date set for any of the above-mentioned activities for such determination of stockholders. (b) If the stock transfer records shall be closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such records shall be closed for at least 10 days immediately preceding such meeting. 188 (c) In lieu of closing the stock transfer records, the Board of Directors may fix in advance a date as the date for any such determination of stockholders, such date in any case to be not more than 60 days prior to the date on which the particular action, requiring such determination of stockholders, is to be taken. (d) If the stock transfer records are not closed and no record date is fixed for the determination of stockholders entitled to notice or to vote at a meeting of stockholders, or to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of stockholders. (e) When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this Section, such determination shall apply to any adjournment thereof, unless the Board of Directors fixes a new record date under this Section for the adjourned meeting. (f) (1) The officer or agent having charge of the stock transfer records of the Corporation shall make, as of a date at least 10 days before each meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting or any adjournment thereof, with the address of each stockholder and the number and class and series, if any, of shares held by each stockholder. (2) Such list shall be kept on file at the registered office of the Corporation, at the principal place of business of the Corporation or at the office of the transfer agent or registrar of the Corporation for a period of 10 days prior to such meeting and shall be available for inspection by any stockholder at any time during usual business hours. (3) Such list shall also be produced and kept open at the time and place of any meeting of stockholders and shall be subject to inspection by any stockholder at any time during the meeting. (g) The original stock transfer records shall be prima facie evidence as to the stockholders entitled to examine such list or stock transfer records or to vote any meeting of stockholders. (h) If the requirements of Section 5(f) of this Article I have not been substantially complied with, then, on the demand of any stockholder in person or by proxy, the meeting shall be adjourned until such requirements are complied with. (i) If no demand pursuant to Section 5(h) of this Article I is made, failure to comply with the re quirements of this Section shall not affect the validity of any action taken at such meeting. (j) Section 5(g) of this Article I shall be operative only at such time(s) as the Corporation shall have 6 or more stockholders. 189 SECTION 6. Quorum (a) At any meeting of the stockholders of the Corporation, the presence, in person or by proxy, of stockholders holding a majority of the issued and outstanding shares of the capital stock of the Corporation entitled to vote thereat shall be necessary to constitute a quorum for the transaction of any business. (b) If a quorum is present, the vote of a majority of the shares represented at such meeting and entitled to vote on the subject matter shall be the act of the stockholders. (c) If there shall not be a quorum at any meeting of the stockholders of the Corporation, then the Chairman of the meeting or the holders of a majority of the shares of the capital stock of the Corporation who shall be present at such meeting, in person or by proxy, may adjourn such meeting from time to time until holders of all of the shares of the capital stock shall attend. (d) At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally scheduled. SECTION 7. Presiding Officer; Order of Business (a) (1) Meetings of the stockholders shall be presided over by the Chairman of the Board, or, if he or she is not present or there is no Chairman of the Board, by the President or, if he or she is not present, by the senior Vice President present or, if neither the Chairman of the Board, the President, nor a Vice President is present, the meeting shall be presided over by a chairman to be chosen by a plurality of the stockholders entitled to vote at the meeting who are present, in person or by proxy. (2) The presiding officer of any meeting of the stockholders may delegate his or her duties and obligations as the presiding officer as he or she sees fit. (b) The Secretary of the Corporation, or, in his or her absence, an Assistant Secretary shall act as Secretary of every meeting of stockholders, but if neither the Secretary nor an Assistant Secretary is present, the presiding officer of the meeting shall choose any person present to act as secretary of the meeting. 190 (c) The order of business shall be as follows: Call of meeting to order. Proof of notice of meeting. Reading minutes of last previous stockholders' meeting or a waiver thereof. Reports of Officers. Reports of committees. Election of Directors. Regular and miscellaneous business. Special matters. Adjournment. (d) (1) Notwithstanding the provisions of Section 7(c) of this Article I, the order and topics of business to be transacted at any meeting shall be determined by the presiding officer of the meeting in his or her sole discretion. (2) In no event shall any variation in the order of business or additions and deletions from the order of business as specified in Section 7(c) of this Article I invalidate any actions properly taken at any meeting. SECTION 8. Voting (a) Unless otherwise provided for in the Articles of Incorporation, each stockholder shall be en titled, at each meeting and upon each proposal to be voted upon, to one vote for each share of voting stock recorded in his name on the stock transfer records of the Corporation on the record date fixed as provided for in Section 5 of this Article I. (b) (1) The presiding officer at any meeting of the stockholders shall have the power to determine the method and means of voting when any matter is to be voted upon. (2) The method and means of voting may include, but shall not be limited to, vote by ballot, vote by hand, vote by voice or vote by written consent in lieu of meeting. (3) No method of voting may be adopted, however, which fails to take account of any stockholder`s right to vote by proxy as provided for in Section 10 of this Article I. (4) In no event may any method of voting be adopted which would prejudice the outcome of the vote. SECTION 9. Action Without Meeting 191 (a) (1) Any action required to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of a majority of the Corporation's outstanding voting stock. (2) Such instrument may be executed in counterparts or as a unitary document. (b) In the event that the action to which the stockholders consent is such as would have required the filing of a certificate under the Florida Business Corporation Act General Corporation Act, the effect of such consent shall be as if such action had been voted on by stockholders at a meeting thereof, however, the certificate filed under such other section shall state that written consent has been given in accordance with the provisions of Section 9 of this Article I. (c) If stockholder action is taken by written consent in lieu of meeting signed by less than all of the Corporation's stockholders, then all non participating stockholders shall be provided with written notice of the action taken within 10 days after the effective date of the written instrument taking such action. (d) No action by written consent in lieu of meeting shall be valid if it is in contravention of ap plicable proxy or informational rules adopted pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including, without limitation, the requirements of Section 14 thereof. SECTION 10. Proxies (a) Every stockholder entitled to vote at a meeting of stockholders or to express consent or dissent without a meeting, or his or her duly authorized attorney-in-fact, may authorize another person or persons to act for him or her by proxy. (b) (1) Every proxy must be signed by the stockholder or his or her attorney-in-fact. (2) No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. (3) Every proxy shall be revocable at the pleasure of the stockholder executing it, except as otherwise provided in this Section 10. (c) The authority of the holder of a proxy to act shall not be revoked by the incompetence or death of the stockholder who executed the proxy unless, before the authority is exercised, written 192 notice of any adjudication of such incompetence or of such death is received by the corporate officer responsible for maintaining the list of stockholders. (d) Except when other provisions shall have been made by written agreement between the parties, the record holder of shares held as pledges or otherwise as security or which belong to another, shall issue to the pledger or to such owner of such shares, upon demand therefor and payment of necessary expenses thereof, a proxy to vote or take other action thereon. (e) A proxy which states that it is irrevocable is irrevocable when it is held by any of the following or a nominee of any of the following: (i) a pledgee; (ii) a person who has purchased or agreed to purchase the shares: (iii) a creditor or creditors of the Corporation who extend or continue to extend credit to the Corporation in consideration of the proxy, if the proxy states that it was given in consideration of such extension or continuation of credit, the amount thereof, and the name of the person extending or continuing credit; (iv) a person who has contracted to perform services as an officer of the Corporation, if a proxy is required by the contract of employment, if the proxy states that it was given in consideration of such contract of employment and states the name of the employee and the period of employment contracted for; and (v) a person designated by or under an agreement as provided in Article XI hereof. (f) (1) Notwithstanding a provision in a proxy stating that it is irrevocable, the proxy becomes revocable after the pledge is redeemed, the debt of the Corporation is paid, the period of employment provided for in the contract of employment has terminated, or the agreement under Article XI hereof has terminated and, in a case provided for in Section 10(e) (iii) or Section 10(e) (iv) of this Article I, becomes revocable three years after the date of the proxy or at the end of the period, if any, specified therein, whichever period is less, unless the period of irrevocability of the proxy as provided in this Section 10. (2) This Section 10(f) does not affect the duration of a proxy under Section 10(b) of this Article I. (g) A proxy may be revoked, notwithstanding a provision making it irrevocable, by a purchaser of shares without knowledge of the existence of the provisions unless the existence of the proxy and its irrevocability is noted conspicuously on the face or back of the certificate representing such shares. (h) If a proxy for the same shares confers authority upon two or more persons and does not otherwise provide, a majority of such persons present at the meeting, or if only one is present then that one, may exercise all the powers conferred by the proxy. if the proxy holders present at the meeting are equally divided as to the right and manner of voting in any particular case, the voting of such shares shall be prorated. 193 (i) If a proxy expressly so provides, any proxy holder may appoint in writing a substitute to act in his or her place. (j) Notwithstanding anything in the Bylaws to the contrary, no proxy shall be valid if it was ob tained in violation of any applicable laws, including, without limitation, the requirements of the Exchange Act or the Rules and Regulations promulgated thereunder. SECTION 11. Voting of Shares by Stockholders (a) (1) Shares standing in the name of another corporation, domestic or foreign, may be voted by the officer, agent, or proxy designated by the bylaws of the corporate stockholder; or, in the absence of any applicable bylaw, by such person as the Board of Directors of the corporate stockholder may designate. (2) Proof of such designation may be made by presentation of a certified copy of the bylaws or other instrument of the corporate stockholder. (3) In the absence of any such designation, or in case of conflicting designation by the corporate stockholder, the chairman of the board, president, any vice president, secretary and treasurer of the corporate stockholder, in that order, shall be presumed to possess authority to vote such shares. (b) Shares held by an administrator, executor, guardian or conservator may be voted by him or her, either in person or by proxy, without a transfer of such shares into his or her name. Shares standing in the name of a trustee may be voted as shares held by him or her without a transfer of such shares into his name. (c) (1) Shares standing in the name of a receiver may be voted by such receiver. (2) Shares held by or under the control of a receiver but not standing in the name of such receiver, may be voted by such receiver without the transfer thereof into his name if authority to do so is contained in an appropriate order of the court by which such receiver was appointed. (d) A stockholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee. (e) Shares of the capital stock of the Corporation belonging to the Corporation or held by it in a fiduciary capacity shall not be voted, directly or indirectly, at any meeting, and shall not be counted in determining the total number of outstanding shares. 194 ARTICLE II DIRECTORS SECTION 1. Board of Directors; Exercise of Corporate Powers (a) (1) All corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, the Board of Directors except as may be otherwise provided in the Articles of Incorporation or in a stockholders' agreement. (2) If any such provision is made in the Articles of Incorporation or in a stockholders' agreement, the powers and duties conferred or imposed upon the Board of Directors shall be exercised or performed to such extent and by such person or persons as shall be provided in the Articles of Incorporation or stockholders' agreement. (3) In the event that the Corporation, pursuant to due and valid authorization by the Board of Directors, enters into an agreement relied on by a third party which requires specific actions by the Board of Directors in the future (e.g., the granting of proxies to vote shares in a subsidiary or the election of a person, or the designee of a person to a corporate office), then the Corporation's future Boards of Directors shall be bound to honor such agreement, unless such agreement is inconsistent with applicable laws. (b) Directors need not be residents of this state or stockholders of the Corporation unless the Ar ticles of Incorporation so require. (c) The Board of Directors shall have authority to fix the compensation of Directors based on recommendations of its compensation committee unless otherwise provided in the Articles of Incorporation. (d) A Director shall perform his or her duties as a Director, including his or her duties as a member of any committee of the Board upon which he may serve, in good faith, in a manner he or she reasonably believes to be in the best interests of the Corporation, and with such care as an ordinarily prudent person in a like position would use under similar circumstances. (e) In performing his or her duties, a Director shall be entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, in each case prepared or presented by: (i) one or more officers or employees of the Corporation whom the Director reasonably believes to be reliable and competent in the matters presented; (ii) legal counsel, public accountants or other persons as to matters which the Director reasonably believes to be within such persons' professional or expert competence; or (iii) a committee of the Board upon which he or she does not serve, duly designated in accordance with a provision of the Articles of Incorporation or these Bylaws, as to matters within its designated authority, which committee the Director reasonably believes to merit confidence. 195 (f) A Director shall not be considered to be acting in good faith if he or she has knowledge con cerning the matter in question that would cause such reliance described in Section 1(e) of this Article II to be unwarranted. (g) A person who performs his or her duties in compliance with Section 1 of this Article II shall have no liability by reason of being or having been a Director of the Corporation. (h) A Director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless he or she votes against such action or abstains from voting in respect thereto because of an asserted conflict of interest. SECTION 2. Number; Election; Classification of Directors; Vacancies (a) (1) The Board of Directors of this Corporation shall consist of not less than one Director. (2) The Board shall have authority, from time to time, to increase the number of Directors or to decrease it to not less than one member, provided that no decrease in the number of Directors shall deprive a serving Director of the right to serve throughout the term of his or her election. (3) Whenever the Board of Directors is comprised of three or more members, at least on such member shall be a person other than a holder of ten percent or more of any class of the Corporation's capital stock, an officer or employee of the Corporation, or a person related to any such person (such director or directors being hereinafter referred to as "Independent Director(s)". (b) Each person named in the Articles of Incorporation as a member of the initial Board of Direc tors shall serve until his or her successor shall have been elected and qualified or until his or her earlier resignation, removal from office, or death. (c) (1) At the first annual meeting of stockholders and at each annual meeting thereafter, the stockholders shall elect Directors to hold office until the next succeeding annual meeting, except in case of the classification of Director as permitted by the Florida Business Corporation Act. (2) Each Director shall hold office for the term for which he or she is elected and until his or her successor shall have been elected and qualified or until his or her earlier resignation, removal from office, or death. 196 (d) (1) The stockholders, by amendment to these Bylaws, may provide that the Directors be divided into not more than four classes, as nearly equal in number as possible, whose terms of office shall respectively expire at different times, but no such term shall continue longer than four years, and at least one fourth of the Directors shall be elected annually. (2) If Directors are classified and the number of Directors is thereafter changed, any increase or decrease in Directorship shall be so apportioned among the classes as to make all classes as nearly equal in number as possible. (e) (1) Any vacancy occurring in the Board of Directors, including any vacancy created by reason of an increase in the number of Directors, may be filled only by the Board of Directors. (2) A Director elected to fill a vacancy shall hold office only until the next election of Directors by the stockholders. SECTION 3. Removal of Directors (a) At a meeting of stockholders called expressly for that purpose, any Director or the entire Board of Directors may be removed, with or without cause, by the vote of the holders of 50% plus one of the shares entitled to attend and vote at the election of Directors; provided that at least one Director remains in office or one Director is elected as a replacement Director concurrently with such removal. (b) In the event that the number of Directors is reduced below the number mandated in the Articles of Incorporation as a result of the removal of one or more Directors by the stockholders, then the remaining Directors or the contemporaneously elected replacement Director will promptly elect replacement Directors, to serve until the next meeting of the Corporation's stockholders, and until their replacements have been elected, qualified and assume their office. SECTION 4. Director Quorum and Voting (a) A majority of the Directors fixed in the manner provided in these Bylaws shall constitute a quorum for the transaction of business. (b) A majority of the members of an executive committee or other committee shall constitute a quorum for the transaction of business at any meeting of such executive committee or other committee. (c) The act of a majority of the Directors present at a Board meeting at which a quorum is present shall be the act of the Board of Directors. 197 (d) The act of a majority of the members of an executive committee present at an executive committee meeting at which a quorum is present shall be the act of the executive committee. (e) The act of a majority of the members of any other committee present at a committee meeting at which a quorum is present shall be the act of the committee, unless the committee is required to maintain a membership comprised of a majority of Independent Directors, in which case an act of the committee will require the affirmative vote of a majority of all Independent Directors who are eligible to attend and vote as well as a majority of those present and voting. (f) Directors may, if not contrary to applicable law, vote either in person or by proxy, provided that the proxy holder must be either another Director, an officer or a stockholder of the Corporation; however, any Director who elects to vote by proxy more than three times during any single fiscal year shall, unless otherwise determined by the Board of Directors, be automatically removed as a Director. SECTION 5. Director Conflicts of Interest (a) No contract or other transaction between this Corporation and one or more of its Directors or any other corporation, firm, association or entity in which one or more of its Directors are Directors or officers or are financially interested shall be either void or voidable because of such relationship or interest or because such Director or Directors are present at the meeting of the Board of Directors or a committee thereof which authorizes, approves or ratifies such contract or transaction or because their votes are counted for such purpose, if: (1) The fact of such relationship or interest is disclosed or known to the Board of Directors or committee which authorizes, approves or ratifies the contract or transaction by a vote or consent sufficient for the purpose without counting the votes or consents of such interested Directors; or (2) The fact of such relationship or interest is disclosed or known to the stockholders en titled to vote and they authorize, approve or ratify such contract or transaction by vote or written consent; or (3) The contract or transaction is fair and reasonable as to the Corporation at the time it is authorized by the Board, a committee, or the stockholders. (b) Interested Directors, whether or not voting, may be counted in determining the presence of a quorum at a meeting of the Board of Directors or a committee thereof which authorizes, approves or ratifies such contract or transaction. SECTION 6. Executive and Other Committees; Designation; Authority 198 c) The Board of Directors, by resolution adopted by the full Board of Directors, may designate from among its Directors an executive committee and one or more other committees each of which, to the extent provided in such resolution or in the Articles of Incorporation or these Bylaws, shall have and may exercise all the authority of the Board of Directors, except that no such committee shall have the authority to : (i) approve or recommend to stockholders actions or proposals required by the Florida Business Corporation Act to be approved by stockholders; (ii) designate candidates for the office of Director for purposes of proxy solicitation or otherwise; (iii) fill vacancies on the Board of Directors or any committee thereof; (iv) amend these Bylaws; (v) authorize or approve the re-acquisition of shares unless pursuant to a general formula or method specified by the Board of Directors; or (vi) authorize or approve the issuance or sale of, or any contract to issue or sell, shares or designate the terms of a series of a class of shares, unless the Board of Directors, having acted regarding general authorization for the issuance or sale of shares, or any contract therefor, and, in the case of a series, the designation thereof has specified a general formula or method by resolution or by adoption of a stock option or other plan, authorized a committee to fix the terms upon which such shares may be issued or sold, including, without limitation, the price, the rate or manner of payment of dividends, provisions for redemption, sinking fund, conversion, and voting or preferential rights, and provisions for other features of a class of shares, or a series of a class of shares, with full power in such committee to adopt any final resolution setting forth all the terms of a series for filing with the Department of State under the Florida Business Corporation Act. (d) The Board, by resolution adopted in accordance with Section 6(a) of this Article II, may desig nate one or more Directors as alternate members of any such committee, who may act in the place and stead of any absent member or members at any meeting of such committee. (e) Neither the designation of any such committee, the delegation thereto of authority, nor action by such committee pursuant to such authority shall alone constitute compliance by a member of the Board of Directors, not a member of the committee in question, with his responsibility to act in good faith, in manner he reasonably believes to be in the best interests of the Corporation, and with such care as an ordinarily prudent person in a like position would use under similar circumstances. (f) The Board of Directors shall at every organizational meeting thereof designate the following committees comprised in each case of a majority of Independent Directors: (1) An audit committee; (7) A derivative litigation committee; (8) A compensation committee; 199 (9) A regulatory compliance committee; and (10) A nominating committee. (g) The audit committee shall be responsible for selection of the auditor for the Corporation's financial statements, which must be a certified public accountant that is a member of the AICPA's Securities Practice Section and already successfully subjected to peer review, for supervision of the annual audit and for review of all financial data submitted by the Corporation to the Commission. (h) (1) No stockholder may assert a derivative cause of action on behalf of the Corporation, rather, any claims that would give rise to derivative causes of action shall be submitted in writing, specifying the nature of the cause of action and providing all evidence associated with such claim, to a the derivative litigation committee of the Board of Directors. (2) The derivative litigation committee shall be comprised of members who do not also serve as officers of the Corporation and who are not reasonably involved with the subject cause of action. (3) In the event that, due to the nature of the litigation involved, no such directors are serving, then its duties shall be delegated by the Board of Directors to a specially selected legal counsel who is not otherwise representing the Corporation, provided that no attorney so designated or his or her partners hold shares of the Corporation's securities, hold any office or position with the Corporation or be related by marriage or through siblings, parents or children to any officer or director of the Corporation. (4) The decision to litigate, or not to litigate by such special committee or special counsel shall be binding on the Corporation and the submitting stockholder or stockholders unless the foregoing procedure has not been initiated within 30 days after completion of the submission by the subject litigant. (g) (1) The compensation committee shall have exclusive jurisdiction to develop compensation plans and alternatives for all executive officers and directors of the Corporation, and shall be responsible for development, implementation and awards under any benefit plans covering the Corporation's directors, officers or employees which, after proposal by the compensation committee, are adopted by the Board of Directors or the stockholders of the Corporation. (2) Plans or proposals developed by the compensation committee must be submitted for ratification to the Board of Directors, and, if approved thereby, shall, if required by applicable laws, be submitted for ratification to the Corporation's stockholders. 200 (3) The Corporation's chief financial officer, a designee of the Corporation's auditors and a designee of the Corporation's general counsel shall serve as ex officio, non-voting members of the compensation committee. (c) The regulatory compliance committee shall be responsible for review and approval of all filings by the Corporation with the Commission and any other federal regulatory body with which the Corporation is regularly required to file information involving matters not under the jurisdiction of the audit committee, and shall supervise the preparation by the Corporation's general counsel of summary materials concerning all such reports as may be required to permit all members of the Board of Directors to make informed decisions concerning approval or ratification of any such reports. (d) The nominating committee shall conduct ongoing searches for candidates to corporate offices, for candidates to the Corporation's board of directors and for membership in committees of the Corporation's board of directors, and, in each instance when it makes recommendations for any such position, shall submit more qualified candidates, if reasonably possible, than there are positions to fill so that the Board of Directors and stockholders will be presented with more than one alternative. (e) Any committee, may, if required for purposes of independence, be comprised of a single voting member. (f) Notwithstanding the foregoing, in the event that the Corporation is a controlled subsidiary of another corporation and the parent corporation is ultimately responsible for the matters delegated to the audit committee, derivative litigation committee, compensation committee, regulatory compliance committee, or nominating committee, then the requirements for such committees as to this Corporation may be dispensed with. SECTION 7. Place, Time, Notice and Call of Directors' Meeting. (a) Meetings of the Board of Directors, regular or special, may be held either within or without the State of Florida. (b) (1) A regular meeting of the Board of Directors of the Corporation shall be held for the election of officers of the Corporation and for the transaction of such other business as may come before such meeting as promptly as practicable after the annual meeting of the stockholders of this Corporation without the necessity of notice other than this Bylaw. (b) Other regular meetings of the Board of Directors of the Corporation may be held at such places as the Board of Directors of the Corporation may from time to time resolve 201 without notice other than such resolution. (c) Special meetings of the Board of Directors may be held at any time upon call of the Chairman of the Board of Directors or a majority of the Directors of the Corporation, at such time and at such place as shall be specified in the call thereof. (d) (A) Notice of any special meeting of the Board of Directors must be given at least two days prior thereto if by written notice delivered personally, by telegram, by telephone, by e-mail or by facsimile transmission; or at least five days prior thereto if mailed. (B) If such notice is given by mail, such notice shall be deemed to have been delivered when deposited with the United States Postal Service addressed to the business address of such Director with postage thereon prepaid. (C) If notice be given by telegram, such notice shall be deemed delivered when the telegram is delivered to the telegraph company. (D) If notice is given by telephone (including facsimile transmission or e-mail), such notice shall be deemed delivered when the call is completed. (E) Notwithstanding the foregoing: if an emergency meeting of the Board of Directors or any committee thereof is required and notice as provided above cannot be reasonably provided within the time periods required, then: (a) Notice shall be provided by all of the foregoing means and to all members, whether or not at the locations normally established for receipt of notice, establishing that an emergency meeting will be held at a specified time through teleconference in which each member must be able to participate, if he or she so elect; (b) The time set for the emergency meeting must be the maximum amount of time following the provision or attempted provision of notice as is reasonable under the circumstances; (c) If a quorum is established, then temporary required actions may be authorized, subject to ratification at a regularly called special meeting to be held within two days after at the emergency meeting, and if not so ratified, any such actions shall be immediately discontinued, and to the extent reasonably possible, undone. (c) (1) Notice of a meeting of the Board of Directors need not be given to any Director who 202 signs a waiver of notice either before or after the meeting. (2) Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting and waiver of any and all objections to the place of the meeting, the time of the meeting, or the manner in which it has been called or convened, except when a Director states, at the beginning of the meeting, any objection to the transaction of business because the meeting is not lawfully called or convened. (d) Neither the business to be transacted at, nor the purpose of, any regular of special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. (e) (1) A majority of the Directors present, whether or not a quorum exists, may adjourn any meeting of the Board of Directors to another time and place. (2) Notice of any such adjourned meeting shall be given to the Directors who were not present at the time of the adjournment and, unless the time and place of the adjourned meeting are announced at the time of the adjournment, to the other Directors. (f) (1) Members of the Board of Directors may participate in a meeting of such Board by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time. (2) Participation by such means shall constitute presence in person at a meeting. SECTION 8. Action by Directors Without a Meeting (a) (1) Any action required by the Florida Business Corporation Act to be taken at a meeting of the Directors of the Corporation, or any action which may be taken at a meeting of the Directors or a committee thereof, may be taken without a meeting if a consent in writing, setting forth the action so to be taken, signed by all of the Directors, or all of the members of the committee, as the case may be, and is filed in the minutes of the proceedings of the Board or of the committee. (2) Such consent shall have the same effect as a unanimous vote. (b) If not contrary to applicable law, Directors may take action as the Board of Directors or com mittees thereof through a written consent to action signed by a number of Directors sufficient to have carried a vote of the Board of Directors or committee thereof with all members present and voting; provided, that all Directors not joining in such written instrument shall be deemed for all purposes to have cast dissenting votes, and that all Directors not parties to such instrument shall receive written notice of all action taken through such instrument within three days after such instrument shall have been subscribed by the requisite number of Directors required for such action. 