EXHIBIT 2.1
EXCHANGE AGREEMENT
EXCHANGE AGREEMENT dated December 14, 1997 among GTB COMPANY, ("GTB") a
Florida corporation; WESTMARK GROUP HOLDINGS, INC., ("Westmark") a Delaware
corporation, and GREENWORLD TECHNOLOGIES, INC. ("Greenworld") a Nevada
corporation, all of the outstanding stock of which is owned by Westmark.
PRELIMINARY STATEMENT
The parties have asserted various rights and claims among themselves with
respect to, among other things
1. Shares of Westmark Series E Preferred Stock issued to GTB (the "Series E
Preferred Stock").
2. Advances made by Westmark to Greenworld for operations and otherwise, (the
"Westmark Greenworld Advances");
3. 50,000 shares of Westmark Series D Preferred Stock issued by Westmark to
GTB (the "GTB Series D Preferred Stock") and subsequently reissued in
satisfaction of obligations of Greenworld in the amount of $250,000 (the
"GTB Greenworld Payments");
4. The matters described in this paragraph are collective referred to as the
"Disputes."
The parties desire to resolve the Disputes and any other outstanding
issues among them, and for that purpose are entering into this Exchange
Agreement.
For valuable consideration mutually exchanged, the parties to this
Agreement, intending to be legally bound, agree as follows:
1. Unless otherwise provided by the terms of this Agreement, the execution
and delivery of the instruments and documents provided for in this Agreement are
to take place simultaneously with its execution and delivery.
2. Westmark and Greenworld and Westmark and GTB shall exchange mutual
general releases (the "Mutual Releases") with each other and with GTB, which
releases shall except only (1) those several obligations provided for in this
Exchange Agreement and (2) the right of Westmark to rescind or nullify the
issuance of the Series E Preferred Stock, or enjoin the assertion of any or all
of rights of the holder's with respect thereto based on the actions of Westmark,
Greenworld and any other individual or entity involved in its issuance and the
right of GTB to claim that such preferred stock has been validly issued to GTB
for valid consideration (the "Conflicting Westmark Series E Preferred Stock
Claims"). The Conflicting Westmark Series E Preferred Stock Claims may only be
asserted in the event Greenworld seeks to enforce the "Greenworld Series E
Preferred Stock Security Interest" as provided for and defined in paragraph 4 of
this Agreement.
3. Immediately after entering into this Agreement, Westmark shall cause
the Certificate of Incorporation of Greenworld to be restated. Westmark shall
thereupon deliver to GTB all of the outstanding shares of common stock of
Greenworld, duly endorsed in blank (the "Greenworld Common Stock"). Westmark
represents to GTB that it is the sole owner of such shares and that it owns such
shares free and clear of all claims and encumbrances. In addition, Westmark
shall issue to GTB 37,500 shares (the "December Shares") of its common stock.
The issuance of such shares will not be registered under the Securities Act of
1933 (the "Act") or any state securities laws. The certificate representing such
shares shall bear customary notations with respect to restrictions under the
Act. GTB by the execution and delivery of this Agreement hereby assigns and
delivers all of its interest in the Series E Preferred Stock to Westmark. GTB
represents to Westmark that it is the sole owner of the Series E Preferred Stock
and that it owns such Series E Preferred Stock free of all claims or
encumbrances except for the conflicting Westmark Series E Preferred Stock
Claims. GTB represents and warrants to Westmark that, after giving effect to the
transactions provided herein, it owns no shares and has no rights with respect
to the shares of capital stock of Westmark other than the December Shares and
its rights with respect to the Series E Preferred Stock.
4. In satisfaction of the Westmark Greenworld Advances, and of the GTB
Greenworld Advances, the amount of which each of the parties agrees is as
provided for in this Agreement, Greenworld shall issue to Westmark 185,000
shares of its Series A Convertible Preferred Stock (the "Greenworld Series A
Convertible Preferred Stock"). As additional consideration for the Greenworld
Series A Convertible Preferred Stock, Westmark has paid to Greenworld $30,000,
is paying to Greenworld $40,000 upon execution of this Agreement, and is
delivering to Greenworld its promissory note in the principal amount of $380,000
(the "Westmark Note"). Payment of the Westmark Note shall be secured by the
Greenworld Series A Convertible Preferred Stock and the Westmark Series E
Preferred Stock (the "Greenworld Series E Preferred Stock Security Interest") as
provided for in a Security Agreement. The parties agree that prior to the
receipt by the holders of the Series A Preferred Stock of Preferred Redemption
Payments of $450,000 and the receipt by Westmark of repayment of the Greenworld
Salary Advances, as defined herein, Greenworld will not make any payments other
than expenditures not material to its financial condition or made in the
ordinary course of business without the prior written consent of Westmark.
