Exhibit 10.01

 

Memorandum of Terms of Settlement

 

1.                                       Whitney Information Network, Inc., WIN
CR 11 Trust, and their respective affiliates, successors and assigns
(collectively, “WIN”) and Russell A. Whitney (“Whitney”), on the one hand, and
M. Barry Strudwick (“Strudwick”), Susan Weiss and Car] Weiss (Susan and Carl
Weiss collectively referred to as “Weiss”), on the other hand, agree to enter
into a binding and enforceable settlement agreement on the record in open Court
on or before Monday, September 14, 2009, or as soon after as the Court will
permit.

 

2.                                       WIN will pay to Strudwick and Weiss a
total principal amount of $3.8 million as follows:

 

a.                                       $600,000 no later than September 30,
2009;

 

b.                                      $200,000 no later than October 25, 2009;

 

c.                                       $200,000 no later than November 25,
2009;

 

d.                                      $200,000 no later than December 25,
2009;

 

e.                                       WIN will enter into a commercially
reasonable promissory note (“First Note”) in the amount of $2.3 million payable
in equal quarterly payments payable over 3 years with payments commencing on
January 15, 2010 and occurring on the 15th day of each succeeding quarter until
paid over 3 years.  Quarterly payments of simple interest will be payable on
outstanding principal at the rate of 6% per annum.  Late payments will accrue
interest at the rate of 8% per annum.  Payments will be in default if not made
within ten (10) days of the due date.  In the event of default, the total unpaid
First Note amount becomes immediately due and payable.  The First Note will be
governed by the laws of New York.  The First Note will be secured by any
interests of WIN, Whitney and any WIN and Whitney related entities, directly or
indirectly, in MDM and the Hotel (see paragraph 5 below) and WIN’s interest in
Tranquility Bay (see paragraph 6 below).  WIN will use commercially reasonably
efforts to substitute the aforementioned security with a Letter of Credit from a
United States bank in the amount of any then unpaid balance on the First Note,
and will take such commercially reasonably steps as necessary on a quarterly
basis to obtain such Letter of Credit.  WIN may prepay the First Note, in whole
or in part, at any time and from time to time.  The parties agree to the
jurisdiction of Judge Tomlinson to enforce the First Note and to enter a
judgment thereon if there is a default.

 

f.                                         WIN will enter into a second
commercially reasonable promissory note (“Second Note”) in the amount of
$300,000.  The Second Note is payable over four years, of which WIN will pay
interest only in years one through three, and principal and interest in year
four.  WIN’s payments will be payable in equal quarterly payments with payments
commencing on January 15, 2010 and occurring on the 15th day of each succeeding
quarter.  The Second Note will accrue simple interest at the rate of 8% per
annum.  Payments will be in default if not made within ten (10) days of the due
date.  In the event of default, the total unpaid Second Note amount becomes
immediately due and payable.  The Second Note will be governed by the laws of
New York.  The Second Note will be secured by any interests of WIN, Whitney and
any WIN and Whitney related entities, directly or indirectly, in MDM and the
Hotel (see paragraph 5 below) and WIN’s interest in Tranquility Bay (see
paragraph 6 below).  WIN will use commercially reasonably efforts to substitute
the aforementioned security with a Letter of Credit from a United States bank in
the amount of any then unpaid balance on the Second Note, and will take such
commercially reasonably steps as necessary on a quarterly basis to obtain such
Letter of Credit.  WIN may prepay the Second Note, in whole or in part, at any
time and from time to time.  The parties agree to the jurisdiction of Judge
Tomlinson to enforce the Second Note and to enter a judgment thereon if there is
a default.

 

g.                                      In the event that WIN pays in full the
First Note and the $1,200,000 (pursuant to subparagraphs 2(a) thru 2(d)) on or
before 12 months after the date this agreement is placed on the record (see
paragraph 1 above), the principal of the Second Note will be reduced by
$150,000.

 

h.                                      All WIN payments will be made payable to
the Law Office of Arnold M.  Weiner, which will receive them on behalf of
Strudwick and Weiss.