203 SECTION 9. Compensation (a) The Directors and members of the executive and any other committee of the Board of Directors shall be entitled to such reasonable compensation for their services and on such basis as shall be fixed from time to time by resolution of the Board of Directors, based on proposals submitted by the compensation committee of the Board of Directors. (b) The Board of Directors and members of any committee of that Board of Directors shall be entitled to reimbursement for any reasonable expenses incurred in attending any Board or committee meeting. (c) Any Director receiving compensation under this Section shall not be prevented from serving the Corporation in any other capacity and shall not be prohibited from receiving reasonable compensation for such other services. SECTION 10. Resignation (a) Unless he or she is the sole serving Director, any Director of the Corporation may resign at any time by providing the Board of Directors with written notice indicating the Director's intention to resign and the effective date thereof. (b) A sole serving Director of the Corporation must, at least concurrently with his or her resignation, elect one or more successor Director(s) at least one of whom must assume his or her office concurrently with the subject resignation, and the resignation shall be effected by providing the successor Director(s) with written notice indicating the Director's intention to resign and the effective date thereof. ARTICLE III OFFICERS SECTION 1. Election; Number; Terms of Office (a) (1) The officers of the Corporation shall consist of a Chairman of the Board of Directors, provided that there are three or more directors then serving, whose title may be designated as "Chairman," a Chief Executive officer, a President, a Chief Operating Officer, a Chief Financial Officer, one or more Vice-Presidents, a Secretary and a Treasurer, each of whom shall be elected by the Board of Directors at such time and in such manner as may be prescribed by these Bylaws. 204 (2) Such other officers and assistance officers and agents as may be deemed necessary may be elected or appointed by the Board of Directors. (3) The officers of the Corporation shall be hereinafter collectively referred to as the "Officers." (b) All Officers and agents, as between themselves and the Corporation, shall have such authority and perform such duties in the management of the Corporation as are provided in these Bylaws, or as may be determined by resolution of the Board of Directors not inconsistent with these Bylaws. (c) Any two or more offices may be held by the same person, except for the offices of President and Secretary. (d) A failure to elect a Chairman of the Board, Chief Executive Officer, President, Chief Operating Officer, Chief Financial Officer, a Vice President, a Secretary or a Treasurer shall not affect the existence of the Corporation. SECTION 2. Removal (a) An Officer of the Corporation shall hold office until the election and qualification of his suc cessor; however, any Officer of the Corporation may be removed from office by the Board of Directors or, if appointed by another Officer pursuant to authority delegated by the Board of Directors, by such appointing Officer, whenever in its, his or her judgment the best interests of the Corporation will be served thereby. (b) Such removal shall be without prejudice to the contract rights, if any, of the person so removed. (c) Election or appointment of an officer shall not of itself create any contract right to employment or compensation or create an employer-employee relationship. SECTION 3. Vacancies Any vacancy in any office from any cause may be filled for the unexpired portion of the term of such office by the Board of Directors. SECTION 4. Powers and duties (a) Chairman: The Chairman of the Board of Directors (hereinafter referred to as the "Chairman"): 205 (1) Shall preside over meetings of the Board of Directors and the stockholders. (2) Unless a separate Chief Executive Officer is elected, shall exercise the powers hereafter granted to that office. (3) Unless a Chairman of the Board is specifically elected, shall be the President. (b) Chief Executive Officer: (1) The Chief Executive Officer shall be the principal Officer of the Corporation to whom all other Officers shall be subordinate. (2) In the event no Chief Executive Officer is separately elected, such office shall be assumed by the Chairman of the Board, and if no such office has been filled, by the President. (3) Except where by law the signature of the President is required or unless the Board of Directors shall rule otherwise, the Chief Executive Officer shall possess the same power as the President to sign all certificates, contracts and other instruments of the Corporation which may be authorized by the Board of Directors. (c) Chief Operating Officer (1) The Chief Operating Officer of the Corporation shall be responsible for management of the day to day affairs of the Corporation, subject to compliance with the directions of the Board of Directors and of the Chief Executive Officer. (2) The Chief Operating Officer shall be responsible for the general day-to-day supervision of the business and affairs of the Corporation. (3) The Chief Operating Officer shall sign or countersign all certificates, contracts or other instruments of the Corporation, as authorized by the Board of Directors or as assigned by the Chief Executive Officer. (4) Unless otherwise provided by specific resolution of the Board of Directors, the President shall be the Chief Operating Officer of the Corporation. (d) President (1) In the absence of a separately elected or available Chief Executive Officer or Chairman of the Board, the President shall be the Chief Executive Officer of the Corporation and shall preside at all meetings of the stockholders and the Board of Directors. 206 (2) The Board of Directors will at all times retain the power to expressly delegate the duties of the President to any other Officer of the Corporation. (e) Chief Financial Officer (1) The Chief Financial Officer shall be responsible for coordinating all financial aspects of the Corporation's operations, including strategic financial planning, supervision of the Corporation's Treasurer, Comptroller and, subject to the supervision of the audit committee, for coordination with the Corporation's outside auditors. (2) The Chief Financial Officer shall be responsible for keeping the audit committee fully and timely informed of all matters under its jurisdiction. (3) The Chief Financial Officer shall, unless otherwise specifically provided by the Board of Directors, serve as the Corporation's principal compliance officer and shall be responsible for overseeing preparation and filing of all reports of the Corporation's activities required to be filed, either periodically or on a special basis with the United States Internal Revenue Service, the Commission and with other federal, state or local governmental agencies. (4) The Chief Financial Officer shall be responsible for keeping the regulatory committee fully and timely informed of all matters under its jurisdiction. (f) Vice President(s) (1) The Vice President(s), if any, in the order designated by the Board of Directors, shall exercise the functions of the President in the event of the absence, disability, death, or refusal to act of the President. (2) During the time that any Vice President is properly exercising the functions of the President, such Vice President shall have all the powers of and be subject to all restrictions upon the President. (3) Each Vice President shall have such other duties as are assigned to him from time to time by the Board of Directors or by the President of the Corporation and shall be subject to such specializing designations (e.g., "senior," executive," etc.) as the Board of Directors may select. (g) Secretary (1) The Secretary of the Corporation shall keep the minutes of the meetings of the stockholders of the Corporation, and, unless provided otherwise by the Chairman at any meeting of the Board of Directors, the Secretary shall keep the minutes of the meetings of the Board of Directors of the Corporation. \ 207 (2) The Secretary shall, unless a chief legal officer is elected, be the custodian of the minute books of the Corporation and such other books and records of the Corporation as the Board of Directors of the Corporation may direct. (3) The Secretary of the Corporation shall have the general responsibility for maintaining the stock transfer records of the Corporation, or of supervising the maintenance of the stock transfer records of the Corporation by the transfer agent, if any, of the Corporation. (3) The Secretary shall be the custodian of the corporate seal of the Corporation and shall affix the corporate seal of the Corporation on contracts and other instruments as the Board of Directors may direct. (4) The Secretary shall perform such other duties as are assigned from time by the Board of Directors, the Chief Executive Officer, the Chairman, the Chief Operating Officer or the President of the Corporation. (h) Treasurer (1) The Treasurer of the Corporation shall be directly subordinate to the Chief Financial Officer. (2) In the absence of a Chief Financial Officer, such office shall be filled by the Treasurer. (3) Unless otherwise specified by the Board of Directors, the Treasurer shall have custody of all funds and securities owned by the Corporation. (4) The Treasurer shall cause to be entered regularly in the proper books of account of the Corporation full and accurate accounts of the receipts and disbursements of the Corporation. (5) The Treasurer of the Corporation shall render a statement of the cash, financial and other accounts of the Corporation whenever he is directed to render such a statement by the Board of Directors or by the President of the Corporation. (6) The Treasurer shall at all reasonable times make available the Corporation's books and financial accounts to any Director of the Corporation during normal business hours. 208 (7) The Treasurer shall perform all other acts incident to the Office of Treasurer of the Corporation, and he shall have such other duties as are assigned to him from time to time by the Board of Directors, the Chief Executive Officer, the Chairman, the Chief Operating Officer or the President of the Corporation. (i) General Counsel & Chief Legal Officer: (1) The Board of Directors shall designate a person licensed to practice law in one of the states comprising the United States as the Corporation's General Counsel and Chief Legal Officer; (2) The Corporation's General Counsel and Chief Legal Officer shall coordinate the Corporation's legal affairs under the directions of the Board of Directors and in coordination with the Chief Executive Officer, to whom he or she shall report; (3) The Board of Directors may appoint such subordinate legal officers and assign them such functions as it may deem appropriate. (j) Other Subordinate or Assistant Officers. (1) Other subordinate, deputy or assistant officers may be appointed by the Board of Directors or by the Chief Executive Officer, the Chairman, the Chief Operating Officer or the President, if such authority is delegated to them by the Board of Directors. (2) Persons so appointed shall exercise such powers and perform such duties as may be delegated to them by the Board of Directors, the Chief Executive Officer, the Chief Operating Officer or by the President, that appointed them, as the case may be. (k) In case of the absence or disability of any Officer of the Corporation and of any person authorized to act in his place during such period of absence or disability, the Board of Directors may from time to time delegate the powers and duties of such Officer or any Director or any other person whom it may select. SECTION 5. Salaries (a) The salaries of all Officers of the Corporation shall be fixed by the Board of Directors based on recommendations by the compensation committee of the Board of Directors. (b) No Officer shall be ineligible to receive such salary by reason of the fact that he is also a Director of the Corporation and receiving compensation therefor. 209 ARTICLE IV LOANS TO EMPLOYEES AND OFFICERS; GUARANTEE OF OBLIGATIONS OF EMPLOYEES AND OFFICERS (a) This Corporation may lend money to, guarantee any obligation of, or otherwise assist any Of ficer or other employee of the Corporation or of a subsidiary, including any Officer or employee who is a Director of the Corporation or of a subsidiary, whenever, in the judgment of the Directors, such loan, guarantee or assistance may reasonably be expected to benefit the Corporation. (b) The loan, guarantee or other assistance may be with or without interest, and may be unsecured, or secured in such manner as the Board of Directors shall approve including, without limitation, a pledge of shares of stock of the Corporation. (c) Nothing in this Article shall be deemed to deny, limit or restrict the powers of guarantee or warranty of this Corporation at common law or under any statute. ARTICLE V STOCK CERTIFICATES; VOTING TRUSTS; TRANSFERS SECTION 1. Certificates Representing Shares To the extent legally permitted by the laws of the United States and the State of Florida, in the event that the Corporation has 100 or more stockholders, records of the holders of the Corporation's capital stock shall be maintained through stock transfer record entry with a transfer agent registered and in good standing with the Commission and certificates evincing ownership of capital stock shall not be issued, except at the request of a stockholder in which case they shall be issued as provided below, at the stockholders' expense: (a) (1) Subject to the foregoing, every holder of shares of this Corporation shall be entitled to one or more certificates representing all shares to which he, she or it is entitled and such certificates shall be signed by the Chairman, Chief Executive Officer, Chief Operating Officer, the President or a Vice President and the Secretary or an Assistant Secretary of the Corporation and may be sealed with the seal of the Corporation or a facsimile thereof. (2) The signatures of the Chairman, the Chief Executive Officer, the Chief Operating Officer, the President or Vice President and the Secretary or Assistant Secretary may be facsimiles if the certificate is manually signed on behalf of a transfer agent or a registrar other than the Corporation itself or an employee of the Corporation. 210 (3) In case any Officer who signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such Officer before such certificate is issued, it may be issued by the Corporation with the same effect as if it were executed by the appropriate Officer at the date of its issuance. (b) Every certificate representing shares issued by this Corporation shall, if shares are divided into one or more classes or series with differing rights, state that the Corporation will furnish to any stockholder upon request and without charge a full statement of: (i) the designations, preferences, limitations, and relative rights of the shares of each class or series authorized to be issued, and (ii) the variations in the relative rights and preferences between the shares of each such series, if the Corporation is authorized to issue any preferred or special class in series and so far as the same have been fixed and determined, and the authority of the Board of Directors to fix and determine, the relative rights and preferences of subsequent series. (c) Every certificate representing shares which are restricted as to sale, disposition or other transfer (including restrictions based on federal or state securities and other laws) shall state that such shares are restricted as to transfer and shall set forth or fairly summarize upon the certificate, or shall state that the Corporation will furnish to any stockholder upon request and without charge a full statement of, such restrictions. (d) Each certificate representing shares shall state upon the face thereof: (1) The name of the Corporation; (2) That the Corporation is organized under the laws of the State of Florida; (3) The name of the person or persons to whom issued; (4) The number and class of shares, and the designation of the series, if any, which such certificate represents; (5) The date of issuance; and (6) The par value of each share represented by such certificate, or a statement that the shares are without par value. (e) No certificate shall be issued for any shares until they are fully paid for and in the event that a certificate is erroneously issued or compensation paid is subsequently discovered to be other than as represented (e.g., dishonored checks, securities of a corporation acquired in a reorganization where the representations and warranties provided prove to be materially false, services provided where other than as represented, etc.), then the Board of Directors shall promulgate a certified resolution detailing the nature of the misrepresented consideration, and shall submit such certified resolution to the person responsible for recording and effecting transactions in the Corporation's securities; whereupon such securities will be restricted from transfer and treated as no longer outstanding for all purposes unless the Corporation becomes subject to a judgment of a couRt of competent jurisdiction providing otherwise. 211 (6) For purposes of Commission Rule 144, the holding period for the company's securities shall be the initial date recorded in the Corporation's stock transfer record entry system for the issuance or transfer thereto to the subject holder, subject to the tacking provisions of such rule, unless a failure of consideration is determined to exist pursuant to the preceding paragraph, in which case the holding period will be deemed to have tolled until a legally binding determination is obtained concerning when the subject securities were, in fact, fully paid for. SECTION 2. Transfer records (a) The Corporation shall keep at its registered office or principal place of business or in the office of its transfer agent or registrar, a stock transfer record (or stock transfer records where more than one kind, class, or series of stock is outstanding) to be known as the Official Stock Transfer Registry, containing the names, alphabetically arranged, addresses and Social Security numbers of every stockholder and the number of shares each kind, class or series of stock held of record. (b) Where the Stock Transfer Registry is kept in the office of the transfer agent, the Corporation shall keep at its chief administrative offices copies of the stock lists prepared from said Stock Transfer Registry and sent to it from time to time (but not less frequently than every month) by the transfer agent. (c) The Stock Transfer Registry or stock lists shall show the current status of the ownership of shares of the Corporation provided that, if the transfer agent of the Corporation be located elsewhere, a reasonable time shall be allowed for transit or mail, not to exceed three days. SECTION 3. Transfer of Shares (a) The name(s) and address(es) of the person(s) to whom shares of stock of this Corporation are issued, shall be entered on the Stock Transfer records of the Corporation, with the number of shares and date of issue. (b) (1) Transfer of shares of the Corporation shall be made on the Stock Transfer records of the Corporation by the Secretary or the transfer agent, subject to compliance with any restrictions specified on such certificate, only when the holder of record thereof or the legal representative of such holder of record or the attorney-in-fact of such holder of record, authorized by power of attorney duly executed and filed with the Secretary or 212 transfer agent of the Corporation, shall direct that such transfer be effected in a written instrument complying with the securities industry requirements for stock and bond powers, bearing a medallion guarantee or such other requirements as may from time to time be promulgated by the Commission, and, if a certificate therefor has been issued, shall require surrender the Certificate representing such shares for cancellation concurrently with the request for transfer. (2) Lost, destroyed or stolen Stock Certificates shall be replaced pursuant to Section 5 of this Article V. (c) The person or persons in whose names shares stand on the stock transfer records of the Corporation shall be deemed by the Corporation to be the owner of such shares for all purposes, except as otherwise provided pursuant to Sections 10 and 11 of Article I, or Section 4 of Article V. (d) Shares of the Corporation's capital stock shall be freely transferable without required Board of Directors' consent unless: (1) Such shares are subject to transfer restrictions under applicable Commission rules; (2) Transfer of the shares has been restricted due to lack of consideration, fraud in the inducement or other legally cognizable reasons heretofore described; or (3) A consent requirement has been imposed pursuant to a binding written contract subscribed to by the holder or his or her predecessor in interest. (e) (1) All transactions in securities subject to any restrictions imposed under Commission Rule 144 ("restricted securities" and "Rule 144," respectively) shall, as a condition to transfer, require the following documentation, to be reviewed and approved by legal counsel to the Corporation: (A) An affidavit from the holder (the "Holder") providing details concerning acquisition of the subject shares; providing evidence of the date when consideration for the shares was paid in full; detailing all transactions in the Corporation's securities during the immediately preceding 90 days; affirming a present intent to dispose of the subject securities; affirming that a Form 144 has been filed with the Commission covering the proposed transaction (and providing a copy thereof); affirming compliance with any reporting obligations under Sections 13(d), 13(g) or 16(b) of the Exchange Act, and providing such other facts or representations as legal counsel to the Corporation may reasonably require; 213 (B) A written confirmation by the Corporation's transfer agent based on records available thereto of all transactions in the Corporation's securities by the Holder and anyone with whom the holder is required to aggregate sales or securities holdings for purposes of Rule 144, as well as confirmation of the percentage of outstanding securities of the Corporation held of record by the Holder and anyone with whom the holder is required to aggregate sales or securities holdings for purposes of Rule 144; (C) Except as provided below, a written confirmation from the broker through whom the Holder is effecting the proposed transaction verifying that the transaction will be effected in full compliance with Rule 144; and (D) A legal opinion from counsel to the Holder (who may not also be the counsel to the Corporation) specifically addressing all aspects of Rule 144 and detailing the manner in which they are being complied with or the reasons that they are not applicable. (2) Transactions in restricted securities that are not being effected in reliance on Rule 144 shall require, as a condition to transfer, the following documentation, to be reviewed and approved by legal counsel to the Corporation: (A) An affidavit from the holder (the "Holder") providing details concerning acquisition of the subject shares; providing evidence of the date when consideration for the shares was paid in full; the identity and qualifications of the person to whom the securities are being transferred; the manner in which such person has been provided with required information concerning the Corporation; affirming compliance with any reporting obligations under Sections 13(d), 13(g) or 16(b) of the Exchange Act and providing such other facts or representations as legal counsel to the Corporation may reasonably require; (B) If the Corporation has a class of securities registered under Section 12 of the Exchange Act, an affidavit from the Holder affirming that all reports required to be filed by the Holder with the Commission pursuant to Sections, 13, 14 and 16 of the Exchange Act (e.g., Forms 3, 4 and 5, and Schedules 13D or 13G), have been filed; and (C) A legal opinion from counsel to the Holder (who may not also be the counsel to the Corporation) addressed to the Corporation in a manner creating enforceable privity between such legal counsel and the Corporation, specifically addressing all aspects of the exemptions relied on to effect the proposed transaction 214 without registration under applicable federal and state securities laws and regulations, detailing the manner in which they are being complied with or the reasons that they are not applicable and, if the Corporation has a class of securities registered under Section 12 of the Exchange Act, asserting that after diligent inquiry, such counsel confirms that all reports required to be filed by the Holder with the Commission pursuant to Sections, 13, 14 and 16 of the Exchange Act (e.g., Forms 3, 4 and 5, and Schedules 13D or 13G), have been filed. (3) No transactions in the Corporation's restricted securities failing to materially comply with the foregoing requirements will be honored, nor will any holding period required under Rule 144 be deemed to commence until all such requirements are materially complied with (material compliance to be determined in the sole discretion of the Board of Directors or a court of competent jurisdiction located in the county where the Corporation's Chief Legal Officer maintains its principal offices). SECTION 4. Voting Trusts (a) (1) Any number of stockholders of the Corporation may create a voting trust for the purpose of conferring upon a trustee or trustees the right to vote or otherwise represent their shares, for a period not to exceed ten years, by: (i) entering into a written voting trust agreement specifying the terms and conditions of the voting trust; (ii) depositing a counterpart of the agreement with the Corporation at its registered office; and (iii) transferring their shares to such trustee or trustees for the purposes of this Agreement. (2) Prior to the recording of the agreement, the stockholder concerned shall, if certificates have been issued, tender the stock certificate(s) described therein to the Corporate Secretary who shall note on each certificate: "This Certificate is subject to the provisions of a voting trust agreement dated ..........., recorded in Minute Book ............, of the Corporation." (b) (1) Upon the transfer of such shares, voting trust certificates shall be issued by the trustee or trustees to the stockholders who transfer their shares in trust. (2) Such trustee or trustees shall keep a record of the holders of voting trust certificates evidencing a beneficial interest in the voting trust, giving the names and addresses of all such holders and the number and class or the shares in respect of which the voting trust certificates held by each are issued, and shall deposit a copy of such record with the Corporation at its registered office. 215 (3) The Corporation shall have no liability to any stockholder participating in a voting trust as a result of any actions or failures to act by the trustee. (c) The counterpart of the voting trust agreement and the copy of such record so deposited with the Corporation shall be subject to the same right of examination by a stockholder of the Corporation, in person or by agent or attorney, as are the books and records of the Corporation, and such counterpart and such copy of such record shall be subject to examination by any holder of record of voting trust certificates either in person or by agent or attorney, at any reasonable time for any proper purpose. (d) (1) At any time before the expiration of a voting trust agreement as originally fixed or as extended one or more times under this Section 4(d), one or more holders of voting trust certificates may, by agreement in writing, extend the duration of such voting trust agreement, nominating the same or substitute trustees, for an additional period not exceeding 10 years. (2) Such extension agreement shall not affect the rights or obligations or persons not parties to the agreement, and such persons shall be entitled to remove their shares from the trust and promptly to have their stock certificates reissued upon the expiration of the original term of the voting trust agreement. (3) The extension agreement shall in every respect comply with and be subject to all the provisions of this Section 4, applicable to the original voting trust agreement except that the 10 year maximum period of duration shall commence on the date of adoption of the extension agreement. (e) The trustees under the terms of the agreements entered into under the provisions of this Section 4, shall not acquire the legal title to the shares but shall be vested only with the legal right and title to the voting power which is incident to the ownership of the shares. (f) Notwithstanding generally applicable prohibitions against a corporation's voting of treasury stock or any other provisions in these Bylaws, if the Corporation is the trustee under a voting trust, it shall have full authority to vote such shares in accordance with the terms of the voting trust agreement, even if such agreement vests absolute and unfettered voting discretion in the trustee and notwithstanding that the voting trust was created at the prompting or direction of the Corporation, its Officers or Directors. SECTION 5. Lost, Destroyed, or Stolen Certificates No Certificate representing shares of stock in the Corporation shall be issued in place of any Certificate alleged to have been lost, destroyed, or stolen except on production of evidence, satisfactory to the Board of Directors, of such loss, destruction or theft, and, if the Board of Directors so requires, 216 upon the furnishing of an indemnity bond in such amount (but not to exceed twice the fair market value of the shares represented by the Certificate) and with such terms and with such surety as the Board of Directors may, in its discretion, require. ARTICLE VI BOOKS AND RECORDS (a) The Corporation shall keep correct and complete books and records of account and shall keep minutes of the proceedings of its stockholders, Board of Directors and committees of Directors. (b) Any books, records and minutes may be in written form or in any other form capable of being converted into written form within a reasonable time. (1) Any person who shall have been a holder of record of shares, or the holder of record of voting trust certificates for, at least five percent of the outstanding shares of any class or series of the Corporation, upon at least five business days prior written demand stating the purpose thereof, shall; subject to the qualifications contained in subsection (2) hereof, have the right to examine, in person or by agent or attorney, at any reasonable business time or times, for any purpose, its relevant books and records of account, minutes and records of stockholders and to make extracts therefrom, provided that, to the extent legally permitted, such person shall be required to reimburse the Corporation for the actual costs of any reasonable expenses occasioned thereby. (d) (1) No stockholder who within two years has sold or offered for sale any list of stockholders or of holders of voting trust certificates for shares of this Corporation or any other corporation; has aided or abetted any person in procuring any list of stockholders or of holders of voting trust certificates for any such purpose; or has improperly used any information secured through any prior examination of the books and records of account, minutes, or record of stockholders or of holders of voting trust certificates for shares of the Corporation of any other corporation; shall be entitled to examine the documents and records of the Corporation as provided in Section (c) of this Article VI. (2) No stockholder who does not act in good faith or for a proper purpose in making his demand shall be entitled to examine the documents and records of the Corporation as provided in Section (c) of this Article VI. (e) Unless modified by resolution of the stockholders, this Corporation shall prepare not later than 70 days after the close of each fiscal year, audited financial statements, including all required schedules, prepared in accordance with Generally Accepted Accounting Principals ("GAAP") consistently applied; and shall prepare not later than 40 days after the close of each fiscal 217 quarter (other than the fourth quarter), quarterly unaudited financial statements, including all required schedules, prepared in accordance with Generally Accepted Accounting Principals ("GAAP"). (f) Upon the written request of any stockholder or holder of voting trust certificates for shares of the Corporation, the Corporation shall mail to such stockholder or holder of voting trust certificates a copy of its most recent balance sheet and profit and loss statement. (g) Such financial statements shall be filed and kept for at least five years in the chief administrative office of the Corporation and shall be subject to inspection during business hours by any stockholder or holder of voting trust certificates, in person or by agent, provided that, to the extent legally permitted, such person shall be required to reimburse the Corporation for the actual costs of any reasonable expenses occasioned thereby. (8) Notwithstanding the foregoing, in the event that this Corporation is part of a group of corporation's which, pursuant to GAAP, is eligible to have financial statements prepared on a consolidated basis, then the inclusion of the Corporation's financial data, prepared in accordance with GAAP, shall satisfy the requirements of this Article, unless otherwise required under applicable provisions of federal securities laws. ARTICLE VII DIVIDENDS & OTHER STOCKHOLDER BENEFITS SECTION 1. Dividends The Board of Directors of the Corporation may, from time to time, declare, and the Corpora tion may pay dividends on its own shares, except when the Corporation is insolvent or when the pay ment thereof would render the Corporation insolvent, subject to the following provisions: (a) Dividends in cash or property may be declared and paid, except as otherwise provided in this Article VII, only out of the unreserved and unrestricted earned surplus of the Corporation or out of capital surplus, however arising, but each dividend paid out of capital surplus shall be identified as a distribution of capital surplus, and the amount per share paid from such capital surplus shall be disclosed to the stockholders receiving the same concurrently with the distribution. (b) If the Corporation shall engage in the business of exploiting natural resources or other wasting assets and if the Articles of Incorporation so provide, dividends may be declared and paid in cash out of depletion or similar reserves, but each such dividend shall be identified as distribution of such reserves and the amount per share paid from such reserves shall be disclosed to the stockholders receiving the same concurrently with the distribution thereof. 