5. Commencing January 2, 1998, and on the first business day of each month
thereafter through December 1998, Westmark shall loan to Greenworld the amount
of the combined salaries of Gary Phillipe and Ted Bristow, in amounts not to
exceed $8,000 per month (the Greenworld Salary Advances"). If, for any month
subsequent to June 1, 1998 Greenworld's Monthly Net Income shall be positive in
the amount of $8,000 or more, Westmark's obligation to make the Greenworld
Salary Advances shall terminate, and in any event such obligations shall
terminate after the last business day of December. In payment of the Greenworld
Salary Advances, Greenworld shall pay to Westmark 1/2 of its Net Income within
45 days from the end of each calendar quarter until the amount of the salary
advances is repaid. For purposes of calculating the payments provided for
herein, Net Income shall mean Greenworld's net income as calculated on the
accrual basis in accordance with generally accepted accounting principles
applied on a consistent basis. after giving effect to all applicable taxes, but
without giving effect to non-cash expenses such as depreciation and amortization
of intangible assets. Greenworld shall deliver to the holder of each share of
Series A Preferred Stock quarterly or annual, as the case may be, statements of
income and expense, a balance sheet and a statement of cash flow (the "Financial
Statements") within 45 days, in case of the quarterly statement, and 90 days, in
the case of the annual statement, which Financial Statements shall include the
calculation of the amounts of any payments provided for herein. In addition, GTB
has reached a preliminary agreement with Gary Phillipe to transfer to him 20,000
shares of Greenworld's common stock, subject to redemption by Greenworld at his
election (the "Phillipe Redemption Election"). If and to the extent Mr. Phillipe
exercises the Phillipe Redemption Election, Greenworld and GTB agree that
Greenworld shall reissue : of the shares reacquired by it pursuant to such
election to Westmark as additional consideration for the agreement to make the
Greenworld Salary Advances.
6. Greenworld hereby agrees to indemnify and hold harmless Westmark from
any and all claims made against it by Gary Phillipe or his Affiliates or others
with respect to the operations of Greenworld, including without limitation (a)
the issuance of 35,000 shares of Westmark Series D Preferred Stock in the name
of Gary Phillipe, (b) The Settlement Agreement dated January 7, 1997 among
Westmark, ECS International, Inc ("ECS") and Greenworld, (c) all contracts and
agreements between ECS, Westmark and others entered into on April 19, 1996,
including but not limited to the Integrated Agreement for Sale of Stock, the
Patent License Agreement, the Distribution Agreement, the Independent Contractor
Agreement and the, Stock Option Agreement, copies of which have been previously
distributed to all of the parties hereto, (d) any claims asserted by Artic
International against Westmark with respect to agreements among, Greenworld and
Artic International existing as of the date of this Agreement, (the "Artic
Agreement") a copy of has been previously distributed to all of the parties and
(e) claims by Mr. Ted Bristow and/or Tom Stoermer, provided that the indemnity
provided for in this Section 6 shall not be effective unless and until Gary
Phillipe enters into a settlement agreement with Greenworld containing terms
substantially the same as those provided for in a memorandum of agreement
between Greenworld and Gary Phillipe dated December 4, 1997, a copy of which has
previously been delivered to each of the parties, with such material
modifications as each of the parties hereto, to the extent affected thereby, may
agree to. Each of the parties hereto agree to cooperate in securing such
agreement.
7. Westmark represents to each of the other parties that it has considered
the potential profitability of Greenworld in light of, among other things, the
Artic Agreement, and that Westmark's Board of Directors nonetheless has
determined that the transactions provided for in this Agreement are fair and
reasonable and in the best interests of its shareholders. Further, the offer to
transfer 815,000 shares of stock in Greenworld to GTB originated from Westmark
in the context of the negotiations relating to this Agreement.