 

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3.                                       The parties (for themselves, their
agents, entities, and business associates) mutually release any and all claims
they may have against one another, their business associates, entities and
attorneys except that: (i) all claims of WIN against Whitney and Whitney against
WIN are preserved, and (ii) all claims of WIN and Whitney against Caputo, CPR,
Rothstein, RRA, Rothstein Rosenfeldt Adler Consulting Group, and Roger Stone are
preserved.  WIN and Whitney also recognize that they are releasing any and all
claims they may have against William Ramirez and any of Strudwick’s and Weiss’s
attorneys (including Garcia, etc).  Excluding claims as preserved in (i) and
(ii) of this paragraph, all released persons and entities will sign mutual
global releases.

 

4.                                       The parties will cooperate in
dismissing all pending litigation between and among them.  The parties will also
cooperate as reasonably necessary to request that any criminal or quasi-criminal
prosecutions involving any of the parties and this litigation be terminated. 
The parties intend that this settlement end all litigation between and among WIN
and Whitney, on the one hand, and Strudwick and Weiss, on the other hand,
including each party’s respective business associates and entities, and the
parties are unaware of any contemplated additional claims and litigation other
than potential claims as referenced in subparagraphs 3(i) and 3(ii) above.

 

5.                                       Within 3 business days after the
agreement is placed on the record, Weiss will place into escrow (Law Offices of
Arnold Weiner) her shares in MDM and the Hotel.  Upon receipt by Strudwick and
Weiss of the first $1,200,000 in payments (pursuant to subparagraphs
2(a) through (d) above), the escrow agent will surrender to WIN Weiss’s shares
in Monterey Del Mar and the Hotel.  The parties will fully cooperate and take
steps reasonably necessary to effectuate the surrender of such shares.  Weiss
also agrees to withdraw in writing any claim of right to manage MDM and the
Hotel, and agrees to relinquish any claim to being an officer or director of MDM
or the Hotel and to provide further assurances as may be reasonably necessary to
facilitate the transfer of MDM and the Hotel.  Weiss further recognizes that she
will not receive any payment for her shares other than the payments as provided
herein to Strudwick and Weiss.

 

a.                                       All proceeds from the sale of MDM and
the Hotel payable to WIN, Whitney and any WIN and Whitney related entities,
directly or indirectly, whether for equity or debt, will be directly payable to
Strudwick and Weiss toward payment of any unpaid First Note and Second Note
amounts to either pay off the First Note and Second Note in full or be applied
to the principal so that the First Note and Second Note are paid off sooner.

 

6.                                       The Note will also be secured by WIN’s
interest in Tranquility Bay in Lee County, Florida.  In the event of default by
WIN on the First Note or Second Note, Strudwick and Weiss may foreclose on WIN’s
interest in the Tranquility Bay.  WIN may substitute as security other
comparable or better security, such as a Letter of Credit from a United States
bank or interest in real property valued at equal or greater value.

 

7.                                       This settlement will be reduced to
writing but this settlement is not contingent upon being so reduced to writing,
The writing will include neutral recitals without admissions by any party.  The
parties agree that any disputes pertaining to this settlement and its
enforcement shall be decided by Judge Tomlinson.  In the event any terms are not
spelled out herein and the parties cannot agree, the parties agree to submit
such issues to Judge Tomlinson for her determination, which determination shall
be binding on the parties, final and not subject to appeal.  All parties to this
agreement consent to Judge Tomlinson exercising such jurisdiction.

 

 

/s/ K. Stewart Evans, Jr.

 

/s/ Arnold M. Weiner

K. Stewart Evans, Jr. as counsel to

 

Arnold M. Weiner, as counsel to

Whitney Information Network, Inc.

 

M. Barry Strudwick

and WIN CRII Trust

 

 

 

 

 

/s/ David J. Shuster

 

/s/ Paul Aloe

David J. Shuster, as counsel to

 

Paul Aloe, as counsel to Susan Weiss

Russell A. Whitney

 

and Carl Weiss

 

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