218 (c) Dividends may be declared and paid in the Corporation's treasury shares, in shares of the capital stock or other securities of the Corporation's subsidiaries, in the shares of capital stock or other securities of other issuers held by the Corporation or in any other assets owned by the Corporation which are capable of equitable distribution to the Corporation's stockholders, in proportion to their ownership of equity interests in the Corporation, or in classes or series thereof, inter se. (d) Dividends may be declared and paid in the Corporation's authorized but unissued shares, out of any unreserved and unrestricted surplus of the Corporation, upon the following conditions: (1) If a dividend is payable in the Corporations' own shares having a par value, such shares shall be issued at not less than the par value thereof and there shall be transferred to stated capital at the time such dividend is paid an amount of surplus equal to the aggregate par value of the shares to be issued as a dividend. (2) If a dividend is payable in the Corporations' own shares without par value, such shares shall be issued at a stated value fixed by the Board of Directors by resolution adopted at the time such dividend is declared, and there shall be transferred to stated capital at the time such dividend is paid an amount of surplus equal to the aggregate stated value so fixed and the amount per share so transferred to stated capital shall be disclosed to the stockholders receiving such dividend concurrently with the payment thereof. (e) No dividend payable in shares of any class shall be paid to the holders of shares of any other class unless the Articles of Incorporation so provide or such payment is authorized by the affirmative vote or the written consent of the holders of at least a majority of the outstanding shares of the class in which the payment is to be made. (f) A split or division of the issued shares of any class into a greater number of shares of the same class without increasing the stated capital of the Corporation shall not be construed to be a stock dividend within the meaning of this Article VII. SECTION 2. Other Stockholder Benefits The Board of Directors may, subject to the restrictions involving impairment of the Corporation's capital applicable to declaration of dividends, enter into arrangements with any other person or entity, including affiliates of the Corporation or its officers, directors or stockholders, designed to provide a benefit or benefits directly to the Corporation's stockholders, including, without limitation, the payment for services provided by the Corporation by making distributions of assets, rights or benefits directly to the Corporation's stockholders. 219 ARTICLE VIII SEAL The Board of Directors shall adopt a Corporate Seal which shall be circular in form and shall have inscribed thereon the name of the Corporation, the state of incorporation and the year of incor poration. ARTICLE IX INDEMNIFICATION (a) This Corporation shall indemnify its officers, Directors and authorized agents for all liabilities incurred directly, indirectly or incidentally to services performed for the Corporation, or for other entities at the request of the Corporation, to the fullest extent permitted under Florida law now existing or hereinafter enacted. (b) Funds required to pay expenses reasonably necessary to defend allegations that would raise the foregoing right of indemnifications shall be advanced by this Corporation at any time that the person claiming such expenses appears reasonably likely to become entitled to indemnification and enters into a binding agreement with this Corporation to repay advances for such expenditures in the event that he, she or it is eventually found not to be entitled thereto. (c) In the event that there are any questions raised concerning the legality of indemnification, they will be referred by the Board of Directors to the derivative litigation committee for resolution, or if such committee is disqualified, to an independent legal counsel in the manner established in these Bylaws for making decisions involving derivative litigation. ARTICLE X AMENDMENT OF BYLAWS The Board of Directors shall have the power to amend, alter, or repeal these Bylaws, and to adopt new bylaws unless the bylaw involved was passed by the stockholders' in a resolution reserving the right to its amendment or repeal to the stockholders. ARTICLE XI FISCAL YEAR The fiscal year of this Corporation shall be determined by the Board of Directors and, subject to compliance with applicable laws, may be modified from time to time by the Board of Directors. 220 ARTICLE XII MEDICAL REIMBURSEMENT SECTION 1. Benefits (a) The Corporation may, subject to approval by the Board of Directors of a plan proposed by its compensation committee, reimburse all employees for expenses incurred by themselves and their dependents, as defined in Section 152 (or any successor provision thereto) of the Internal Revenue Code of 1986, as amended (the "IRC"), for medical care, as defined in IRC Section 213(e) or any successor section thereto, subject to the conditions and limitations hereinafter set forth. (b) It is the intention of the Corporation that the benefits payable to employees hereunder will be excluded from their gross income pursuant IRC Section 105 or any successor section thereto. SECTION 2. Employees Defined The term "employees" as used in this medical expense plan is hereby defined to include all in dividuals employed by the corporation except the following: (a) Employees who have not completed three months of service as is provided in IRC Section 105(h)(3) (b)(i), or any successor section thereto; (b) Employees who have not attained the age of 25 years; (c) Employees who are part-time or seasonal as is defined in IRC Section 105(h)(3)(B)(iii) or any successor section thereto; (d) Employees who are included in a unit of employees covered by an agreement between employee representatives and one or more employers found to be a collective bargaining agreement where accident and health benefits were the subject of good faith bargaining between such employee representatives and such employer(s) as is defined in IRC Section 105(h)(3)(B)(iv) or any successor section thereto; (e) Employees who are nonresident aliens and who receive no earned income from the employer which constitutes income from sources within the United States as is further defined in IRC Section 105(h)(5)(B)(v) or any successor section thereto. 221 SECTION 3. Limitations (a) The Corporation will reimburse any employee no more than $5,000.00 in any fiscal year for medical care expenses; (b) Reimbursement or payment provided under this plan will be made by the Corporation only in the event and to the extent that such reimbursement or payment is not provided under any insurance policy(ies), whether owned by the Corporation or the employee, or under any other health and accident or wage continuation plan; (c) In the event that there is such an insurance policy or plan in effect providing for reimbursement in whole or in part, then to the extent of the coverage under such policy or plan, the Corporation will be relieved of any and all liability hereunder. SECTION 4. Submission of Proof (a) Any employee applying for reimbursement under this plan will submit to the Corporation, at least quarterly, all bills for medical care, including premium notices for accident or health insurance, for verification by the Corporation prior to payment. (b) Failure to comply herewith, may at the discretion of the Board of Directors, terminate such employee's right to said reimbursement. SECTION 5. Discontinuation This plan will be subject to termination at any time by vote of the Board of Directors; provided, however, that medical care expenses incurred prior to such termination will be reimbursed or paid in accordance with the terms of this plan. SECTION 6. Determination The Chief Executive Officer will determine all questions arising from the administration and interpretation of the Plan except where reimbursement is claimed by the Chief Executive Officer, in which such case determination will be made by the compensation committee of the Board of Directors. The Undersigned, being the duly elected and acting Secretary of the Corporation, hereby cer tifies that the foregoing constitute the validly adopted and true Bylaws of the Corporation, as of the date set forth below. Dated: June 25, 1999 ------------------------ Michael D. Umile Secretary (Corporate Seal) 222 EX-4.11 8 FORM OF DEBENTURES EXHIBIT 4.11 Class A, Series A, Convertible, Subordinated Debenture Equity Growth Systems, inc. (a Delaware corporation) Debenture Number 00000_ Class A, Series A, Convertible, Subordinated Debenture $________ June __, 1999 FOR VALUE RECEIVED, Equity Growth Systems, inc., a Delaware corporation with a class of securities registered under Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and with offices at 8001 DeSoto Woods Drive; Sarasota, Florida 34243 (the "Registrant"), promises to pay to the order of: ----------------------------------- Type Name ------------------------------------------------- Type Address ------------------------------- Type Social Security or Federal Employer Identification Number (the "Debenture Holder;" hereinafter collectively referred to with its successors in interest and the Registrant as the "Parties"), the principal sum of $________, together with interest thereon at the annual rate of 8%, at the Registrant's offices, or such other address as the Debenture Holder may provide for such purpose, subject to the following terms: TERMS 1. Basic Terms: (4) This Debenture is one of that series of debentures in the aggregate principal amount of $110,000, identical in all material terms to this one, privately placed by the Registrant solely to accredited 223 investors pursuant to the provisions of Section 4(6) of the Securities Act, and designated as the Class A, Series A, Convertible, Subordinated Debentures. (5) This Debenture shall be payable as follows: (1) Interest shall be payable in one aggregate payment on the maturity date of the Debenture, subject to tender of the Debenture for cancellation and payment in the manner hereinafter provided therefore. Except in the event of a default on payment after presentation therefor, interest shall cease on the maturity date. (2) Principal on this Debenture shall be payable on the 366th day following the later of its execution by the Registrant, as evinced by the date hereon, or the tender of the total subscription price for this Debenture, to the Registrant, in cleared and immediately available funds. (b) The Debenture Holder may elect to subdivide this Debenture into two or more separate obligations, at its option, provided, however, that each separate resulting instrument must be in an amount of at least $10,000 in principal and must be divisible by 1,000 without resulting fraction, except as to one single certificate which will be in such amount as is required to accurately reflect the principal balance then due. (c) Transfers or divisions of Debentures will be affected by the Registrant, at the written request of the Debenture Holder, including appropriate signature guarantees (but payment of bond transfer fees and taxes shall be the responsibility of the Debenture Holder); provided, however, that unless the Debentures are properly registered pursuant to Section 5 of the Securities Act of 1933, as amended (the "Securities Act"), and comparable state blue sky laws in the state of the transferee's domicile, no transfers will be effected unless accompanied by an opinion of legal counsel acceptable to the Registrant is providing attesting to the fact that the transfer will not violate applicable laws and detailing the factual and legal basis for such opinion. (d) The Registrant shall immediately instruct its transfer agent to reserve the quantity of common stock required to be issued in the event of conversion of the Debentures and shall require its transfer agent to maintain such reserved stock until the Debentures are either paid in full or converted. (e) Security and Subordination This Debenture is an unsecured, general obligation of the Registrant. 2.01: Debentures Subordinate to Senior Indebtedness. (a) The Registrant covenants and agrees, and each Holder of a Debenture, by his acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this 224 Section 2, the indebtedness represented by the Debentures and the payment of the principal of and interest on each and all of the Debentures are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Indebtedness. (b) "Senior Indebtedness" means all liabilities, contingent or otherwise, of the Registrant (1) for borrowed money (but only if the recourse of the lender is secured by any assets of the Registrant) and (2) with respect to letters of credit, bankers acceptances, or similar instruments issued or accepted by banks ("Indebtedness") incurred by the Registrant prior to or after the date of this Debenture and any replacement, renewal, refinancing, and extension (whether direct or indirect) thereof; provided, however, that notwithstanding anything to the contrary in this Debenture, Senior Indebtedness does not include (i) any Indebtedness of the Registrant that by its terms or the terms of the instrument creating or evidencing it expressly provides that such Indebtedness is subordinate in right of payment to, or pari passu in right of payment with, this Debenture and (ii) any Indebtedness that ranks subordinate in right of payment to any other Indebtedness of the Registrant; provided, that the limitation set forth in this clause (ii) shall not apply to distinctions between categories of Senior Indebtedness that exist by reason of any liens arising or created in respect of some but not all Senior Indebtedness. 2.02: Payment Over of Proceeds Upon Dissolution, Etc. (a) In the event of (1) any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding in connection therewith, relative to the Registrant or to its creditors, as such, or to its assets, or (2) any liquidation, dissolution or other winding up of the Registrant, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, or (3) any assignment for the benefit of creditors or any other marshaling of assets and liabilities of the Registrant, then and in any such event the holders of Senior Indebtedness shall be entitled to receive payment in full of all amounts due or to become due on or in respect of all Senior Indebtedness, or provision shall be made for such payment in money or money's worth, before the Holders of the Debentures are entitled to receive any payment on account of principal of (or premium, if any) or interest on the Debentures, and to that end the holders of Senior Indebtedness shall be entitled to receive, for application to the payment thereof, any payment or distribution of any kind or character, whether in cash, property or securities, which may be payable or deliverable in respect of the Debentures in any such case, proceeding, dissolution, liquidation or other winding up or event. (b) In the event that, notwithstanding the foregoing provisions of this Section 2, the Holder of any Debenture shall have received any payment or distribution of assets of the Registrant of any kind or character, whether in case, property or securities, before all Senior Indebtedness is paid in full or payment thereof provided for, and if such fact shall, at or prior to the time of such payment or distribution, have been made known to such Holder, then and in such event such payment or distribution shall be paid over or delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other Person making payment or distribution of 225 assets of the Registrant for application to the payment of all Senior Indebtedness remaining unpaid, to the extent necessary to pay all Senior Indebtedness in full, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness. (c) The consolidation of the Registrant with, or the merger of the Registrant into, another Person or the liquidation or dissolution of the Registrant following the conveyance or transfer of its properties and assets substantially as an entirety to another Person shall not be deemed a dissolution, winding up, liquidation, reorganization, assignment for the benefit of creditors or marshaling of assets and liabilities of the Registrant for the purposes of this Section 2 if the Person formed by such consolidation or into which the Registrant is merged or the Person which acquires by conveyance or transfer such properties and assets substantially as an entirety, as the case may be, shall, as a part of such consolidation, merger, conveyance or transfer, agree to comply with the Registrant's obligations under the Senior Indebtedness. 2.03: Prior Payment to Senior Indebtedness Upon Acceleration of Debentures. (a) In the event that any Debentures are declared due and payable before their Stated Maturity, then and in such event the Holders of Senior Indebtedness shall, if required pursuant to the terms of any Senior Indebtedness, be entitled to receive payment in full of all amounts due or to become due on or in respect of all Senior Indebtedness, or provision shall be made for such payment in money or money's worth, before the Holders of the Debentures are entitled to receive any payment by the Registrant on account of the principal of (or premium, if any) or interest on the Debentures or on account of the purchase or other acquisition of Debentures. (b) In the event that, notwithstanding the foregoing, the Registrant shall make any payment to the Holder of any Debenture prohibited by the foregoing provisions of this Section 2, such Holder, then and in such event such payment shall be paid over and delivered forthwith to the Registrant. (c) The provisions of this Section 2 shall not apply to any payment with respect to which Section 2.02 would be applicable. 2.04: No Payment when Senior Indebtedness in Default. (a) In the event and during the continuation of (1) any default in the payment of principal of (or premium, if any) or interest on any Senior Indebtedness beyond any applicable grace period with respect thereto, or in the event that any event of default with respect to any Senior Indebtedness shall have occurred and be continuing permitting the Holders of such Senior Indebtedness (or a trustee on behalf of the holders thereof to declare such Senior Indebtedness due and payable prior to the date on which it would otherwise have become due and payable, unless and until such event of default shall have been cured or waived or shall have ceased to exist, or (2) in the event any 226 judicial proceeding shall be pending with respect to any such default, then no payment shall be made by the Registrant on account of principal of (or premium, if any) or interest on the (b) Debentures or on account of the purchase or other acquisition of Debentures. (c) In the event that, notwithstanding the foregoing, the Registrant shall make any payment to the Holder of any Debenture prohibited by the foregoing provisions of this Section 2, and if such fact shall, at or prior to the time of such payment, have been made known to such Holder, then and in such event such payment shall be paid over and delivered forthwith to the Registrant. (d) The provisions of this Section 2 shall not apply to any payment with respect to which Section 2.02 would be applicable. 2.05: Payment Permitted if No Default. Nothing contained in this Section 2 or elsewhere in the Debentures shall prevent (a) the Registrant, at any time except during the pendency of any case, proceeding dissolution, liquidation or other winding up, assignment for the benefit of creditors or other marshaling of assets and liabilities of the Registrant referred to in Section 2.02 or under the conditions described in Section 2.03 or 2.04, from making payments at any time of principal of (and premiums, if any) or interest on the Debentures, or (b) the retention of such payment by the Holders, if, at the time it did not have knowledge that such payment would have been prohibited by the provisions of this Section 2. 2.06: Subrogation to Rights of Holders of Senior Indebtedness. (a) Subject to the payment in full of all Senior Indebtedness, the Holders of the Debentures shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Indebtedness pursuant to the provisions of this Section 2 (equally and ratably with the holders of all indebtedness of the Registrant which by its express terms is subordinated to indebtedness of the Registrant to substantially the same extent as the Debentures are subordinated and is entitled to like rights of subrogation) to the rights of the holders of such Senior Indebtedness to receive payments and distributions of cash, property and securities applicable to the Senior Indebtedness until the principal of (and premium, if any) and interest on the Debentures shall be paid in full. (b) For purposes of such subrogation, no payments or distributions to the holders of the Senior Indebtedness of any cash, property or securities to which the Holders of the Debentures would be entitled except for the provisions of this Section 2, and no payments over pursuant to the provisions of this Section 2 to the Holders of Senior Indebtedness by Holders of the Debentures shall, as among the Registrant, its creditors other than holders of Senior Indebtedness and the Holders of the Debentures, be deemed to be a payment or distribution by the Registrant to or on account of the Senior Indebtedness. 227 2.07: Provisions Solely to Define Relative Rights. (a) The provisions of this Section 2 are and are intended solely for the purpose of defining the relative rights of the Holders of the Debentures on the one hand and the holders of Senior Indebtedness on the other hand. (b) Nothing contained in this Section 2 or elsewhere in the Debentures is intended to or shall (1) impair, as among the Registrant, its creditors other than holders of Senior Indebtedness and the Holders of the Debentures, the obligation of the Registrant, which is absolute and unconditional (and which, subject to the rights under this Section 2 of the holders of Senior Indebtedness, is intended to rank equally with all other general obligations of the Registrant), to pay to the Holders of the Debentures the principal of (and premium, if any) and interest on the Debentures as and when the same shall become due and payable in accordance with their terms; or (2) affect the relative rights against the Registrant of the Holders of the Debentures and creditors of the Registrant other than the holders of Senior Indebtedness; or (3) prevent the Holder of any Debenture from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Section 2 of the holders of Senior Indebtedness to receive cash, property and securities otherwise payable or deliverable to such Holder. 2.08: The Registrant to Effectuate Subordination. Each Holder of a Debenture by his acceptance thereof authorizes and directs the Registrant on his behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Section 2 and appoints any designee of the Registrant his attorney-in-fact for any and all such purposes. 2.09: No Waiver of Subordination Provisions. (1) No right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Registrant or by any act or failure to act, in good faith, by any such holder, or by any non-compliance by the Registrant with the terms, provisions and covenants of this Debenture, regardless of any knowledge thereof any such holder may have or be otherwise charged with. (2) Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Holders of the Debentures, without incurring responsibility to the Holders of the Debentures and without impairing or releasing the subordination provided in this Section 2 or the obligation hereunder of the Holders of the Debentures to the holders of Senior Indebtedness, do any one or more of the following: (1) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness, or otherwise amend or supplement in any 228 manner Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding; (2) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (3) release any Person liable in any manner for the collection of Senior Indebtedness; and (4) exercise or refrain from exercising any rights against the Registrant and any other Person. 2.10: Notice to Holder. (1) The Registrant shall give prompt written notice to the Holder of any fact known to the Registrant which would prohibit the making of any payment to or by the Holder in respect of the Debentures. (2) Notwithstanding the provisions of this Section 2 or any other provision of this Debenture, the Holder shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment to or by the Holder in respect of the Debentures, unless and until the Holder shall have received written notice thereof from the Registrant or a holder of Senior Indebtedness or from any trustee therefor; and, prior to the receipt of any such written notice, the Holder shall be entitled in all respects to assume that no such facts exist; provided, however, that if the Holder shall not have received the notice provided for in this Section 2 at least ten business days prior to the date upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of (and premium, if any) or interest on any Debenture), then, anything herein contained to the contrary notwithstanding, the Holder shall have full power and authority to receive such money and to apply the same to the purpose for which such money was received and shall not be affected by any notice to the contrary which may be received by it within ten business days prior to such date. (3) The Registrant shall be entitled to rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior Indebtedness (or a trustee therefor) to establish that such notice has been given by a holder of Senior Indebtedness (or a trustee therefor). (4) In the event that the Registrant determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Section 2, the Registrant may request such Person to furnish evidence to the reasonable satisfaction of the Registrant as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such Payment or distribution and any other facts pertinent to the rights of such Person under this Section 2, and if such evidence is not furnished, the Registrant may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. 229 2.11: Reliance on Judicial Order or Certificate of Liquidating Agent. Upon any payment or distribution of assets of the Registrant referred to in this Section 2, the Holders of the Debentures shall be entitled to rely upon any order or decree entered by any court of competent jurisdiction in which such insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution, winding up or similar case or proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Holders of Debentures, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness and other indebtedness of the Registrant, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Section 2. 2.12: The Registrant Not Fiduciary for Holders of Senior Indebtedness. (1) No implied covenants or obligations with respect to holders of Senior Indebtedness shall be read into this Indenture against the Registrant. (2) The Registrant shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Debentures or to the Registrant or to any other Person cash, property or securities to which any holders of Senior Indebtedness shall be entitled by virtue of this Section 2 or otherwise. 2.13: Certain Conversions Deemed Payment. (1) For the purposes of this Section 2 only, (1) the issuance and delivery of common stock upon conversion of Debentures as provided for in this Debenture shall not be deemed to constitute a payment or distribution on account of the principal of or premium or interest on Debentures or on account of the purchase or other acquisition of Debentures, and (2) the payment, issuance or delivery of cash, property or securities (other than common stock) upon conversion of a Debenture shall be deemed to constitute payment on account of the principal of such Debenture. (2) For the purposes of this Section 2, the term junior securities means (1) shares of any stock of any class of the Registrant and (2) securities of the Registrant which are subordinated in right of payment to all Senior Indebtedness which may be outstanding at the time of issuance or delivery of such securities to substantially the same extent as, or to a greater extent than, the Debentures are so subordinated as provided in this Section 2. (3) Nothing contained in this Section 2 or elsewhere in the Debentures is intended to or shall impair, as among the Registrant, its creditors other than holders of Senior Indebtedness and the Holders of the Debentures, the right, which is absolute and unconditional, of the Holder of any Debenture to convert such Debenture in accordance with the provisions of this Debenture. 230 3. Conversion, Trading, Exemptions from Securities Laws & Registration: (a) (1) This Debenture shall, at the Debenture Holder's option, be convertible into shares of the Registrant's common stock, $0.01 par value per share, at a conversion price of $.50 per share, unless the Registrant shall have split or reverse split its common stock subsequent to the date of this Debenture, in which case, the exercise price shall be adjusted in inverse ratio to such reverse or forward split (e.g., in the event of a three for one split, the Debenture Holder shall be entitled to three shares of common stock for each $0.50 in principal and accrued interest, whereas in the event of a one share for three reverse split, the Debenture Holder shall be entitled to one third of a share of common stock for each $0.50 in principal and accrued interest. (2) Conversion may not be in part but rather must involve all of the Debentures held by a Debenture Holder; provided that the decision of any Debenture Holder not to convert will not preclude any other Debenture Holder from exercising conversion rights, unless he, she or it is merely the nominee or an alter ego of the non-exercising Debenture Holder. (b) This Debenture has not been registered under any federal or state securities requirements in reliance on the exemption provided by Section 4(6) of the Securities Act, the Debenture Holder having heretofore confirmed to the Registrant that he, she or it is meets the following definition of an "accredited investor" contained in Rule 501(a) of Securities and Exchange Commission (the "Commission") Regulation D, and by acceptance of this Debenture, the Debenture Holder hereby confirms such assertion under penalty of perjury: "Reg. ss.230.501. As used in Regulation D (ss.ss.230.501-230.508), the following terms shall have the meaning indicated: (3) Accredited investor. "Accredited investor" shall mean any person who comes within any of the following categories, or who the issuer reasonably believes comes within any of the following categories, at the time of the sale of the securities to that person: (1) Any bank as defined in section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; any insurance company as defined in section 2(13) of the Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small 231 Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors; [Amended in Release No. 33-6758 (P. 84,211), effective April 11, 1988, 53 F.R. 7866; and Release No. 33-6825 (P. 84,404), effective April 19, 1989, 54 F.R. 11369.] (2) Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940; (3) Any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000; [Amended in Release No. 33- 6758 (P. 84,211), effective April 11, 1988, 53 F.R. 7866.] (4) Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer; (5) Any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of his purchase exceeds $1,000,000; (6) Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; [Amended in Release No. 33-6758 (P. 84,221), effective April 11, 1988, 53 F.R. 7866.] (7) Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in ss.230.506(b)(2)(ii); and [Added in Release No. 33-6758 (P. 84,221), effective April 11, 1988, 53 F.R. 7866.] 232 (8) Any entity in which all of the equity owners are accredited investors.