8. Each of the parties hereto agrees that such party shall not directly or
indirectly bring or assert any charges, claims or actions against any other
party or their agents, directors, officers, employees, partners, associates,
successors, heirs, assigns or other representatives, in the future with respect
to any charge, claim or action which is the subject of the Mutual Releases,
except as provided for therein or in this Agreement. If any party violates the
provisions of this Paragraph 8, by bringing or asserting any such charges,
claims or actions such party shall be deemed to be in breach of this Agreement
and such party agrees to pay all costs and expenses, including attorney's fees,
incurred by any other party in defending such charges claims or actions. Each of
the parties agree that because of the nature of the agreements provided for in
this Paragraph 8, and the irreparable harm and inadequacy of remedies at law
such a breach may involve, this covenant not to sue shall be enforceable by
injunctive relief, both preliminary and permanent, and appropriate orders
providing for such relief may be entered with respect to any anticipated or
actual breach by any court of competent jurisdiction against the party violating
its provisions in favor of any party against which such charge, claim or action
is asserted without thereby waiving or affecting any claims for damages or other
available relief. Any such action may be brought without the necessity of
posting a bond. If a bond is nevertheless required, notwithstanding the
provisions of the paragraph, each of the parties agree that the amount of such
bond shall not exceed $1,000.
9. In addition to the rights provided for in Paragraph 8 of this
Agreement, each of the parties, severally and not jointly, agrees to defend,
indemnify and hold harmless each of the other parties, and, if applicable, their
directors, officers, employees and agents from and against any loss, liability,
damage, settlement or expense (including without limitation, attorneys' fees and
disbursements) arising from or related to the inaccuracy or breach of any of the
representations, warranties, covenants or agreements of such party contained in
this Agreement or in any document incorporated by reference into this Agreement,
and, in the case of GTB, with respect to claims by the shareholders or creditors
of Westmark directly or though Westmark asserting that the transactions provided
for herein are not at arms length or are not fair and reasonable to Westmark
from a business point of view.
The party seeking indemnification pursuant to this Paragraph 12 (the
"Indemnified Party") shall give (or cause to be given) to the party or parties
from whom indemnification is sought hereunder (the "Indemnifying Party") notice
of any claim or matter for which indemnity is (or will be) sought under this
Paragraph 12. Such notice shall be given promptly after the Indemnified Party
receives actual notice or knowledge of the claim or matter that is subject to
indemnification. With respect to any claim asserted by a third party against an
Indemnified Party for which indemnity is sought hereunder, the relevant
Indemnifying Party shall have the right to employ counsel reasonably acceptable
to the relevant Indemnified Party to defend against such assertion and such
Indemnifying Party shall have the right to compromise or otherwise settle any
such action or claim only with the prior written consent of such relevant
Indemnified Party, which consent shall not be unreasonably withheld.
10. All notices or other communications required or permitted under the
terms of this Agreement shall be made in writing and shall be deemed given upon
(i) hand delivery or (ii) three days after mailing of same via Certified Mail,
Return Receipt Requested, first class postage and registration fees prepaid and
correctly addressed to the parties at the following addresses:
If to GTB: c/o Charles C. Chillingworth, Esq.
2090 Palm Beach Lakes Blvd., Suite 800
West Palm Beach, FL 33409-6523
with a copy to: Charles C. Chillingworth, Esq.
Chillingworth & Conway, P.A.
2090 Palm Beach Lakes Blvd., Suite 800
West Palm Beach, FL 33409-6523
If to Westmark: 355 N.E. Fifth Avenue, Suite 4
Delray Beach, FL 33483
Attn: Mark Schaftlein, CEO
with a copy to: Greenberg Traurig Hoffman Lipoff Rosen & Quentel, P.A.
777 S. Flagler Drive, Suite 300-East
West Palm Beach, FL 33401
Attn: Morris C. Brown, Esq.
If to Greenworld: c/o Charles C. Chillingworth, Esq.
Chillingworth & Conway, P.A.
2090 Palm Beach Lakes Blvd., Suite 800
West Palm Beach, FL 33409-6523
with a copy to: Charles C. Chillingworth, Esq.
Chillingworth & Conway, P.A.
2090 Palm Beach Lakes Blvd., Suite 800
West Palm Beach, FL 33409-6523
or to such other address as any of the parties hereto may designate by notice
to the others.
11. (a) SUCCESSORS. This Agreement shall be binding upon, and inure to
the benefit of, the parties hereto and their respective successors and assigns.
(b) EXPENSES. Except as otherwise provided in this Agreement, each
party shall be responsible for any and all of the respective fees, costs and
expenses incurred by each, in connection with the negotiation, preparation or
performance of this Agreement.
(c) ENTIRE AGREEMENT. This Agreement incorporates by this reference
all Exhibits hereto and all documents executed and/or delivered at Closing. This
Agreement and the documents so incorporated into it contain the parties' entire
understanding and agreement with respect to the subject matter hereof; and any
and all conflicting or inconsistent discussions, agreements, promises,
representations and statements, if any, between the parties or their
representatives that are not incorporated in this Agreement shall be null and
void and are merged into this Agreement.