[Amended in Release No. 33-6758 (P. 84,221), effective April 11, 1988, 53 F.R. 7866.]" (c) The Class A, Series A, Convertible, Subordinated Debentures will not be subject to the protective features of the Trust Indenture Act of 1939, as amended (the "Indenture Act") pertaining to required use of an approved form of trust indenture and the employment of an independent trustee to protect the interests of the Debenture Holders, pursuant to exemptive provisions of Sections 304(a)(8) and 304 (b) of the Indenture Act and Rule 4a-1 adopted thereunder (Reg. Section260.4a- 1). Consequently, all of the terms of the Class A, Series A, Convertible, Subordinated Debentures are contained in this instrument and each Debenture Holder will be required to monitor compliance by the Registrant with its obligations hereunder directly and to take enforcement actions individually. (d) The Debenture Holder, by acceptance of this Debenture, hereby confirms that (a) He, she or it has reviewed all of the Registrant's filings under the Exchange Act currently posted on the Commission's Internet web site during the past 12 months, has had the opportunity to question officers and directors of the Registrant concerning its business, history, personnel and the terms of the private placement pursuant to which this Debenture was issued; (b) Because neither this Debenture nor the shares of common stock issuable in the event of its conversion have been registered with the Commission or any state securities regulatory authorities, the Debenture Holders hereby acknowledge that: (1) This Debenture and the shares of common stock issuable upon conversion will bear legends restricting their transfer, sale, conveyance or hypothecation unless they are either registered under the provisions of Section 5 of the Securities Act and the securities laws of the Debenture Holders state of domicile, or an opinion of legal counsel, in form and substance satisfactory to legal counsel to the Registrant is provided by the Debenture Holder to the effect that such registration is not required as a result of applicable exemptions therefrom; provided that the Parties agree that it is their understanding that because the exchange of the Debenture on conversion is solely in consideration for shares of the Registrant's common stock, the holding period applicable prior to resale under Commission Rule 144(d) will commence on the date of the Debenture, pursuant to the exchange of securities provisions of Rule 144(d)(3)(ii). (b) The Registrant's transfer agent shall be instructed not to transfer this Debenture or any of the common stock issued on conversion thereof unless the Registrant advises it that such transfer is in compliance with all applicable laws; and 233 (c) The Debenture Holder is acquiring this Debenture for its own account, for investment purposes only, and not with a view to further sale or distribution. (e) In the event the Registrant files a registration statement during the term of this Agreement, it shall notify all of the original Debenture Holders of the series of debentures which includes this Debenture (the Class A, Series A, Convertible, Subordinated Debentures") in writing, and their successors in interest either in writing or by publication in a newspaper of national circulation (e.g., USA Today or the Wall Street Journal) of such intent and shall, at the request of any of them, register their Debenture(s) and the shares of common stock underlying the conversion rights described herein, in such registration statement. 4. Prepayment: (a) The Debenture is pre-payable, in whole or in part, at the sole election of the Registrant, at any time, without prepayment penalties, subject to the following requirements: (a) The Registrant may not selectively prepay the Debentures but rather, unless it has elected to prepay all of the Class A, Series A, Convertible, Subordinated Debentures, it must notify all Class A, Series A, Convertible, Subordinated Debenture Holders (the "Prepayment Notice"), either as hereinafter provided by United States 1st Class Mail, postage prepaid, addressed to the address set forth on the face hereof or such other address as the Debenture Holder has provided to the Registrant and the Registrant has listed in its securities registry records; or, at the Registrant's option, in the manner hereinbefore set forth for notice of intent to file a registration statement with the Commission, of its intention to partially prepay the Debentures, specifying the terms of prepayment, and advising all Debenture Holders who desire to voluntarily accept prepayment to notify the Registrant on or before a specified date no earlier than the tenth business day following the date of the Prepayment Notice, in writing in the manner hereinafter set forth for providing notice to the Registrant, of such fact (the "Prepayment Request Notice"). (b) The Registrant shall first prepay the Debentures held by persons who have provided timely Prepayment Request Notices and if such Debenture Holders held Debentures with an aggregate balance due exceeding the amount specified for prepayment, the Registrant may, in its sole discretion, either elect to increase the amount due which it is prepared to prepay in order to prepay all of them; elect to prepay the Debentures based on first paying Debenture Holders of Debentures with the largest aggregate amount due; or, elect to prepay the Debentures by random selection of Debenture serial numbers. (c) In the event that the aggregate amount due to the holder of Debentures that have provided Prepayment request Notices is less than the amount that the amount specified for prepayment, the Registrant may, in its sole discretion, either elect to decrease the amount due which it is prepared to prepay in order to limit prepayment to the Debentures held by those Debenture Holders that provided the Prepayment Request Notice; elect to prepay the balance of the Debentures to be prepaid based on first paying holders of Debentures with the smallest aggregate amount due; or, elect to prepay the Debentures by random selection of Debenture serial numbers. 234 (d) In all cases, the holders of Debentures will be provided until not earlier than the 30th day following the date of the Prepayment Notice, with the option of converting all (but not less than all) of the Debentures held by them, directly or indirectly, into shares of the Registrant's common stock, in the manner hereinbefore provided. 5. Notices: (a) Any demand or notice made or given by the Debenture Holder pursuant hereto or in connection herewith shall be made upon or given to the Registrant by registered mail, return receipt requested, postage prepaid, directed to the Registrant at its address as et forth on the latest Exchange Act report filed by the Registrant with the Commission, as reflected on the Commission's Internet we site (www.sec.gov), unless the Registrant has ceased filing such reports, in which case it shall be provided to the address maintained for the Registrant by the Office of the Secretary of State of the state in which it is then incorporated, but making or giving or attempting to make or give any demand or notice shall not waive any right granted hereunder or otherwise to act without demand or notice. (b) Any demand or notice made or given by the Registrant to any Debenture Holder pursuant hereto or in connection herewith shall be made upon or given to the by United States 1st Class Mail, postage prepaid, addressed to the address set forth on the face hereof or such other address as the Debenture Holder has provided to the Registrant and the Registrant has listed in its securities registry records; or, at the Registrant's option, by publication in a newspaper of national circulation (e.g., USA Today or the Wall Street Journal). 6. Litigation The Parties hereby covenant and agree that in the event that either is required to retain an attorney to assist it in enforcing the provisions of this Debenture, the victor in such proceeding shall, by application to the subject tribunal, be entitled to recover from the other Party such costs, expenses and damages associated with the actions or failures to act which led to such decision, as such tribunal deems appropriate under the circumstances, including, without limitation, attorneys fees actually paid throughout the course of any negotiations, trials or appeals, but shall exclude consequential or incidental damages. 235 7. Governing Law, Venue, Process, Reformation & Enforcement (a) This note shall be governed by and construed in accordance with the laws of the State of Delaware but any proceedings arising hereunder shall be adjudicated before a forum located within the county in which the Registrant maintains its principal legal offices, or in the absence of any such offices, its principal administrative offices. (b) In the event any provision of this Agreement shall be deemed unenforceable under the laws binding on a tribunal adjudicating its validity, then the Parties hereby request that such tribunal reform this Debenture in such manner as will most closely accomplish its purpose without violating applicable laws or public policies. (c) By execution and delivery of this Debenture, the Parties hereby irrevocably accept and submit to, for themselves and in respect of their, generally and unconditionally, to the in personam jurisdiction of any tribunal meeting the requirements for venue set forth above. (d) (1) The Parties hereby irrevocably consent to service of any summons and/or legal process by registered or certified United States air mail, postage prepaid, to the Party served at the address determined in the manner hereinbefore set forth in this Debenture for the provision of notice, such method of service to constitute, in every respect, sufficient and effective service of process in any such legal action or proceeding. (2) Nothing in this Agreement shall affect the right to service of process in any other manner permitted by law. (3) The Parties further agree that final judgment against either of them in any legal action, suit or proceeding complying with the foregoing provisions shall be conclusive and may be enforced in any other jurisdiction, within or outside the United States of America, by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the fact and the amount of the subject Party's liability. 236 8. Acceptance of Terms of this Agreement by the Debenture Holders By accepting any of the rights granted under this Debenture, the Debenture Holder and all of the Debenture Holder's successors in interest to any rights under this Debenture shall be conclusively presumed to have accepted all obligations set forth herein as applying to Debenture Holders, such acceptance constituting a condition precedent to any obligations of the Registrant to the Debenture Holder or its successor in interest arising from the transaction reflected in this Debenture. 9. License This instrument is the property of The Yankee Companies, Inc., a Florida corporation ("Yankees"), and has been licensed for use only in conjunction with this transaction. No one may utilize this form or any derivations thereof without the prior written consent of Yankees. In Witness Whereof, the Registrant has executed this instrument on this 25th day of June, 1999. Equity Growth Systems, inc. By: ___________________________________ Charles J. Scimeca, President [Corporate Seal] Attest: ___________________________________ G. Richard Chamberlin, Esquire Secretary & General Counsel 237 Conversion Form The Undersigned hereby irrevocably elects to convert all amounts due under this Debenture and all other Class A, Series A Convertible, Subordinated Debentures held by or on behalf of the undersigned, into shares of the Registrant's common stock, as provided for in this Debenture. Instructions For Registration and Delivery of Stock Please type or print in block letters --------------------- (Name) -------------------------------- (Social Security or Federal Employer Identification Number) -------------------------------- -------------------------------- (Address) Dated: ___________ ------------------------------------- Debenture Holder's Signature NOTICE: The signatures to this notice of conversion must correspond with the name as written upon the face of the Debenture in every particular, without alteration or enlargement or any change whatever. Signature Guaranteed: IMPORTANT: SIGNATURE MUST BE GUARANTEED BY A FIRM WHICH IS A MEMBER OF A REGISTERED NATIONAL EXCHANGE OR BY A COMMERCIAL BANK OR A TRUST COMPANY! 238 Assignment Form (Please type or print in block letters) FOR VALUE RECEIVED, ___________________ hereby sells, assigns and transfers unto ----------------------------------------------------------- Name ----------------------------------------------------------- Address $_______________ of the principal amount and accrued interest of this Debenture to which this Debenture relates, and does hereby irrevocably constitute and appoint _______________________ attorney, to transfer the same on the books of the Registrant with full power of substitution in the premises. Dated: ___________ ------------------------------------- Debenture Holder's Signature NOTICE: The signatures to this assignment must correspond with the name as written upon the face of the Certificate in every particular, without alteration or enlargement or any change whatever. Signature Guaranteed: IMPORTANT: SIGNATURE MUST BE GUARANTEED BY A FIRM WHICH IS A MEMBER OF A REGISTERED NATIONAL EXCHANGE OR BY A COMMERCIAL BANK OR A TRUST COMPANY! 239 EX-4.12 9 FORM OF SUBSCRIPTION AGREEMENT EXHIBIT 4.12 FORM OF SUBSCRIPTION AGREEMENT FOR DEBENTURE Equity Growth Systems, inc. Accredited Investor Subscription Agreement THE SECURITIES REFERRED TO IN THIS OFFERING MEMORANDUM WILL BE SOLD TO, AND ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE FLORIDA SECURITIES ACT. THE SECURITIES HAVE NOT BEEN REGIS TERED UNDER SAID ACT IN THE STATE OF FLORIDA, IN ADDITION, ALL FLORIDA RESI DENTS SHALL HAVE THE PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE IS SUER, AN AGENT OF THE ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER. THE CLASS A, SERIES A, CONVERTIBLE, SUBORDINATED DEBENTURES WILL NOT BE SUBJECT TO THE PROTECTIVE FEATURES OF THE TRUST INDENTURE ACT OF 1939, AS AMENDED (THE "INDENTURE ACT") PERTAINING TO REQUIRED USE OF AN APPROVED FORM OF TRUST INDENTURE AND THE EMPLOYMENT OF AN INDEPENDENT TRUSTEE TO PROTECT THE INTERESTS OF THE DEBENTURE HOLDERS, PURSUANT TO EXEMPTIVE PROVISIONS OF SECTIONS 304(A)(8) AND 304(B) OF THE INDENTURE ACT AND RULE 4a-1 ADOPTED THEREUNDER (REG. SECTION 260.4a-1). CONSEQUENTLY, ALL OF THE TERMS OF THE CLASS A, SERIES A, CONVERTIBLE, SUBORDINATED DEBENTURES ARE CONTAINED IN THE DEBENTURE CERTIFICATE AND EACH DEBENTURE HOLDER WILL BE REQUIRED TO MONITOR COMPLIANCE BY THE REGISTRANT WITH ITS OBLIGATIONS THEREUNDER DIRECTLY AND TO TAKE ENFORCEMENT ACTIONS INDIVIDUALLY. THESE SECURITIES ARE OFFERED IN RELIANCE ON THE EXEMPTION FROM REGISTRATION REQUIREMENTS IMPOSED BY THE SECURITIES ACT OF 1933, AS AMENDED, PROVIDED BY SECTION 4(6) THEREOF. TERMS: 1. General. (a) (1) This Subscription is part of a limited subscription by accredited investors, as that term is defined in Rule 501 of Securities and Exchange Commission (the "Commission") Regulation D promulgated under authority of the Securities Act of 1933, as amended ("Rule 501", "Regulation D" and the "Act", respectively) for the acquisition of an aggregate of up to $110,000 in principal of Class A, Series A, convertible, subordinated debentures of Equity Growth Systems, inc., a publicly held Delaware corporation with a class of securities currently registered under Section 12 of the Securities Exchange Act of 1934, as amended, in the form annexed hereto and made a part hereof as exhibit 1(a)(1) (the "Registrant" and the "Debentures"). (2) The hereinafter described subscriber is an "accredited investor" as that term is defined in Rule 501 of Regulation D. 240 (3) The issuance of the Debentures is to be effected pursuant to the exemptive provisions of Section 4(6) of the Act, providing for the issuance of securities solely to accredited investors and Sections 304(a)(8) and 304(b) of the Trust Indenture Act of 1939, as amended (the "Indenture Act"). (4) The Registrant will, immediately following closing on the first subscription accepted in this limited offering, file a Form D with the Securities and Exchange Commission, as required to permit the contemplated subscription. (b) (1) Current information concerning the Registrant is contained on the SEC's EDGAR web site on the Internet, including certified financial statements for the period ended December 31, 1998, and unaudited quarterly updates thereto for the period ended March 31, 1999, all of which is hereby incorporated by reference herein (the "34 Act Reports"). 2. Annexed hereto and made a part hereof as exhibit 1(b)(2) is a draft of a current report on Form 8-KSB (the "American Internet 8-KSB")that the Registrant intends to file with the Commission within fifteen days after it acquires the American Internet Subsidiaries (as defined therein), the American Internet 8-KSB being, for purposes of this Agreement, being deemed one of the 34 Act Reports. (c) (1) The proceeds of this limited offering are to be used to comply with obligations of the Registrant to provide $100,000 in working and expansion capital in conjunction with closing on the acquisition of American Internet Technical Center, Inc. ("American Internet"), as described in the Registrant's report on Form 10-KSB for the year ended December 31, 1998, and for working capital for the Registrant. (2) The Registrant may elect to borrow funds required for the purposes identified in Section 1(a)(1) and to repay such loans using proceeds of this limited offering. (3) (A) The Registrant's management is of the opinion that the net proceeds from the offering ($110,000) would be sufficient to permit the Registrant to close on the acquisition of American Internet, but that it will require substantial additional capital in order to effect other acquisitions and to properly capitalize American Internet, which it intends to obtain through a private placement of up to $2,000,000 in its securities following closing on the American Internet transaction. (2) No assurances can be provided that required capital will be available in the future. (4) (1) The Registrant may temporarily invest any unexpended balances on hand in government securities, certificates of deposit, money market funds. 241 (2) The Registrant intends to make such investments only temporarily in order to avoid any requirement to register the Registrant under the Investment Company Act of 1940. (3) Any income realized from investment of the net proceeds of this limited offering will be general revenues of the Registrant. (5) The Registrant will provide reports on the actual use of proceeds on a quarterly basis until all proceeds have been expended, in its quarterly reports to the Commission on Form 10- QSB. (d) Certain risks associated with this limited offering are disclosed in exhibit 1(d) annexed hereto and made a part hereof (the "Material Risk Factors") and prospective investors must carefully review such exhibit prior to making an investment decision. (5) The Registrant will not pay any commissions or grant of any discounts in conjunction with this limited offering. 2. Subscription Consideration. (a) The undersigned Accredited Subscriber hereby subscribes $_____________ in principal amount of the Debentures and will tender payment in full therefor immediately following receipt of an executed copy of this Agreement evincing acceptance of this subscription by the Registrant. (b) Within 72 hours after receipt of payment for the Debentures, the Registrant's transfer agent will issue and deliver to the Accredited Subscriber, at the Registrant's expense, a certificate for the Debentures. 3. Accredited Subscriber's Representations, Warranties and Covenants. As a material inducement to the Registrant's consideration of the Accredited Subscriber's offer to acquire Debenture(s), the Accredited Subscriber represents, warrants and covenants to the Registrant, as follows: (a) The Accredited Subscriber is familiar with the requirements for treatment as an "accredited investor" under Regulation D and Section 4(6) of the Securities Act of 1933, as amended (the "Act") and meets one or more of the definitions of an "accredited investor" contained in Rule 501 promulgated under authority of the Act and has, alone or together with his Offeree's Representative, if any, (as hereinafter defined) such knowledge and experience in financial matters that the Accredited Subscriber is capable of evaluating the relative risks and merits of this subscription (the text of Rule 501 being set forth, in full, in the Debentures); 242 (b) The Accredited Subscriber acknowledges that he, she or it has, based on his, her or its own substantial experience, the ability to evaluate the transactions contemplated hereby and the merits and risks thereof in general and the suitability of the transaction for the Accredited Subscriber in particular; (c) (1) The Accredited Subscriber understands that the offer and issuance of the Debentures is being made in reliance on the Accredited Investor's representation that he, she or it has reviewed all of the Registrant's reports filed with the Commission during the past 12 months and posted on the Commission's Internet web site (www.sec.gov) and has become familiar with the information disclosed therein, including that contained in exhibits filed with such reports concerning the proposed acquisition of American Internet. (2) The Accredited Subscriber is fully aware of the material risks associated with becoming an investor in the Registrant and confirms that he, she or it was previously informed that all documents, records and books pertaining to this investment have been available from the Registrant and that all documents, records and books pertaining to this transaction requested by the Accredited Subscriber have been made available to the Accredited Subscriber; (d) The Accredited Subscriber has had an opportunity to ask questions of and receive answers from the officers of the Registrant concerning: (1) the terms and conditions of this Subscription Agreement and the transactions contemplated hereby, as well as the affairs of the Registrant and related matters; and (2) any arrangements or proposed arrangements of the Registrant relating to any of its Debentures Holders that are not identical to those relating to all of its Debentures Holders; (e) The Accredited Subscriber has had an opportunity to obtain additional information necessary to verify the accuracy of the information referred to in subparagraphs (a), (b), (c) and (d) hereof, as well as to supplement the information in the 34 Act Reports, as called for by Florida Rule 3E-500.005. (f) The Accredited Subscriber has provided the Registrant with the personal and business financial information concerning himself which he, she or it agrees demonstrates the Accredited Subscriber's general ability to bear the risks of the subject transaction and suitability as a subscriber in a private offering and the Accredited Subscriber hereby affirms the correctness of such information; (g) The Accredited Subscriber acknowledges and is aware that: 243 (1) The Debentures are a speculative investment with no assurance that the Registrant will be successful, or if successful, that such success will result in payments to the Accredited Subscriber or to realization of capital gains by the Accredited Subscriber on disposition of the Debentures or the shares of common stock issuable upon conversion thereof; and (2) The Debentures being subscribed for and the shares of common stock into which they are convertible have not been registered under the Securities Act or under any state securities laws, accordingly the Accredited Subscriber may have to hold such Debentures or common stock and may not be able to liquidate, pledge, hypothecate, assign or transfer them; (h) The Accredited Subscriber has obtained its own oral opinion from his, her or its legal counsel to the effect that after an examination of the transactions associated herewith and the applicable law, no action needs to be taken by either the Accredited Subscriber or the Registrant in conjunction with this Subscription and the issuance of the Debentures in conjunction therewith, other than such actions that have already been taken in order to comply with the securities law requirements of the Accredited Subscriber's state of domicile; and (i) (1) The Debentures and the shares of common stock into which they may be converted will bear restrictive legends and the Registrant's transfer agent will be instructed not to transfer the subject securities unless they have been registered pursuant to Section 5 of the Securities Act of 1933, as amended, or an opinion of counsel satisfactory to legal counsel to the Registrant and the Registrant's president has been provided, to the effect that the proposed transaction is exempt from registration requirements imposed by the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and any applicable state or foreign laws. (2) The legend shall read as follows: "The securities represented by this certificate were issued without registration under the Securities Act of 1933, as amended, or comparable state laws in reliance on the provisions of Section 4(6) of such act, and comparable state law provisions. These securities may not be transferred pledged or hypothecated unless they are first registered under applicable federal, state or foreign laws, or the transaction is demonstrated to be exempt from such requirements to the Registrant's satisfaction." 4. Responsibility. (a) The officers of the Registrant will endeavor to exercise their best judgment in the conduct of all matters arising under this Subscription Agreement; provided, however, that this provision shall not enlarge, limit or otherwise affect the liability of the Registrant or its officers. (b) The Accredited Subscriber shall indemnify and hold harmless the Registrant; any corporation or entity affiliated with the Registrant; the officers, directors and employees of any of the foregoing; 244 or any professional adviser thereto, from and against any and all loss, damage, liability or expense, including costs and reasonable attorney's fees at trial or on appeal, to which said entities and persons may be subject or which said entities and persons incur by reason of or in connection with any misrepresentation made by the Accredited Subscriber, any breach of any of the Accredited Subscriber's warranties or the Accredited Subscriber's failure to fulfill any of the covenants or agreements under this Subscription Agreement. 5. Survival of Representations, Warranties and Agreements. The representations, warranties, covenants and agreements contained herein shall survive the delivery of and the payment for the Debentures being subscribed for. 6. Notices. Any and all notices, designations, consents, offers, acceptances or any other communication provided for herein shall be given in writing by registered or certified mail which shall be addressed in the case of the Registrant to Equity Growth Systems, inc.; 8001 DeSoto Woods Drive; Sarasota, Florida 34243; and, in the case of the Accredited Subscriber, to the address set forth at the end of this Agreement, or to the address appearing on the books of the Registrant or to such other address as may be designated by the Accredited Subscriber or the Registrant in writing. Accredited Subscriber Information Please Print the following Information Accredited Subscriber's Name: _____________________________________ Accredited Subscriber's Authorized Signatory: * _______________________________ Accredited Subscriber's Address: _____________________________________ Accredited Subscriber's Telephone Number: _____________________________________ Accredited Subscriber's Tax ** Number: _____________________________________ - - ------ * If applicable (e.g., if the Subscriber is a corporation, partnership, joint venture, etc.) ** FEIN or Social Security number 7. Miscellaneous. (a) This Agreement shall be governed by, construed and enforced in accordance within the laws of the State of Delaware, both substantive, procedural (except for choice of law provisions) and remedial. (b) The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. 245 (c) This Agreement shall be binding on and shall inure to the benefit of the Parties and their respective successors, assigns, executors and administrators, but this Agreement and the respective rights and obligations of the Parties hereunder shall not be assumable by any Party hereto without the prior written consent of the other. (d) This Agreement represents the entire understanding and agreement between the Parties hereto with respect to the subject matter hereof; and cannot be amended, supplemented or modified except by an instrument in writing signed by the Party against whom enforcement of any such amendment, supplement or modification is sought. (e) The failure of any provision of this Agreement shall in no manner affect the right to enforce the other provisions of same, and the waiver of any Party of any breach of any provision of this Agreement shall not be construed to be a waiver by such Party of any succeeding breach of such provision or waiver by such Party of any breach of any provision. IN WITNESS WHEREOF, I have executed this Agreement on behalf of the Accredited Subscriber this ___ day of June, 1999. Accredited Subscriber ------------------------------------------. (Print or Type Name) By: _________________________________ (Signature) Subscription Accepted: Equity Growth Systems, inc. Dated: June ___, 1999. By: _______________________ Charles J. Scimeca President Attest: _______________________ G. Richard Chamberlin, Esquire Secretary & General Counsel 246 Exhibit Index Exhibit Description 1(a)(1) Form of the Debentures 1(b)(2) The American Internet 8-KSB 1(d) Material Risk Factors 3(f) Investment Letter Exhibit 1(a)(1) Form of the Debentures Provided in independent form separate from this Agreement, but the receipt thereof is hereby acknowledged by the Accredited Subscriber: Dated: June ___, 1999 --------------------------- Accredited Subscriber's Signature Exhibit 1(b)(2) The American Internet 8-KSB Provided in independent form separate from this Agreement, but the receipt thereof is hereby acknowledged by the Accredited Subscriber: Dated: June ___, 1999 --------------------------- Accredited Subscriber's Signature Exhibit 1(d) RISK FACTORS General Warning The securities offered hereby are speculative and prospective investors should be aware that they will be subject to a number of material risks, including the risk factors described below. Accordingly, only persons who qualify as accredited investors and can afford to lose their entire investment without a materially adverse impact on their standard of living and financial security participate in this limited offering. Prospective investors should carefully consider the following risk factors relating to the Registrant, the industries in which it operates, general economic factors and the offering together with the other information and financial data available concerning the Registrant, its history and its activities which is available through the Securities and Exchange Commission's (the "Commission") EDGAR system, available at the Commission's Internet web site (www.sec.gov). 247 Risks Associated with the Registrant Development Stage Company The Registrant recently divested itself of all assets and operations in order to posture itself to make a complete change in its business strategies, as a result of which it was reclassified, for accounting purposes, as a development stage company. The Registrant has entered into an agreement (the "Reorganization Agreement") to acquire 90% of the capital stock of American Internet Technical Centers, Inc., a Nevada corporation ("AI Nevada"), which owns 100% of the capital stock of American Internet Technical Center, Inc., a Florida corporation ("AI Florida;" AI Nevada and AI Florida being collectively hereinafter referred to as the "Subsidiary") and $100,000 from the proceeds of this limited offering will be invested by the Registrant in the Subsidiary immediately following closing on such acquisition. However, it is possible that due to unforseen circumstances, closing on the Reorganization Agreement will not take place and the Registrant will remain a publicly held corporation without material business operations. Dependence on Future Financing The Registrant's anticipates that it will raise all or a substantial portion of the financing required for the Subsidiary and other unrelated acquisitions through a private placement which the Registrant expects to undertake during 1999. However, there are no assurances that the Registrant will succeed in effecting such private placement on favorable terms, if at all, or that the Registrant will be able to raise sufficient capital from such undertaking. Even if the Registrant successfully concludes the proposed private placement, there are no assurances that the Registrant will be able to use those proceeds to generate new favorable acquisitions or to materially improve the business and business prospects of any businesses acquired, including the Subsidiary. Risks Associated with the Debentures Arbitrary Conversion Price The Registrant's management determined the conversion price of the Debentures unilaterally, based upon management's good faith belief as to the reasonable minimum value of the Registrant's restricted securities after the acquisition of the American Internet subsidiaries; however, the conversion price is not based on the Registrant's assets, book value, or earnings or any other tangible or objectively verifiable criteria. Accordingly, the conversion price should not be considered an indication of the actual fair market value of the Registrant's common stock as if appraised by a disinterested party. 248 Subordination The Debentures are not secured and instead, are specifically made subordinate to any other obligations that the Registrant identifies as "Senior Indebtedness." Consequently, in the event of liquidation of the Registrant, the Debentures could possibly rank behind all of the Registrant's creditors and ahead of only the Registrant's common stock. Subordination is essential to the Registrant and the American Internet subsidiaries because they hope that its will permit them to obtain debt or line of credit financing to expand their operations and fund new acquisitions. If successful, such activities would make it more likely that the terms of the Debentures would be fully complied with. However, if not successful, subordination will greatly reduce the assets available for liquidation in the event of a default. Lack of Protection under Trust Indenture Act of 1939 The Trust Indenture Act of 1939, as amended (the "Indenture Act") protects holders of public debt by requiring the use of an approved form of indenture governing the rights and obligations of the parties, and the use of a trustee to act for the creditors. Because of the small amount of debt involved and the restricted nature of the Debenture offering, it is subject to exemptions from the indenture and trustee requirements of the Indenture Act. No Assurances of a Public Market for Debentures There is no public market for the Registrant's Debentures nor is one expected to develop because they have not been registered with the Commission or the securities regulatory authorities of any state; rather, they are being issued in reliance on the exemption from registration under the Securities Act provided by Section 4(6) thereof pertaining to sales solely to "accredited investors," as that term is defined in Commission Rule 501 of regulation D. Consequently, it may be difficult or impossible for the holders of the Debentures to sell pledge, hypothecate or sell them should they desire to do so. In addition, there are substantial restrictions on the sale or transfer of the Debentures imposed by federal and state securities laws. Risks Associated with the Registrant's Common Stock In the event that the Debentures are converted into common stock, the holder will be subject to all the risks inherent in investments in common stock and those that pertain to investments in equity securities of less mature public companies, including legal impediments to liquidity resulting from "penny stock" rules as described in Item __, of the Registrant's report on Form 10-KSB for the year ended December 31, 1998). Such risks include: (6) Dividends will be paid only when declared by the Registrant's board of directors out of funds legally available therefore. The Registrant's Board of Directors will determine future dividend policy based upon the Registrant's results of operations, financial condition, capital requirements, and other circumstances. The Registrant currently does not contemplate paying dividends on the 249 common stock in the foreseeable future since it intends to use all its earnings, if any, to finance expansion, acquisition, and marketing campaigns. (7) Currently, the Registrant's officers and directors beneficially own approximately __% of the Registrant's outstanding common stock and, if all of the Debentures are converted into common stock, will continue to beneficially own approximately ___% of the Registrant's outstanding common stock. When added to the outstanding shares beneficially owned by the Registrant's control group (its consultants, officers and directors, the officers and directors of its subsidiaries (including the shares to be issued for the American Internet Subsidiaries), and their affiliates, collectively hereinafter referred to as the "Control Group"), the Registrant's Control Group beneficially will own _____% of the Registrant's outstanding common stock. Based on such ownership, the Control Group will be in a position to totally control all aspects of the Registrant's operations, including election of directors, selection of auditors, approval of charter amendments and benefit plans, etc. Risks Associated with the American Internet Subsidiaries The information called for hereby is incorporated by reference from "Item 2, Risk factors" as contained in the draft of the report on Form 8-KSB prepared by the Registrant for filing with the Securities and Exchange Commission within 15 days after closing on the acquisition of the American Internet Subsidiaries, a copy of which is included as exhibit 1(b)(2) to the Accredited Investor Subscription Agreement. Exhibit 3(f) FORM OF INVESTMENT LETTER Date: Charles J. Scimeca President Equity Growth Systems, inc. 8001 DeSoto Woods Drive Sarasota, Florida 34243 Re.: Debentures Subscription Dear Sir: I hereby certify and warrant that I am acquiring $_______________ in principal amount of Class A, Series A, Convertible, Subordinated, Debentures of Equity Growth Systems, inc. (the "Registrant" and the "Debentures," respectively). I hereby certify under penalty of perjury that upon receipt of the Debentures, I will be acquiring them for my own account for investment purposes without any intention of selling or distributing all or any part thereof. I represent and warrant that I qualify as an accredited investor (as that term is defined in rule 501 of Regulation D promulgated under authority of the Securities Act of 1933, as amended) and that I am sophisticated in financial affairs, or have relied on the advice of someone sophisticated in financial affairs, and I able to bear the economic risks of this investment and I do not have any reason to anticipate any change in my circumstances, financial or otherwise, nor any other particular occasion or event which should cause me to sell or distribute, or necessitate or require my sale or distribution of the Debentures. No one other than me has any beneficial interest in the Debentures. 250 I further certify that I have consulted with my own legal counsel who, after having been apprized by me of all the material facts surrounding this transaction, opined to me, for the benefit of the Registrant, that this transaction was being effected in full compliance with the applicable securities laws of my state of domicile. I agree that I will in no event sell or distribute any of the Debentures or the shares of common stock into which they are convertible unless in the opinion of your counsel (based on an opinion of my legal counsel) the Debentures or common stock may be legally sold without registration under the Securities Act of 1933, as amended, and/or registration and/or other qualification under then-applicable State and/or Federal statutes, or the Debentures or common stock shall have been so registered and/or qualified and an appropriate prospectus, shall then be in effect. I am fully aware that the Debentures are being offered and sold by the Registrant to me in reliance on the exemption provided by Section 4(6) or the Securities Act of 1933, as amended, which exempts the sale of securities by an issuer solely to accredited investors and on my certifications and warranties. In connection with the foregoing, I consent to your legending my certificates representing the Debentures to indicate my investment intent and the restriction on transfer contemplated hereby and to your placing a "stop transfer" order against the Debentures in the Registrant's securities transfer books until the conditions set forth herein shall have been met. I acknowledge by my execution hereof that I have had access to your books, records and properties, and have inspected the same to my full and complete satisfaction prior to my acquisition of the Debentures. I represent and warrant that because of my experience in business and investments, I am competent to make an informed investment decision with respect thereto on the basis of my inspection of your records and my questioning of your officers. I further certify that my domicile is located at the following address: Accredited Subscriber's Name: _____________________________________ Accredited Subscriber's Address: _______________________________________ ------------------------------------ Very truly yours, Accredited Subscriber 251 EX-10.33 10 LOCK UP AND VOTING AGREEMENT EXHIBIT 10.33 LOCK-UP & VOTING AGREEMENT This Lock-Up & Voting Agreement (the "Agreement") is made and entered into by and among Equity Growth Systems, inc., a Delaware corporation with a class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the "Holding Company" and the "Exchange Act," respectively) and the officers directors and principal stockholders of the Holding Company made signatories to this Agreement (the "Holding Company's Principals"), the Holding Company and the Holding Company's Principals being sometimes hereinafter collectively referred to as the "Parties" and each being sometimes hereinafter generically referred to as a "Party"). Preamble: WHEREAS, the Holding Company and the Holding Company's Principals desire to induce American Internet Technical Centers, Inc., a Nevada corporation originally organized as Ascot Industries, Inc. (the "Target Company") and the individuals and entities which are listed in exhibit 0.1 to the proposed reorganization agreement between the Holding Company, the Target Company (the "Reorganization Agreement" and the "Subscribers." respectively), to enter into and close on the Reorganization Agreement, as a result of which the target Company will become a 90% owned subsidiary of the Holding Company in a transaction intended to meet the requirements of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended; and WHEREAS, the Subscribers desire to engage in such transaction provided that they receive additional assurances from the Holding Company that certain covenants in the Reorganization Agreement which require ongoing action by the directors and stockholders of the Holding Company are confirmed by the Holding Company's Principals, as set forth below; and WHEREAS, the Holding Company's Principals are agreeable to such confirmation through entry into this Agreement: 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: 252 Witnesseth: First Voting Agreements The Holding Company's Principals, jointly and severally, hereby agree that during the five year period following the Closing (as defined in the Reorganization Agreement, all capitalized terms not otherwise defined in this Agreement having the meanings defined in the Reorganization Agreement), they will, in their roles as members of the Holding Company's Board of Directors and as stockholders in the Holding Company, at all meetings of the Holding Company's stockholders or of Board of Directors, vote in such a manner as to secure approval of the following covenants made by the Holding Company to the Subscribers in Section 4.6 of the Reorganization Agreement, to wit: "During the five years following the Closing, the Holding Company shall use its best efforts to assure that: (1) At least one designee of the Subscribers is nominated for membership on the Holding Company's Board of Directors at each meeting of the Holding Company's stockholders or directors at which the membership of its Board of Directors is up for election, and to use their best efforts consistent with applicable law to secure such nominee's election, so that the membership of the Holding Company's Board of Directors includes at least one designee of the Subscribers; (2) Designees of the Subscribers are elected to at least two thirds of the seats on the Target Company's Board of Directors and (3) On one occasion only, [the Holding Company] provide "piggy back" registration rights covering up to an aggregate of 35,000 shares of the Holding Company's Stock obtained pursuant to this Agreement to Messrs. Bruce Drezner and Gary Walk; Theodore Gill and Susan Gill, his wife, as tenants by the entireties; and, Lyn Poppiti." Second: Stock Lock-Up Agreements During the following periods, the Holding Company's Principals will refrain from any sales of the Holding Company's securities, except as specified below: (a) During the 90 day period following closing on this Agreement, the Holding Company's Principals will not engage in any sales of the Holding Company's common stock; and (b) (1) From the 91st through the 270th day following closing on this Agreement, the Holding Company's Principals will not engage in any sales of the Holding Company's common stock in excess of 10,000 shares per month; 253 (2) For purposes of this Section 2-b only, the persons or entities included within each separately numbered subsection shall be deemed to be acting in concert as part of a related group for purposes of determining such 10,000 shares per month limitation: 1. Charles J. Scimeca, on his own behalf and on behalf of his affiliates. 2. Anthony Q. Joffe, on his own behalf and on behalf of his affiliates. 3. Penny Adams Field, on her own behalf and on behalf of his affiliates. 4. G. Richard Chamberlin Esquire, on his own behalf and on behalf of his affiliates. 5. Jerry C. Spellman, and on behalf of his affiliates. 6. The Yankee Companies, Inc., on its own behalf and on behalf of its affiliates. 7. The Granville-Smith Group: Mark Granville- Smith, on his own behalf and on behalf of his affiliates; and, Edward Granville-Smith, and on behalf of his affiliates. 8. The Calvo Group: Cyndi N. Calvo, on her own behalf, on behalf of her affiliates and as a trustee for the Calvo Family Spendthrift Trust; and, William A. Calvo, III, on his own behalf, on behalf of his affiliates and as a trustee for his children, William, Alexander & Edward. 9. The Tucker Group: Leonard Miles Tucker, on his own behalf, on behalf of his affiliates and on behalf of Carrington Capital Corp. (exclusive of the 50,000 shares as to which Equitrade Securities Corporation has purchase rights under two covered option/leap agreements, each dated December 18, 1998); and, Michelle Tucker, on her own behalf, on behalf of her affiliates, on behalf of Blue Lake Capital Corp., and as a trustee for her children Shayna and Montana. 10. The Radcliffe Group: Joseph D. Radcliffe, on his own behalf and on behalf of his affiliates; Dennis V. Radcliffe, on his own behalf and on behalf of his affiliates; Michael J. Radcliffe, on his own behalf and on behalf of his affiliates; and, Vanessa Radcliffe, on her own behalf and on behalf of her affiliates. 254 (2) Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall be interpreted as an agreement by the Holding Company's Principals to engage in any concerted or group activities involving the Holding Company's common stock, as determined for purposes of Commission Rule 144, or Sections 13, 14 or 16 of the Exchange Act. 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. (a) 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 the Holding Company's Principals (other than The Yankee Companies, Inc. ["Yankees"]): At such addresses as they provide the Holding Company's transfer agent for such purpose, with a copy to G. Richard Chamberlin, Esquire (at the address set forth below), who is hereby appointed by each of the Holding Company's Principals, as his, her or its authorized agent for purposes of initialing each page of this Agreement, and as a supplemental recipient of notices. To the Holding Company: Equity Growth Systems, inc. 8001 DeSoto Woods Drive; Sarasota, Florida 34243; Telephone (941) 358-8182; Fax (941) 358-8423 Attention: Charles J. Scimeca, President; with a copy to G. Richard Chamberlin, Esquire; General Counsel Equity Growth Systems, inc. 14950 South Highway 441; Summerfield, Florida 34491 Telephone (352) 694-6714, Fax (352) 694-9178; and, e-mail, GrichardCh@aol.com. To Yankees: The Yankee Companies, Inc. 902 Clint Moore Road, Suite 136; Boca Raton, Florida 33487 Telephone (561) 998-2025, Fax (561) 998-3425; and, e-mail carrington@flinet.com; Attention: Leonard Miles Tucker, President; with a copy to 255 The Yankee Companies, Inc. 1941 Southeast 51st Terrace; Ocala, Florida 34471 Telephone (352) 694-9179, Fax (352) 694-9178; and, e-mail wacalvo3@atlantic.net Attention: William A. Calvo, III, Vice President 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. (b) (1) The Parties acknowledge that Yankees serves as a strategic consultant to the Holding Company and has acted as scrivener for the Parties in this transaction but that Yankees is neither a law firm nor an agency subject to any professional regulation or oversight. (2) Because of the inherent conflict of interests involved, Yankees has advised all of the Parties to retain independent legal and accounting counsel to review this Agreement and its exhibits and incorporated materials on their behalf. 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 the Closing hereon 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. 256 3.6 Governing Law. This Agreement shall be construed in accordance with the substantive and procedural laws of the State of Delaware (other than those regulating taxation and choice of law) but any proceedings pertaining directly or indirectly to the rights or obligations of the Parties hereunder shall, to the extent legally permitted, be held in Broward 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. 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. (a) 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. (b) 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 Broward County, Florida to be selected by lot from six alternatives to be provided, two by Yankees as agent for the Holding Company's Principals, one by the Holding Company and three by the Subscribers acting by majority vote (based on their relative stock ownership in the Holding Company). (B) The mediation efforts shall be concluded within ten business days after their in itiation 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 Broward County, Florida to be selected by lot, from six alternatives to be provided, two by Yankees as agent for the Holding Company's Principals, one by the Holding Company and three by the Subscribers acting by majority vote (based on their relative stock ownership in the Holding Company). 257 (3) (A) Expenses of mediation shall be borne by the Holding Company, if successful. Expenses of mediation, if unsuccessful 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 equally by the Parties. 3.9 Benefit of Agreement. The terms and provisions of this Agreement shall be binding upon and inure to the benefit of the Parties, their successors, assigns, personal representatives, estate, heirs and legatees. 3.10 Captions. The captions in this Agreement are for convenience and reference only and in no way define, describe, extend or limit the scope of this Agreement or the intent of any provisions hereof. 3.11 Number and Gender. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the Party or Parties, or their personal representatives, successors and assigns may require. 3.12 Further Assurances. The Parties agree to do, execute, acknowledge and deliver or cause to be done, executed, acknowledged or delivered and to perform all such acts and deliver all such deeds, assignments, transfers, conveyances, powers of attorney, assurances, stock certificates and other documents, as may, from time to time, be required herein to effect the intent and purpose of this Agreement. 3.13 Status. Nothing in this Agreement shall be construed or shall constitute a partnership, joint venture, employer-employee relationship, lessor-lessee relationship, or principal-agent relationship. 258 3.14 Counterparts. (a) This Agreement may be executed in any number of counterparts. All executed counterparts shall constitute one Agreement notwithstanding that all signatories are not signatories to the original or the same counterpart. (b) 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 Commission. 3.15 License. (a) This Agreement is the property of Yankees and the use hereof by the Parties is authorized hereby solely for purposes of this transaction. (b) The use of this form of agreement or of any derivation thereof without Yankees' prior written permission is prohibited. In Witness Whereof, the Parties have caused this Agreement to be executed effective as of the date last set forth below. Signed, sealed and delivered In Our Presence: Equity Growth Systems, inc. - - --------------------------------- _________________________________ By:_____________________________ Charles J. Scimeca Personally and as President (Corporate Seal) Attest:_______________________________ G. Richard Chamberlin, Secretary Dated: June __, 1999 The Holding Company's Principals: - - --------------------------------- - - --------------------------------- -------------------------- Charles J. Scimeca Officer, Director and Stockholder Dated: June __, 1999 259 - - --------------------------------- - - --------------------------------- -------------------------- Anthony Q. Joffe Director and Stockholder Dated: June __, 1999 - - --------------------------------- - - --------------------------------- -------------------------- Penny Adams Field Director and Stockholder Dated: June __, 1999 - - --------------------------------- - - --------------------------------- -------------------------- G. Richard Chamberlin Esquire Officer, Director and Stockholder Dated: June __, 1999 - - --------------------------------- - - --------------------------------- -------------------------- Mark Granville-Smith, Director and Stockholder, on his own behalf and as attorney-in-fact for his father, Edward Granville-Smith Dated: June __, 1999 - - --------------------------------- - - --------------------------------- -------------------------- Edward Granville-Smith, Stockholder on his own behalf and on behalf of his affiliates Dated: June __, 1999 - - --------------------------------- - - --------------------------------- -------------------------- Jerry C. Spellman, Stockholder on his own behalf and on behalf of his affiliates Dated: June __, 1999 260 - - --------------------------------- - - --------------------------------- -------------------------- Cyndi N. Calvo, on her own behalf and as a trustee for the Calvo Family Spendthrift Trust, Stockholders Dated: June __, 1999 - - --------------------------------- - - --------------------------------- -------------------------- William A. Calvo, III, on his own behalf and as a trustee for his children, William, Alexander & Edward, Stockholders Dated: June __, 1999 - - --------------------------------- - - --------------------------------- -------------------------- Leonard Miles Tucker, on his own behalf and on behalf of Carrington Capital Corp., Stockholders Dated: June __, 1999 - - --------------------------------- - - --------------------------------- -------------------------- Michelle Tucker, on her own behalf, on behalf of Blue Lake Capital Corp., and as a trustee for her children Shayna and Montana, Stockholders Dated: June __, 1999 - - --------------------------------- - - --------------------------------- -------------------------- Joseph D. Radcliffe, on his own behalf and on behalf of his affiliates, Stockholder Dated: June __, 1999 261 - - --------------------------------- - - --------------------------------- -------------------------- Dennis V. Radcliffe, on his own behalf and on behalf of his affiliates, Stockholder Dated: June __, 1999 - - --------------------------------- - - --------------------------------- -------------------------- Michael J. Radcliffe, on his own behalf and on behalf of his affiliates, Stockholder Dated: June __, 1999 - - --------------------------------- - - --------------------------------- -------------------------- Vanessa Radcliffe, on her own behalf and on behalf of her affiliates, Stockholder Dated: June __, 1999 The Yankee Companies, Inc. - - --------------------------------- _________________________________ By: ------------------------------- Leonard Miles Tucker, President (Corporate Seal) Attest:______________________________ William A. Calvo, III, Secretary Dated: June __, 1999 262 EX-10.34 11 PROPOSED ENGAGEMENT AGREEMENT WITH AUDITORS DASZKAL, BOLTON & MANELA CERTIFIED PUBLIC ACCOUNTANTS A PARTNERSHIP OF PROFESSIONAL ASSOCIATIONS 240 W. PALMETTO PARK ROAD, SUITE 300 o BOCA RATON, FLORIDA 33432 TELEPHONE (561) 367-1040 FAX (561) 750-3236 JEFFREY A. BOLTON, CPA, P.A. MEMBER OF THE AMERICAN INSTITUTE MICHAEL I. DASZKAL, CPA, P.A. OF CERTIFIED PUBLIC ACCOUNTANTS ROBERT A. MANELA, CPA, P.A. TIMOTHY R. DEVLIN, CPA, P.A. July 9, 1999 To the Board of Directors Equity Growth Systems, Inc. 8001 Desoto Woods Drive Sarasota, FL 34243 We are pleased to confirm our understanding of the services we are to provide for Equity Growth Systems, Inc. for the six months ended June 30, 1999. We will audit the balance sheet of Equity Growth Systems, Inc. as of June 30, 1999 and the related statements of income, retained earnings, and cash flows for the period then ended. The objective of our audit is the expression of an opinion about whether your financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principals. Our audit will be conducted in accordance with generally accepted auditing standards and will include tests of your accounting records and other procedures we consider necessary to enable us to express such an opinion If our opinion is other than unqualified, we will discuss the reasons with you in advance. If, for any reason, we are unable to complete the audit or are unable to form or have not formed an opinion, we may decline to express an opinion or issue a report as a result of this engagement. Our procedures will include tests of documentary evidence supporting the transactions recorded in the accounts, direct confirmation of receivables and certain other assets and liabilities by correspondence with selected customers, creditors, and banks. We will request written representations from your attorneys as part of the engagement, and they may bill you for responding to this inquiry. At the conclusion of our audit, we will also request certain written representations from you about the financial statements and related matters. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgement about the number of transactions to be examined and the areas to be tested. Also, we will plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Because of the concept of reasonable assurance and because we will not perform a detailed examination of all transactions, there is a risk that material errors, fraud, or other illegal acts, may exist and not be detected by us. In addition, an audit is not designed to detect errors, fraud, or other 263 Equity Growth Systems, Inc. Page 2 illegal acts that are immaterial to the financial statements. Our responsibility as auditors is limited to the period covered by our audit and does not extend to any later periods for which we are not engaged as auditors. Our audit will include obtaining an understanding of internal control sufficient to plan the audit and to determine the nature, timing, and extent of audit procedures to be performed. An audit is not designed to provide assurance on internal control or to identify reportable conditions, that is, significant deficiencies in the design or operation of internal control. However, during the audit, if we become aware of such reportable conditions, we will communicate them to you. We understand that you are responsible for making all financial records and related information available to us and that you are responsible for the accuracy and completeness of that information. We will advise you about appropriate accounting principles and their application and will assist in the preparation of your financial statements, but the responsibility for the financial statements remains with you. This responsibility includes establishment and maintenance of adequate records and effective internal controls over financial reporting, the selection and application of accounting principles, and the safeguarding of assets. Management is also responsible for identifying and ensuring that the entity complies with applicable laws and regulations. Because many computer systems use only two digits to record the year in date fields, such systems may not be able to accurately process dates including the year 2000 and after. The effects of this problem will vary from system to system and may adversely affect your operations as well as the ability to prepare financial statements. An audit of financial statements conducted in accordance with generally accepted auditing standards is not designed to detect whether your systems are year 2000 compliant. Further, we have no responsibility with regard to your efforts to make your systems year 2000 compliant or to provide assurance on whether you have addressed, or will be able to address, all of the affected systems on a timely basis. These are your responsibilities. However, we may choose to communicate matters that come to our attention relating to the potential effects of the year 2000 on your computer systems. We understand that your employees will prepare all cash, accounts receivable, and other confirmations we request and will locate any documents selected by us for testing. Our fees for these services will be based on firm hourly rates which range from $50 to $140 per hour. We expect our fees for the audit of the June 30, 1999 financial statements in accordance with, generally accepted accounting principles to be approximately $6,500 to $7,000. You will also be responsible for travel and other out-of-pocket costs. Our invoices will be rendered as work progresses and are payable on presentation. In accordance with our firm's policies, work may be suspended if your account becomes overdue and will not be resumed until your account is paid in full. We require a retainer of $4,000 prior to the commencement of the engagement. 264 Equity Growth Systems, Inc. Page 3 We appreciate the opportunity to be of service to you and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter, please sign below and return the letter to us with a retainer check for $4,000. Very truly yours, DASZKAL, BOLTON & MANELA /s/ Michael I Daszkal /s/ Michael I. Daszkal, CPA Partner RESPONSE: This letter correctly sets forth the understanding of Equity Growth Systems, Inc. Officer Signature: Charles J. Scimeca Title: President Date: 7/9/99 265 EX-10.35 12 EMPLOYMENT AGREEMENT (GLEASON & UMILE) EXHIBIT 10.35 EMPLOYMENT AGREEMENT WITH J. BRUCE GLEASON Executive's Employment Agreement This Executive's Employment Agreement (the "Agreement") is entered into by and among J. Bruce Gleason, an individual residing in the State of Florida (the "President"); American Internet Technical Centers, Inc., a Nevada corporation (the "Parent Company"); and, American Internet Technical Center, Inc., a Florida corporation (the " Company"), the Parent Company and the Company being collectively hereinafter referred to as the "Consolidated Corporation," and the Consolidated Corporation and the President being sometimes hereinafter collectively to as the "Parties" or generically as a "Party". Preamble: WHEREAS, The Consolidated Corporation, and the Consolidated Corporation's boards of directors are of the opinion that in conjunction with effectuation of the Consolidated Corporation's future plans, the Consolidated Corporation must continue the services of the Company's co-founder, who currently serves as the president, director and chief executive officer of the Consolidated Corporation, on a long term basis; and WHEREAS, the President is thoroughly knowledgeable with all aspects of the Consolidated Corporation's operations and plans; and WHEREAS, the President is agreeable to serving as the Consolidated Corporation's president and chief executive officer, on the terms and conditions hereinafter set forth: NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements hereby exchanged, as well as of the sum of Ten ($10.00) 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 Term, Renewals, Earlier Termination 1.1 Term. Subject to the provisions set forth herein, the term of the President's employment hereunder shall be deemed to commence on June 15, 1999 and continue until June 14, 2004. 1.2 Renewals. This Agreement shall be renewed automatically, after expiration of the original term, on a continuing annual basis, unless the Party wishing not to renew this Agreement provides the other Party with written notice of its election not to renew ("Termination Election Notice") on or before the 30th day prior to termination of the then current term. 266 1.3 Earlier Termination. The Parent Company and the Company shall each have the right to terminate this Agreement prior to the expiration of its Term, as it applies to them (without affecting the Agreement as it applies to the other, except in conjunction with the compensation aspects thereof), or of any renewals thereof, subject to the provisions of Section 1.4, for the following reasons: (a) For Cause: (1) The Parent Company and the Company may each terminate the President's employment under this Agreement at any time for cause. (2) Such termination shall be evidenced by written notice thereof to the President, which notice shall specify the cause for termination. (3) For purposes hereof, the term "cause" shall mean: (3) The inability of the President, through sickness or other incapacity, to discharge his duties under this Agreement for ninety or more consecutive days or for a total of 120 or more days in a period of twelve consecutive months; (4) The refusal of the President to follow the directions of the Consolidated Corporation's boards of directors; (5) Dishonesty; theft; or conviction of a crime involvin moral turpitude; (6) Material default in the performance by the President of his obligations, services or duties required under this Agreement (other than for illness or incapacity) or materially breach of any provision of this Agreement, which default or breach has continued for twenty days after written notice of such default or breach and such material default or breach has resulted in material damage to the Consolidated Corporation. (2) In the event of a dispute concerning termination due to breach or default, the President's compensation shall be continued until resolution of such dispute by a tribunal of competent jurisdiction, it being understood that the President must repay any amounts so paid upon final determination that he was not entitled to such compensation. (b) Discontinuance of Business: In the event that the Parent Company or the Company discontinues operating its business, this Agreement shall terminate as to that entity as of the last day of the month on which it ceases 267 operation with the same force and effect as if such last day of the month were originally set as the termination date hereof; provided, however, that a reorganization of the Parent Company, the Company or the Consolidated Corporation shall not be deemed a termination of their respective business. (c) Death: This Agreement shall terminate immediately on the death of the President; however, all accrued compensation at such time shall be promptly paid to the President's estate. 1.4 Final Settlement. Upon termination of this Agreement and payment to the President of all amounts due him hereunder, the President or his representative shall execute and deliver to the terminating entity on a form prepared by the terminating entity, 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 terminating entity all records, manuals and written procedures, as may be desired by it for the continued conduct of its business. Article Two Scope of Employment 2.1 Retention. The Parent Company and the Company each hereby hires the President and the President hereby accepts such employment, in accordance with the terms, provisions and conditions of this Agreement. 2.2 General Description of Duties. (a) The President shall be employed as the president of the Company and the Parent Company and perform the duties generally associated with the position of president and chief executive officer of thereof. (b) Without limiting the generality of the foregoing, the President shall have exclusive control of all aspects of the Consolidated Corporation's day to day operations, subject only to compliance with the directions of the Consolidated Corporation's boards of directors, applicable laws and fiduciary obligations. (c) The President covenants to perform in good faith his employment duties, devoting substantially all of his business time, energies and abilities to the proper and efficient management of the business of the Consolidated Corporation, and for its benefit. 268 2.3 Status. (a) Throughout the term of this Agreement, the President shall serve as a member of the boards of directors of the Consolidated Corporation and as their president and chief executive officer. (b) In the event that he is not elected to such positions, then, at the option of the President, this Agreement may be deemed terminated as to the non-complying entity and, at the President's election, the other entity constituting the Consolidated Corporation, effective as of the earliest time that it can be reasonably determined that such election will not take place, provided that written notice of such election is provided to the entity involved within 30 days after the date that the subject entity failed to elect the President. 