(d) AMENDMENTS ONLY IN WRITING. No amendment, modification, waiver
or discharge of this Agreement or any provision of this Agreement shall be
effective against any party, unless such party shall have consented thereto in
writing.
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all of which
together shall constitute a single agreement.
(f) COOPERATION. Each of the parties to this Agreement, when
requested by another party, shall give all reasonable and necessary cooperation
with respect to any reasonable matters relating to the transactions contemplated
by this Agreement.
(g) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida, and, except as provided for
in Paragraph 7 of this Agreement, any suit, action or proceeding arising out of
or relating to this Agreement shall be commenced and maintained in the District
Court in Palm Beach County, Florida or the appropriate United States District
Court for the State of Florida and each party waives objection to such
jurisdiction and venue.
(h) HEADINGS. The various section headings are inserted for purposes
of reference only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.
(i) GENDER; NUMBER. All references to gender or number in this
Agreement shall be deemed interchangeably to have a masculine, feminine, neuter,
singular or plural meaning, as the sense of the context requires.
(j) SEVERABILITY. The provisions of this Agreement shall be
severable, and any invalidity, unenforceability or illegality of any provision
or provisions of this Agreement shall not affect any other provision or
provisions of this Agreement, and each term and provision of this Agreement
shall be construed to be valid and enforceable to the full extent permitted by
law.
(k) SURVIVAL. Except as otherwise expressly provided in this
Agreement, the liabilities and obligations of each party with respect to any and
all of its representations, warranties, covenants and agreements set forth in
this Agreement and/or in any document incorporated into it shall not be merged
into, affected or impaired by the Closing under this Agreement.
(l) NO THIRD PARTY BENEFICIARIES. This Agreement has been entered
into solely for the benefit of the parties that have executed it, and not to
confer any benefit or enforceable right upon any other party or entity.
Accordingly, no party or entity that has not executed this Agreement shall have
any right to enforce any of the provisions of it.
(m) ATTORNEYS' FEES. In any suit, action or proceeding arising out
of or in connection with this Agreement, the prevailing party shall be entitled
to an award of the amount of attorneys' fees and disbursements incurred by such
party in connection herewith, including fees and disbursements on one or more
appeals.
12. Each of the parties to this Agreement represent to the others that (1)
with respect to such party, the execution and delivery of this Agreement and the
completion of the transactions provided in it in accordance with its terms
(a)have been duly authorized, and (b) do not and will not conflict with, or l
cause a breach of, the terms of any other agreement by which he or it is bound,
and (2) such party has either been represented by counsel or has had the
opportunity to consult with counsel and declined to do so, and has read and
fully understands this Agreement and the Exhibits incorporated into it by
reference
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives, under seal, the day and year first
above written.
WITNESSES: GTB COMPANY, a Florida corporation
Sign: By:
Name: Charles C. Chillingworth
Print: Title: President
Sign:
Print:
WESTMARK GROUP HOLDINGS, INC.,
a Delaware corporation
Sign: By:
Name:
Print: Title:
Sign:
Print:
GREENWORLD TECHNOLOGIES, INC.,
a Nevada corporation
Sign: By:
Name:
Print: Title:
Sign:
Print:
STATE OF FLORIDA )
) ss.:
COUNTY OFPALM BEACH )
The foregoing instrument was acknowledged before me this 14th day of
December, 1997 by Charles C. Chillingworth, as President of GTB COMPANY, a
Florida corporation, on behalf of the corporation.
Notary:
[NOTARIAL SEAL] Print Name:
Notary Public, State of Florida
My commission expires:12/28/99
Personally Known OR Produced Identification
Type of Identification Produced: ____________________________
STATE OF FLORIDA )
) ss.:
COUNTY OFPALM BEACH )
The foregoing instrument was acknowledged before me this 14th day of
December, 1997 by Mark Schaftlein, as President and CEO of WESTMARK GROUP
HOLDINGS, INC., a Delaware corporation, on behalf of the corporation.
Notary:
[NOTARIAL SEAL] Print Name:
Notary Public, State of Florida
My commission expires:12/28/99
Personally Known OR Produced Identification
Type of Identification Produced: _______________
STATE OF FLORIDA )
) ss.:
COUNTY OFPALM BEACH )
The foregoing instrument was acknowledged before me this 14th day of
December, 1997 by Alan Adelson, as President and Chief Operating Officer of
GREENWORLD TECHNOLOGIES, INC., a Nevada corporation, on behalf of the
corporation.
Notary:
[NOTARIAL SEAL] Print Name:
Notary Public, State of Florida
My commission expires:12/28/99
Personally Known OR Produced Identification
Type of Identification Produced: _______________