2.4 Exclusivity. The President shall, unless specifically otherwise authorized by Consolidated Corporation's board of directors, on a case by case basis, devote his business time exclusively to the affairs of the Consolidated Corporation. Article Three Compensation 3.1 Compensation. 1. As consideration for the President's services to the Consolidated Corporation the President shall be entitled to a salary in an aggregate gross sum equal to $75,000.00 per annum payable in bi-monthly installments (the "Base Salary"). 2. The Base Salary shall be increased by $5,000.00 per year starting on the third anniversary date of this Agreement. 3.2 Benefits. During the term of this Agreement, the President shall also be entitled to the following benefits: (a) Three weeks paid vacation per year during the first three years of this Agreement and four weeks per year thereafter. (b) During the period of his employment, the President shall be reimbursed for reasonable traveling and other expenses reasonably required in connection with the performance of his duties hereunder, subject to verification required by the Consolidated Corporation for audit purposes, for tax deduction purposes and in order to assure compliance with applicable laws and regulations. 269 (c) The President shall be entitled to receive health and life insurance (provided that in the aggregate, they cost not more than $500 per month to the Consolidated Corporation, any excess being deducted from the Base salary) and all other benefits of employment generally available to management of the Consolidated Corporation or its subsidiaries. 3.3 Indemnification. The Consolidated Corporation will defend, indemnify and hold the President harmless from all liabilities, suits, judgments, fines, penalties or disabilities, including expenses associated directly, therewith (e.g. legal fees, court costs, investigative costs, witness fees, etc.) resulting from any reasonable actions taken by him in good faith on behalf of the Consolidated Corporation, their affiliates or for other persons or entities at the request of the board of director of the Parent Company or the Company, to the fullest extent legally permitted, and in conjunction therewith, shall assure that all required expenditures are made in a manner making it unnecessary for the President to incur any out of pocket expenses; provided, however, that the President permits the majority stockholders of the Parent Company to select and supervise all personnel involved in such defense and that the President waive any conflicts of interest that such personnel may have as a result of also representing the Consolidated Corporation, their stockholders or other personnel and agrees to hold them harmless from any matters involving such representation, ex cept such as involve fraud or bad faith. Article Four Special Covenants 4.1 Confidentiality. (a) The President acknowledges that, in and as a result of his employment hereunder, he will be developing for the Consolidated Corporation, making use of, acquiring and/or adding to, confidential information of special and unique nature and value relating to such matters as the Consolidated Corporation's trade secrets, systems, procedures, manuals, confidential reports, personnel resources, strategic and tactical plans, advisors, clients, investors and funders; consequently, as material inducement to the entry into this Agreement by the Consolidated Corporation, the President hereby covenants and agrees that he shall not, at anytime during or following the terms of his employment hereunder, directly or indirectly, personally use, divulge or disclose, for any purpose whatsoever, any of such confidential information which has been obtained by or disclosed to him as a result of his employment by the Consolidated Corporation, or the Consolidated Corporation's affiliates. (b) In the event of a breach or threatened breach by the President of any of the provisions of this Section 4.1, the Consolidated Corporation, in addition to and not in limitation of any other rights, remedies or damages available to the Consolidated Corporation, 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 President, or by the President's partners, agents, representatives, servants, employers, employees, affiliates and/or any and all persons directly or indirectly acting for or with him. 270 4.2 Special Remedies. In view of the irreparable harm and damage which would undoubtedly occur to the Consolidated Corporation as a result of a breach by the President of the covenants or agreements contained in this Article Four, and in view of the lack of an adequate remedy at law to protect the Consolidated Corporation's interests, the President hereby covenants and agrees that the Consolidated Corporation shall have the following additional rights and remedies in the event of a breach hereof: (a) The President hereby consents to the issuance of a permanent injunction enjoining him from any violations of the covenants set forth in Section 4.1 hereof; and (b) Because it is impossible to ascertain or estimate the entire or exact cost, damage or injury which the Consolidated Corporation may sustain prior to the effective enforcement of such injunction, the President hereby covenants and agrees to pay over to the Consolidated Corporation, in the event he violates the covenants and agreements contained in Section 4.2 hereof, the greater of: (i) Any payment or compensation of any kind received by him because of such violation before the issuance of such injunction, or (ii) The sum of One Thousand ($1,000.00) Dollars per violation, which sum shall be liquidated damages, and not a penalty, for the injuries suffered by the Consolidated Corporation as a result of such violation, the Parties hereto agreeing that such liquidated damages are not intended as the exclusive remedy available to the Consolidated Corporation 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 the Consolidated Corporation from the injury caused by such breaches would be injunctive relief. 4.3 Cumulative Remedies. The President hereby irrevocably agrees that the remedies described in Section 4.3 hereof shall be in addition to, and not in limitation of, any of the rights or remedies to which the Consolidated Corporation is or may be entitled to, whether at law or in equity, under or pursuant to this Agreement. 271 4.4 Acknowledgment of Reasonableness. The President hereby represents, warrants and acknowledges that he has carefully read and considered the provisions of this Article Four 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 Consolidated Corporation, its officers, directors and other employees; consequently, in the event that any of the above-described restrictions shall be held unenforceable by any court of competent jurisdiction, the President hereby covenants, agrees and directs such court to substitute a reasonable judicially enforceable limitation in place of any limitation deemed unenforceable and, the President 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. In determining the nature of this limitation, the President 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 this covenant not to compete be imposed and maintained to the greatest extent possible. 4.5 Unauthorized Acts. The President hereby covenants and agrees that he will not do any act or incur any obligation on behalf of the Parent Company or the Company of any kind whatsoever, except as authorized by the board of directors of the subject entity or by its stockholders pursuant to duly adopted stockholder action. Article Five Miscellaneous 5.1 Notices. (a) All notices, demands or other 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 registered or certified mail, return receipt requested, postage prepaid, addressed as follows: To the President: J. Bruce Gleason: 46 Havenwood Drive; Pompano Beach, Florida 33064; To the Parent Company: American Internet Technical Centers, Inc. 440 East Sample Road, Suite 204; Pompano Beach, Florida 33064 Attention: Michael D. Umile, Senior Vice President; To the Company: American Internet Technical Center, Inc. 440 East Sample Road, Suite 204; Pompano Beach, Florida 33064 Attention: Michael D. Umile, Senior Vice President. or to 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. (b) (1) The Parties acknowledge that The Yankee Companies, Inc., a Florida corporation ("Yankees") has acted as scrivener for the Parties in this transaction and that Yankees is neither a law firm nor an agency subject to any professional regulation or oversight. 272 (2) Because of the inherent conflict of interests involved, Yankees has advised all of the Parties to retain independent legal and accounting counsel to review this Agreement and its exhibits and incorporated materials on their behalf. 5.2 Amendment. (1) No modification, waiver, amendment, discharge or change of this Agreement shall be valid unless the same is in writing and signed by the Party against which the enforcement of said modification, waiver, amendment, discharge or change is sought. (2) This Agreement may not be modified without the consent of a majority in interest of the Parent Company's stockholders. 5.3 Merger. (a) This instrument contains all of the understandings and agreements of the Parties with respect to the subject matter discussed herein. (b) All prior agreements whether written or oral, are merged herein and shall be of no force or effect. 5.4 Survival. The several representations, warranties and covenants of the Parties contained herein shall survive the execution hereof and shall be effective regardless of any investigation that may have been made or may be made by or on behalf of any Party. 5.5 Severability. If any provision or any portion of any provision of this Agreement, 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 effected thereby. 5.6 Governing Law and Venue. 273 This Agreement shall be construed in accordance with the laws of the State of Florida but 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 Broward County, Florida. 5.7 Litigation. (a) 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. (b) 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 Broward County, Florida, to be selected by lot from six alternatives to be provided, one by the majority stockholder of the Parent Company, one by the Parent Company, one by the Company and three by the President. (B) The mediation efforts shall be concluded within ten business days after their in itiation 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 Broward County, Florida to be selected by lot, from six alternatives to be provided, one by the majority stockholder of the Parent Company, one by the Parent Company, one by the Company and three by the President. (3) (1) Expenses of mediation shall be borne by the Company, if successful. (2) Expenses of mediation, if unsuccessful and of arbitration shall be borne by the Party or Parties against whom the arbitration decision is rendered. (3) If the terms of the arbitral award do not establish a prevailing Party, then the expenses of unsuccessful mediation and arbitration shall be borne equally by the Parties. 5.8 Benefit of Agreement. (1) This Agreement may not be assigned by the President without the prior written consent of the Consolidated Corporation. 274 (2) Subject to the restrictions on transferability and assignment contained herein, the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the Parties, their successors, assigns, personal representative, 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 or acknowledged or delivered and to perform all such acts and deliver all such deeds, assignments, transfers, conveyances, powers of attorney, assurances, recipes, records and other documents, as may, from time to time, be required herein to effect the intent and purposes of this Agreement. 5.12 Status. Nothing in this Agreement shall be construed or shall constitute a partnership, joint venture, agency, or lessor-lessee relationship; but, rather, the relationship established hereby is that of employer-employee in the Consolidated Corporation. 5.13 Counterparts. (a) This Agreement may be executed in any number of counterparts. (b) 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. 275 5.14 License. (a) This Agreement is the property of Yankees and the use hereof by the Parties is authorized hereby solely for purposes of this transaction. (b) The use of this form of agreement or of any derivation thereof without Yankees' prior written permission is prohibited. In Witness Whereof, the Parties have executed this Agreement, effective as of the last date set forth below. Signed, Sealed & Delivered In Our Presence President - - -------------------------- - - -------------------------- ------------------------ J. Bruce Gleason Dated: June ___, 1999 American Internet Technical Centers, Inc. a Nevada corporation. - - -------------------------- __________________________ By: ___________________________ J. Bruce Gleason, President (CORPORATE SEAL) Attest: __________________________ Michael D. Umile Senior Vice President & Secretary Dated: June ___, 1999 American Internet Technical Center, Inc. a Florida corporation. - - -------------------------- __________________________ By: ___________________________ J. Bruce Gleason, President (CORPORATE SEAL) Attest: _________________________ Michael D. Umile Senior Vice President & Secretary Dated: June ___, 1999 276 EXHIBIT 10.35 EMPLOYMENT AGREEMENT WITH MICHAEL D. UMILE Executive's Employment Agreement This Executive's Employment Agreement (the "Agreement") is entered into by and among Michael D. Umile, an individual residing in the State of Florida (the "Senior Vice President"); American Internet Technical Centers, Inc., a Nevada corporation (the "Parent Company"); and, American Internet Technical Center, Inc., a Florida corporation (the " Company"), the Parent Company and the Company being collec tively hereinafter referred to as the "Consolidated Corporation," and the Consolidated Corporation and the Senior Vice President being sometimes hereinafter collectively to as the "Parties" or generically as a "Party". Preamble: WHEREAS, The Consolidated Corporation, and the Consolidated Corporation's boards of directors are of the opinion that in conjunction with effectuation of the Consolidated Corporation's future plans, the Consolidated Corporation must continue the services of the Company's co-founder, who currently serves as the senior vice president, director and chief operating officer of the Consolidated Corporation, on a long term basis; and WHEREAS, the Senior Vice President is thoroughly knowledgeable with all aspects of the Consolidated Corporation's operations and plans; and WHEREAS, the Senior Vice President is agreeable to serving as the Consolidated Corporation's senior vice president and chief operating officer, on the terms and conditions hereinafter set forth: NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements hereby exchanged, as well as of the sum of Ten ($10.00) 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 Term, Renewals, Earlier Termination 1.1 Term. Subject to the provisions set forth herein, the term of the Senior Vice President's employment hereunder shall be deemed to commence on June 15, 1999 and continue until June 14, 2004. 277 1.2 Renewals. This Agreement shall be renewed automatically, after expiration of the original term, on a continuing annual basis, unless the Party wishing not to renew this Agreement provides the other Party with written notice of its election not to renew ("Termination Election Notice") on or before the 30th day prior to termination of the then current term. 1.3 Earlier Termination. The Parent Company and the Company shall each have the right to terminate this Agreement prior to the expiration of its Term, as it applies to them (without affecting the Agreement as it applies to the other, except in conjunction with the compensation aspects thereof), or of any renewals thereof, subject to the provisions of Section 1.4, for the following reasons: (a) For Cause: (1) The Parent Company and the Company may each terminate the Senior Vice President's employment under this Agreement at any time for cause. (2) Such termination shall be evidenced by written notice thereof to the Senior Vice President, which notice shall specify the cause for termination. (3) For purposes hereof, the term "cause" shall mean: (A) The inability of the Senior Vice President, through sickness or other incapacity, to discharge his duties under this Agreement for ninety or more consecutive days or for a total of 120 or more days in a period of twelve consecutive months; (B) The refusal of the Senior Vice President to follow the directions of the Consolidated Corporation's boards of directors; (C) Dishonesty; theft; or conviction of a crime involving moral turpitude; (D) Material default in the performance by the Senior Vice President of his obligations, services or duties required under this Agreement (other than for illness or incapacity) or materially breach of any provision of this Agreement, which default or breach has continued for twenty days after written notice of such default or breach and such material default or breach has resulted in material damage to the Consolidated Corporation. (4) In the event of a dispute concerning termination due to breach or default, the Senior Vice President's compensation shall be continued until resolution of such dispute by a tribunal 278 of competent jurisdiction, it being understood that the Senior Vice President must repay any amounts so paid upon final determination that he was not entitled to such compensation. (b) Discontinuance of Business: In the event that the Parent Company or the Company discontinues operating its business, this Agreement shall terminate as to that entity as of the last day of the month on which it ceases operation with the same force and effect as if such last day of the month were originally set as the termination date hereof; provided, however, that a reorganization of the Parent Company, the Company or the Consolidated Corporation shall not be deemed a termination of their respective business. (c) Death: This Agreement shall terminate immediately on the death of the Senior Vice President; however, all accrued compensation at such time shall be promptly paid to the Senior Vice President's estate. 1.4 Final Settlement. Upon termination of this Agreement and payment to the Senior Vice President of all amounts due him hereunder, the Senior Vice President or his representative shall execute and deliver to the terminating entity on a form prepared by the terminating entity, 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 terminating entity all records, manuals and written procedures, as may be desired by it for the continued conduct of its business. Article Two Scope of Employment 2.1 Retention. The Parent Company and the Company each hereby hires the Senior Vice President and the Senior Vice President hereby accepts such employment, in accordance with the terms, provisions and conditions of this Agreement. 2.2 General Description of Duties. (a) The Senior Vice President shall be employed as the senior vice president of the Company and the Parent Company and perform the duties generally associated with the position of senior vice president and chief operating officer of thereof. 279 (b) Without limiting the generality of the foregoing, the Senior Vice President shall serve as the president's principal deputy and shall perform such duties as are assigned to him by the Consolidated Corporation's president and boards of directors, subject to compliance with all applicable laws and fiduciary obligations. (c) The Senior Vice President covenants to perform in good faith his employment duties, devoting substantially all of his business time, energies and abilities to the proper and efficient management of the business of the Consolidated Corporation, and for its benefit. 2.3 Status. (a) Throughout the term of this Agreement, the Senior Vice President shall serve as a member of the boards of directors of the Consolidated Corporation and as their senior vice president and chief operating officer. (b) In the event that he is not elected to such positions, then, at the option of the Senior Vice President, this Agreement may be deemed terminated as to the non-complying entity and, at the Senior Vice President's election, the other entity constituting the Consolidated Corporation, effective as of the earliest time that it can be reasonably determined that such election will not take place, provided that written notice of such election is provided to the entity involved within 30 days after the date that the subject entity failed to elect the Senior Vice President. 2.4 Exclusivity. The Senior Vice President shall, unless specifically otherwise authorized by Consolidated Corporation's board of directors, on a case by case basis, devote his business time exclusively to the affairs of the Consolidated Corporation. Article Three Compensation 3.1 Compensation. 1. As consideration for the Senior Vice President's services to the Consolidated Corporation the Senior Vice President shall be entitled to a salary in an aggregate gross sum equal to $75,000.00 per annum payable in bi-monthly installments (the "Base Salary"). 2. The Base Salary shall be increased by $5,000.00 per year starting on the third anniversary date of this Agreement. 280 3.2 Benefits. During the term of this Agreement, the Senior Vice President shall also be entitled to the following benefits: (a) Three weeks paid vacation per year during the first three years of this Agreement and four weeks per year thereafter. (b) During the period of his employment, the Senior Vice President shall be reimbursed for reasonable traveling and other expenses reasonably required in connection with the performance of his duties hereunder, subject to verification required by the Consolidated Corporation for audit purposes, for tax deduction purposes and in order to assure compliance with applicable laws and regulations. (c) The Senior Vice President shall be entitled to receive health and life insurance (provided that in the aggregate, they cost not more than $500 per month to the Consolidated Corporation, any excess being deducted from the Base salary) and all other benefits of employment generally available to management of the Consolidated Corporation or its subsidiaries. 3.3 Indemnification. The Consolidated Corporation will defend, indemnify and hold the Senior Vice President harmless from all liabilities, suits, judgments, fines, penalties or disabilities, including expenses associated directly, therewith (e.g. legal fees, court costs, investigative costs, witness fees, etc.) resulting from any reasonable actions taken by him in good faith on behalf of the Consolidated Corporation, their affiliates or for other persons or entities at the request of the board of director of the Parent Company or the Company, to the fullest extent legally permitted, and in conjunction therewith, shall assure that all required expenditures are made in a manner making it unnecessary for the Senior Vice President to incur any out of pocket expenses; provided, however, that the Senior Vice President permits the majority stockholders of the Parent Company to select and supervise all personnel involved in such defense and that the Senior Vice President waive any conflicts of interest that such personnel may have as a result of also representing the Consolidated Corporation, their stockholders or other personnel and agrees to hold them harmless from any matters involving such representation, except such as involve fraud or bad faith. 281 Article Four Special Covenants 4.1 Confidentiality. (a) The Senior Vice President acknowledges that, in and as a result of his employment hereunder, he will be developing for the Consolidated Corporation, making use of, acquiring and/or adding to, confidential information of special and unique nature and value relating to such matters as the Consolidated Corporation's trade secrets, systems, procedures, manuals, confidential reports, personnel resources, strategic and tactical plans, advisors, clients, investors and funders; consequently, as material inducement to the entry into this Agreement by the Consolidated Corporation, the Senior Vice President hereby covenants and agrees that he shall not, at anytime during or following the terms of his employment hereunder, directly or indirectly, personally use, divulge or disclose, for any purpose whatsoever, any of such confidential information which has been obtained by or disclosed to him as a result of his employment by the Consolidated Corporation, or the Consolidated Corporation's affiliates. (b) In the event of a breach or threatened breach by the Senior Vice President of any of the provisions of this Section 4.1, the Consolidated Corporation, in addition to and not in limitation of any other rights, remedies or damages available to the Consolidated Corporation, 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 Senior Vice President, or by the Senior Vice President's partners, agents, representatives, servants, employers, employees, affiliates and/or any and all persons directly or indirectly acting for or with him. 4.2 Special Remedies. In view of the irreparable harm and damage which would undoubtedly occur to the Consolidated Corporation as a result of a breach by the Senior Vice President of the covenants or agreements contained in this Article Four, and in view of the lack of an adequate remedy at law to protect the Consolidated Corporation's interests, the Senior Vice President hereby covenants and agrees that the Consolidated Corporation shall have the following additional rights and remedies in the event of a breach hereof: (a) The Senior Vice President hereby consents to the issuance of a permanent injunction enjoining him from any violations of the covenants set forth in Section 4.1 hereof; and (b) Because it is impossible to ascertain or estimate the entire or exact cost, damage or injury which the Consolidated Corporation may sustain prior to the effective enforcement of such injunction, the Senior Vice President hereby covenants and agrees to pay over to the Consolidated Corporation, in the event he violates the covenants and agreements contained in Section 4.2 hereof, the greater of: (i) Any payment or compensation of any kind received by him because of such violation before the issuance of such injunction, or 282 (ii) The sum of One Thousand ($1,000.00) Dollars per violation, which sum shall be liquidated damages, and not a penalty, for the injuries suffered by the Consolidated Corporation as a result of such violation, the Parties hereto agreeing that such liquidated damages are not intended as the exclusive remedy available to the Consolidated Corporation 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 the Consolidated Corporation from the injury caused by such breaches would be injunctive relief. 4.3 Cumulative Remedies. The Senior Vice President hereby irrevocably agrees that the remedies described in Section 4.3 hereof shall be in addition to, and not in limitation of, any of the rights or remedies to which the Consolidated Corporation is or may be entitled to, whether at law or in equity, under or pursuant to this Agreement. 4.4 Acknowledgment of Reasonableness. The Senior Vice President hereby represents, warrants and acknowledges that he has carefully read and considered the provisions of this Article Four 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 Consolidated Corporation, its officers, directors and other employees; consequently, in the event that any of the above-described restrictions shall be held unenforceable by any court of competent jurisdiction, the Senior Vice President hereby covenants, agrees and directs such court to substitute a reasonable judicially enforceable limitation in place of any limitation deemed unenforceable and, the Senior Vice President 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. In determining the nature of this limitation, the Senior Vice President 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 this covenant not to compete be imposed and maintained to the greatest extent possible. 4.5 Unauthorized Acts. The Senior Vice President hereby covenants and agrees that he will not do any act or incur any obligation on behalf of the Parent Company or the Company of any kind whatsoever, except as authorized by the board of directors of the subject entity or by its stockholders pursuant to duly adopted stockholder action. 283 Article Five Miscellaneous 5.1 Notices. (a) All notices, demands or other 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 registered or certified mail, return receipt requested, postage prepaid, addressed as follows: To the Senior Vice President: Michael D. Umile: 210 Oregon Lane; Boca Raton, Florida 33487; To the Parent Company: American Internet Technical Centers, Inc. 440 East Sample Road, Suite 204; Pompano Beach, Florida 33064 Attention: J. Bruce Gleason, President; To the Company: American Internet Technical Center, Inc. 440 East Sample Road, Suite 204; Pompano Beach, Florida 33064 Attention: J. Bruce Gleason, President. or to 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. (b) (1) The Parties acknowledge that The Yankee Companies, Inc., a Florida corporation ("Yankees") has acted as scrivener for the Parties in this transaction and that Yankees is neither a law firm nor an agency subject to any professional regulation or oversight. (2) Because of the inherent conflict of interests involved, Yankees has advised all of the Parties to retain independent legal and accounting counsel to review this Agreement and its exhibits and incorporated materials on their behalf. 5.2 Amendment. (1) No modification, waiver, amendment, discharge or change of this Agreement shall be valid unless the same is in writing and signed by the Party against which the enforcement of said modification, waiver, amendment, discharge or change is sought. (2) This Agreement may not be modified without the consent of a majority in interest of the Parent Company's stockholders. 284 5.3 Merger. (a) This instrument contains all of the understandings and agreements of the Parties with respect to the subject matter discussed herein. (b) All prior agreements whether written or oral, are merged herein and shall be of no force or effect. 5.4 Survival. The several representations, warranties and covenants of the Parties contained herein shall survive the execution hereof and shall be effective regardless of any investigation that may have been made or may be made by or on behalf of any Party. 5.5 Severability. If any provision or any portion of any provision of this Agreement, 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 effected thereby. 5.6 Governing Law and Venue. This Agreement shall be construed in accordance with the laws of the State of Florida but 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 Broward County, Florida. 5.7 Litigation. (a) 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. (b) 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 Broward County, Florida, to be selected by lot from six alternatives to be 285 provided, one by the majority stockholder of the Parent Company, one by the Parent Company, one by the Company and three by the Senior Vice President. (B) The mediation efforts shall be concluded within ten business days after their in itiation 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 Broward County, Florida to be selected by lot, from six alternatives to be provided, one by the majority stockholder of the Parent Company, one by the Parent Company, one by the Company and three by the Senior Vice President. (3) (A) Expenses of mediation shall be borne by the Company, if successful. (2) Expenses of mediation, if unsuccessful and of arbitration shall be borne by the Party or Parties against whom the arbitration decision is rendered. (3) If the terms of the arbitral award do not establish a prevailing Party, then the expenses of unsuccessful mediation and arbitration shall be borne equally by the Parties. 5.8 Benefit of Agreement. (1) This Agreement may not be assigned by the Senior Vice President without the prior written consent of the Consolidated Corporation. (2) Subject to the restrictions on transferability and assignment contained herein, the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the Parties, their successors, assigns, personal representative, 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. 286 5.11 Further Assurances. The Parties hereby agree to do, execute, acknowledge and deliver or cause to be done, executed or acknowledged or delivered and to perform all such acts and deliver all such deeds, assignments, transfers, conveyances, powers of attorney, assurances, recipes, records and other documents, as may, from time to time, be required herein to effect the intent and purposes of this Agreement. 5.12 Status. Nothing in this Agreement shall be construed or shall constitute a partnership, joint venture, agency, or lessor-lessee relationship; but, rather, the relationship established hereby is that of employer-employee in the Consolidated Corporation. 5.13 Counterparts. (a) This Agreement may be executed in any number of counterparts. (b) 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. 5.14 License. (a) This Agreement is the property of Yankees and the use hereof by the Parties is authorized hereby solely for purposes of this transaction. (b) The use of this form of agreement or of any derivation thereof without Yankees' prior written permission is prohibited. 287 In Witness Whereof, the Parties have executed this Agreement, effective as of the last date set forth below. Signed, Sealed & Delivered In Our Presence Senior Vice President - - -------------------------- - - -------------------------- ------------------- Michael D. Umile Dated: June ___, 1999 American Internet Technical Centers, Inc. a Nevada corporation. - - -------------------------- __________________________ By: --------------------------- J. Bruce Gleason, President (CORPORATE SEAL) Attest:________________________ Michael D. Umile Senior Vice President & Secretary Dated: June ___, 1999 American Internet Technical Center, Inc. a Florida corporation. - - -------------------------- __________________________ By: --------------------------- J. Bruce Gleason, President (CORPORATE SEAL) Attest:_________________________ Michael D. Umile Senior Vice President & Secretary Dated: June ___, 1999 288 EX-10.36 13 EMPLOYMENT AGREEMENT WITH CARMEN PICCOLO EXHIBIT 10.36 EMPLOYMENT AGREEMENT WITH CARMEN PICCOLO Employment Agreement This Employment Agreement (the "Agreement") is entered into by and among Carmen Piccolo, an individual residing in the State of Florida (the "Corporate Information Spokesperson"); Equity Growth Systems, inc., a Delaware publicly held corporation with a class of securities registered under Section 12(g) of the Securities Exchange Act of 1934, as amended ("Equity Growth" and the "Exchange Act," respectively); and, American Internet Technical Center, Inc., a Florida corporation ("American Internet"), Equity Growth, American Internet and all other subsidiaries of Equity Growth, whether current or subsequently formed or acquired, being collectively hereinafter referred to as the "Consolidated Corporation," and the Consolidated Corporation and the Corporate Information Spokesperson being sometimes hereinafter collectively to as the "Parties" or generically as a "Party". Preamble: WHEREAS, The Consolidated Corporation, and the Consolidated Corporation's boards of directors are of the opinion that in light of their public status and the importance of dissemination of accurate and complete information concerning their business affairs, it is critical to appoint one person with responsibility for gathering, verifying, securing required approvals and then disseminating information in full compliance with all applicable laws; and WHEREAS, the Corporate Information Spokesperson is experienced and well known in the financial community and is thoroughly knowledgeable with the communications related obligations and restriction imposed on public companies by the Exchange Act, as well as by the Securities Act of 1933, as amended (the "Securities Act"); and WHEREAS, the Corporate Information Spokesperson is agreeable to serving as the Consolidated Corporation's corporate information spokesperson on the terms and conditions hereinafter set forth: NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements hereby exchanged, as well as of the sum of Ten ($10.00) 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 Term, Renewals, Earlier Termination 1.1 Term. Subject to the provisions set forth herein, the term of the Corporate Information Spokesperson's employment hereunder shall be deemed to commence on first business day of the first week following the 289 last date appearing on the signature page of this Agreement and continue until June 30, 2000, unless extended or earlier terminated by Equity Growth as hereinafter set forth. 1.2 Renewals. This Agreement shall be renewed automatically, after expiration of the original term, on a continuing annual basis, unless the Party wishing not to renew this Agreement provides the other Party with written notice of its election not to renew ("Termination Election Notice") on or before the 30th day prior to termination of the then current term. 1.3 Earlier Termination. Equity Growth and American Internet shall each have the right to terminate this Agreement prior to the expiration of its Term, as it applies to them (without affecting the Agreement as it applies to the other, except in conjunction with the compensation aspects thereof), or of any renewals thereof, subject to the provisions of Section 1.4, for the following reasons: (a) For Cause: (1) Equity Growth and American Internet may each terminate the Corporate Information Spokesperson's employment under this Agreement at any time for cause. (2) Such termination shall be evidenced by written notice thereof to the Corporate Information Spokesperson, which notice shall specify the cause for termination. (3) For purposes hereof, the term "cause" shall mean: (a) The inability of the Corporate Information Spokesperson, through sickness or other incapacity, to discharge her duties under this Agreement for 15 or more consecutive days or for a total of 30 or more days in a period of twelve consecutive months; (b) The refusal of the Corporate Information Spokesperson to follow the directions of the Consolidated Corporation's boards of directors, or their presidents or other superior officers; (c) Dishonesty; theft; or conviction of a crime involving moral turpitude; (d) Material default in the performance by the Corporate Information Spokesperson of her obligations, services or duties required under this Agreement (other than for illness or incapacity) or materially breach of any provision of this Agreement, which default or breach has continued for five days after written notice of such default or breach. 290 (b) Discontinuance of Business: In the event that Equity Growth or American Internet discontinues operating its business, this Agreement shall terminate as to that entity as of the last day of the month on which it ceases operation with the same force and effect as if such last day of the month were originally set as the termination date hereof; provided, however, that a reorganization of Equity Growth, American Internet or the Consolidated Corporation shall not be deemed a termination of their respective business. (c) Death: This Agreement shall terminate immediately on the death of the Corporate Information Spokesperson; however, all accrued compensation at such time shall be promptly paid to the Corporate Information Spokesperson's estate. 1.4 Final Settlement. Upon termination of this Agreement and payment to the Corporate Information Spokesperson of all amounts due her hereunder, the Corporate Information Spokesperson or her representative shall execute and deliver to the terminating entity on a form prepared by the terminating entity, 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 terminating entity all records, manuals and written procedures, as may be desired by it for the continued conduct of its business. Article Two Scope of Employment 2.1 Retention. Equity Growth hereby hires the Corporate Information Spokesperson and the Corporate Information Spokesperson hereby accepts such employment, in accordance with the terms, provisions and conditions of this Agreement. 2.2 General Description of Duties. (a) The Corporate Information Spokesperson shall be employed as the corporate information spokesperson for Equity Growth and its subsidiaries, including American Internet, and shall 291 perform the duties generally associated with the position of corporate information spokesperson thereof. (b) Without limiting the generality of the foregoing, the Corporate Information Spokesperson shall: (1) Serve as the principal point of contact between the Consolidated Corporation and: (a) The media (print, electronic, voice and picture); (b) The investment community; (c) Their security holders; (2) Be responsible for the collection and maintenance of all information concerning the Consolidated Corporation and for verification of the accuracy and completeness thereof; (3) Assist in the prepare and distribution of regular reports of the activities of the Consolidated Corporation to the investment community, the press, their securities holders and the general public; (4) Assist in development and implement all public relations programs required by the Consolidated Corporation; (5) Be responsible for securing prior written approval for the release of any information concerning the Consolidated Corporation from any regulatory authorities (e.g., the Securities and Exchange Commission [the "Commission") or self regulatory organizations (e.g., the National Association of Securities Dealers, Inc. [the "NASD"]) having jurisdiction over dissemination of such information; the boards of directors and chief executive officers of the Consolidated Corporation, and from Equity Growth's General Counsel; (6) Maintain orderly and easy to find records of all corporate information released by her. (7) Perform such other duties as are assigned to her by the Consolidated Corporation's president and boards of directors, subject to compliance with all applicable laws and fiduciary obligations. (c) The Corporate Information Spokesperson covenants to perform in good faith her employment duties, devoting substantially all of her business time, energies and abilities to the proper and efficient management and execution thereof and for its benefit. 292 2.3 Status. (1) The Corporate Information Spokesperson shall serve as an employee of Equity Growth but shall have no authority to act as an agent thereof, or to bind Equity Growth or its subsidiaries as a principal or agent thereof, all such functions being reserved to their officers as specified by their boards of directors and in compliance with the requirements of their constituent documents. (2) The Corporate Information Spokesperson hereby covenants and agrees that she shall not hold herself out as an authorized agent of the Consolidated Corporation unless such authority is specifically assigned to her, on a case by case basis, by the boards of directors of the Constituent Corporation, pursuant to a duly adopted resolution which remains in effect. (3) The Corporate Information Spokesperson hereby represents and warrants to Equity Growth and American Internet that she is subject to no legal, self regulatory organization (e.g., National Association of Securities Dealers, Inc.'s bylaws) or regulatory impediments to the provision of the services called for by this Agreement, or to receipt of the compensation called for under this Agreement or any supplements thereto; and, the Corporate Information Spokesperson hereby irrevocably covenants and agrees to immediately bring to the attention of Equity Growth any facts required to make the foregoing representation and warranty continuingly accurate throughout the term of this Agreement, or any supplements or extensions thereof. 2.4 Exclusivity. The Corporate Information Spokesperson shall, unless specifically otherwise authorized by Consolidated Corporation's board of directors, on a case by case basis, devote her business time ex clusively to the affairs of the Consolidated Corporation. 2.5 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., in-house "due diligence" or "compliance" departments of Licensed Securities Firms, etc.; accordingly, the Corporate Information Spokesperson agrees that she will not: (1) Release any financial or other material information or data about the Consolidated Corporation without the prior written consent and approval of Equity Growth's General Counsel; 293 (2) Conduct any meetings with financial analysts without informing Equity Growth's General Counsel and board of directors in advance of the proposed meeting and the format or agenda of such meeting; (3) Release any information or data about the Consolidated Corporation to any selected or limited person(s), entity, or group if the Corporate Information Spokesperson is aware that such information or data has not been generally released or promulgated. (b) In any circumstances where the Corporate Information Spokesperson is describing the securities of Equity Growth to a third party, the Corporate Information Spokesperson shall disclose to such person any compensation received from Equity Growth to the extent required under any applicable laws, including, without limitation, Section 17(b) of the Securities Act of 1933, as amended. (c) In rendering her services, the Corporate Information Spokesperson shall not disclose to any third party any confidential non-public information furnished by Equity Growth or American Internet or otherwise obtained by it with respect to the Consolidated Corporation. (d) The Corporate Information Spokesperson shall restrict or cease, as directed by Equity Growth, all efforts on behalf of the Consolidated Corporation, including all dissemination of information regarding the Consolidated Corporation, immediately upon receipt of instructions (in writing by fax or letter) to that effect from Equity Growth. (e) If the Corporate Information Spokesperson learns of any pending public securities offering to be made or expected to be by made the Consolidated Corporation, the Corporate Information Spokesperson shall immediately cease any public relations activities on behalf of the Consolidated Corporation until receipt of written instructions from Equity Growth's General Counsel as to how to proceed, and thereafter shall proceed only in accordance with such written instructions. (f) The Corporate Information Spokesperson shall not take any action which would in any way adversely affect the reputation, standing or prospects of Equity Growth or the Consolidated Corporation or which would cause Equity Growth or the Consolidated Corporation to be in violation of applicable laws. 294 Article Three Compensation 3.1 Compensation. 1. As consideration for the Corporate Information Spokesperson's services to the Consolidated Corporation the Corporate Information Spokesperson shall be entitled to a gross monthly salary of $2,000 payable in bi-monthly installments of $1,000 less related taxes and withholding obligations imposed under federal, state or local laws (the "Base Salary"). 2. (1) In addition to the Base Salary, the Corporate Information Spokesperson shall be entitled to an option to purchase up to 48,000 shares of Equity Growth's common stock at an exercise price of $_.00 per share, vesting at the rate of 4,000 shares per month, provided that she remains in the employ of the Consolidated Corporation at the time of exercise (the "Options"). 2. The Options shall be exercisable for a period of 12 months from their date of vesting and will be issued in reliance on the exemption from registration under Section 5 of the Securities Act and the Florida securities and Investor Protection Act (the "Florida Act"), pursuant to Section 4(2) of the Securities Act and Section 517.061(11) of the Florida Act. 3. The Corporate Information Spokesperson hereby represents, warrants, covenants and acknowledges that: (A) The securities being issued as compensation under Section 3.1(b) of this Agreement (the "Securities") will be issued without registration under the provisions of Section 5 of the Securities Act or the securities regulatory laws and regulations of the State of Florida (the "Florida Act") pursuant to exemptions provided pursuant to Section 4(2) of the Act and comparable provisions of the Florida Act; 2. The Corporate Information Spokesperson shall be responsible for preparing and filing any reports concerning this transaction with the Florida Division of Securities (none being expected), and payment of any required filing fee (none being expected); 3. All of the Securities will bear legends restricting their transfer, sale, conveyance or hypothecation unless such Securities are either registered under the provisions of Section 5 of the Act and under the Florida Act, or an opinion of legal counsel, in form and substance satisfactory to legal counsel to Equity Growth is provided to Equity Growth's General Counsel to the effect that such registration is not required as a result of applicable exemptions therefrom; 295 4. Equity Growth's transfer agent shall be instructed not to transfer any of the Securities unless the General Counsel for Equity Growth advises it that such transfer is in compliance with all applicable laws; 5. The Corporate Information Spokesperson is acquiring the Securities for her own account, for investment purposes only, and not with a view to further sale or distribution; and 6. The Corporate Information Spokesperson or her advisors have examined Equity Growth's books and records and questioned its officers and directors as to such matters involving Equity Growth as she deemed appropriate. 4. In the event that Equity Growth files a registration or notification statement with the Commission or any state securities regulatory authorities registering or qualifying any of its securities for sale or resale to the public as free trading securities, it will notify the Corporate Information Spokesperson of such intent at least 15 business days prior to such filing, and shall, if requested by her, include any shares theretofore issued upon exercise of the Options in such registration or notification statement, provided that the Corporate Information Spokesperson c ooperates in a timely manner with any requirements for such registration or qualification by notification, including, without limitation, the obligation to provide complete and accurate information therefor. 3.2 Benefits The Corporate Information Spokesperson shall be entitled to any benefits generally made available to all other employees (rather than to a specified employee or group of employees). 3.3 Indemnification. The Consolidated Corporation will defend, indemnify and hold the Corporate Information Spokesperson harmless from all liabilities, suits, judgments, fines, penalties or disabilities, including expenses associated directly, therewith (e.g. legal fees, court costs, investigative costs, witness fees, etc.) resulting from any reasonable actions taken by her in good faith on behalf of the Consolidated Corporation, their affiliates or for other persons or entities at the request of the board of directors of Equity Growth or American Internet, to the fullest extent legally permitted, and in conjunction therewith, shall assure that all required expenditures are made in a manner making it unnecessary for the Corporate Information Spokesperson to incur any out of pocket expenses; provided, however, that the Corporate Information Spokesperson permits Equity Growth to select and supervise all personnel involved in such defense and that the Corporate Information Spokesperson waive any conflicts of interest that such personnel may have as a result of also representing the Consolidated Corporation, their stockholders or other personnel and agrees to hold them harmless from any matters involving such representation, except such as involve fraud or bad faith. 296 Article Four Special Covenants 4.1 Confidentiality. (a) The Corporate Information Spokesperson acknowledges that, in and as a result of her employment hereunder, she will be developing for the Consolidated Corporation, making use of, acquiring and/or adding to, confidential information of special and unique nature and value relating to such matters as the Consolidated Corporation's trade secrets, systems, procedures, manuals, confidential reports, personnel resources, strategic and tactical plans, advisors, clients, investors and funders; consequently, as material inducement to the entry into this Agreement by the Consolidated Corporation, the Corporate Information Spokesperson hereby covenants and agrees that she shall not, at anytime during or following the terms of her employment hereunder, directly or indirectly, personally use, divulge or disclose, for any purpose whatsoever, any of such confidential information which has been obtained by or disclosed to her as a result of her employment by the Consolidated Corporation, or the Consolidated Corporation's affiliates. (b) In the event of a breach or threatened breach by the Corporate Information Spokesperson of any of the provisions of this Section 4.1, the Consolidated Corporation, in addition to and not in limitation of any other rights, remedies or damages available to the Consolidated Corporation, 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 Corporate Information Spokesperson, or by the Corporate Information Spokesperson's partners, agents, representatives, servants, employers, employees, affiliates and/or any and all persons directly or indirectly acting for or with her. 4.2 Special Remedies. In view of the irreparable harm and damage which would undoubtedly occur to the Consolidated Corporation as a result of a breach by the Corporate Information Spokesperson of the covenants or agreements contained in this Article Four, and in view of the lack of an adequate remedy at law to protect the Consolidated Corporation's interests, the Corporate Information Spokesperson hereby covenants and agrees that the Consolidated Corporation shall have the following additional rights and remedies in the event of a breach hereof: (a) The Corporate Information Spokesperson hereby consents to the issuance of a permanent injunction enjoining her from any violations of the covenants set forth in Section 4.1 hereof; and (b) Because it is impossible to ascertain or estimate the entire or exact cost, damage or injury which the Consolidated Corporation may sustain prior to the effective enforcement of such injunction, 297 the Corporate Information Spokesperson hereby covenants and agrees to pay over to the Consolidated Corporation, in the event she violates the covenants and agreements contained in Section 4.2 hereof, the greater of: (i) Any payment or compensation of any kind received by her because of such violation before the issuance of such injunction, or (ii) The sum of One Thousand ($1,000.00) Dollars per violation, which sum shall be liquidated damages, and not a penalty, for the injuries suffered by the Consolidated Corporation as a result of such violation, the Parties hereto agreeing that such liquidated damages are not intended as the exclusive remedy available to the Consolidated Corporation 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 the Consolidated Corporation from the injury caused by such breaches would be injunctive relief. 4.3 Cumulative Remedies. The Corporate Information Spokesperson hereby irrevocably agrees that the remedies described in Section 4.3 hereof shall be in addition to, and not in limitation of, any of the rights or remedies to which the Consolidated Corporation is or may be entitled to, whether at law or in equity, under or pursuant to this Agreement. 4.4 Acknowledgment of Reasonableness. The Corporate Information Spokesperson hereby represents, warrants and acknowledges that she has carefully read and considered the provisions of this Article Four 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 Consolidated Corporation, its officers, directors and other employees; consequently, in the event that any of the above-described restrictions shall be held unenforceable by any court of competent jurisdiction, the Corporate Information Spokesperson hereby covenants, agrees and directs such court to substitute a reasonable judicially enforceable limitation in place of any limitation deemed unenforceable and, the Corporate Information Spokesperson 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. In determining the nature of this limitation, the Corporate Information Spokesperson 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 this covenant not to compete be imposed and maintained to the greatest extent possible. 298 4.5 Unauthorized Acts. The Corporate Information Spokesperson hereby covenants and agrees that she will not do any act or incur any obligation on behalf of Equity Growth or American Internet of any kind whatsoever, except as authorized by the board of directors of the subject entity or by its stockholders pursuant to duly adopted stockholder action. 4.6 Covenant not to Disparage The Corporate Information Spokesperson hereby irrevocably covenants and agrees that during the term of this Agreement and after its termination, she will refrain from making any remarks that could be construed by anyone, under any circumstances, as disparaging, directly or indirectly, specifically, through innuendo or by inference, whether or not true, about the Consolidated Company, its constituent members, or their officers, directors, stockholders, employees, agent or affiliates, whether related to the business of the Consolidated Company, to other business or financial matters or to personal matters. Article Five Miscellaneous 5.1 Notices. (a) All notices, demands or other 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 registered or certified mail, return receipt requested, postage prepaid, addressed as follows: To the Corporate Information Spokesperson: Carmen Piccolo: 246 Northeast 30th Street; Boca Raton, Florida 33431; telephone (561) 392-0102; To Equity Growth: Equity Growth Systems, inc. Equity Growth Systems, inc. 8001 DeSoto Woods Drive; Sarasota, Florida 34243; Telephone (941) 358-8182; Fax (941) 358-8423 Attention: Charles J. Scimeca, President; with a copy to G. Richard Chamberlin, Esquire; General Counsel Equity Growth Systems, inc. 14950 South Highway 441; Summerfield, Florida 34491 Telephone (352) 694-6714, Fax (352) 694-9178; and, e-mail, GrichardCh@aol.com. 299 To American Internet: American Internet Technical Center, Inc. 440 East Sample Road; Pompano Beach, Florida 33056 Attention: J. Bruce Gleason, President. Telephone (954) 943-4748; Fax (954) 943-4046; e-mail aitc2@bellsouth.net To Yankees: The Yankee Companies, Inc. 902 Clint Moore Road, Suite 136; Boca Raton, Florida 33487 Attention: Leonard Miles Tucker, President Telephone (561) 998-2025, Fax (561) 998-3425; and, e-mail carrington@flinet.com; 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. (b) (1) The Parties acknowledge that Yankees serves as a strategic consultant to Equity Growth and has acted as scrivener for the Parties in this transaction but that Yankees is neither a law firm nor an agency subject to any professional regulation or oversight. (2) Because of the inherent conflict of interests involved, Yankees has advised all of the Parties to retain independent legal and accounting counsel to review this Agreement and its exhibits and incorporated materials on their behalf. (c) The decision by any Party not to use the services of legal counsel in conjunction with this transaction shall be solely at their own risk, each Part acknowledging that applicable rules of the Florida Bar prevent Equity Growth's general counsel, who has reviewed, approved and caused modifications on behalf of the Consolidated Corporation, from representing anyone other than the Consolidated Corporation in this transaction. 5.2 Amendment. (1) No modification, waiver, amendment, discharge or change of this Agreement shall be valid unless the same is in writing and signed by the Party against which the enforcement of said modification, waiver, amendment, discharge or change is sought. (2) This Agreement may not be modified without the consent of a majority in interest of Equity Growth's stockholders. 300 5.3 Merger. (a) This instrument contains all of the understandings and agreements of the Parties with respect to the subject matter discussed herein. (b) All prior agreements whether written or oral, are merged herein and shall be of no force or effect. 5.4 Survival. The several representations, warranties and covenants of the Parties contained herein shall survive the execution hereof and shall be effective regardless of any investigation that may have been made or may be made by or on behalf of any Party. 5.5 Severability. If any provision or any portion of any provision of this Agreement, 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 effected thereby. 5.6 Governing Law and Venue. This Agreement shall be construed in accordance with the laws of the State of Florida but 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 Broward County, Florida. 5.7 Litigation. (a) 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. (b) 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 Broward County, Florida, to be selected by lot from six alternatives to be provided, two by Equity Growth, one by American Internet and three by the Corporate Information Spokesperson. 301 (B) The mediation efforts shall be concluded within ten business days after their in itiation 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 Broward County, Florida to be selected by lot, from six alternatives to be provided, two by Equity Growth, one by American Internet and three by the Corporate Information Spokesperson. (3) (A) Expenses of mediation shall be borne by the Consolidated Corporation, if successful. (B) Expenses of mediation, if unsuccessful and of arbitration shall be borne by the Party or Parties against whom the arbitration decision is rendered. (c) If the terms of the arbitral award do not establish a prevailing Party, then the expenses of unsuccessful mediation and arbitration shall be borne equally by the Parties. 5.8 Benefit of Agreement. (1) This Agreement may not be assigned by the Corporate Information Spokesperson without the prior written consent of the Consolidated Corporation. (2) Subject to the restrictions on transferability and assignment contained herein, the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the Parties, their successors, assigns, personal representative, 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. 302 5.11 Further Assurances. The Parties hereby agree to do, execute, acknowledge and deliver or cause to be done, executed or acknowledged or delivered and to perform all such acts and deliver all such deeds, assignments, transfers, conveyances, powers of attorney, assurances, recipes, records and other documents, as may, from time to time, be required herein to effect the intent and purposes of this Agreement. 5.12 Status. Nothing in this Agreement shall be construed or shall constitute a partnership, joint venture, agency, or lessor-lessee relationship; but, rather, the relationship established hereby is that of employer-employee in the Consolidated Corporation. 5.13 Counterparts. (a) This Agreement may be executed in any number of counterparts. (b) 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. 5.14 License. (a) This Agreement is the property of Yankees and the use hereof by the Parties is authorized hereby solely for purposes of this transaction. (b) 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 more strictly interpreted against any Party as a result of its authorship. 303 In Witness Whereof, the Parties have executed this Agreement, effective as of the last date set forth below. Signed, Sealed & Delivered In Our Presence Corporate Information Spokesperson - - -------------------------- - - -------------------------- ------------------------ Carmen Piccolo Dated: July ___, 1999 Equity Growth Systems, inc. a Delaware corporation - - -------------------------- __________________________ By: ___________________________ Charles J. Scimeca, President (CORPORATE SEAL) Attest: ________________________ G. Richard Chamberlin, Esquire General Counsel & Secretary Dated: July ___, 1999 American Internet Technical Center, Inc. a Florida corporation. - - -------------------------- __________________________ By: ___________________________ J. Bruce Gleason, President (CORPORATE SEAL) Attest: ________________________ Michael D. Umile Senior Vice President & Secretary Dated: July ___, 1999 304 EX-10.37 14 DITRIBUTOR AGREEMENT EXHIBIT 10.37 DISTRIBUTOR AGREEMENT EDUCATION TO GO AGREEMENT TO OFFER ONLINE COURSES THIS AGREEMENT TO OFFER ONLINE COURSES (Agreement) is made and entered into as of the 4th day of August, 1998, between Education To Go, P.O. Box 890516, Temecula, California, 92589 (Contractor), and American Internet Technical Center, 1500 East Atlantic Blvd., Pompano Beach, FL 33060, (College). RECITALS: WHEREAS, Contractor is engaged in the business of producing and providing online college courses to students via the Internet; and WHEREAS, College is an academic institution interested in offering the courses produced by Contractor to its students; NOW, THEREFORE, College and Contractor agree as follows: 74. Terms and Automatic Renewal- This Agreement shall commence as of the date first written above and continue until the end of the academic term (semester or quarter) of the College. At the end of the academic term, it will be automatically renewed for the following academic term, unless either party gives written notice to the other party of its decision to terminate the Agreement thirty (30) days prior to commencement of the following academic term. 2. Selection of Courses- College will select courses by notifying Contractor through its website using an order form. Courses will be delivered to individual students via e-mail and the World Wide Web. 3 Cost and Payment- College shall make payment on a per student basis to Contractor an NET 30 terms by sending remittance to mailing address P.O. Box 890516, Temecula, CA 92589. Billing commences after a course completes 50% of instruction. Course prices are listed in Addendum A as part of this contract. The College shall pay Contractor for instructional services upon submission of the following: a. an invoice with total amount for each course; b. a student roster verifying students receiving course instruction; 4. Waiver on Dissatisfaction. Contractor agrees to waive its fee for any student who expresses, In writing, dissatisfaction with a course provided by Contractor. 5. No Minimum Enrollment There shall be no minimum enrollment required for any of the courses offered by Contractor. 305 6. Advertising- Contractor hereby grants College permission to use Contractor's name, qualifications, and course description(s) in advertising or promotion. In addition, College may list the Contractor's on-line courses in its catalog. 7. Cancellation- In the event the Contractor cancels any course, such course may, at College's option, be rescheduled to a mutually agreed later date. 8. Costs- Contractor shall be responsible for the expenses in producing and delivering the courses via the Internet The student shall be responsible for the expenses of receiving the courses, including hardware, software, Internet access, and telephone charges. 9. Course Contents- For each course, Contractor shall provide: a. A total of twelve (12) sets of written lecture notes delivered to each student by e-mail at the rate of two (2) per week for six (6) weeks. b. Interactive tutorials developed by the instructor and made available with lesson and assignments. c. A list of students who have met the requirements for a completion certificate. 10. Limits of Liability- The liability of Contractor for any breach of this Agreement or other cause of action arising from the services rendered or agreed to be rendered under this Agreement, including but not limited to damages for cancellation of a course, the course content, the failure to deliver courses, or the interruption of courses, shall be limited to a refund of any tuition paid by College to Contractor for said courses. Contractor shall not be liable for the tuition or fees the College has collected or to the student or College for consequential damages 11. Status of Contractor- While performing services hereunder, Contractor is an independent contractor and not an officer, agent, or employee of College. 12. General Provisions- This Agreement supersedes any and all other agreements, either oral or written, between the parties with respect to the subject matter of this Agreement and contains all covenants and agreements between the parties with respect therein. Each party acknowledges that no representations, inducements, promises, or agreements, oral or otherwise, have been made by any panty, or by anyone acting on the behalf of any parry, which are not embodied herein. and that no other agreement, statement or promise not contained herein shall be valid or binding. Any modification shall be effective only if it is in writing and signed by the party to be charged, in the form of an amendment to this Agreement. 306 IN WITNESS WHEREOF, this Agreement is entered into as of the date first written above by and on behalf of Contractor and College by the authorized agen thereof. Contractor: EDUCATION TO GO, a California General Partnership EIN 33-0769719 By: Jules Ruggles Institution: AMERICAN INTERNET TECHNICAL CENTER By: J. Bruce Gleason Title: President 307 EX-22 15 AUDITOR'S CONSENT EXHIBIT 22 AUDITOR'S CONSENT DASKAL, BOLTON & MANELA CERTIFIED PUBLIC ACCOUNTANTS A PARTNERSHIP OF PROFESSIONAL ASSOCIATIONS 240 W. PALMETTO PARK ROAD, SUITE 300 BOCA RATON, FLORIDA 33432 TELEPHONE 561 367-1040 FAX (561) 750-3236 JEFFREY A. BOLTON, C.P.A., P.A. MEMBER OF THE AMERICAN INSTITUTE MICHAEL I. DASZKAL, C.P.A., P.A. OF CERTIFIED PUBLIC ACCOUNTANTS ROBERT A. MANELA, C.P.A., P.A. TIMOTHY B. DEVLIN, C.P.A., P.A. July 9, 1999 To: the Board of Directors Equity Growth Systems, inc. (the "Registrant") 8001 Desoto Woods Drive Sarasota, Florida 34243 Re: Consent for use of Auditor's Name Dear Sirs; We hereby consent to the use of our name in Item 4 of the Registrant's Form 8-KSB dated July 12, 1999, disclosing that we have been appointed as its auditors. --------------- Daskal, Bolton & Manela Certified Public Accountants Boca Raton, Florida 308 EX-99.34 16 OFFICER & DIRECTORS QUESTIONNAIRE (GLEASON) EXHIBIT 99.34 OFFICERS & DIRECTORS QUESTIONNAIRES (GLEASON) TO: Mr. Bruce Gleason American Internet Technical Center, Inc. 440 E. Sample Road Pompano Beach, Florida 33064 From G. Richard Chamberlin, Esq Re: Due Diligence Disclosures for Equity Growth Systems, inc. DIRECTOR/OFFICER/PRINCIPAL QUESTIONNAIRE (Please Print or Type Responses) Please provide us with the following information, as soon as possible. 1. Name: J. Bruce Gleason 2. (a) Home Address: 44 Havenwood Drive Pompano Beach, Florida 33064 309 (b) Business Address: 440 E. Sample Road #204 Pompano Beach, Florida 33064 . (a) Home Phone: 954-946-6236 (b) Business Phone: 954-943-4748 3.. Age: 56 4.. State positions and offices held or to be held with the juridical entity or entities disclosed above (each being hereinafter generically referred to as the "Juridical Entity"), and your term of office for each: President/Treasurer/CEO State periods during which you have served in such position(s) and office(s): 1 year & 3 months 5. Is there any arrangement or understanding between you and any other person pursuant to which you were or will be selected as an officer, director or nominee or principal? yes ____ no X (If "yes," briefly describe such arrangement or understanding, and name such person. Do not include arrangements with directors and officers acting solely in their capacities as such.) 6. State the nature of any family relationship (by blood, marriage, or adoption, not more remote than first cousin) between yourself and any director, executive officer, or person nominated or chosen by the Juridical Entity to become a director or executive officer. Not Applicable 7. List all places of employment, their principal business, and your principal occupation(s) during the last five years, staring with your current positions and working back in time. Include all positions as an officer, director, partner, consultant or sole proprietor: Principal Dates Location Name of Business Principal Purpose Occupation 3/98 to Present American Internet Technical Center President 2/96 to 2/98 Prepaid Legal Services, Inc. Owner/ Ind. Agent Lighthouse Point, FL 6/93 to 6/95 Showcase Group Real Estate Development President Deerfield Beach, FL 310 8.. State whether any of the businesses listed are parents, subsidiaries, or affiliates of the Juridical Entity. Not Applicable 9. State, in detail, the nature of responsibility undertaken by you in the prior positions listed above. (Answer should include specific principal duties which relate to the level of your professional competence.) Owner/operator, Management duties 10.. Have you ever held a directorship in any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 or subject to the reporting requirements of Section 15(d) of such Act, or of any company registered as an investment company under the Investment Company Act of 1940? yes ____ no X (if "yes" list all such companies below): 11. During the past five years, has a petition under the federal bankruptcy laws or under any state insolvency law been filed by or against you, or any partnership in which you were a general partner within two years before such filing, or any corporation or business association of which you were an executive officer within two years before such filing? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: 12. During the past five years, has a receiver, fiscal agent, or similar officer been appointed by a court for your business or property, or any partnership in which you were a general partner within two years before such appointment, or any corporation or business association of which you were an executive officer within two years before such appointment? yes ____ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: 13. During the past five years, have you been convicted in a criminal proceeding or named the subject of a pending criminal proceeding (excluding minor traffic violations)? yes ____ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: 14. During the past five years, have you been the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining you from, or otherwise limiting your involvement in, the following activities: (1) Acting as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, engaging in or continuing conduct or practice in connection with such activity? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: 311 (2) Engaging in any type of business practice? yes ______ no ______. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: Not Applicable (3) Engaging in any activity in connection with the purchase or sale of any security or in connection with any violation of federal or state securities laws? yes ______ no ______. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: Not Applicable 15. During the past five years, have you been the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, on any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to act as an underwriter, investment adviser, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: 16. Have you ever been disbarred by any agency of the United States from contracting with the United States? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: 17. Has it ever been the finding of any court of competent jurisdiction, the Commodity Futures Trading Commission or the Securities and Exchange Commission, or have you, by agreement or settlement with the foregoing, admitted or consented to without admitting or denying, to charges that you: (1) Have violated any provision(s) of the Commodity Exchange Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Public Utility Holding Company Act of 1935, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisors Act of 1940, the Securities Investors Act of 1970, the Foreign Corrupt Practices Act of 1977, or any similar statute of a state or foreign jurisdiction, or any rule or regulation under such statutes? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: 312 (2) Have aided, abetted, counseled, commanded, induced, or procured the violation by any other person of such statutes or rules or regulations? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: You should be aware that the Juridical Entity is currently preparing materials to be filed with the Securities and Exchange Commission in accordance with rules and regulations of the Securities and Exchange Commission. The information provided by you on this questionnaire may be used, in whole or in part, as needed to comply with these rules and regulations. Please also include with this completed questionnaire a current resume detailing your educational background (including schools or universities attended, dates of graduation and degrees received); and listing your work experience during the last five years (including name of firm, dates of employment, principal positions held and specific duties involved in those positions, and the nature of business and location of such firms). The answers and information which I have given above, including all supplemental information attached hereto on separate sheets, each of which I have signed, are true and accurate to the best of my knowledge. I have read and understand the foregoing and I consent to the use of all or part of the information provided in this questionnaire in the Registration Statement. I further certify that the attached resume is a complete and accurate account of my education, and work experience for the last five years, and that there are no material facts required to be included therein in order to make the information therein not misleading, which are not so included therein. Dated: 5/28/99 /s/ J. Bruce Gleason /s/ ---------------------- Signature Please return this completed form to us at the address listed on the letterhead of this questionnaire! Very truly yours, /s/ G. Richard Chamberlin /s/ ------------- G. Richard Chamberlin, Esq For Chamberlin Law Office, Inc. 313 EX-99.35 17 OFFICER & DIRECTORS QUESTIONNAIRE (UMILE) EXHIBIT 99.35 OFFICERS & DIRECTORS QUESTIONNAIRES (UMILE) TO: Mr. Mike Umile American Internet Technical Center, Inc. 440 E. Sample Road Pompano Beach, Florida 33064 From G. Richard Chamberlin, Esq Re: Due Diligence Disclosures for Equity Growth Systems, inc. DIRECTOR/OFFICER/PRINCIPAL QUESTIONNAIRE (Please Print or Type Responses) Please provide us with the following information, as soon as possible. 1. Name: Michael Umile 2. (a) Home Address: 210 Oregon Lane Boca Raton, Florida 33487 (b) Business Address: 440 E. Sample Road #204 Pompano Beach, Florida 33064 . (a) Home Phone: 561-988-2484 (b) Business Phone: 954-943-4748 3. Age: 49 4. State positions and offices held or to be held with the juridical entity or entities disclosed above (each being hereinafter generically referred to as the "Juridical Entity"), and your term of office for each: Vice President and Secretary State periods during which you have served in such position(s) and office(s): 314 1 year and 3 months 5. Is there any arrangement or understanding between you and any other person pursuant to which you were or will be selected as an officer, director or nominee or principal? yes ____ no X (If "yes," briefly describe such arrangement or understanding, and name such person. Do not include arrangements with directors and officers acting solely in their capacities as such.) 6. State the nature of any family relationship (by blood, marriage, or adoption, not more remote than first cousin) between yourself and any director, executive officer, or person nominated or chosen by the Juridical Entity to become a director or executive officer. None 7. List all places of employment, their principal business, and your principal occupation(s) during the last five years, staring with your current positions and working back in time. Include all positions as an officer, director, partner, consultant or sole proprietor: Principal Dates Location & Name of Business Principal Purpose Occupation 3/98-Present American Internet Technical Centers Internet Vice President Lighthouse Point, FL 2/96-2/98 Universal Group Sales President Lighthouse Point, FL 10/94-5/95 Smoking Joe's Vice President Lighthouse Point, FL Owner 6/93-6/95 Showcase Group Sec Builders Deerfield Beach, FL 8. State whether any of the businesses listed are parents, subsidiaries, or affiliates of the Juridical Entity. Not Applicable 9. State, in detail, the nature of responsibility undertaken by you in the prior positions listed above. (Answer should include specific principal duties which relate to the level of your professional competence.) Management of companies 10. Have you ever held a directorship in any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 or subject to the reporting requirements of Section 15(d) of such Act, or of any company registered as an investment company under the Investment Company Act of 1940? yes ____ no X (if "yes" list all such companies below): 315 11. During the past five years, has a petition under the federal bankruptcy laws or under any state insolvency law been filed by or against you, or any partnership in which you were a general partner within two years before such filing, or any corporation or business association of which you were an executive officer within two years before such filing? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: 12. During the past five years, has a receiver, fiscal agent, or similar officer been appointed by a court for your business or property, or any partnership in which you were a general partner within two years before such appointment, or any corporation or business association of which you were an executive officer within two years before such appointment? yes ____ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: 13. During the past five years, have you been convicted in a criminal proceeding or named the subject of a pending criminal proceeding (excluding minor traffic violations)? yes ____ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: 14. During the past five years, have you been the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining you from, or otherwise limiting your involvement in, the following activities: (1) Acting as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, engaging in or continuing conduct or practice in connection with such activity? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: (2) Engaging in any type of business practice? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: (3) Engaging in any activity in connection with the purchase or sale of any security or in connection with any violation of federal or state securities laws? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: 15. During the past five years, have you been the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, on any federal or state authority barring, suspending or 316 otherwise limiting for more than 60 days the right of such person to act as an underwriter, investment adviser, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: 16. Have you ever been disbarred by any agency of the United States from contracting with the United States? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: 17. Has it ever been the finding of any court of competent jurisdiction, the Commodity Futures Trading Commission or the Securities and Exchange Commission, or have you, by agreement or settlement with the foregoing, admitted or consented to without admitting or denying, to charges that you: (1) Have violated any provision(s) of the Commodity Exchange Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Public Utility Holding Company Act of 1935, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisors Act of 1940, the Securities Investors Act of 1970, the Foreign Corrupt Practices Act of 1977, or any similar statute of a state or foreign jurisdiction, or any rule or regulation under such statutes? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: (2) Have aided, abetted, counseled, commanded, induced, or procured the violation by any other person of such statutes or rules or regulations? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: You should be aware that the Juridical Entity is currently preparing materials to be filed with the Securities and Exchange Commission in accordance with rules and regulations of the Securities and Exchange Commission. The information provided by you on this questionnaire may be used, in whole or in part, as needed to comply with these rules and regulations. Please also include with this completed questionnaire a current resume detailing your educational background (including schools or universities attended, dates of graduation and degrees received); and listing your work experience during the last five years (including name of firm, dates of employment, principal positions held and specific duties involved in those positions, and the nature of business and location of such firms). The answers and information which I have given above, including all supplemental information attached hereto on separate sheets, each of which I have signed, are true and accurate to the best of my knowledge. I have read and understand the foregoing and I consent to the use of all or part of the information provided in this questionnaire in the Registration Statement. I further certify that the attached resume is a complete 317 and accurate account of my education, and work experience for the last five years, and that there are no material facts required to be included therein in order to make the information therein not misleading, which are not so included therein. Dated: 5/28/99 /s/ Michael Umile/s/ ---------------------- Signature Please return this completed form to us at the address listed on the letterhead of this questionnaire! Very truly yours, /s/ G. Richard Chamberlin /s/ ------------- G. Richard Chamberlin, Esq For Chamberlin Law Office, Inc. 318 EX-99.36 18 OFFICER & DIRECTOR QUESTIONNAIRE (GRANVILLE-SMITH) EXHIBIT 99.36 OFFICERS & DIRECTORS QUESTIONNAIRES (M. GRANVILLE-SMITH) TO: Mark Granville-Smith From G. Richard Chamberlin, Esq Re: Due Diligence Disclosures for Equity Growth Systems, inc. DIRECTOR/OFFICER/PRINCIPAL QUESTIONNAIRE (Please Print or Type Responses) Please provide us with the following information, as soon as possible. 1. Name: R. Mark Granville-Smith 2. (a) Home Address: 9743 Brentsville Road Manassas, VA 90112 319 (b) Business Address: 10460 Dumfries Road Manassas, VA 90110 . (a) Home Phone: 703-365-8662 (b) Business Phone: 703-365-0070 703-791-2885 3. Age: 41 4. State positions and offices held or to be held with the juridical entity or entities disclosed above (each being hereinafter generically referred to as the "Juridical Entity"), and your term of office for each: non voting standing in for Edward Granville-Smith by power of attorney to become a voting director of Equity Growth at a board meeting of later date. State periods during which you have served in such position(s) and office(s): December 8, 1998 as power of attorney for Edward Granville-Smith 5. Is there any arrangement or understanding between you and any other person pursuant to which you were or will be selected as an officer, director or nominee or principal? yes X no ___ (if "yes," briefly describe such arrangement or understanding, and name such person. Do not include arrangements with directors and officers acting solely in their capacities as such.) Equity Growth Systems, inc. and Edward Granville-Smith Settlement Agreement 6. State the nature of any family relationship (by blood, marriage, or adoption, not more remote than first cousin) between yourself and any director, executive officer, or person nominated or chosen by the Juridical Entity to become a director or executive officer. None other than Edward Granville-Smith 7. List all places of employment, their principal business, and your principal occupation(s) during the last five years, staring with your current positions and working back in time. Include all positions as an officer, director, partner, consultant or sole proprietor: Principal Dates Location & Name of Business Principal Purpose Occupation 1992-Present Classic Concept Custom Home Builder Chairman/CEO Manassas, VA 320 8. State whether any of the businesses listed are parents, subsidiaries, or affiliates of the Juridical Entity. None of above 9. State, in detail, the nature of responsibility undertaken by you in the prior positions listed above. (Answer should include specific principal duties which relate to the level of your professional competence.) Not Applicable 10. Have you ever held a directorship in any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 or subject to the reporting requirements of Section 15(d) of such Act, or of any company registered as an investment company under the Investment Company Act of 1940? yes ____ no X (if "yes" list all such companies below): 11. During the past five years, has a receiver, fiscal agent, or similar officer been appointed by a court for your business or property, or any partnership in which you were a general partner within two years before such appointment, or any corporation or business association of which you were an executive officer within two years before such appointment? yes ____ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: No for me personally No for Edward Granville-Smith other than would the court case in Baltimore (Albright) be applicable 12. During the past five years, have you been convicted in a criminal proceeding or named the subject of a pending criminal proceeding (excluding minor traffic violations)? yes ____ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: No for me personally No for Edward Granville-Smith 13. During the past five years, have you been the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining you from, or otherwise limiting your involvement in, the following activities: (1) Acting as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance 321 company, engaging in or continuing conduct or practice in connection with such activity? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: No for me personally No for Edward Granville-Smith (2) Engaging in any type of business practice? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: No for me personally No for Edward Granville-Smith (3) Engaging in any activity in connection with the purchase or sale of any security or in connection with any violation of federal or state securities laws? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: No for me personally No for Edward Granville-Smith 14. During the past five years, have you been the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, on any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to act as an underwriter, investment adviser, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: No for me personally No for Edward Granville-Smith 15. Have you ever been disbarred by any agency of the United States from contracting with the United States? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: No for me personally No for Edward Granville-Smith 16. Has it ever been the finding of any court of competent jurisdiction, the Commodity Futures Trading 322 Commission or the Securities and Exchange Commission, or have you, by agreement or settlement with the foregoing, admitted or consented to without admitting or denying, to charges that you: (1) Have violated any provision(s) of the Commodity Exchange Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Public Utility Holding Company Act of 1935, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisors Act of 1940, the Securities Investors Act of 1970, the Foreign Corrupt Practices Act of 1977, or any similar statute of a state or foreign jurisdiction, or any rule or regulation under such statutes? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: No for me personally (2) Have aided, abetted, counseled, commanded, induced, or procured the violation by any other person of such statutes or rules or regulations? yes ______ no X. If yes, please provide specific details and, under separate cover, please provide copies of any pleadings, orders or judgments associated therewith: No for me personally No for Edward Granville-Smith You should be aware that the Juridical Entity is currently preparing materials to be filed with the Securities and Exchange Commission in accordance with rules and regulations of the Securities and Exchange Commission. The information provided by you on this questionnaire may be used, in whole or in part, as needed to comply with these rules and regulations. Please also include with this completed questionnaire a current resume detailing your educational background (including schools or universities attended, dates of graduation and degrees received); and listing your work experience during the last five years (including name of firm, dates of employment, principal positions held and specific duties involved in those positions, and the nature of business and location of such firms). The answers and information which I have given above, including all supplemental information attached hereto on separate sheets, each of which I have signed, are true and accurate to the best of my knowledge. I have read and understand the foregoing and I consent to the use of all or part of the information provided in this questionnaire in the Registration Statement. I further certify that the attached resume is a complete and accurate account of my education, and work experience for the last five years, and that there are no material facts required to be included therein in order to make the information therein not misleading, which are not so included therein. 323 Dated: 3/30/99 Mark Granville-Smith , individually Mark Granville-Smith, as power of attorney for Edward Granville-Smith ---------------------- Signature Please return this completed form to us at the address listed on the letterhead of this questionnaire! Very truly yours, /s/ G. Richard Chamberlin /s/ ------------- G. Richard Chamberlin, Esq For Chamberlin Law Office, Inc. 324 EX-10.37 19 SETTLEMENT AGREEMENT EXHIBIT 10.37 LAWRENCE S. BENJAMIN SETTLEMENT AGREEMENT SETTLEMENT AGREEMENT This Settlement Agreement and Release is entered into this day of 24 day of June 1999 by and between Lawrence S. Benjamin ("Benjamin'), and American Internet Technical Center ("American Internet"). WITNESSETH: WHEREAS, the parties are involved in a dispute which is the subject maker of certain litigation in the Cuyahoga County Court of Common Pleas styled Lawrence S. Benjamin v USA Cellular, et al., designated as Case No. 355845 (the "Lawsuit"). WHEREAS, Benjamin alleges that American Internet sent unauthorized business solicitations via facsimile to Benjamin. WHEREAS, Benjamin alleges that the facsimiles violate 47 U.S.C. 227(b) (1)(C). WHEREAS, American Internet disputes Benjamin's allegations. WHEREAS, the Defendant American Internet debuts all liability alleged in the Plaintiff' s Complaint and the Plaintiff and Defendant American Internet agree that this Settlement Agreement does not effect the status of the denials by Defendant American Internet. WHEREAS, Benjamin and American Internet wish to amicably settle all claims and disputes between them regarding the lawsuit and anything relating to the facsimiles delivered to Benjamin by 325 American Internet. NOW, THEREFORE:, it is the desire of Benjamin and American Internet to state in writing the details of their agreements. For money paid and received and other valuable consideration between the parties, it is mutually agreed as follows: 1. American Internet agrees to pay Benjamin $7,500.00 ("Settlement Sum") within seven (7) days of the date of the execution of this Settlement Agreement and Release, and upon receipt of the Settlement Sum the Plaintiff shall dismiss with prejudice the action as against Defendant American Internet. 2. The Settlement Sum shall be in full satisfaction of Benjamin's claims arising out of the lawsuit. 3. In consideration of the terms stated above, Benjamin does hereby for himself, his heirs, executors, administrators, successors, agents, assigns, insurers, and attorneys, releases and forever discharges American Internet, its executors, administrators, successors, subsidiaries and parent companies, affiliates, and respective past and present officers, directors, agents, successor assigns, insurers, attorneys, and employees of those corporations and their predecessors and successor companies, and assigns, all of which are included collectively or individually in the defined term "American Internet," from all debts, claims, demands, damages, actions, causes of action, controversies, costs, obligations, lawsuits and liabilities whatsoever, past or present, both known and unknown, in law or equity, from the beginning of time to the date of the execution of this Settlement Agreement and Release and particularly, without limiting the generality of the foregoing, all matters relating to the Lawsuit, and the facsimiles delivered from American Internet to Benjamin. 4. In consideration of the terns stated above, American Internet does hereby for itself, its executors, administrators, successors, its subsidiaries and parent companies,, its affiliates, and their respective past and present officers, directors, agents, successor assigns, insurers attorneys, and employees of those corporations and its predecessors and successor companies, and assigns, releases and forever discharges Benjamin. its executors, administrators, successors,, agents, insurers and attorneys, and assigns, from all debts, claims, demands, damages, actions, causes of action, controversies, costs, obligations, lawsuits and liabilities whatsoever, past or present, both known and unknown, in law or equity, from the beginning of time to the date of the execution of this Settlement Agreement and Release and particularly, without limiting the generality of the foregoing, all matters relating to the Lawsuit and the facsimiles delivered from American Internet to Benjamin. 5. This Settlement Agreement and Release constitutes the complete and exclusive agreement of the parties and settlement of claims regarding the Lawsuit, and anything relating to the delivery of facsimiles to Benjamin from American Internet. 6. The terms of this Settlement Agreement and Release may not be modified except in writing and signed by all the parties. 326 6. The rights and obligations of the parties hereto and the interpretation of this Settlement Agreement and Release shall be governed by the laws of the State of Ohio. Cuyahoga County shall be the designated venue for any issue, dispute, cause of action, or any other matter, uncles or arising out of this Settlement Agreement and Release. 7. Except where otherwise required by the context, words of any gender used herein shall be deemed to include any and all genders and the singular and plural shall be interchangeable. 8. If any term or provision of this Settlement Agreement and Release or any application thereof shall be invalid or unenforceable, such term or provision shall be deemed to be severed and the remainder of this Settlement Agreement and Release and any other application of such term or provision shall not be affected or invalidated thereby. 9. The individuals who have signed this Settlement Agreement and Release represent that they have full authority to bind the parties herein and an understanding of all of the terms of this Settlement Agreement and Release. 10 The parties hereto represent that in reaching this Settlement Agreement and Release that they have been represented by legal counsel and received legal advice as to their respective rights. 11. Confidentiality. All information regarding American Internet and Lawrence Benjamin obtained in the course of this litigation not made a part of the public record and all the terms and conditions of the settlement and this Agreement, including all demands and offers and the contents of all discussions preceding settlement and the signing thereof, are and will be confidential; and the undersigned agree not to disclose any of that information, terms and conditions, demands and offers; and neither the undersigned nor the agent nor representative of any of them may or will disclose any of the confidential information, unless given permission in writing from all signatories to the Agreement. IN WITNESS WHEREOF, the parties have hereunto affixed their signatures on the date and at the place first written above. SIGNED AND ACKNOWLEDGED: LAWRENCE S. BENJAMIN _______________________________ By: Lawrence S. Benjamin _______________________________ Date: ________________________ 327 AMERICAN INTERNET TECHNICAL CENTER _______________________________ By: J. Bruce Gleason _______________________________ Date: STATE OF OHIO ) COUNTY OF _______ ) SS: SWORN to and subscribed in my presence this _ day of _______, 1999 by Lawrence S. Benjamin, who acknowledges that this was his free and authorized act and deed. - - ------------------------- Notary Public STATE OF FLORIDA ) COUNTY OF __________) SS: SWORN to and subscribed in my presence this ___ day of _____ , 1999 by authorized representative of American Internet Technical Center, who acknowledges that this was his free and authorized act and deed and the free and authorized act and deed of said company. - - ------------------------- Notary Public 328 EX-99.38 20 NOTICE OF ELECTION OF RIGHTS EXHIBIT 99.38 NOTICE OF ELECTION OF RIGHTS Corporate Offices Equity Growth Systems, inc. A Publicly held Delaware Corporation July 9, 1999 American Internet Technical Centers, Inc. A Nevada corporation ("American Internet Nevada") 440 East Sample Road, Suite 204 Pompano Beach, Florida 33064 American Internet Technical Center, Inc. A Florida corporation ("American Internet Florida") 440 East Sample Road Pompano Beach, Florida 33064 Re.: Exercise of rights under Section 4.9 of Reorganization Agreement; related rescission of American Internet Nevada stock exchange with former American Internet Florida stockholders. Gentlemen: Please be advised that Equity Growth Systems, inc., a publicly held Delaware corporation, hereby exercises its rights under Section 4.9 of the Reorganization Agreement with certain of the stockholders of American Internet Nevada, the former stockholders of American Internet Florida, American Internet Nevada, American Internet Florida, and, as a consequence thereof, American Internet Florida is now a direct wholly owned subsidiary of Equity Growth, American Internet Nevada no longer has any right title and interest in American Internet Florida, and only the former stockholders of American Internet Florida (J. Bruce Gleason and Michael D. Umile) have any rights to the shares of Equity Growth common stock being issued in exchange for all of the capital stock of American Internet Florida, subject to reallocation required to protect the interest of several innocent subscribers for American Internet Nevada common stock which we have agreed to honor, at the request of Messrs. J. Bruce Gleason and Michael D. Umile. Very truly yours Equity Growth Systems, inc. /s/ Charles J. Scimeca /s/ /s/ G. Richard Chamberlin /s/ - - ------------------------- ----------------------------- Charles J. Scimeca G. Richard Chamberlin, Esquire President General Counsel GRC/vhl 329 -----END PRIVACY-ENHANCED MESSAGE-----